PR. COMMISSIONER OF INCOME TAX vs. M/S RAJASTHAN STATE ROAD DEVELOPMENT AND CONSTRUCTION CORPORATION LIMITED

Order 27/05/2019 Four questions of law are urged by the revenue in this appeal under Section 260-A of the Income Tax Act. So far as the first question in respect to disallowance is concerned, was set aside by the ITAT. This expense was claimed under Section 37(1). This court notices that for previous years, by a common judgment dated 02.08.2017 in ITA No. 145/2015 Principal Commissioner of Income Tax v. M/s. Rajasthan State Industrial Dev. & Investment Corporation Ltd., the court upheld the expenditure. Thus, the ITAT’s order is reasonable and does not call for interference. The second question is with respect to the contribution made towards State Renewal Fund (₹ 6932000/-). As far as this is concerned, the question is now covered by the decision in Pr. Commissioner of (2 of 3) [ITA-355/2018] Income Tax v. M/s. Rajasthan Renewable Energy Corporation Ltd. [ITA No. 10/2018 decided on 13.03.2018]. The court had then followed Principal Commissioner of Income-Tax v. Rajasthan State Seed Corporation Ltd [(2016) 386 ITR 267 (Raj), where it has held as follow :- “Insofar as the expenditure incurred on State Renewal Fund is concerned, said expenditure also goes to show that the renewal fund was set up by the State Government and was created with the object of providing a safety net for the workers likely to be effect by restricting in the State Public Enterprise and that a finding of fact has been recorded that the contribution made to the State Renewal fund is solely for the purposes of the welfare and benefit of the employee. In our view, it is for the assessee to decide whether any expenditure should be incurred in the course of business and expenditure of this nature being for business expediency is certainly allowable deduction under Section37 (1), of the Act. In our view any normal employee expenditure for the welfare and benefit of employees is allowable expenditure under Section 37 (1), the Tribunal has come to a finding of fact that it was a legal obligation of the respondent-assessee towards contribution of the said amount to the State Renewal fund and there being a legal obligation as well in our view the Tribunal has come to a correct conclusion.” Following the same reasoning it is held that the expenditure i.e. contribution towards State Renewal Fund, is covered and allowable under Section 37 of the Act. The third and fourth questions are common and relate to contribution towards provident fund. On this aspect the decision of this court in Commissioner of Income Tax v. M/s. State Bank of Bikaner and Jaipur [(2014) 363 ITR 70 (Raj) decided on 06.01.2014] bind and cover the issues against the revenue. However, special leave petition is pending before the Supreme Court. Though these questions with respect to interpretation of Section 43-B, are answered against the (3 of 3) [ITA-355/2018] appellant, they are subject to final order of the Supreme Court on these questions. For the above reasons, the appeal is dismissed. (G R MOOLCHANDANI),J (S. RAVINDRA BHAT),CJ db/26