PRINCIPAL COMMISSIONER OF I T JAIPUR-2 vs. M/S RAJ STATE BEVERAGES CORP LTD

HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT JAIPUR D.B. Income Tax Appeal No. 141 / 2016 Principal Commissioner Of I T Jaipur-2 ----Appellant Versus M/S Raj State Beverages Corp Ltd ----Respondent _____________________________________________________ For Appellant(s) : Mr. K.D. Mathur for Mr. R.B. Mathur _____________________________________________________ HON'BLE MR. JUSTICE K.S. JHAVERI HON'BLE MR. JUSTICE VIJAY KUMAR VYAS Judgment 20/04/2017 1. By way of this appeal, the appellant has assailed the judgment and order of the Tribunal whereby Tribunal has dismissed the appeal of the department. 2. Counsel for the department has framed the following substantial questions of law:- “1. Whether in the facts and circumstances of the case, the Tribunal was justified in confirming the order of CIT(A) in deleting the addition of Rs.29 crore made by the Assessing Officer by disallowing the payment of privilege fees without appreciating the fact that he said expenses are of capital in nature. 2. Whether in the facts and circumstances of the case, the Tribunal was justified in deleting addition of Rs.1699447/- made on account of depositing the PF/ESI payment beyond the prescribed time limit provided in the respective Acts, when the employee’s contribution is governed by the provisions of section 36(1)(va) r.w.s. 2(24)(x) and not Section 43B of the IT Act. 3. Whether on the facts and in the circumstances of the case and in law the ITAT is justified in holding that employee’s contribution to PF & ESI are governed by the provision of Section 43B and not by Section 36(1)(va) r.w.s. 2(24)(x) of the I.T. Act.”

(2 of 3) [ITA-141/2016] 3. However, taking into consideration, the judgment of this court in the case of assessee itself in D.B. Income Tax Appeal No.150/2016 (Principal Commissioner of Income Tax, Jaipur-2 vs. M/s Rajasthan State Beverages Corpn. Ltd.) decided on 4.8.2016 wherein Division Bench observed as under:- “5. So far as the question relating to privilege fees amounting to Rs.26.00 Crores in the instant year as well as the deduction of claim of Rs.17,80,765/- on account of Provident Fund (PF) and ESI is concerned, this Court has extensively considered the aforesaid two questions in assessee's own case vide judgment and order dt.26.05.2016 referred to (supra) and has held that the privilege fees being a revenue expenditure, is required to be allowed as a revenue expenditure. This court in the aforesaid case has also allowed the claim of the assessee, in so far as payment of PF & ESI etc. is concerned, on the finding of fact that the amounts in question were deposited on or before the due date of furnishing of the return of income and taking in consideration judgment of this Court in Commissioner of Income Tax Vs. State Bank of Bikaner & Jaipur and Commissioner of Income Tax Vs. Jaipur Vidyut Vitaran Nigam Ltd. (2014) 363 ITR 70 (Raj.) and accordingly both the questions are covered by the aforesaid judgment and against the revenue. 6. In so far as the claim about bad debt of Rs.12,79,968/- is concerned, we notice that the said amount relates to debit balances of the supplier which remained outstanding since 2005-06 and 2007-08 and it was the claim of the assessee that the advances were given to the suppliers for business purposes but supply of liquor was not received and there is a finding of fact recorded by the CIT (A) as well as the Tribunal and could not be disputed by the counsel for the Revenue that the amounts were old and outstanding and the said amount was written off in accordance with the provisions contained in Sec.36 (1) (VII) of the Act. The CIT (A) as well as the Tribunal has taken into consideration the judgment of the Apex Court in the case of T.R.F. Ltd Vs. CIT : (2010) 323 ITR 397 and recorded a finding of fact that the said amount having become irrecoverable, the assessee has rightly written off the same and merely because the assessee has not filed any claim, that could not be considered to be a ground for 4 disallowing a bad debt. 6.1. Admittedly, the amounts were lying outstanding for the last couple of years and the assessee has rightly written off the said amount in the books of account and

(3 of 3) [ITA-141/2016] merely because a suit was not filed and that cannot be considered to be a cogent reason to disallow the claim which became bad. One need not incur good money for recovery of the so called irrecoverable or a bad money and file a suit which remains pending for years and with uncertainty. 7. In the light of the judgment in assessee's own case, the first two questions being covered against the revenue, no more remains substantial question of law which can be considered by this court and so far as question of bad debt is concerned, essentially it is based on a finding of fact and no substantial question of law can be said to emerge out of the order of the Tribunal.” 4. In that view of the matter, no substantial question of law arises. The appeal stands dismissed. (VIJAY KUMAR VYAS),J. (K.S. JHAVERI),J. Brijesh 148.