DCIT, JAIPUR vs. SHREE SALASAR OVERSEAS PVT. LTD., JAIPUR

PER SHRI KUL BHARAT, J.M.

This appeal by the revenue is directed against the order of ld. CIT (A)-I,

Jaipur dated 03.02.2016 pertaining to assessment year 2012-13. The revenue has

raised the following grounds of appeal :-

“1. Whether on the facts and in the circumstances of the case and in law the ld. CIT (A) has erred in deleting the addition of Rs. 79,22,175/- made by the Assessing Officer by disallowing the provision for Development Expenses made by the assessee, ignoring the provisions of section 37(1) of the Act and wrongly holding the same an ascertained liability?

2 ITA No. 496/JP/2016 Shree Salasar Overseas Pvt. Ltd.

picked up for scrutiny assessment and the assessment was framed under section

143(3) of the Income Tax Act, 1961 (hereinafter referred to as the Act) vide order

dated 04.03.2015. While framing the assessment, the AO made additions of Rs.

79,22,175/- on account of disallowance of Development expenses and Rs.

1,65,50,000/- on account of payment made in cash in contravention of provisions of

section 40A(3) of the Act. Aggrieved by this, the assessee preferred appeal before

ld. CIT (A), who allowed the appeal of the assessee taking into considering the

decisions of the Tribunal in the assessee’s own case. Aggrieved, the revenue is in

appeal before this Tribunal.

assessee is squarely covered by the earlier orders of the Jaipur Bench of the Tribunal

in the assessee’s own case including order passed in ITA No. 416/JP/2015 for the

assessment year 2010-11 order dated 15.06.2016. Therefore, he prayed that the

order of ld. CIT (A) be upheld.

3.1 On the other hand, the ld. D/R supported the order of Assessing Officer.

3.2 We have heard rival contentions, perused the material available on record

and gone through the orders of the authorities below. We find that the issues raised

in this appeal are squarely covered by the earlier orders of the Tribunal. The

Coordinate Bench of the Tribunal in ITA No. 416/JP/2015 for the A.Y. 2010-11 vide

order dated 15.06.2016 on the identical grounds has decided the issue in favour of

the assessee. In respect of identical Ground No. 1 above, the Coordinate Bench has

decided the issue in favour of the assessee by observing as under :-

3 ITA No. 496/JP/2016 Shree Salasar Overseas Pvt. Ltd. “2.5 We have heard the rival contentions and perused the material available on record. Undisputedly, there is no change in the facts and circumstances of the case. The issue in question is covered in favour of the assessee by the earlier decisions of the Coordinate Benches in assessee’s own case. Respectfully following the earlier decisions of the Coordinate Benches, provision for development expenses of Rs. 5,18,11,442/- is allowed as an eligible deduction against the profits and gains of the business of the assessee. Thus, the ground raised by the Revenue is dismissed.”

In respect of identical ground no. 2 above, the Coordinate Bench has decided the issue in favour of the assessee by observing as under :-

“3.9 We have heard the rival contentions and perused the material available on record. It is noted that during the year under consideration, the assessee has made cash payments of Rs. 74.51 lacs in respect of 21 separate transactions towards purchase of agriculture land. Out of 21 transactions, 19 payments were made to various farmers on Sunday and the remaining two payments totalling to Rs. 5,51,000/- was made after the close of the banking hours. Undisputedly the genuineness of the transactions and identity of the parties have been clearly spelt out by the assessee and forms part of the assessment records. The payments were made to farmers for purchase of their agricultural land and the payments are duly supported by the various documentation in form of agreement to sale, conveyance deed etc. The fact that the payments were made earlier through cheque cannot be made the sole basis for disallowance u/s 40A(3) of payments being made in cash. The assessee has explained the circumstances in which the land deals/negotiations are done with the farmers and the need for cash payment given the lack of banking facility, cheques given earlier not being deposited thus requiring cash payments in respect of these 21 transactions. Further, it is noted that these cash payments of Rs 74.51 lacs constitute only a small percentage of total payments towards purchase of land totalling to Rs. 236.90 crores during the year

4 ITA No. 496/JP/2016 Shree Salasar Overseas Pvt. Ltd. under consideration and thus constitute an exception rather than a norm. In our view, the need for cash payments on Sundays/after banking hours and test of business expediency has been satisfactorily fulfilled in the instant case and the second proviso to section 40A(3) read with Rule 6DD which provides relaxation from the rigour of disallowance under section 40A(3) is clearly attracted.

3.10 Further it is noted that the assessee has been in this line of business and in the past under similar circumstances, cash payments have been made to the farmers for purchase of the land and the Co-ordinate Bench vide its order dated 28.03.2014 has deleted the disallowance in A.Y. 2006-07, 2007-08 and 2008-09.

3.11 In the light of above discussions, facts and circumstances of the case and respectfully following the decision of the Co-ordinate Bench (supra), we find no infirmity in the order of the ld. CIT(A) who has rightly deleted the disallowance of Rs. 74,51,000 u/s 40A(3) of the Income Tax Act. 1961.”

We find that in the year under consideration the issues involved are identical to the grounds raised in assessment year 2010-11 and there is no change in the facts and circumstances of the case. The ld. D/R has also not controverted the submissions of the assessee. Therefore, respectfully following the decisions of the Coordinate Bench of the Tribunal in ITA No. 416/JP/2015 dated 15.06.2016, we find no reason to interfere in the order of ld. CIT (A), the same is affirmed. 4. In the result, appeal of the revenue is dismissed. Order pronounced in the open court on 08/03/2017. Sd/- Sd/- ( HkkxpUn] ½ ( dqy Hkkjr) (BHAGCHAND ) ( KUL BHARAT ) ys[kk lnL;@Accountant Member U;kf;d lnL;@Judicial Member Jaipur Dated:- 08/03/2017.

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