TMI Blog2018 (8) TMI 1643X X X X Extracts X X X X X X X X Extracts X X X X ..... Saini, AM And Shri Pavan Kumar Gadale, JM Assessee by : Shri A.K.Sabat, AR Revenue by : Shri Saad Kidwai, CIT DR ORDER Per Shri Pavan Kumar Gadale, JM The assessee has filed two appeals i.e. ITA No.48 49/CTK/2018 and the Revenue has filed an appeal i.e. ITA No.63/CTK/2018 against the order passed by the CIT(A)-1, Bhubaneswar in I.T. Appeal Nos.0138/16- 17 0225/16-17, all dated 06.11.2017 for the assessment year 2010- 2011 2014-2015. 2. Since the issues in these appeals are common, they are heard together and disposed off by this consolidated order. For the sake of convenience we shall take up the facts and grounds raised in assessee s appeal i.e. ITA No.48/CTK/2018 for the assessment year 2010-2011, wherein the assessee has raised the following grounds :- 1. That on the facts and in the circumstances of the case, the order passed by the Learned Assistant Commissioner of Income Tax, Corporate Circle - 1(2), Bhubaneswar ('Ld. AO') u/s 147 read with section 143(3) of the Income-tax Act, 1961 ('Act') and upheld by Learned Commissioner of Income Tax (Appeals)-I, Bhubaneswar (here-in-after referred to as 'Ld. CIT(Appeals)') is con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Diminution in value of GOI Fertiliser Bonds and passed order u/s.143(3)/147 of the Act, dated 31.03.2016. 4. Aggrieved by the order of AO, the assessee filed an appeal before the CIT(A). In the appellate proceedings, the ld. AR of the assessee reiterated the submissions made before the AO. The CIT(A) after considering the submissions of the assessee and findings of the AO, has dismissed the appeal of assessee. 5. Aggrieved by the order of CIT(A), the assessee is in further appeal before the Tribunal. 6. Ld. AR before us submitted that the CIT(A) has erred in confirming the addition made by the AO on account of diminution in value of GOI Fertiliser Bonds and submitted that the issue is covered by the decision of this Tribunal in assessee s own case for the assessment year 2009-2010 in ITA No.560/CTK/2013, order dated 27.04.2018. 7. Per contra, ld. DR supported the orders of lower authorities. 8. We have heard rival submissions and perused the material on record. We find that the disputed issue in respect of diminution in value of GOI Fertiliser Bonds as envisaged by the ld. AR of the assessee has been dealt by the coordinate bench of this Tribunal in assessee s own ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o pertinent to note that the assessee was entitled to receive fertilizer subsidy in cash but due to shortage of funds with the Government of India an alternative way was created and the assessee company was compelled to receive fertilizer's bonds in lieu of cash fertilizers subsidy. In this situation, we hold that the assessee company rightly showed these bonds as other current assets (prayed) under the head current assets, loans and advances . In the case of Patnaik Company (supra) the Apex Court explicitly held that where the investments were made under commercial expediency for the purpose of carrying on the assessee's business, then, the losses suffered by the assessee on the sale of such investments must be regarded as Revenue loss because the investment did not bringing an asset of capital nature and in these circumstances of the case, the losses suffered by the assessee should be treated as Revenue loss and not a capital loss. We, further respectfully take cognizance of the judgment of the Hon'ble High Court of Delhi in the case of CIT vs. D.S. Bisht and Sons (supra), wherein it was held that when the assessee had no option but to subscribe the securities if ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isallowance of provision for diminution in value of GOI Fertiliser Bonds. We have already decided the issue in favour of the assessee in assessee s own case while deciding the appeal of the assessee for assessment year 2010-2011 in ITA No.48/CTK/2018, wherein relying on the earlier order of the Tribunal in assessee s own case, we have directed the AO to delete the addition made on account of diminution in value of GOI Fertiliser Bonds. Accordingly, allow the ground raised by the assessee in the present appeal on account of provision for diminution in value of GOI Fertiliser Bonds and direct the AO to delete the same. 13. Thus, appeal of the assessee for assessment year 2014-2015 in ITA No.49/CTK/2018 is allowed. 14. Now, we shall take up the appeal of Revenue for the assessment year 2014-2015 in ITA No.63/CTK/2018, wherein the Revenue has raised the following grounds :- 1. The order of the Ld. CIT(A) is erroneous on facts and in law. On the facts and the circumstances of the case and in law, Id. CIT(A) is not justified in deleting the addition of ₹ 2,84,34,453/-, which was made by the AO holding that the said amount of expenses incurred in running of a school, claim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... holding that the same is not eligible as expenses . The aforesaid amount of ₹ 1,74,85,684/- is for the welfare of employees being the expenses of the school (DAV school), which has been established within the plant premises and all the expenses are wholly met by the company during the year and has been incurred wholly and exclusively for the purpose of business and therefore ought to be fully allowable as deduction u/s.37 of the Act. In this regard, we would humbly submit that, for the welfare of the employees, a school has been established within the plant premises and the school is managed by DAV. All the expenses of the school are met directly by the company. It may be mentioned here that, during the AY 2010-11, an amount of ₹ 1,74,85,684/- has been booked towards school expenses. Since the entire expenses had been incurred for the staff welfare, the same is an allowable business expenditure. Section 40A(9) provides that No deduction shall be allowed in respect of any sum paid by the assessee as an employer towards the setting up or formation of, or as contribution to, any fund, trust, company, association of persons, body of individuals, society registered under t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... laiming expenditure as business expenses. There has to be a reasonable basis for expenditure on staff welfare activity. Under the guise of staff welfare activities, the employer could not take over every aspect of an employee's private life and day-to-day existence. Running of a school has become a business in itself. In view of the same, the expenditure incurred in running of a school is not business expenditure and hence the AO is correct in disallowing the same, The addition of ₹ 1,74,85,684/- made by the AO is confirmed. 23.Ld A.R. relied on the decision of Delhi Benches of the Tribunal in the case of DCIT vs. Gujarat Guardian Ltd., (2006) 152 Taxman 37 (Del) (Mag), wherein, the assessee had incurred an expenditure of ₹ 10 lakhs towards contribution to a school and the Assessing Officer disallowed the same u/s.40A(9) of the Act, which bars deduction of contribution made by an employer to any fund, trust, etc, for the benefit of employees. On appeal, the CIT(A) allowed the deduction by following the decision of the Delhi Benches of the Tribunal in the case of Modi Rubber Ltd vs IAC(IT Appeal Nos.6227 (Delhi) of 1986 and 142 (Del) of 1987 dated 29.1.1993. O ..... X X X X Extracts X X X X X X X X Extracts X X X X
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