Income Tax Appellate Tribunal - Jaipur
Rajasthan State Road Development & ... vs Assistant Commissioner Of Income Tax, ... on 24 July, 2018
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IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR
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BEFORE: SHRI VIJAY PAL RAO, JM & SHRI BHAGCHAND, AM
vk;dj vihy la-@ITA No. 548/JP/2018
fu/kZkj.k o"kZ@Assessment Year : 2014-15
Rajasthan State Road Development & cuke The ACIT,
Construction Corporation Ltd. Vs. Circle-6,
Setu Bhawan, Jhalana Doongri, Jaipur.
Jaipur.
LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: AABCR 9650 F
vihykFkhZ@Appellant izR;FkhZ@Respondent
vk;dj vihy la-@ITA No. 182/JP/2018
fu/kZkj.k o"kZ@Assessment Year : 2014-15
The DCIT, cuke Rajasthan State Road Development &
Circle-6, Vs. Construction Corporation Ltd.
Jaipur. Setu Bhawan, Jhalana Doongri,
Jaipur.
LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: AABCR 9650 F
vihykFkhZ@Appellant izR;FkhZ@Respondent
fu/kZkfjrh dh vksj l@
s Assessee by : Shri Dileep Shivpuri (Adv.)
jktLo dh vksj ls@ Revenue by : Shri Varinder Mehta (CIT)
lquokbZ dh rkjh[k@ Date of Hearing : 18/07/2018
mn?kks"k.kk dh rkjh[k@Date of Pronouncement: 24/07/2018
vkns'k@ ORDER
ITA No.548 & 182/JP/2018 Rajasthan State Road Dev. & construction Cor. Ltd. vs. ACIT PER: VIJAY PAL RAO, J.M. These cross appeals are directed against the order dated 30.11.2017 of CIT(A), Jaipur for the assessment year 2014-15.
2. At the outset of the hearing, the Bench observed that the appeal filed by the assessee is late by 64 days for which the ld. AR of the assessee filed the application for condonation of delay with following prayers.
"1. That the impugned order of the CIT(A)-ii, Jaipur was received by the appellant on 14.12.2018. Hence, an appeal in this case had to be filed by or on 13.02.2018.
2. That there as change of Authorized Representative to represent the appellant before the Hon'ble ITAT.
3. That the appellant being a corporation of the Government of Rajasthan there are multiple layers of Authorities for every decision, and it to considerable time for the change in A/R to be approved by the competent authority.
4. That it was the new A/R who pointed out that appeal needs to be filed on two issues where additions made by the Assessing Officer had been confirmed by the CIT(A). It was only then that necessary approvals were taken to file separate appeal.
5. That the courts of the country have taken a consistent view that appellant authorities should be lenient in condoning delay in filing of appeal in case where Government entites are involved for it is the purpose of appellant authorities to dispense justice and not to stand on technicalities.
Hence, it is requested that delay of 70 days in filing of appeal my kindly be condoned, and the appeal heard on merits."2
ITA No.548 & 182/JP/2018 Rajasthan State Road Dev. & construction Cor. Ltd. vs. ACIT
3. We have heard the rival contentions and perused the materials available on record. Taking into consideration the facts and circumstances of the case narrated by the assessee, it is observed that there was sufficient cause in preventing the assessee to file the appeal time. Hence, the delay in filing the appeal by the assessee is condoned.
4. First, we take up assessee's appeal in ITA No. 548/JP/2018. The assessee has taken following grounds of appeal:-
" Ground no. 1:
That the Learned CIT(A) erred in law and on facts in confirming an addition of Rs. 2,00,00,000/- for construction of Guest House in Mumbai.
Ground no. 2:
That the Learned CIT(A) erred in law and on facts in confirming part disallowance of Rs. 3,03,00,000/- being deduction claimed u/s 80IA of the Income-Tax Act.
Ground no.3:
That the Appellant craves indulgence to add, modify or amend any ground of appeal on or before the hearing.
5. Ground No. 1 is regarding disallowance of claim at Rs. 2,00,00,000/- on account of contribution for construction of State Government Guest House in Mumbai.
6. We have heard the ld. AR as well as the ld. DR and considered that the assessee has contributed Rs. 2,00,00,000/- for construction of 3 ITA No.548 & 182/JP/2018 Rajasthan State Road Dev. & construction Cor. Ltd. vs. ACIT the State Government Guest House at Mumbai and the assessee will get the benefit of accommodation facility in the Mumbai. The ld. AR has submitted that the State Government of Rajasthan has allowed the rebate of 50% in the tariff of guest house for stay of the Officers and the employees of the assessee. He has filed a copy of order dated 24.10.2017 of state government. The ld. AR has further submitted that this issue is covered by the decision of Coordinate Bench of this Tribunal dated 10.04.2018 in case of M/s Rajasthan state Industrial Development & Investment Corp. Ltd. vs. ACIT in ITA No. 380& 381/JP/2017.
