TMI Blog2015 (10) TMI 404X X X X Extracts X X X X X X X X Extracts X X X X ..... in the nature of insurance and directly related to the business of the assessee. In such circumstances, the contribution of amount equivalent to 5% of the net profits towards rehabilitation fund was held to be expended wholly and exclusively for business purposes and admissible under Section 37 of the Act. Learned counsel for the revenue could not demonstrate any error or perversity in the approach of the Tribunal warranting interference by this Court. Accordingly, question No.(ii) is answered in favour of the assessee and against the revenue. Disallowance on account of contribution made specifically for the construction of office building of the Apex body i.e. Haryana State Federation of Sugar Mills - Held that:- The impugned expenditure of ₹ 5 lakhs incurred by the assessee towards the construction of head office of Haryana State Federation of Cooperative Sugar Mills Limited, Chandigarh is allowable as a revenue expenditure and the tax authorities below erred in disallowing the same and hence their orders in this regard are set aside. Accordingly, assessee's appeal is allowed Addition of business expenditure paid to the farmers - whether resulting in double deduction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ystem of accounting and that the liability of the annual subscription for the earlier assessment years of which the assessee was well aware was not allowable in the year relevant to the assessment year 1999- 2000? ii) Whether on the facts and in the circumstances of the case, the learned ITAT is right in holding that amount of ₹ 10,05,000/- paid by the assessee on account of contribution towards rehabilitation fund is a business expenditure allowable under section 37(1) of the I.T.Act, 1961? iii) Whether on the facts and in the circumstances of the case, the learned ITAT was right in law in allowing the disallowance of ₹ 5,00,000/- on account of contribution made specifically for the construction of office building of the Apex body i.e. Haryana State Federation of Sugar Mills by following the decision of the Hon'ble Supreme Court in the case of CIT vs. Bombay Dying Manufacturing Company Limited, ignoring the fact that the assessee had not advanced the amount for construction of houses under a subsidized industrial scheme for its employees as in the case decided by the Apex court and that the ratio of the decision of the Hon'ble Supreme Court in the cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... towards the construction of the office building. Thus, the amount of ₹ 5 lacs instead of ₹ 2,50,000/- was disallowed enhancing the income of the assessee. The Tribunal relying upon its own order dated 23.6.2006 in M/s Shahbad Cooperative Sugar Mills limited decided the issue in favour of the assessee observing that the expenditure of ₹ 5 lacs towards construction of head office of Haryana State Federation of Cooperative Sugar Mills limited was allowable as revenue expenditure. 5. Further, the Assessing officer also made addition of ₹ 57,28,554/- on account of cane penalty recoverable from the farmers by following the history of similar addition made in the case of the assessee in the assessment year 1993-94 wherein addition made on account of penalty imposed on the farmers was confirmed by the CIT(A). The CIT(A) vide order dated 27.2.2002, Annexure A.2 decided the appeal by holding that the amount actually paid by the assessee will be allowed as expenditure on cash basis. Accordingly, a sum of ₹ 39,80,482/- claimed by the assessee on account of cane penalty paid during the relevant previous years was allowed by the Assessing officer. Penalty recover ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enefit of all the mills including the assessee in case of need. The payment made to the said fund was in the nature of insurance and directly related to the business of the assessee. In such circumstances, the contribution of amount equivalent to 5% of the net profits towards rehabilitation fund was held to be expended wholly and exclusively for business purposes and admissible under Section 37 of the Act. It was recorded as under:- 15. Briefly, the facts relating to the issue involved in ground no.3 are that according to the assessee Cooperative Sugar Mills Limited, it paid an amount of ₹ 1005000/- to Haryana State Cooperative Sugar mills as contribution towards rehabilitation fund for assistance to weak sugar mills. The sugar Federation is a statutory body which assists cooperative sugar mills in the state and formulates policy. It has no source of income and is run by the contribution from cooperative sugar mills. It is a sort of mutual benefit association. The rehabilitation fund is created for the benefit of all the mills, including the assessee, in the case of need. It is like an insurance. The expenditure therefor is directly relatable to the business of the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ar issue had come up for consideration before this court in ITA No.104 of 2007 (The Commissioner of Income Tax vs. The Shahbad Coop. Sugar Mills Limited) decided on 17.12.2010 in favour of the assessee with the following observations:- 9. As regards contribution for construction of office building,it is clear that the assessee did not get any benefit of enduring nature from the payment for building of the apex body. The building did not belong to the assessee which situation is similar to the facts of judgment of the Hon'ble Supreme Court. This being so, the principle laid down therein was rightly applied by the Tribunal to the present case. Accordingly, question No.2 has to be answered in favour of the assessee and against the revenue. Further, the Tribunal while adjudicating the said issue had observed as under:- 24. Briefly the facts relating to the issue involved in this ground of appeal are that the tax authorities below disallowed the entire contribution of ₹ 5 lakhs made by the assessee towards building fund on the reasoning that the members were not required to make any such contribution specifically for the construction of the office building of it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... controvert the above submission of learned AR for the assessee and thus impliedly conceded to the submission of learned AR for the assessee. 27. On going through the facts of the instant case of the assessee under consideration as well as that of case (supra) decided by the Tribunal we find that in both the cases facts and issue involved is identical. Hence judicial propriety demands that we respect and follow the judicial decisions of coordinate Benches delivered on same issues. Therefore, respectfully following the decisions (supra) of the Tribunal it is held that the impugned expenditure of ₹ 5 lakhs incurred by the assessee towards the construction of head office of Haryana State Federation of Cooperative Sugar Mills Limited, Chandigarh is allowable as a revenue expenditure and the tax authorities below erred in disallowing the same and hence their orders in this regard are set aside. Accordingly, the ground No.4 of the assessee's appeal is allowed. Accordingly, question No.(iii) is answered in favour of the assessee and against the revenue. Re:(iv) 12. Considering question No.(iv), learned counsel for the revenue submitted that the cane penalty which ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
