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Income Tax Appellate Tribunal, “C” BENCH: KOLKATA
Before: Shri Sanjay Garg & Shri Rakesh Mishra
order :November 20, 2024 आदेश / ORDER संजय गग�, �याियक सद�य �ारा/ Per Sanjay Garg, Judicial Member: Both the captioned appeals have been preferred by the assessee against the separate orders dated 01.03.2024 and 23.03.2024 of the Ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi (hereinafter referred to as the “Ld. CIT(A)” passed u/s. 250 of the Income-tax Act, 1961 (hereinafter referred to as the “Act”) for Assessment Years (AY) 2013-14 and 2016-17.
First we take up for AY 2013-14. The assessee in this appeal has taken four grounds of appeal. Ground No. 1:
& 777/Kol/2024 Assessment Years: 2013-14 & 2016-17 Keventer Agro Ltd.
“That, on the facts and in the circumstances of the case, the Ld. CIT(A), NFAC, Delhi erred in law in having upheld the entire disallowance of deduction of Rs.56,83,680/- u/s. 43B(f) of the Act towards liability for leave encashment debited to the P/L Account in view of direction of Hon’ble Supreme Court on SLP in the case of Exide Industries Ltd. Vs. UOI when the assessee sought relief of Rs.27,08,690/- only on actual payment basis which was included in the said deduction of Rs.56,83,680/- and not claimed separately in the ROI.” 2.1. The assessee, vide ground no. 1 has contested the actions of the lower authorities in making/confirming the disallowance of deduction claimed of Rs.56,83,680/- u/s.43B(f) of the Act towards liability for leave encashment.
2.2. At the outset, the Ld. Counsel for the assessee has demonstrated that out of the total liability claim of Rs.56,83,680/-, the assessee has actually paid the amount of Rs.27,08,690/- during the year. A certificate, in this respect, from the Chartered Accountant has also been placed at page 93 of the paper book, wherein, the aforesaid fact has been affirmed.
2.3. Considering the aforesaid factual position, the assessee is entitled to get deduction to the extent of amount actually paid i.e. Rs.27,08,690/-. The issue is covered in favour of the assessee in the own case of the assessee for AY 2015-16 vide order of the Tribunal dated 05.06.2024 passed in ITA No. 396/Kol/2024. The Assessing Officer (in short “AO”) is accordingly, directed to allow the deduction to the extent of amount actually paid of Rs.27,08,690/-. This ground is partly allowed.
Ground No. 2 :
“That, on the facts and in the circumstances of the case, the Ld. CIT(A) erred in having upheld the disallowance of depreciation of Rs.32,70,538/- and addition of the same to the total income on the presumption of excess depreciation claimed for non-adjustment of grants received from NDDB in spite of the fact that depreciation of & 777/Kol/2024 Assessment Years: 2013-14 & 2016-17 Keventer Agro Ltd.
Rs.1,30,97,511/- claimed u/s. 32 of the Act on the WDV of the assets was arrived at after reducing the grant received from the value of assets and the same was in accordance with AS-12 issued by ICAI.” 3.1. The assessee, vide ground no.2, has contested the actions of the lower authorities in making/confirming the disallowance of depreciation of Rs.32,70,538/- on account of excess depreciation claimed in respect of assets purchased out of the grant received from National Dairy Development Board (in short “NDDB”). The Ld. Counsel, in this respect has referred to the following chart:
Particulars Amounts Remarks Total depreciation computed Rs. 3,48,05,331/- Refer page 28 of the in the books of account as per Paper Book. Companies Act, 2013. Depreciation on Grants from Rs. 69,54,152/- Refer page 26 & 34 of NDDB the Paper Book. Depreciation charged to profit Rs.2,78,51,179/- Refer page 34 & 17 of and loss account the Paper Book. Depreciation added back to Rs.2,78,51,179/- the business income Refer page 55 of the Paper book. Depreciation claimed as per Rs.1,30,97,511/- Income Tax Act 3.2. The Ld. Counsel, therefore, has demonstrated that the assessee has added back the amount of depreciation on grants from NDDB. The identical issue has been thoroughly examined by the Co-ordinate Bench of the Tribunal in assessee’s own case for AY 2015-16 vide order of the Tribunal dated 05.06.2024 passed in ITA No. 396/Kol/2024. This issue is accordingly, decided in favour of the assessee and the impugned addition made by the AO of Rs.32,70,538/- is ordered to be deleted.
Ground no.3:
“That, on the facts of the case and in view of the above grounds raised in this appeal, the interest charged u/s. 234B & 234D of the Act in the & 777/Kol/2024 Assessment Years: 2013-14 & 2016
17. Keventer Agro Ltd. assessment order is erroneous and the same being consequential in nature, necessary directions be issued to modify the same.” 4.1. The assessee, vide ground no. 3, has agitated the levy of interest u/s. 234B and 234D of the Act. The levy of interest is consequential in nature and does not require any specific adjudication.
