Principal Commissioner Of Income Tax, Jaipur-2, Jaipur v. M/S Rajasthan State Ganganagar Sugar Mills Ltd., 4Th Floornehru Sahakar Bhawan Jaipur

HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT JAIPUR D.B. Income Tax Appeal No. 81/2018 Principal Commissioner Of Income Tax, Jaipur-2, Jaipur ----Appellant Versus M/s Rajasthan State Ganganagar Sugar Mills Ltd., 4Th FloorNehru Sahakar Bhawan Jaipur Pan -Aaacr8906R ----Respondent Connected With D.B. Income Tax Appeal No. 82/2018 Principal Commissioner Of Income Tax, Jaipur-2, Jaipur Raj ----Appellant Versus M/s Rajasthan State Ganganagar Sugar Mills Ltd., 4Th FloorNehru Sahakar Bhawan Jaipur Pan -Aaacr8906R ----Respondent For Appellant(s) : Mr. K.D. Mathur for Mr. R.B. MathurFor Respondent(s): HON'BLE MR. JUSTICE K.S.JHAVERI HON'BLE MR. JUSTICE INDERJEET SINGH 17/04/2018 Judgment In both appeals common questions of law and facts areinvolved, hence, they are decided by this common judgment. By way of both the appeals, the appellant has challenged thejudgment and order of the Tribunal whereby the Tribunal hasdismissed the appeal of the department confirming the order ofCIT(A). Counsel for the appellant has framed following questions oflaw:- In DBITA No. 81/2018 i) Whether on the facts and in law the ITAT wasjustified in deleting the disallowance of export passfee of Rs. 9925000/- made by the AssessingOfficer without appreciating the fact that liability tomake such payment is not finalized. ii) Whether in the facts and circumstances of thecase, the Tribunal was justified in deleting theaddition of Rs. 730000/- made by the AssessingOfficer on account of contribution of State RenewalFund. iii) Whether in the facts and circumstances of thecase, the Tribunal was justified in upholding thedeleting of addition of Rs. 1360303/- made fordepositing the employee’s contribution to PF & ESIbeyond the prescribed time limit provided in therespective Act. iv) Whether in the facts and circumstances of thecase, the Tribunal was justified in holding thatemployee’s contribution to PF & ESI are governedby the provision of Section 43B and not by section36(1)(va) r.w.s. 2 (24)(x) of the Income Tax Act.” In DBITA No. 82/2018 i) Whether on the facts and in law the ITAT wasjustified in deleting the disallowance of export passfee of Rs. 19587500/- made by the AssessingOfficer without appreciating the fact that liability tomake such payment is not finalized. ii) Whether in the facts and circumstances of thecase, the Tribunal was justified in deleting theaddition of Rs. 730000/- made by AssessingOfficer on account of contribution of State RenewalFund. iii) Whether in the facts and circumstances of thecase, the Tribunal was justified in upholding thedeleting of addition of Rs. 3871238/- made fordepositing the employee’s contribution to PF & ESIbeyond the prescribed time limit provided in therespective Act. iv) Whether in the facts and circumstances of thecase, the Tribunal was justified in holding thatemployee’s contribution to PF & ESI are governedby the provision of Section 43B and not by section36(1)(va) r.w.s. 2 (24)(x) of the Income Tax Act.” However, in our considered opinion, the issue no. 1 iscovered by the decision of this Court in case of PrincipalCommissioner of Income Tax vs. M/s Rajasthan State GanganagarSugar Mills Ltd. (DBITA No. 13/2017) decided on 17[th] January,2017 wherein it has been held as under:- iii) Whether in the facts and circumstances of thecase, the Tribunal was justified in upholding thedeleting of addition of Rs. 3871238/- made fordepositing the employee’s contribution to PF & ESIbeyond the prescribed time limit provided in therespective Act. iv) Whether in the facts and circumstances of thecase, the Tribunal was justified in holding thatemployee’s contribution to PF & ESI are governedby the provision of Section 43B and not by section36(1)(va) r.w.s. 2 (24)(x) of the Income Tax Act.” However, in our considered opinion, the issue no. 1 iscovered by the decision of this Court in case of PrincipalCommissioner of Income Tax vs. M/s Rajasthan State GanganagarSugar Mills Ltd. (DBITA No. 13/2017) decided on 17[th] January,2017 wherein it has been held as under:- “3. The Tribunal in paragraph 6 observed as under:- “6. We have heard the rival contentions of both theparties and perused the material available on the recordand also gone through the record. It has not disputedin view of the judgment of Hon’ble Jurisdictional HighCourt in the case of JVVNL 265 CTR 62(Raj) and also inthe case of CIT Vs SBBJ (2014) 33 DTR 131 (Raj) hasallowed the contribution towards PF and ESI in thesimilar facts and circumstances of the case. Byrespectfully following the Hon’ble Jurisdictional HighCourt decision, we dismiss the revenue’s