9911796707
TMI Blog2018 (4) TMI 313X X X X Extracts X X X X X X X X Extracts X X X X ..... aised by the assessee for A.Y. 2007-08 are as under: "(1) That on the facts and circumstances of the case and in law, the issue of notice u/s 148 and the re-assessment made are unlawful and without jurisdiction and, therefore, the same be quashed. The learned CIT(A), therefore, is not justified in his findings that the initiation of re-assessment proceedings are valid in law, such findings be quashed. (2) That on the facts and circumstances of the case and in law, the learned CIT(A) erred and not justified in sustaining the disallowance of Rs. 25 lacs made towards expenditure-gratia payments to labours. The assessee submits that it is a fully allowable expenditure u/s 37 of the I.T. Act. The deduction claimed at Rs. 25 lacs be kindly allowed. (3) That on the facts and circumstances of the case and in law, it be held that if the disallowance has been made on wrong concession by the assessee or his counsel on point of law is appealable and, hence the learned CIT(A) is erred and not justified in not adjudicating the issue with regard the allowability of Rs. 3814708 to the State Govt. is a privilege fee and not royalty as contemplated u/s 43B of the I.T. Act, hence the disallow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ced before us. We find that the regular assessment u/s. 143(3) of the Act completed on 31.12.2009 and disallowance was made for Anugrah Rashi of Rs. 25 lacs. The matter went up to the Tribunal and vide order dt. 22.5.2012 the issue was set aside to the file of Ld. AO for fresh adjudication by the Tribunal. During the period when the appeal was pending before the tribunal the notice u/s 148 of the Act was issued on 19.03.2012 recording reasons. We find that notice u/s 148 of the Act was issued before the expiry of 4 years from the end of relevant A.Y. and the reason for reopening related was the issue of additional royalty privilege fees and there was no finding of the Ld. AO on this issue in the regular assessment completed u/s 143(3) of the Act. We, therefore, find no merit in the grounds raised by the assessee in view of the facts and circumstances of the case wall as in view of Hon'ble Apex Court judgment in the case Kalyanji Mobji & Co. vs. CIT (1976) 102 ITR 287 (SC) wherein Hon'ble Apex Court observed that "reassessment can be initiated even when the information is obtained from the record of the original assessment, investigation of the material of the record or fact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Ld. AO for all these three years. 7. Now the assessee is in appeal before the Tribunal. Ld. counsel for the assessee relied on the submissions made before the lower authorities as well as written submissions given before the Tribunal. On the other hand, Ld. DR supported the orders of the authorities below. 8. We have heard the rival contentions and perused material on record placed before us. The common issues raised in all these three appeals relates to disallowance of ex-gratia payment to labourers working at the sand mines located in the district of Hoshangabad and Sehore. These labourers are engaged in the excavation and loading of sand in truck which enters into mining area and the truck owners pay royalty to the assessee at the rates specified by the government. In pursuance to decision taken by the State Government in the year 1998 the assessee is making the alleged payment to the labourers as 'Anugrah Rashi'. It is contended by the Ld. counsel that these payments were made in the business interest of the assessee corporation and for commercial expediency. Both the lower authorities treated the alleged payment in the nature of personal expenditure i.e. charity in donatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wners and in turn of the work of these labourers for filling the sand in the trucks. The truck owner has to pay royalty to the assessee. It shows that the activity of labourers of filing the sand in the truck has a connection with the revenue earning of the company. Even, though the labourers are not the employees of the assessee company, they are very much connected to the assessee company through truck owners. 13. Further all these labourers are residing in the same locality near sand mines and if with the help of ex-gratia payment/Protsahan Rashi, they earn better living, then certainly with the better living and good health they can work more efficiently and also will not be forced to migrate to other areas. If shows that even though the alleged payment to labourers are not directly linked to the revenue earned by the company but they are very much directly linked with the royalty paid by the truck owners which is calculated on the basis of sand excavated from the mines. It is also observed that the alleged payment is made, through constituted body of the local collector which comprise of Sub Divisional Magistrate, Mining Inspector, Tahsildar & Nayab Tahsildar. This fact is al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... accordingly allowed the claim of Rs. 15 crores being the payment before the due date of furnishing of return of income u/s 139(1) of the Act and disallowed the remaining amount of Rs. 38,14,708/- which was actually paid on 24.01.2008 i.e. after the due date of filing return u/s 139(1) . 17. Against the said disallowance, assessee came in appeal before the Ld. CIT(A) and contended that the alleged amount is privilege fee and not royalty. The assessee referred to the provisions of section 40(iib) of the Act and submitted that this amendment came in effect from 01.04.2014 by Finance Act 2013 and before this amendment the expenditure in the nature of privilege fee are allowable on due basis. However, the Ld. CIT(A) was of the confirmed view that the alleged expenditure is an additional royalty which is in the nature of tax payable to the state Government and provision of section 43B of the Act are squarely applicable on this expenditure. 18. Now the assessee is in appeal before the Tribunal. Ld. counsel for the assessee submitted that the provision of section 40(iib) of the Act came in fact from 1st April 2014 and therefore, those were not applicable on the assessee for A.Y. 2007-08 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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