TMI Blog2004 (1) TMI 300X X X X Extracts X X X X X X X X Extracts X X X X ..... essee is located in District Medak in Andhra Pradesh. On 27th November, 1995, the assessee-company entered into a memorandum of settlement with its workers' union, namely Markwel Hose Industries Employees Union, and one of the terms of settlement, set out in paragraph 35 of the same provided as follows: "The management has agreed to provide 120 square yards plot of land for each permanent employee at free of cost at a place selected by the management. It is also agreed that the land Gift Agreement will be conditioned at the discretion of management." It was undisputedly in pursuance of this agreement that the company purchased land, and claimed the expenses of Rs. 4,05,000, incurred in connection with the same, as revenue deduction. In all fairness, however, the company attached a note with the statement of total income which stated as follows: "Staff welfare expenses include Rs. 4,05,000 being expenditure incurred towards cost of purchase of land. The same has been incurred to provide a plot of land to workers free of cost as per the terms of agreement dated 27-11-1995 entered with the workers union. Reliance is made on the ratio of judgment in the case of CIT v. TV Sunderam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tors to prove that the company is only a custodian and not the owner. It was also submitted that in any event, the Assessing Officer ought not to have treated the purchase of land meant for its workers, in consequence of the agreement with the workers' union as a capital asset in its hand but as revenue expenditure incurred for the workmen. The CIT(A) was, however, not at all impressed with these arguments which he dismissed by observing as follows: "... I have considered the above submissions and also perused the assessment order as well as the case cited supra. In this case, ownership of the land purchased is with the company and it is the discretion of the management as and how the land is to be utilized by the workmen. In the case relied upon by the AR and cited supra, the land was purchased in the name of the Government and for construction of houses for employers and the company was not the owner of the land but had only contributed a portion of construction cost on subsidized welfare scheme. Hence the facts of the present case are distinguishable from the cited by the AR. In the circumstances, I find myself in agreement with the views of the Assessing Officer that the amou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion does not belong to the assessee, and on formally transferring the plots of land to the workers, the assessee loses all its interests and title in the land in question. The asset, if at all, is created for the purposes of beneficiary workers but then while deciding the deductibility under section 37(1) what is to be seen is the nature of advantage in the hands of the assessee incurring the expenditure rather then the advantage in the hands of the beneficiaries of the expenditure. As the expenditure on giving plots of lands to the workers is admittedly incurred in pursuance to a union settlement, bona fides of which have not been called into question at any stage by the revenue, and giving the plots of land to the workers does not create any assets for the assessee-company, the expenditure in question in principle constitutes admissible deduction under section 37(1) of the Act. 7. That takes us to the second question that we had posed for ourselves i.e., in case the expenditure on giving free plots to the workers is to be held as an admissible deduction, in which year the deduction is to be allowed- the year in which the assessee acquires the plot of land which is to be given a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... refore, it is not open to us to give specific direction to Assessing Officer to allow that deduction for the next year. That is not a ground of appeal before us. We may, in this regard, refer to the following observations of Hon'ble Gauhati High Court in the case of Jeypore Timber Veneer Mills (P.) Ltd. v. CIT [1982] 137 ITR 415: "The provision of section 254 of the Act is an enabling as well as disabling provision. A passing glance creates an impression that the Tribunal has been endowed with plenary power under section 254 of the Act to pass any order as it thinks fit. However, it is not so, as it will appear in the expression "such orders thereon as it thinks fit", in section 254. The word "thereon" in the expression is a serious constriction on the exercise of power by the Tribunal. It can decide only the points or grounds raised before it whereas the Income Tax authorities can travel beyond the grounds and consider the entire assessment." In this view of the matter, as far as the question of giving directions for the next year are concerned, we are not inclined to accept the plea of the assessee. 11. The remedy, however, lies elsewhere. 12. Section 153(3) of the Inco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ficer for that purpose, or, we may further add at the cost of stating the obvious, to approach the Commissioner, along with the requisite petition for condonation of delay, for revision under section 264 of the Act. 13. For the reasons set out above, we uphold the disallowance in principle so far the year in appeal before us is concerned, and decline to interfere in the matter. The issue raised in the appeal is whether the expenditure in question is deductible in the year before us or not; we hold it is not deductible in the year before us. Whatever be the reasoning and finding in coming to this conclusion, that cannot broaden the scope of our adjudication so as to give an express direction for its allowability in some other year. The assessee shall, however, be at liberty to approach the Assessing Officer or the CIT, as he may be advised to do, in accordance with the above observations. 14. Subject to the above observations, ground Nos. 1 and 2 are dismissed. 15. In ground Nos. 3 and 4, the assessee is aggrieved that the CIT(A) erred in confirming the inclusion of excise duty and sales tax in the 'total turnover' for the purpose of computing deduction under section 80HHC. ..... 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