appeal on thisground and held that the order passed by the ld CIT(A)in allowing the contribution towards PF and ESI was inaccordance with law.” 4. The counsel for the appellant contended that theTribunal has committed serious error. However, theissue is now covered by the decision of this Court inPrincipal Commissioner of Income Tax, Jaipur-2 Vs.M/s. Rajasthan State Ganganagar Sugar Mills Ltd.,decided on 9.11.2016 wherein it has been held asunder:- “In Income Tax Appeal No.172/2016 the Tribunal hasspecifically confirmed the order only in view of the factthat the CIT (Appeals) has followed the decision of theTribunal. In all appeals we are not reproducing thequestions of law but in Income Tax Appeal No.128/2015we are producing the questions of law as under : i) Whether in the facts and circumstances of the case,the Tribunal was justified in deleting the additions ofRs.73,20,000/- made by the Assessing Officer holdingthat the Excise Duty cannot be part of valuation offinished stock u/s. 145A and can only levied on theremoval of goods from the premises. ii) Whether on the facts and in law the ITAT wasjustified in deleting the addition of Rs.97,15,000/-holding that the Export pass fee was allowableexpenditure deposit of the fact that it was contingentliability. iii) Whether in the facts and circumstances of the case,the Tribunal was justified in law in deleting the additionof Rs.6,86,900/- made by the Assessing Officer onaccount of accrued interest earned on accrued interestearned on decreed disputed compensation. iv) Whether in the facts and circumstances of the case,the Tribunal was justified in deleting the addition of onecrore made by the Assessing Officer by way ofdisallowing privilege fees paid by the assessee to ExciseCommissioner Govt. Rajasthan despite the fact that itwas application of income. v) Whether in the facts and circumstances of the case,the Tribunal has erred in deleting addition of Rs.6,463/-made under Section 36(1)(va) r.w.s. 2(24) (x) of the ITAct for depositing the employee's contribution to PF &ESI beyond the prescribed time limit provided in therespective Acts. iv) Whether in the facts and circumstances of the case,the Tribunal was justified in deleting the addition of onecrore made by the Assessing Officer by way ofdisallowing privilege fees paid by the assessee to ExciseCommissioner Govt. Rajasthan despite the fact that itwas application of income. v) Whether in the facts and circumstances of the case,the Tribunal has erred in deleting addition of Rs.6,463/-made under Section 36(1)(va) r.w.s. 2(24) (x) of the ITAct for depositing the employee's contribution to PF &ESI beyond the prescribed time limit provided in therespective Acts. vi) Whether in the facts and circumstances of the case,the Tribunal has erred in holding that employee'scontribution to PF & ESI are governed by the provisionof section 43B and not by section 36(1)(va) r.w.s. 2(24)(X) of the IT Act. However, in view of decision of thisCourt in DB Income Tax Appeal No.99/2009, titled asCommissioner of Income Tax Vs. M/s. Rajasthan StateGanganagar Sugar Mills Ltd., decided on 26.05.2016,the issues are completely covered by the said decisionof this Court. Therefore, substantial questions of laware required to be answered in favour of the assesseeand against the Department.” The question no. 2 is squarely covered by the decision of this Court in case of Principal Commissioner of Income Tax vs.Rajasthan State Seed Corporation Ltd. (DBITA No. 4/2016)decided on 29[th] April, 2016 wherein it has been held as under:- “6.Insofar as the prior period expenses isconcerned a finding of fact has been recorded by theAppellate Authorities that approval for payment ofthe said expenditure was given during the yearunder appeal therefore the liability crystallizedduring the year and similar method was beingregularly followed by the assessee consistently andwhen there is a finding recorded by the AppellateAuthorities that the expenditure crystallized duringthe year, was written in the books this year and onyear to year basis was claimed in the same mannerand fashion was rightly claimed and allowed duringthe year, is a finding of fact. 7.Insofar as disallowance of claim of Rs.19282605/- is concerned, admittedly, the assessee-respondent has claimed to have applied foraccording approval of Group Gratuity Scheme to theconcerned Commissioner on 31st March, 1981. Oncethe assessee files an application for approval of thescheme, it was for the Commissioner to have takenrecourse of disposing of the said application either to 7.Insofar as disallowance of claim of Rs.19282605/- is concerned, admittedly, the assessee-respondent has claimed to have applied foraccording approval of Group Gratuity Scheme to