Ground No.4: “That the appellant craves leave to amend, alter, modify, substitute, add to, abridge and/or rescind any or all of the above grounds.” 5.1. Ground no. 4 is general in nature and does not require any adjudication.
In view of our findings given above, this appeal of the assessee is treated as partly allowed. for AY 2016-17. The assessee, in this case, has taken seven grounds of appeal. Ground no. 1: 7.
“That, on the facts and in the circumstances of the case, the Ld. CIT(A) erred in having upheld the disallowance of depreciation of Rs.7,33,106/- and addition of the same to the total income on the presumption of excess depreciation claimed for non-adjustment of grants received from NDDB in spite of the fact that quantum of depreciation of Rs.2,51,17,281/- claimed u/s 32 of the Act on the WDV of the assets was arrived at after reducing the grant received from the value of assets and the same was in accordance with AS-12 issued by lCAI.
7.1. Vide ground no. 1, the assessee has contested the disallowance of depreciation of Rs.7,33,106/- made by the lower authorities on account of non-adjustment of depreciation on assets bought out of grant received from NDDB.
7.2. At the outset, the Ld. Counsel for the assessee has referred to the following chart:
& 777/Kol/2024 Assessment Years: 2013-14 & 2016-17 Keventer Agro Ltd.
Particulars Amounts Remarks Total depreciation computed Rs. 2,16,58,189/- Refer page 136 of the in the books of account as per Paper Book. Companies Act, 2013. Depreciation on Grants from Rs. 6,14,197/- Refer page 134 & 142 NDDB of the Paper Book. Depreciation charged to profit Rs.2,78,51,179/- Refer page 34 & 17 of and loss account the Paper Book. Depreciation added back to Rs.2,10,43,992/- Refer page 125 & 142 the business income of the Paper book. Depreciation added back to Rs.2,10,43,992/- Refer page 165 of the the business income Paper book.
7.3. The Ld. Counsel, therefore, has demonstrated that the assessee has duly added back the depreciation in respect of assets bought from out of grant received from NDDB. The issue is otherwise, squarely covered in favour of the assessee by the Co-ordinate Bench of the Tribunal in assessee’s own case for AY 2015-16 vide order of the Tribunal dated 05.06.2024 passed in ITA No. 396/Kol/2024. The ground of appeal is accordingly, decided in favour of the assessee and the impugned addition made by the lower authorities on account of excess depreciation claimed is hereby ordered to be deleted.
8. Ground No. 2:
“That, the Ld. A.O. wrongly disallowed business expenditure of Rs.9,959/-incurred on payment of interest for delayed payment of TDS contending the same as penal in nature and the Ld. C.I.T.(A) has erred in law in having upheld the said disallowance in spite of the several decisions on the issue that such payment of interest did not have the character of penalty for an offence as the same was merely compensation for moneys withheld and hence an allowable deduction u/s 37(1) of the Act. 8.1. Vide ground no.2, the assessee has contested the disallowance made by the lower authorities of Rs.9,959/- incurred on payment of interest on account of delayed deposit of TDS.
8.2. This issue is covered against the assessee by the decision of Co- ordinate Bench of the Tribunal in the case of Premier Irrigation Adritec & 777/Kol/2024 Assessment Years: 2013-14 & 2016-17 Keventer Agro Ltd. (P) Ltd. Vs. ACIT [2023] 146 taxmann.com 389 (Kolkata Trib.) (one of us i.e. Judicial Member herein, being author of the said decision), wherein, the Co-ordinate Bench of the Tribunal after considering the relevant provisions has held that interest payment on delayed deposit of income tax whether TDS or otherwise, is not an allowable expenditure. Though the Ld. Counsel for the assessee, in this respect, has relied on another decision of the Co-ordinate Bench of the Tribunal in the case of Welkin Telecom Infra (P) Ltd. Vs. DCIT [2022] 96 ITR (T) 475 (Kol) and has further submitted that in case of conflicting judgments of Co-ordinate Benches, the judgment delivered earlier will continue to govern the law till the same is overturned. However, it is to be noted that the said decision in the case of Welkin Telecom Infra (P) Ltd. (supra) has been duly considered in the case of Premier Irrigation Adritec (P) Ltd. (supra), therefore, we rely upon the said decision in the case of Premier Irrigation Adritec (P) Ltd.(supra) and hold that the interest on delayed deposit of TDS is not an allowable expenditure. This ground of appeal is accordingly, dismissed. Ground no.3: 9.
