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Income Tax Appellate Tribunal, RAIPUR BENCH, RAIPUR
Before: S/SHRI N.S SAINI & PAVAN KUMAR GADALE
per the requirements of SEBI and other misc professional fees relating to the
work. The Assessing Officer rejected the submission of the assessee and
disallowed Rs.21,94,020/-.
11 ITA Nos.363 & 364/Rpr/2014 Assessment Years : 20098-2010 & 2010-2011
Before the CIT(A), the assessee reiterated the submissions before the
Assessing Officer and submitted that as per Board Circular No.10/67/65-
IT(A-1) dated 26.8.1965, such expenditure is allowable as revenue
expenditure.
The CIT(A) deleted the addition by observing that the Assessing officer
has disallowed the claim of the assessee without considering relevant
schedule of the balance sheet. The nature of expenses as claimed shows
that expenses are of recurring nature incurred in connection with various
compliances as per listing agreements, etc. He also cited the Board
circular(supra) and deleted the addition.
Before us, ld D.R. supported the order of the Assessing Officer
whereas ld AR supported the order of the CIT(A).
We find that the assessee is listed with BSE, NSE and SEBI, and the
expenses relate to annual custodian fees, listing fees, compliance certificate
fees, printing of annual reports, charges publication of quarterly, half-yearly
and annual results as per the requirements of SEBI and other misc
professional fees relating to the work, which are recurring in nature. The
CIT(A) has deleted the addition after properly appreciating the facts of the
case. Hence, we confirm his order and reject the ground of appeal of the
revenue.
12 ITA Nos.363 & 364/Rpr/2014 Assessment Years : 20098-2010 & 2010-2011
The next issue relates to deletion of disallowance of Rs.77,58,654/- on
account of Social Welfare expenses which have not been incurred wholly and
exclusively for the purpose of business.
The Assessing Officer has claimed deduction for an amount of
Rs.77,58,654/- on account of social welfare expenses for development of
various facilities for public of nearby villages like construction of ponds,
organizing of medical camps, promotion of education facilities, contribution
to gram vikas samitees for various development works to earn goodwill in
the society. The Assessing Officer rejected the explanation of the assessee
and disallowed the claim of the assessee.
On appeal, the CIT(A) observed that there is no dispute to the
genuineness of claim of expenditure i.e. incurrence of expenditure and
payment thereof. The CIT(A) following the decision in the case of CIT vs.
Modi Industries Ltd., 327 ITR 570, the decision of Karnataka High Court in
the case of CIT vs. Infosys Technologies Ltd., 360 ITR 714 (kar) and also the
amendment in Section 37 in the Finance No.(2) Act, 2014 w.e.f. 1.4.2015,
deleted the disallowance of Rs.2,68,796/-.
Being aggrieved, the revenue is in appeal before us.
13 ITA Nos.363 & 364/Rpr/2014 Assessment Years : 20098-2010 & 2010-2011
We have heard the rival submissions and perused the record of the
case. We find that the CIT(A) has relied on the decision in the case of Modi
Industries (supra) and Hon’ble Karnataka High Court in the case of CIT vs.
Infosys Technologies Ltd (supra), wherein, it has been held that the
expenditure incurred on social responsibility was laid out or expended wholly
and exclusively for purposes of business. The CIT(A) has referred to the
amendment made in Finance Act (No.2) 2014 w.e.f. 1.4.2015 in Section 37,
wherein, it is declared that for the purposes of sub-section(1) any
expenditure incurred by an assessee on the activities relating to corporate
social responsibility referred to in section 135 of the Companies Act, 2013
shall not be deemed to be an expenditure incurred by the assessee for the
purposes of the business or profession. The CIT(A) has held that there was
no such embargo for the preceding years. In view of above, the CIT(A) held
that the disallowance cannot be sustained. In the instant case, it is
submitted that CSR expenses are incurred for the welfare of local community
and thereby improve corporate image of the companies incurring such
expenditure. We are of the considered opinion that the CIT(A) has rightly
considered the decision and deleted the addition made by the Assessing
Officer and Ground No.d of appeal of the revenue is dismissed.
14 ITA Nos.363 & 364/Rpr/2014 Assessment Years : 20098-2010 & 2010-2011
The last issue pertains to restriction of disallowance u/s.40A(3) of the
Act to Rs.17,54,455/- thereby giving relief of Rs.7,02,475/- to the assessee.
The Assessing Officer observed that the assessee has made payments
in violation of provisions of section 40A(3) of the Act as per the list enclosed
in the assessment order and, therefore, disallowed Rs.17,54,455/-.
On appeal, the CIT(A) the assessee submitted that as per list
furnished, the expenses to the tune of Rs.7,02,476/- were below as
prescribed limit u/s.40A(3) of the Act. It was submitted that out of total
expenses of Rs.75,10,62,825/-, as transport expenses, only Rs.24,56,931/-
was paid in cash that too due to urgent requirement of transporters and the
payments were genuine.
The CIT(A) found that only Rs.7,02,476/- paid in cash were below the
prescribed limit and deleted the addition to that extent and sustained the
addition for the balance amount.
Having heard the rival submissions, we have carefully gone through
the orders of lower authorities. We find that the CITA) has allowed the
deduction which are below the prescribed limit u/s.40A(3) of the Act. Before
us, no plausible explanation was submitted by the ld D.R. to controvert the
15 ITA Nos.363 & 364/Rpr/2014 Assessment Years : 20098-2010 & 2010-2011
above findings of the CIT(A). Hence, we uphold the order of the CIT(A) and
dismiss the ground of appeal of the revenue.
In the result, appeal filed by the revenue is partly allowed.
Order pronounced on 18 /01/2018.
Sd/- sd/- (N.S Saini) (Pavan Kumar Gadale) ACCOUNTANT MEMBER JUDICIALMEMBER Raipur; Dated 18 /01/2018 B.K.Parida, SPS Copy of the Order forwarded to : 1. The Appellant : DCIT 1(2), Aayakar Bhavan, Raipur 2. The Respondent. Godawari Power & Ispat Limited, Plot No.482/2, Industrial Growth Central Phase-1, Raipur 3. The CIT(A)- Raipur 4. Pr.CIT- Raipur 5. DR, ITAT, Raipur 6. Guard file. //True Copy//
BY ORDER,
SR.PRIVATE SECRETARY ITAT, Raipur