TMI Blog2021 (9) TMI 438X X X X Extracts X X X X X X X X Extracts X X X X ..... cisions and follow the rule of consistency and the settled position in the earlier years, the order passed by the AO cannot be held as erroneous in nature - the order so passed by the ld. Pr. CIT is hereby set-aside and the order of the AO is sustained. - Decided in favour of assessee. . - ITA No. 152/JODH/2019 - - - Dated:- 31-8-2021 - Sandeep Gosain, Member (J) and Vikram Singh Yadav, Member (A) For the Appellant : Sunil Porwal, CA For the Respondents : Sanchita Kumar, CIT-DR ORDER Per Vikram Singh Yadav, A M This is an appeal filed by the assessee against the order of ld. Pr. CIT, Ajmer dated 22.02.2019 wherein the assessee has challenged the order passed by the ld. Pr. CIT u/s. 263 of the Act pertaining to A.Y 2014-15. 2. Briefly stated facts of the case are that the assessment in this case was originally completed u/s. 143(3) vide order dated 04.11.2016. Subsequently, the assessment records were examined and a show cause dated 07.02.2019 u/s. 263 of the Act was issued by the ld. Pr. CIT stating that assessee has incorrectly debited a sum of ₹ 35,93,215/- in its profit and loss account on account of PAC Development Fund under the head ' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3. Deputy registrar/assistant registrar : Member 4. Executive officer of DCCB : Member 5. It was submitted that the above committee should meet at least once in a quarter to take decision on all the proposals. It was submitted that as the fund shall be the part of bank's own fund, it will be administered by M.D. RSCB/MD of concerned DCCB as the case may be. Thus from above, it is clear that PAC development fund are contribution by bank to government agency. All administration, utilization of fund shall be governed by a committee formed as per rules assessee will have no control thereon. Thus contribution to fund is a Business Expediency is thus a business expenditure in terms of section 37(1) of Income Tax Act, 1961. Based on Business Expediency Legal decision on issue, the Hon'ble Rajasthan High Court, Jaipur in case of CIT Jaipur II V/s M/s. Rajasthan State Co-operative Bank Ltd., Jaipur in DBT No. 290/2016 has dismissed the Revenue's appeal. Later, SLP filed by Ld. PCIT - 2, Jaipur in composite order in DBIT, Appeal No. 18/2012, 233/2012, 294/2016 290/2019 dated 05.09.2017 in Hon'ble Supreme Court further, vide SLP(C) No. 027725/2018 filed on 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f capital expenditure or personal expenses of the assessee), laid out or expended wholly and exclusively for the purpose of the business or profession shall be allowed in computing the income chargeable under the head Profits and gains of business or profession. As provided by the section 37(1) of the I.T. Act, 1961, the expenditure which has been expended wholly and exclusively for the purpose of the business or profession, is only allowable as deduction under the head 'Profits and gains of business or profession'. In its submission, the assessee bank merely reiterated that the contribution to PACS Development Fund is obligator to the assessee bank. However, the assessee bank has failed to explain that the contribution towards PACS Development Fund is actually an expenditure which has been incurred wholly and exclusively for the purpose of the business or profession. 6.1 Further, in the case of CIT, Jaipur-II Vs M/s. Rajasthan State C-operative Bank Ltd., Jaipur in DBIT Appeal No. 290/2016, the Hon'ble High Court, Jaipur has dismissed the appeal of the Revenue. However, as informed by office of the PCIT-2, Jaipur vide their letter dated 07.01.2019, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er: 15. We have heard counsel for both the sides. 16. Before proceeding, it will not be out of place to mention that respondent is statutory authority registered under the Rajasthan Cooperative Society Act and they are required to follow the rules which are mandatory in nature and if incur disqualification either they will be superseded or they will incur disqualification. 17. In that view of the matter, while interpreting local act, the court has very guarded under the Income Tax Act whether the deduction or the expenses which are incurred are admissible under Section 37 or not. 18. Looking to the provisions of the Rule 2003 referred hereinabove, the expenses are mandatory in nature, thus, they are required to be deducted to be kept in reserve fund and they are expenses as stated under Rule 28. 19. In that view of the matter, it is to be kept reserve fund and the view taken by the AO is very conservative and considering the opinion neither the Tribunal nor the CIT(A) has committed any error. 20. Hence, the first issue is required to be answered in favour of the assessee against the department. 10. The fact that the decision of the Hon'ble Raj ..... X X X X Extracts X X X X X X X X Extracts X X X X
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