7. On the other hand, the ld. DR has relied upon the orders of the authorities below and submitted that the contribution to the State Government guest house is only an application of income and not allowable Revenue expenditure.
8. We have considered the rival submissions as well as relevant material on record. At the outset we note that the Coordinate Bench of this Tribunal in case of M/s Rajasthan State Industrial Development & Investment Corp. Ltd. vs. ACIT (supra) has considered an identical issue in paras 2.5 & 2.6 as under:-
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ITA No.548 & 182/JP/2018 Rajasthan State Road Dev. & construction Cor. Ltd. vs. ACIT "2.5 We have heard the rival contentions, and perused the material available on record. We find that the issue is covered in favour of the assessee by the recent decision of this Bench in assessee's own case for AY 2011-12 (in ITA no. 93/JP/2015 dated 23.02.2018) and the relevant findings therein are reproduced as under:
"36. We have considered the rival submissions as well as relevant material on record. At the outset we note that this Tribunal in assessee's own case for the assessment year 2003-04 while considering an issue of the expenditure incurred towards the contribution made to the construction of guest house in Delhi vide order dated 21.08.2007 in ITA No. 324/JP2006 has held in para 12 as under:-
"12. Considering the above submissions, we are of the view that undisputedly assessee was not the owner of the four rooms in the guest house of the State Government at Chanakyapuri in New Delhi and the assessee was only entitled to use those four rooms allotted to it for staying of its officials visiting Delhi. Assessee has no right to sell, alter or amend those allotted room. The guest house was undisputed neither purchased nor constructed by the assessee. The maintenance of these rooms were also in the hands of the State Government who has been charging the same on annual basis from the assessee. Thus in a sense only the facilities to use those allotted four rooms to the assessee were purchased on a lump-sum payment. It is an established position of law that in a case of ownership against immovable property, the unconditional interest in absolute term with freedom to sell, alienate ect. is transferred by the seller to the purchaser, which is admittedly not the case over here. Under these circumstances we are of the view that the Ld. CIT(A) has rightly come to the conclusion that no capital assets have been created to the assessee but only a privilege or a reservation of four rooms were made on permanent basis to the assessee. Therefore, the provisions of guest house at Delhi was in the normal course of 5 ITA No.548 & 182/JP/2018 Rajasthan State Road Dev. & construction Cor. Ltd. vs. ACIT business and expenditure incidental to it is of revenue nature. The ld. CIT(A) has rightly observed further that the AO has not appreciated the facts properly that total expenditure of Rs. 40,00,000/- was deferred in five equal instalments and only Rs. 8,00,000/- was debited in A.Y. 2003-04. Thus, the entire addition of Rs. 40,00,000/- need to be deleted and the claim of depreciation allowed by the AO at Rs. 2,00,000/- is also to be added back in the computation of income as per the first appellate order. We concur with the view of Ld. CIT(A) which also finds support from the decisions of Hon'ble Delhi High Court in the case of NESET Holdings (P) Ltd. v/s CIT(supra) wherein one time payment was allowed as revenue expenditure where such payment is meant for reducing the overall revenue expenditure of the assessee. The guest house in the present case was required only for running the business and working of the assessee for better inter-action with the Government of India and various financial organizations. The first appellate order being comprehensive and reasons one, we are not inclined to interfere therewith. The same is upheld. The ground No. 2 is thus rejected."
We further note that as per letter dated 24.10.2017 the Government of Rajasthan has allowed the assessee a rebate of 75% of tariff of the room for staying of the employees/officers of the assessee. The Coordinate Bench of this Tribunal in case of Rajasthan Renewal Energy Corporation Ltd. vs. DCIT vide order dated 18.08.2017 in ITA No. 159& 202/JP/2015 and others while considering an identical issue has held in para 55 as under:-
"55. We have heard the rival contentions and pursued the material available on record. It is not disputed that the contribution towards construction of Rajasthan Bhawan has been made as directed and authorized by the State Government, being the owner and shareholder of the assessee company. The question is therefore not about the authorization before incurrence of the said expenditure. The question is whether the 6 ITA No.548 & 182/JP/2018 Rajasthan State Road Dev. & construction Cor. Ltd. vs. ACIT said expenditure has been incurred by the assessee company for the purposes of its business or not. The onus is on the assessee company to establish the said fact. The ld AR has submitted that the assessee company has written to the Government of Rajasthan to provide accommodation facilities in the Rajasthan Bhawan to its officers on their visit to Mumbai, however, there is nothing on record to support the said contention. We are accordingly setting aside the matter to the file of the AO to examine the said contention and the examine the matter a fresh. In the result, the ground of the assessee is allowed for statistical purposes."
