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Assistant Commissioner of Income Tax Circle-6, Jaipur. Versus M/s Rajasthan State Seeds Corp. Ltd.,

2015 (7) TMI 1128 - ITAT JAIPUR

Allowability of prior period expenses - Held that:- The assessee is a government company. The genuineness of the expenses has not been doubted by the Assessing Officer. The ld CIT(A) had followed the Coordinate Bench decision passed on identical fact, therefore, we uphold the order of the ld CIT(A) holding prior period expenses as allowable expense - Allowability of deduction for the contribution made to an unapproved gratuity fund - Held that:- The issue is identical to A.Y. 2006-07, in ass .....

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. had set up a State Renewal Fund in the year 1995 with the object of providing a safety net for the workers likely to be affected by restricting in the State Public Enterprises, as a result of this process, these expenses have been correctly claimed by the assessee. Allow the expenses as being covered by the decision of the Hon’ble ITAT for A.Y. 2006-07. - ITA No. 893/JP/2012 - Dated:- 17-7-2015 - SHRI R.P. TOLANI, JM & SHRI T.R. MEENA, AM Revenue by : Shri Kailash Mangal (JCIT) Assessee by .....

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77; 46,28,663/- made to an unapproved gratuity fund. 3) Holding contribution to state renewal fund as allowable expenditure though it is not actual expenditure. 2. The 1st ground of revenue s appeal is against allowing prior period expenses by the ld CIT(A). the ld Assessing Officer observed that the assessee had claimed prior period expenses at ₹ 9,82,874/-, which includes T.A. expenses, subsidy, sales, repair and maintenance of plant and machinery, purchases and trade discount. The ld As .....

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; 8,71,093/- in prior period expenses. These purchases bills pertained to August, 2007. These bills had been received by the corporation but moving between units of head wise. Thus the simply vouchers has been approved in the year under consideration cannot be said to be expense crystallized during the year. The same position was found by the Assessing Officer on other expenses. Therefore, he disallowed the prior period expenses of ₹ 8,76,224/-. 3. Being aggrieved by the order of the Asses .....

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filed the complete details of the prior period expenses of ₹ 1,96,917. Vide letter dated 26/04/2008, vouchers in respect of the same were filed. From the details we not that the approval for payment of these expenditure were given during the year and therefore the liability crystallized during the year in view of these facts and the consistent view of this Bench that the liability crystallized on approval of payment, we find no infirmity in the order of ld. CIT(A) deleting the disallowanc .....

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on the order of the ld CIT(A) and argued that this case is covered by the Hon ble ITAT s decision for A.Y. 2006- 07. Therefore, same may be allowed. 5. We have heard the rival contentions of both the parties and perused the material available on record. The assessee is a government company. The genuineness of the expenses has not been doubted by the Assessing Officer. The ld CIT(A) had followed the Coordinate Bench decision passed in ITA No. 307/JP/2009 for A.Y. 2006-07 on identical fact, theref .....

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r its approval in time but formal approval letter was not yet been received. However, the department had not rejected the scheme. The said issue had been decided in favour of the assessee in earlier year. The Hon ble ITAT Jaipur Bench in assessee s own case for A.Ys. 1996-97 and 1997-98 in ITA Nos. 58,238/JP/2002 dated 23/09/2005 allowed the claim of assessee. This issue also considered by the Hon ble Bench in case of Rajasthan Finance corporation Limited where identical question has been decide .....

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nt of ₹ 1,92,82,605/- the appellant has not made payment of ₹ 1,46,53,942/- and the same has been disallowed by it in the computation of income filed in the return, therefore, there is no justification for the disallowance of ₹ 1,46,53,942/-, the A.O. is directed to delete the same. As far as balance amount of ₹ 46,28,663/- claimed in respect of contribution to LIC Group Gratuity Scheme is concerned, Hon ble ITAT Bench A Jaipur through order dated 21/08/2009 in the appell .....

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department. Considering these facts, this Bench in assessee s own case of A.Y. 1996-97 and 1997-98 in ITA No. 58,238/JP/2002 dated 23/09/2005 and again in A.Y. 2000- 01 in ITA No. 85/JP/2002 dated 15/09/2006 allowed the claim of the assessee following the same, we dismiss the ground No. 1 of the revenue. Respectfully following Hon ble ITAT order in the appellant s own case in A.Y. 2006-07 cited above the A.O. is directed to delete the disallowance of ₹ 46,28,663/- in A.Y. 2009-10 as the is .....

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sed the material available on the record. The issue is identical to A.Y. 2006-07, which has been considered by the Coordinate Bench in ITA No. 307/JP/2009 in assessee s own case. As the assessee has applied for its approval in time but formal approval had not been issued by the department, therefore, there is no fault on the assessee. The identical issue has been decided by the Coordinate Bench, which is squarely application on this year also. Therefore, we uphold the order of the ld CIT(A). 10. .....

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enses have been disallowed in computation of income itself. He further held as under:- The principles relating to diversion of income by overriding title are: if a third person becomes entitled to receive an amount under an obligation of an assessee even before he could claim to receive it as his income, there would be a diversion of income by overriding title but when after receipt of income by the assessee, same is passed on to a third person in discharge of the obligation of the assessee, it .....

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rt in CIT Vs. Jodhpur Co-operative Marketing Society (2005) 275 ITR 372 (Raj) came to the conclusion that such reserves under the control of society were for the ultimate benefit of society as well as its shareholder, so that such amount could not be excluded from income of society. Hence, it is clear that, transfer to education fund does not lead to diversion of income by overriding title; it is merely, an application of income, in view of foregoing decision, transfer of ₹ 7,58,134/- to s .....

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r is quoted below: We have considered the rival submissions and perused the material available on record. We find that as per the memorandum of State Renewal Fund set up by the State Government, it is created with the object of providing a safety net for the workers likely to be affected by restricting in the State Public Enterprises. We are thus of the view that contribution made to the said fund is solely for the purpose of the welfare and benefit of the employees. The Rajasthan High Court in .....

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ere assessee gave contribution to the employee s welfare fund, the same is allowable as business expenditure. The case relied by A.O. of CIT Vs. Jodhpur Cooperative marketing Society 275 ITR 372 (Raj) is distinguishable as in this case the amount was set apart for the shareholders of the society whereas in the present case amount was provided for the benefit of the employees. In view of this the contribution made to State Renewal Fund is allowable u/s 37(1). Respectfully following Hon ble ITAT o .....

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