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Income Tax Appellate Tribunal, BANGALORE BENCHES “ C ” BENCH: BANGALORE
Before: SHRI A.K. GARODIA & SHRI PAVAN KUMAR GADALE
O R D E R
PER SHRI PAVAN KUMAR GADALE, JM :
The assessee has filed an appeal against the order of Commissioner of Income Tax (Appeals), Gulbarga passed under Section 143(3) & 250 of the Income Tax Act, 1961.
The assessee has raised the following grounds of appeal :
3. The Brief facts of the case are that the assessee is a civil contractor and PWD Govt. Contractor and filed the Return of Income for Assessment Year 2014-15 on 30.11.2015 of Rs.1,04,58,340. Subsequently, the case was selected for scrutiny under CASS and Notice under Section 143(2) and 142(1) of the Act were issued along with questionnaire. The learned Authorised Representative appeared from time to time and filed the details. The Assessing Officer on verification of the details furnished find Rs.1,42,446 against CBF Contractor Benevolent Fund under the head ‘Duties and Taxes’. The Assessing Officer is of the opinion that the assessee is not eligible for claim of deduction under Section 37(1) of the Act in the absence of evidence and the assessee has not supported the claim with any documentary evidence and hence made an addition Similarly, A.O. disallowed interest on loan paid to Non- Banking Finance Ltd. (NBFC) to the extent of Rs.22,89,609 and assessed the total income of Rs.1,28,90,395 and passed the order under Section 143(3) of the Act Dt.5.12.2016. Aggrieved by the order, assessee filed an appeal with the CIT (Appeals) and whereas the CIT(Appeals) on the disputed issue of disallowance of expenditure towards the Contractor Benevolent Fund has confirmed the addition and granted relief in respect of other addition and partly allowed the appeal. Aggrieved by the CIT (Appeals) order the assessee has filed an appeal before the Tribunal.
4. At the time of hearing, the learned AR submitted that CIT(Appeals) has erred in confirming the addition of contribution to CBF and it is mandatory to contribute as per the State Notification and filed Paper Book demonstrating the Government of Karnataka Notification dt.18.01.2007 and ledger account of CBF submitted before the CIT(Appeals) and ITAT order in assessee's own case for Asst. Year 2013-14 and placed a copy on record and prayed for allowing the assessee's appeal. Contra, the ld. DR supported the order of CIT(Appeals).
We heard the rival contentions and perused the material on record. The sole disputed issue envisaged by the ld. AR on the disallowance of contribution to Contributory Benevolent Fund (CBF) which is allowable as business expenditure and further emphasized that it is a mandatory requirement to make contribution to CBF and supported the arguments relying on the Notification of Govt. of Karnataka Dt.18.1.2007 and CBF Ledger in respect of payments made over the period in the financial year we found in assessee's own case in Dt.20.07.2018 for the Assessment Year 2013-14, at page 3 and para 5 of the order has dealt on this issue and matter was remitted to A.O. which is read as under : “ 5. We have gone through the record and considered the arguments made by both the parties. I0n our view the contractor is under an obligation to deduct tax by notification issued by the Government of Karnataka, dt.18.1.2007 to make the payment of CBF which is equivalent to 1% of the estimated cost of the contract and therefore this is an expenditure which is wholly and solely related to the business of the assessee. However in our view, whether actually this amount is spent by the assessee for the purposes of business is required to be verified by the A O with reference to the bills / running bills submitted by the assessee. In view of the above, we remand the matter back to the file of the AO with a direction to verify whether the assessee had made the contribution to CBF in pursuance to the notification dt.18.1.2007 or the corrigendum issued. If the payment of CBF is made in accordance with the said notification then the same shall be allowed after verification.” We follow the judicial precedence and in the present assessment year the issue is similar and identical and as discussed. Accordingly we restore the entire disputed issue to the file of Assessing Officer for limited purpose along with the evidences filed in the course of hearing to verify and examine the claim and allow and the assessee should be provided adequate opportunity of hearing and should co-operate in submitting the information and the grounds of appeal
of the assessee is allowed for statistical purposes.
6. In the result, the appeal of assessee is treated as allowed for statistical purposes. Order pronounced in the open court on 9th Aug., 2019.