Thus, the Tribunal by considering the accommodation facility in the guest house as relevant factor set aside the issue to the record of the AO to examine the accommodation facility available to the assessee in Rajasthan Bhawan at Mumbai.
36. Since this letter dated 24.10.2017 was not available before the Coordinate Bench in case of Rajasthan Renewal Energy Corporation Ltd. (Supra) therefore, the AO was asked to examine the fact. However, in view of the said letter dated 24.10.2017 it is clear that the assessee got the rebate of 75% as well as the right to use the accommodation by its officers/employees visiting at Mumbai. Accordingly, in view of the earlier decision of this Tribunal in assessee's own case as well as in view of the fact that the assessee has received the benefit in the shape of accommodation against the said expenditure for construction of Rajasthan house we hold that the claim of the assessee is an allowable expenditure u/s 37(1) of the Act."
2.6 Undisputedly, there are no changes in the facts and circumstances of the case. Following our earlier decision referred supra in assessee's own case for AY 2011-12, the ground no.1 of assessee's appeal is allowed."
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ITA No.548 & 182/JP/2018 Rajasthan State Road Dev. & construction Cor. Ltd. vs. ACIT Thus, it is clear that this Tribunal has been taking a consistent view on this issue and when the assessee received benefit in the shape of accommodation at concessional rate for stay of its officers and employees in the State Guest House, the said contribution for construction of the Rajasthan guest house is allowable claim U/s 37(1) of the Act. Following the earlier order of this Tribunal we decide this issue in favour of the assessee against the Revenue. The addition made by the AO is deleted.
9. Ground No. 2 is regarding disallowance of claim U/s 80IA of the Act.
10. We have heard the ld. AR as well as the ld. DR and considered the relevant material on record. At the outset we note that an identical issue was considered by this Tribunal in assessee's own case for the assessment year 2012-13 vide order dated 10.04.2017 in case of ACIT vs. M/s Rajasthan State Road Development & Construction Corp. Ltd. in ITA No. 123/JP2017 in para 6 as under:-
"6. Ground no. 3, is against restricting the disallowance of u/s 80IA of Rs. At the outset, the ld. Counsel for the assessee submitted that this issue is covered in favour of the assessee reiterated the submissions as made in the written submissions. Ld. Departmental Representatives is conceded the facts, however he supported the order of the Assessing Officer.8
ITA No.548 & 182/JP/2018 Rajasthan State Road Dev. & construction Cor. Ltd. vs. ACIT 6.1 We have heard the rival contentions, perused the material available on record. We find that the Co-ordinate Bench in assessee's own case in pertaining to the assessment year 2011- 12 in ITA No. 558/JP/2016, decided the issue by observing as under:-
"8.2 We have heard the rival contentions, perused the material available on record and gone through the orders of the authorities below. The AO observed that during the year under consideration, the Company has claimed establishment expenses under the head "payment to and provision for employees" as per schedule "I" at Rs. 32,68,44,701/- and "Administrative expenses"
at Rs. 6,05,47,431/- as per Schedule "J" annexed to the profit & loss account. Total of these expenses comes to Rs. 38,73,92,132/-. The AO further observed that none of the expenses were charged towards income disclosed from various toll road projects eligible for claiming deduction u/s 80IA of the Act. He observed that assessee has claimed total 8 toll road/bridge projects eligible for deduction u/s 80IA of the Act within the meaning of section 80IA(4)(i) of the Act for developing, operating and maintaining of infrastructure facility i.e. Road/Bridge. These 8 projects are : (i) Bikaner Bypass, (ii) Hanumangarh-Suratgarh Road, (iii) Hanumangarh- Shriganganagar Road, (iv) Massi Bridge, (v) Chala Neema Ka Thana-Kotputli Road, (vi) Chomu-Ajitgarh Shahpura Road, (vii) Chala Neem Ka Thana-Kotputli Road (Improvement) (viii) Mangalwar Nimbahera Road. Out of these, two projects Bikaner Bypass & Chomu- Ajitgarh-Shahpura Road have incurred losses. On balance 6 projects assessee has claimed deduction u/s 80IA of the Act to the tune of Rs. 8,20,34,909/-. As the establishment and administrative expense were utilized for the entire business activities of the company which includes road & bridge projects; as such the assessee was asked to show cause and explain as to why the establishment and administrative expense of Rs. 38,73,92,132/- should not be allocate proportionately to road/Bridge projects in proportion to their income of Rs. 9
