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2017 (10) TMI 1538 - AT - Income TaxAddition on account of grant to sports and recreations - allowable business expenditure or not - AO disallowed the same by observing that these expenses are not incidental to business of the assessee and added to the total income of the assessee - CIT-A allowed claim - HELD THAT:- Assessee was bound to provide as part of the conditions of service to its employees, sports and recreational facilities. The grant in question is in pursuance of the aforesaid agreement. Therefore it cannot be said that the grants given by the Assessee are not for the purpose of business of the Assessee. As an employer provision of grants to provide better conditions of service will be part of the labour cost of the Assessee and it has to be allowed as deduction. Plea of the revenue that the evidence of area-wise expenses were not produced, the plea of the Assessee was that the coal area is scattered over a large area and that the Assessee being a Government of India undertaking, its accounts are subject to review by CAG and no adverse comments have been made by the CAG. This plea in our view, in the facts and circumstances of the present case was enough to disregard the findings of the AO Since the issue is identical with the issue raised in AYs. 2003-04 to 2005-06 which is squarely covered in favour of the assessee and the Ld. DR could not controvert the facts and since there is no change in facts or law, we respectfully following the aforesaid order we confirm the order of ld CIT(A) and dismiss the ground of appeal of revenue. Addition on account of Hire Charges of Bus & Ambulance - AO disallowed the same as the assessee was unable to produce any acceptable reason as to why the expenses should not be disallowed - CIT-A allowed claim - HELD THAT:- As in assessee’s own case for AYs 2003-04 to 2005-06 incurring of the expenses by the Assessee cannot be disputed and in fact has not been disputed by the revenue. There appears to be only a dispute with regard to the evidence of incurring of the expenses. The details to which our attention was drawn by the learned counsel for the Assessee, in our view, requires to be verified by the AO. We, therefore set aside the order of the CIT(A) on this issue and remand the question of incurring of these expenses to the AO for fresh consideration with liberty to the Assessee to let in evidence to substantiate its claim for deduction of the aforesaid expenditure. For statistical purposes the relevant grounds of appeal are treated as allowed. - Ground of appeal of revenue is allowed for statistical purposes. Disallowance of Uniform and Stitching Charges - AO disallowed the same by observing that these expenses are not incidental to business of the assessee and added to the total income of the assessee - CIT-A deleted the addition observing that the expenses incurred were wholly and exclusively for business purposes and eligible for deduction u/s. 37(1) - HELD THAT:- We find that no such disallowances were made in any of the earlier years and these expenses were duly allowed. Before us, the Ld. DR could not produce any material to controvert the factual finding recorded by the ld CIT(A) in respect of the expenses to be non-incidental to business of the assessee. In view of the above, we find no infirmity in the order of the Ld. CIT(A) in deleting the disallowance as made by the AO and the same is hereby upheld. This ground of appeal of the revenue is dismissed. Not admitting and adjudicating the additional ground raised before CIT-A albeit first - Disallowance u/s. 40A(3) of the Act read with Rule 6DD - HELD THAT:- If an assessee, under a mistake, misconception or on not being properly instructed, is over-assessed, the authorities under the Act are required to assist him and ensure that only legitimate taxes due are collected.” Further, we rely on the decision of the Hon’ble Supreme Court in CIT Vs. V. MR. P. Firm, Muar [1964 (10) TMI 13 - SUPREME COURT] and Circular No. 114XL 35 of 1955 issued by the CBDT on April 11, 1955 that an officer must not take advantage of ignorance of the assessee as to his rights. The judgment of Hon’ble Supreme Court in the case of Goetz (India) Ltd. [2006 (3) TMI 75 - SUPREME COURT] was limited to the power of the AO and did not impinge upon the power of the appellate authorities/Tribunal. We are inclined to admit this claim of the assessee and restore this issue back to the file of AO to verify the claim made by the assessee. The assessee is directed to bring all the facts before the AO and in case the issue is already covered by the decision of this Tribunal as claimed by the assessee, then the AO after verification finds that the issue raised has already been settled by this Tribunal then the claim of the assessee should be allowed. Disallowance u/s. 40A(9) - As according to the assessee, since the payments were made to the labourers working in farflung collieries where no banking facilities were available falls under the exemption given under Rule 6DD(i) of the Rules, therefore, the assessee’s mistake of inadvertently disallowing the said amount needs to revisited and claim needs to be allowed we admit this issue also and restore the issue back to the file of the AO to decide as to whether the claim made by the assessee is allowable as per Rule 6DD(i) of the Rules. Appeal of the assessee is allowed for statistical purposes.
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