“That, the Ld. CIT(A) further erred in having sustained on estimate basis 50% of the unrealistic disallowance of Rs.53,32,927/- made by the Ld. AO as abnormal loss to Rs.26,66,465/- instead of allowing the entire loss as a revenue loss when he himself has endorsed such loss as normal on account of shortage in finished products (milk) due to normal wear and tear, transportation, filling, packing etc., that too at 0.197% of total quantity of 8,06,67,234 litres of milk sold. “ 9.1. Vide ground no. 3, the assessee has contested the disallowance made by the lower authorities of Rs.26,66,465/- on account of shortage of finished products (milk). 9.2. The AO disallowed 50% of the loss claimed on account of shortage of finished product of milk on ad-hoc basis. Ld. Counsel for the assessee has submitted that such loss was normal on account of & 777/Kol/2024 Assessment Years: 2013-14 & 2016-17 Keventer Agro Ltd. shortage in finished products (milk) due to normal wear and tear, transportation, filling, packing etc., which was at a very small percentage of 0.197% of the total quantity of milk. The Ld. Counsel has further, in this respect, brought our attention to the decision of the Co- ordinate Bench of the Tribunal in assessee’s own case for AY 2015-16 vide order of the Tribunal dated 05.06.2024 passed in wherein, the identical issue has been decided in favour of the assessee. In view of the above, this ground of appeal is allowed and the impugned addition on account of shortage of milk product is ordered to be deleted.
10. Ground No. 4:
“ That, the Ld. CIT(A) further erred in having upheld the disallowance of Rs.5,34,400/- on account of advertisement expenses as not coming within the purview of see 37(1) of the Act in spite of the fact that payments towards advertisements in souvenirs during festivities for commercial expediency are to be considered from the businessman's stand point and hence an allowable expenditure u/s. 37(1) of the Act.” 10.1. Vide ground no. 4, the assessee has contested the disallowance made by the lower authorities of Rs.5,34,400/- on account of advertisement expenses. 10.2. The lower authorities disallowed the said expenditure stating that the said expenditure was not a business expenditure. However, the Ld. Counsel for the assessee has submitted that the said advertisement expenses were incurred for business purposes. The identical issue has come up for consideration before the Co-ordinate Bench of this Tribunal in assessee’s own case for AY 2015-16 vide order of the Tribunal dated 05.06.2024 passed in wherein, the said issue has been decided by the Bench in favour of the assessee. In view of this, the aforesaid disallowance made by the lower authorities is ordered to be deleted.
& 777/Kol/2024 Assessment Years: 2013-14 & 2016-17 Keventer Agro Ltd.
Ground no.5:
“That, without any prejudice to the above grounds, the Ld. CIT(A) erred in not adjudicating the following disputes/claims raised before him on merits of the facts of the case and evidence already on record and instead directing the Ld. A.O. to rectify/allow the same after verification of the assessee's claims/contentions when as per sec. 251(l)(a) of the Act it is beyond his scope to set aside an issue to the file of the Ld. A.O. : i) Refund of excess Dividend Distribution Tax of Rs. 1,39,059/- along with applicable interest u/s. 244A of the Act. ii) Book profit determined in 143(3) order at Rs. 29,18,50,528/- inadvertently stated in the appended computation sheet as Rs.29,23,95,142/-, leading to a difference of Rs.5,44,614/-.” 11.1. Vide ground no.5, the assessee has contested the actions of the lower authorities in not adjudicating the following issues on merits:
“i) Refund of excess Dividend Distribution Tax of Rs. 1,39,059/- along with applicable interest u/s. 244A of the Act. ii) Book profit determined in 143(3) order at Rs. 29,18,50,528/- inadvertently stated in the appended computation sheet as Rs.29,23,95,142/-, leading to a difference of Rs.5,44,614/-.” 11.2. The Ld. Counsel for the assessee, in this respect, has submitted that the Ld. CIT(A) has set aside the issue before the AO with a direction to verify the claim and if found correct then to rectify and allow the same. The Ld. Counsel has submitted that though the rectification application was filed with the AO, but the same is pending till date.
11.3. Considering the rival submissions, we are not inclined to interfere in this respect with the directions given by the Ld. CIT(A). However, it is directed that the AO will verify the claim of the assessee and decide the same as per directions given by the Ld. CIT(A) within sixty days of the receipt of copy of this order.
Ground no. 6:
“That, on the facts of the case and in view of the above grounds raised in this appeal, the interest charged u/s. 234B of the Act in the assessment & 777/Kol/2024 Assessment Years: 2013-14 & 2016
17. Keventer Agro Ltd. order is erroneous and the same being consequential in nature, necessary directions be issued to modify the same.” 12.1. Ground no.6 is relating to charging of interest u/s. 234B of the Act. The charging of interest u/s.234B is consequential in nature, does not require any specific adjudication.
Ground no. 7:
“That, the appellant craves leave to amend, alter, modify, substitute, and to abridge and/or rescind any or all of the above grounds.” 13.1. Ground No. 7 is general in nature and does not require any adjudication. 14. In view of our findings given above, this appeal of the assessee is treated as partly allowed. 15. In the result, both the appeals of the assessee are treated as partly allowed.