TMI Blog2018 (4) TMI 1664X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the disallowance u/s 40(a)(ia) in respect of bank guarantee commission. Accordingly, we allow ground of the assessee s appeal and order the deletion of this disallowance. Expenses incurred towards corporate social responsibility - allowable expenditure u/s 37(1) - expenditure was not mandatory in nature -HELD THAT:- Disallowance under Explanation (2) to section 37(1) will not come into play and there is no such disabling provision even if the expenses in discharge of corporate social responsibility are incurred on voluntary basis. Explanation (2) to section 37(1) comes into play only w.e.f. 1.4.2015 and accordingly, expenses incurred towards corporate social responsibility incurred prior to this date will necessarily be allowable as revenue expenditure. We set aside the order of the CIT (A) on this issue and direct the AO to allow the expenses incurred towards corporate social responsibility. Provision for long service award made on actuarial basis -ascertained liability - MAT computation - HELD THAT:- As decided in assessee s own case for assessment years 2008-09 and 2009-10 liability determined on the basis of provision was not a contingent liability but was definite and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... absorbed depreciation and the book profit was declared at ₹ 285,03,42,896/- and tax of ₹ 56,80,87,591/- was paid thereon. The case was selected through CASS for scrutiny assessment and the assessment was completed after making the following additions:- i) Disallowance of provision for retirement benefit- ₹ 55,67,488/- ii) Disallowance of additional depreciation of ₹ 14,12,82,832/- iii) Disallowance u/s 40(a)(ia) - ₹ 15,24,220/- iv) Disallowance of expenses incurred on account of Corporate Social Responsibility(CSR) ₹ 1,04,61,947/- 2.1 Aggrieved, the assessee approached the Ld. CIT(A) who upheld the disallowance u/s 40(a)(ia) of the Income Tax Act, 1961 ( the Act ) amounting to ₹ 15,24,220/- being bank guarantee commission. The Ld. CIT (A) also upheld the disallowance of ₹ 1,04,61,947/- being expenses on CSR. However, the Ld. Commissioner of Income Tax (A) gave relief to the assessee by deleting the disallowance of provision for retirement benefits amounting to ₹ 55,67,488/- as well as deleting the disallowance of additional depreciation of ₹ 14,12,82,832/- 2.2 Now, the assessee as well as th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... basis and, therefore, the issue was covered in favour of the assessee. It was further submitted that the Ld. Commissioner of Income Tax (A) was correct in deleting the disallowance made in respect of long service award made on actuarial basis from the book profits as long service award benefit is a determined liability and not a contingent liability and since it was allowable under normal provisions of the Act, the same should be allowed while determining the book profits also. 5.1 With respect to ground no. 2 of the department s appeal regarding deletion of disallowance of additional depreciation, the Ld. AR submitted that this issue is also covered in favour of the assessee by order of ITAT Delhi Bench in the case of NTPC Ltd. vs. DCIT in ITA No. 1438/Del/2009 wherein it had been held that power generation companies were eligible for additional depreciation. It was submitted that the Ld. Commissioner of Income Tax (A) had also followed this order of the ITAT, Delhi Bench. The Ld. AR prayed that the ground raised by the department should be dismissed. 6. In response, the Ld. CIT DR vehemently supported the findings of the Assessing Officer and submitted that the Ld. Commiss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the expenses have been incurred in respect of tree plantation/environment protection, construction of Zoology Lab in Rourkela, construction of Special Wings for cerebral palsy children in Rourkela, medical camps in Sirsa village in Bhilai, development of Dongia Pond in a village near Bhilai, construction of Bus stop shed in the city of Rourkela, creating awareness against drug abuse in Bhilai, construction of road in Durgapur etc. besides other expenses incurred under the head. It is not in dispute that these expenses have been incurred and the only reason they were disallowed by the Assessing Officer and so confirmed by the Ld. Commissioner of Income Tax (A) was that this expenditure was not expended wholly or exclusively for the purpose of business of the assessee. Although, it is undisputed that the assessee had incurred this expenditure on the basis of guidelines issued by Bureau of Public Enterprises, Govt. of India, the department was of the view that since the expenditure was not mandatory in nature, the same could not be allowed. However, we are unable to concur with the findings of the lower authorities on this issue and we hold that the disallowance under Explanation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AT Delhi Bench in the case of NTPC Ltd. vs. DCIT in ITA No. 1438/2109 wherein ITAT Delhi Bench had placed reliance on the judgment of the Hon ble Apex Court in the case of State of Andhra Pradesh vs. NTPC and had held that electricity would fall under the definition of goods as given in Article 366 (12) of the Constitution of India. The Hon ble Apex Court, in this case, had observed that goods means all kinds of moveable properties and merely because electrical energy was not tangible or cannot be moved or touched, it cannot cease to be moveable property. The Coordinate Bench of ITAT went on to hold that additional depreciation cannot be denied to the assessee merely on the ground that electricity is not an article or thing. Accordingly, respectfully following the order of the Coordinate Bench in the case of NTPC vs. DCIT (supra), we hold that the Ld. Commissioner of Income Tax (A) had rightly directed the deletion of disallowance with respect to additional depreciation. Accordingly, ground no. 2 raised by the department stands dismissed. 10. In the result, ITA No. 6501/Del/2014 stands dismissed. 11. Accordingly, the appeal of the assessee is allowed whereas the appeal of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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