Pr. Commissioner Of Income Tax, Jaipur-Ii, Jaipur v. M/S. Rajasthan Renewable Energy Corp. Ltd., E

HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT JAIPUR D.B. Income Tax Appeal No. 10/2018 Pr. Commissioner Of Income Tax, Jaipur-Ii, Jaipur. ----Appellant Versus M/s. Rajasthan Renewable Energy Corp. Ltd., E-166, Akshay UrjaBhawan, Yudhister Marg, C-Scheme, Jaipur ----Respondent Connected With D.B. Income Tax Appeal No. 11/2018 Pr. Commissioner Of Income Tax, Jaipur-Ii, Jaipur ----Appellant Versus M/s. Rajasthan Renewable Energy Corp. Ltd., E-166, Akshay UrjaBhawan, Yudhister Marg, C-Scheme, Jaipur ----Respondent D.B. Income Tax Appeal No. 12/2018 Pr. Commissioner Of Income Tax, Jaipur-Ii, Jaipur. ----AppellantVersus M/s. Rajasthan Renewable Energy Corp. Ltd., E-166, Akshay UrjaBhawan, Yudhister Marg, C-Scheme, Jaipur ----Respondent For Appellant(s) : Mr. K. D. Mathur & Mr. Prateek Kedawat on behalf ofMr. R. B. MathurFor Respondent(s): HON'BLE MR. JUSTICE K.S.JHAVERI HON'BLE MR. JUSTICE VIJAY KUMAR VYAS 13/03/2018 Judgment 1. In these appeals since identical questions of law and factsare involved, they are decided by this common judgment. 2.By way of these appeals, the appellant has challenged thejudgment and order of the Tribunal whereby the Tribunal hasdisposed of the appeal of the assessee by issuing certaindirections. 3.This court while admitting the appeals framed the followingquestion of law:- 1. In D.B. Income Tax Appeal No. 10/ 2018 “IWhether in the facts and circumstancesof the case and in law the ITAT was justified indeleting the addition of Rs. 20,00,000/- madeon account of contribution made to StateRenewal Fund ignoring the fact thatcontribution towards fund is not connectedwith the business but is diversion of Incomeand not allowable u/s. 37(1) of the IT Act?” IIWhether in the facts and circumstancesof the case and in law the ITAT was justified indeleting the addition of Rs. 126059/- made fordepositing the employees’ contribution to PF &ESI beyond the prescribed time limit providedin the respective Acts. IIIWhether in the facts and circumstancesof the case and in law the ITAT was justified inholding that employees’ contribution to PF andESI governed by the provision of Section 43 Band not by Section 36(1)(va) r.w.s. 2(24)(x) ofthe IT Act. IV.Whether on the facts and in thecircumstances of the case and in law the ITATis justified in upholding the deletion ofdisallowance of contribution to EnergyConservation Fund of Rs. 10000000/- as madeby Assessing Officer ignoring the fact thatcontribution towards fund is diversion ofincome and not allowable u/s. 37(1) of theIncome Tax Act. 2.In D.B. Income Tax Appeal No. 11/ 2018 “IWhether in the facts and circumstancesof the case and in law the ITAT was justified indeleting the addition of Rs. 80,00,000/- madeon account of contribution made to StateRenewal Fund despite the fact that it wasapplication of income and not expenditureincurred for business expediency?”IIWhether in the facts and circumstancesof the case and in law the ITAT was justified indeleting the addition of Rs. 395066/- made fordepositing the employees’ contribution to PF &ESI beyond the prescribed time limit providedin the respective Acts. IIIWhether in the facts and circumstancesof the case and in law the ITAT was justified inholding that employees’ contribution to PF andESI governed by the provision of Section 43 Band not by Section 36(1)(va) r.w.s. 2(24)(x) ofthe IT Act.?” 3. In D.B. Income Tax Appeal No. 12/ 2018 3. In D.B. Income Tax Appeal No. 12/ 2018 “IWhether in the facts and circumstancesof the case and in law the ITAT was justified indeleting the addition of Rs. 20,00,000/- madeon account of contribution made to StateRenewal Fund ignoring the fact thatcontribution towards fund is not connectedwith the business but it is diversion of Incomeand not allowable u/s. 37(1) of the IT Act ?”IIWhether in the facts and circumstancesof the case and in law the ITAT was justified indeleting the addition of Rs. 124442/- made fordepositing the employees’ contribution to PF &ESI beyond the prescribed time limit providedin the respective Acts. IIIWhether in the facts and circumstancesof the case and in law the ITAT was justified inholding that employees’ contribution to PF andESI governed by the provision of Section 43 Band not by Section 36(1)(va) r.w.s. 2(24)(x) ofthe IT Act?” 4.So far as question No.1 is concerned, the same is now covered by the decision of this Court in Principal Commissionerof Income-Tax V/s Rajasthan State Seed Corporation Ltd.[2016] 386 ITR 267 (Raj) wherein it has been held as under:- “Insofar as the expenditure incurred onState Renewal Fund is concerned, saidexpenditure also goes to show that the renewalfund was set up by the State Government andwas created with the object of providing a safetynet for the workers likely to be effected by restricting in the State Public Enterprise and thata finding of fact has been recorded that thecontribution made to the State Renewal fund issolely for the purposes of the welfare and benefitof the employees. In our view, it is for theassessee to decide whether any expenditureshould be incurred in the course of business andexpenditure of this nature being for businessexpediency is certainly allowable deduction underSection 37(1) of the Act.In our view any normalexpenditure for the welfare and benefit ofemployees is allowable expenditure under Section37(1), the Tribunal has come to a finding of factthat it was a legal obligation of the respondent-assessee towards contribution of the said amountto the State Renewal Fund and there being a legalobligation as well in our view the Tribunal hascome to a correct conclusion. 5. In view of above, question No.1 is answered in favour of theassessee and against the department. 6.With regard to issue No.2 and 3 the controversy is pendingbefore the Supreme Court in C.I.T., Jaipur Vs/ Ms State Bank of Bikaner and Jaipur in SLP(c) No. 16249/2014, therefore,subject to decision of SLP, for the present, these issues aredecided on in favour of the department and against the assessee.It will be open for the department to recover the amount if thedecision is in their favour. 7.With regard to Issue No.4 in D. B. Income Tax Appeal No.10/2018, in view of the observations made by CIT(A), which hasnot been challenged before the Tribunal, that question will notarise and the same is answered against the department. 8.In view of the above, the appeals stand disposed of. (VIJAY KUMAR VYAS),J (K.S.JHAVERI),J B.M.G/Gourav/4-6