theconcerned Commissioner on 31st March, 1981. Oncethe assessee files an application for approval of thescheme, it was for the Commissioner to have takenrecourse of disposing of the said application either to approve or to reject the same. The same having notbeen done for the last more than almost 25 years,the assessee could not have been blamed for thesame. There is no denial by the AO that applicationfor approval has not been filed by the assessee on31.3.1981. Even the Assessing Officer admits thatthe application for approval was submitted on 31stMarch, 1981 and both the Appellate Authorities havecome to a definite finding of fact that once anapplication has been moved for approval and havingnot been rejected then the claim could not havebeen disallowed or the claim could not have beenrejected merely because the Commissioner did notaccord approval of the same. The assessee cannotbe made to suffer for inaction of the revenue,admittedlytherespondent-assesseeisaGovernment of Rajasthan Undertaking or evenotherwise the Commissioner ought not have sleptover the application for approval for more than 25years. The Appellate Authorities are well justified incoming to the said conclusion. Needless to mentionthat a finding has been given by the Tribunal thatthe amounts are being disallowed by the learned AOfrom year to year at least from the assessment year1996-97 i.e. almost 20 years but is being allowedregularly in appeal therefore, for this reason also wereject the claim of the revenue. The AssessingOfficer ought not have made a repeated additionmerely for this purpose and a litigation of this natureought not to have come before this court as appealsall throughout is being allowed year after year. Onthe one hand the revenue does not decide theapplication for approval and the amount is beingdisallowed by the Assessing Officer from year to yearwhich is not at all justified. The Revenue is welladvisednottomakerepetitiveadditions/disallowance for this purpose and exposeits weakness before the Courts as on the one handapplication for according approval has not beengranted and for inaction of Commissioner amountsare disallowed and to incur wasteful public moneyeither way as at least the respondent has also toincur public money to defend its case being aGovernment of Rajasthan Undertaking in filingrepetitive appeals though succeeding year after year.Merely because the tax effect is more than what isprescribed in the Circulars be it old or the latestbeing in December 2015 is no ground to file suchappeals, we though were inclined to levy cost on theRevenue but stop ourselves in doing the same tomake it clear to the Revenue to be more careful infuture that such kind of litigation deserves to beavoided as the Courts are choked with such frivolouslitigation and is not able to concentrate on otherimportant issues. 8.Insofar as the expenditure incurred on StateRenewal Fund is concerned, said expenditure alsogoes to show that the renewal fund was set up bythe State Government and was created with theobject of providing a safety net for the workers likelyto be effected by restricting in the State PublicEnterprise and that a finding of fact has beenrecorded that the contribution made to the StateRenewal fund is solely for the purposes of thewelfare and benefit of the employees. In our view, itis for the assessee to decide whether anyexpenditure should be incurred in the course ofbusiness and expenditure of this nature being forbusiness expediency is certainly allowable deductionunder Section 37(1) of the Act. In our view anynormal expenditure for the welfare and benefit ofemployees is allowable expenditure under Section37(1), the Tribunal has come to a finding of fact thatit was a legal obligation of the respondent-assesseetowards contribution of the said amount to the StateRenewal Fund and there being a legal obligation aswell in our view the Tribunal has come to a correctconclusion. 9.Taking into consideration the facts andcircumstances on all the 3 questions raised, in ourview the deletion of disallowance is based onmaterial evidence on record and is a finding of fact,no question of law much less substantial question oflaw can be said to emerge. We find no perversity orillegality in the order impugned so as to call forinterference of this Court. Accordingly the appealbeing devoid of merits, is hereby dismissed.” With regard to issue no. 3 and 4, the controversy is pendingbefore Supreme Court in CIT Jaipur vs. M/s State Bank of Bikaner& Jaipur SLP (C) No. 016249/2014, therefore, these issues areanswered subject to decision by the Supreme Court. In view of the above, no substantial question of law arises. The appeals stand dismissed. (INDERJEET SINGH),J (K.S.JHAVERI),J A.Sharma/2-3