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TMI Blog2016 (5) TMI 1559X X X X Extracts X X X X X X X X Extracts X X X X ..... opportunity to the assessee, requested to show cause as to why such expenses should not be disallowed. In compliance, the assessee filed reply dated 17.10.2012 as under :- " It is submitted that federation has its units spread over at various places in the State of Rajasthan and therefore, looking to the volume of the transactions and activity involved some expenditure remains unadjusted for want of proper and timely information. The rate of tax being the same, it does not matter whether it is allowed as deduction in the year in which the expenditure is booked or in earlier year. We may also submit that federation is State government Undertaking. Since all these prior period expenses has been accounted after obtaining all the supporting documents, vouchers and obtaining approval of concerned higher authority, hence same has been crystallized during the year and allowable as current year expenses." Before the AO, the ld. A/R further pleaded that the claim of the assessee is supported by the decision of ITAT Jaipur Bench in the case of RIICO Ltd., Instrumentation Ltd. and many other public sector undertakings. Alternative, the ld. A/R requested the AO to allow prior period expe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ipur, it is held that prior period expenses are allowable in this year. The Assessing Officer is directed to delete the addition on account of disallowance of prior period expenditure. With this direction, the issue of allowing prior period expenses of A.Y. 11-12 in this year, does not arise." 4. Now the revenue is in appeal before us. 4.1. The ld. D/R for the revenue supported the order of AO and requested that the order of ld. CIT (A) be set aside and that of the AO may be confirmed. 4.2. On the other hand, the ld. A/R for the assessee vehemently submitted that similar disallowance of prior period expenses was made by the AO in assessee's own case in A.Y. 2007-08 to A.Y. 2009-10. The disallowance was deleted by the ld. CIT(A) vide appeal no. 444/09-10, 268/10-11 and 380/11-12 respectively. The Revenue has not filed any appeal before the ITAT against the order of ld. CIT (A) thereby accepted the decision of the ld. CIT (A). The ld. A/R for the assessee has reproduced the finding of the ld. CIT (A) in Appeal No. 380/11-12 order dated 24.09.2012, in his written submission as under :- " It is seen that through order dt. 24.10.2011, my predecessor has allowed prior period expense ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ture. Since this ground is common in both the years except in figures, we dispose off this ground for the assessment years under consideration together. 5.1. The AO while making the assessment, noted that the assessee has made contribution towards rehabilitation fund to milk unions. To justify the contribution to rehabilitation fund, the assessee was asked to show cause as to why these expenses may not be disallowed while computing the total income of the assessee. In compliance, the ld. A/R for the assessee vide his letter dated 17.10.2012 has stated that the levy charges to the rehabilitation fund had been paid by the four cattle feed plants which are the units of the assessee federation. The federation has set up a fund for providing financial assistance and revival of Milk Unions and District Cooperative Societies. The ld. A/R further submitted that during the year, all the cattle feed plants have incurred expenses for the purpose of revival/setting up of milk unions and district co-operative societies. The finished goods of cattle feed plant is purchased by these societies and hence the assessee is incurring expenses on welfare of them so that assessee may increase its b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sthan Spinning & Weaving Mills Ltd. 274 ITR 465, it is held that the above expenditure is allowable as a deduction u/s 37(1) of the I.T. Act. The Assessing Officer is directed to delete the above disallowance. This ground of appeal is allowed." 7. Now the revenue is before us. 7.1. The ld. D/R for the revenue supported the order of the AO and requested to set aside the order of ld. CIT (A) and confirm the order of AO. 7.2. On the other hand, the ld. A/R for the assessee submitted that Dairy Cooperatives in Rajasthan follow vertical integrated three tier structure as under :- - Primary Society i.e. Village Dairy Co-operative at the bottom level. - Union i.e. District processing union at the middle/centre level. - Federal Society i.e. State Co-operative Dairy Federation. Each of these societies is having different functional responsibilities. The village level primary societies are responsible for collection of milk, district processing unions process the milk collected by the primary societies/village level societies. The federal society/State level society i.e. RCDF (assessee) is an apex body which market the milk and milk products of their members union like, Jaipur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nditure. The Supreme Court in case of Sasson J David & Co P. Limited V. CIT 118 ITR 261 held that the expression 'Wholly and Exclusively" does not mean necessarily. The fact that somebody other than the assessee is also benefited by the expenditure should not come in the way of deduction if it satisfy otherwise the test laid down by law. If the expenditure is incurred voluntarily, even without necessity, but if it is for promoting the business, the deduction would be permissible. In present case the contribution made by the assessee to the fund is utilized in providing financial help to needy members milk unions/societies. From these members milk unions/societies, assessee procures milk. This helps in uninterrupted and timely supply of milk to the assessee. Thus, expenditure is wholly and exclusively for the purpose of business and allowable u/s 37(1). For this reliance is placed on the following cases:- CIT Vs. Rajasthan Spinning and Weaving Mills Ltd. 274 ITR 465 (Raj.) CIT Vs. Shri Rajasthan Sales Tax Ltd. 221 CTR 410 (Raj) 7.5. The ld. A/R fairly admitted that in the A.Ys. 07-08 and 08-09, contribution to RCDF Rehabilitation Fund was disallowed because in that year no separa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... accordance with law after giving assessee an opportunity of being heard." In the light of above, we find no infirmity in the order of ld. CIT (A), the same is confirmed. The ground of the revenue for both the years is dismissed. 8. Ground No. 2 (a) and 2 (b) for the assessment year 2012-13 relates to deletion of addition of Rs. 6,70,168/- made for depositing the employee's contribution to PF and ESI beyond the prescribed time limit and holding that employee's contribution to PF and ESI are governed by provisions of sec. 43B and not by sec. 36(1)(va) read with section 2(24)(x) of the IT Act. 8.1. The AO at the time of assessment proceedings, noticed that the assessee has made the payments of employee's contribution to PF and ESI after the due date of payment relevant to PF & ESI Acts. On being asked to justify the late payment, the assessee vide its letter dated 12.02.2014 submitted that - " the contribution on account of P.F. received from the employee has been deposited before due date of submission of the return even within the financial year itself. It is further submitted that it is well decided matter by various court that deduction of statutory liability towards PF and o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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