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I.T.O., Ward-2 (4) , Kolkata Versus M/s. West Bengal Tourism Development Corporation Ltd.

2018 (1) TMI 243 - ITAT KOLKATA

Disallowance on contribution to Staff Welfare Fund - CIT-A allowed the claim - Held that:- On identical facts this tribunal has already taken a view in assessee’s own case for A.Y.2003-04 and held that the contribution towards staff welfare fund was based on a resolution of the board of directors of the assessee held on 05.12.1979 and by virtue of that resolution an over riding title on the service charges received and consequently there was a diversion of income by over riding title at source o .....

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dance with law - Held that:- The contention raised on behalf of the revenue is correct but nevertheless we are of the view that the issue requires examination by the AI and in the circumstances we direct the AO to verify the claim of the assessee and if found correct give appropriate relief. Thus ground no.2 is treated as allowed. - I.T.A Nos.1538 to 1540/Kol/2014 - Dated:- 3-1-2018 - Sri N.V.Vasudevan, JM And Dr.Arjun Lal Saini, AM For The Appellant : Shri S.Dasgupta, Addl. CIT (DR) For The Res .....

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are heard together. We deem it convenient to pass a common order. ITA No.1538/Kol/2014 (A.Y.2004-05) 2. Ground No.1 raised by the revenue reads as follows :- 1. That on the facts and circumstances of the case, the ld. CIT(A) is not justified in deleting disallowance of ₹ 3,17,638/- on contribution to Staff Welfare Fund. This fund was created without passing the same through the Profit & loss Account. The assessee actually understated service charge income and resultant cash was directl .....

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re accordingly condoned. 4. The Assessee is a state government undertaking engaged in the business of tourism in the state of West Bengal and also in the interstate tourism development. In the course of assessment proceedings u/s 143 (3) of the Income Tax Act, 1961 (Act) the AO noticed that there was an item, of staff welfare funds of ₹ 3,17,638/- which was shown as current liability in the balance sheet. There was also another item of current liability brokerage compensation fund of ͅ .....

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the AO was of the view that the staff welfare fund and brokerage compensation fund should be added to the total income of the assessee for the following reasons :- 3. During the course of investigation of accounts, it was found' that the assessee company created two funds in the names of 'Staff Welfare Fund' and 'Breakage Compensation Fund'. The assessee treated the said funds as current liability. These funds were created without passing the same through the Profit & Los .....

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rge income is shown at Rs..26,32,569/- in the Schedule 12 of the Balance sheet furnished by the assessee, implying that assessee has understated its service charge income by ₹ 5,43,811/-. It appears from the accounts furnished by the assessee that no amount out of the said funds was utilised during the relevant. financial year. During the course of hearing the matter was discussed and it was found that the assessee actually understated the service charge income and the resultant cash was d .....

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aid order the CIT(A) deleted the addition made towards contribution to staff welfare of ₹ 3,17,638/-. The following were the relevant observations of the CIT(A) :- 4.2 The submissions of the Appellant as above have been considered. It has been held by the ITAT in the Appellant's own case for A.Y 2003-04 that the claim of the Appellant is allowable only to the extent of Staff Welfare Fund. The relevant portion of the order of ITAT is re-produced as under :- On careful consideration of t .....

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Bengal Tourism Development & Corpn. held on 5-12-79 a copy of which is also made available before the tribunal but at the same time, the assessee is not able to justify the claim relating to breakage compensation fund. Therefore, we are of the considered view that the amounts created for the staff welfare fund are to be allowed as it is in accordance with the Minutes of the Board of Directors which is having an overriding title and basing on which the diversion of the fund was made. Accordi .....

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2,85,871/- is confirmed. 6. Aggrieved by the order of CIT(A) the revenue raised ground no.1 before the tribunal. 7. None appeared on behalf of the assessee. We have heard the submissions of the ld. DR, who relied on the order of AO. We are of the view that there is no merit in ground no.1 raised by the revenue. On identical facts this tribunal has already taken a view in assessee s own case for A.Y.2003-04 and held that the contribution towards staff welfare fund was based on a resolution of the .....

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e revenue reads as follows :- 2. That on the facts and circumstances of the case, the ld. CIT(A) is not justified in directing the A.O. to verify the claim of the assessee in respect of a carry forward of losses for A.Y. 1995-96 i) unabsorbed depreciation of ₹ 1,70,56,577/-, ii) Business loss of ₹ 1,45,62,730/- and b) Dividend income of ₹ 7,25,760/- as exempt income u/s 10(34) of the I.T.Act, 1961 and to allow the same as per law. The issue has been set aside by the ld. CIT(A), .....

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ssessee the CIT(A) directed the AO to verify the relevant assessment records with regard to carry forward of unabsorbed depreciation and business loss and gave the benefit after due verification. With regard to the exclusion of dividend income the CIT(A) directed the AO to verify the claim of the assessee and if found correct allow relief in accordance with law. 10. It is the plea of the revenue in ground no.2 that the CIT(A) u/s 251 of the Act does not have the power to set aside an issue to th .....

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A No.1540/Kol/2014 (A.Y.2005-06 & 2008-09) 12. Grounds of appeal raised by the revenue read as follows : A.Y.2005-06 1. That on the facts and circumstances of the case, the ld. CIT(A) is not justified in deleting disallowance of ₹ 3,39,328/- on contribution to Staff Welfare Fund. These expenses were not actual expenses, only provisions were created. 2. That on the facts and circumstances of the case, the ld. CIT(A) is not justified in directing the A.O. to verify the claim of the asses .....

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