ITA No.548 & 182/JP/2018 Rajasthan State Road Dev. & construction Cor. Ltd. vs. ACIT 23,00,24,830/- with total income of Rs. 64,78,66,500/- The assessee, in response to this query, made a detailed submission. However, the submissions of the assessee were not found acceptable by the AO. The AO, therefore, by relying on the provisions of section 80IA(5) allocated the direct expenses towards eligible units as well. The AO further observed that it is clear that many expenses of common nature i.e. head office and other day-to-day management and supervision expenses have not been apportioned amongst the unit claiming deduction u/s 80IA of the Act. The assessee has considered only direct operation and maintenance expenses for working out the profits of road and bridge project for claiming deduction u/s 80IA, as if these projects were automatically set up and running without any strategic planning, management, directions, supervision, marketing support, regular contract awarding, works tendering, control etc. by the head office/branch offices. The administrative, head office and other expenses have a direct nexus with the running of road/bridge projects of the assessee situated at various places and, therefore, the same are deductible on proportionate basis in computing the profits and gains from the eligible business for the purpose of sub-section (1) of Sec. 80IA of the Act. Therefore, the AO observed that a sum of Rs. 13,75,43,459/- is required to be apportioned to 80IA units, accordingly this will be deducted for the purpose of working out deduction under section 80IA of the Act. Thus the AO reduced the allowable deduction accordingly. However, the ld. CIT(A) after considering the submissions of the assessee, restricted the disallowance to Rs. 6,98,93,301/- against Rs. 8,20,34,909/-. The ld. CIT (A) by doing so has observed as under:-
"5.5. The appellant has stated that while apportioning the expenditure, the Assessing Officer has wrongly taken the total turnover as Rs. 64,78,66,570/- whereas the correct turnover is Rs. 4,38,13,34,652/-, reflected in the inner column of Schedule-G of the final accounts relating to operating receipts. If the inner column of Schedule-G pertaining to operating receipts is totaled, 10 ITA No.548 & 182/JP/2018 Rajasthan State Road Dev. & construction Cor. Ltd. vs. ACIT the gross turnover amounts to Rs. 69,89,85,491/- as against Rs. 4,38,13,34,652/- claimed by the appellant.
5.6. The appellant has stated that the work of BOT projects is handled by only five divisions of the appellant and the remaining 26 divisions do not undertake any work relating to BOT projects. Therefore, payment to and provision for employees of these five divisions and the head office should only be taken. This contentions of the appellant is correct and this expenditure relatable to BOT projects is taken as Rs. 16,98,40,588/-.
5.7. The appellant has stated that administrative expenses incurred at the head office of Rs. 6,05,47,731/- do not related to BOT projects. Looking to the nature of administrative expenses, this contentions of the appellant is without any basis and cannot be accepted. The administrative expenses which need to be apportioned to the BOT projects is Rs. 6,05,47,731/- - Rs. 1,80,00,500/- = Rs. 4,25,46,931/- (expenditure is Rs. 1,80,00,500/- has been disallowed by the appellant in the computation of income). Therefore, the total expenditure which needs to be apportioned to the BOT projects is Rs. 21,23,87,519/- (Rs. 16,98,40,588 + Rs. 4,25,46,931/-). 5.8. In this way, disallowance under section 80IA(4) will be computed as under:-
Rs. 21,23,87,519 x Rs. 23,00,24,830/ Rs. 69,89,85,491= Rs. 6,98,93,301/-.
The disallowance u/s 80IA of Rs. 8,20,34,909/- made by the assessing officer is restricted to the above amount of Rs. 6,98,93,301/-. Ground 4.1 is partly allowed.
The assessee has demonstrated that the authorities below have taken incorrect figure of turnover. Another contention of the assessee is that the amount related to Head Office is already 11 ITA No.548 & 182/JP/2018 Rajasthan State Road Dev. & construction Cor. Ltd. vs. ACIT apportioned and, therefore, there was no need for apportionment of the same. We find merit in the contention of the ld. Counsel for the assessee. Therefore, the ground raised in the appeal of the revenue is dismissed."
Following the earlier order of this Tribunal we allowed the claim of the assessee for deduction U/s 80IA of the Act
11. Now, we take up Revenue's appeal in ITA No. 182/JP/2018. The Revenue has raised the following grounds:-
"(i) Whether on the facts in the circumstances of the case and in law the ld. CIT(A) was justified in deleting the addition of Rs.
69,32,000/- made by the A.O. by disallowing of contribution to State Renewal fund despite the fact that it was application of income and not expenditure incurred for business expediency.
(ii) Whether on the facts in the circumstances of the case and in law the ld. CIT(A) was justified in deleting the disallowance of Rs. 29,65,065/- made by the A.O. for depositing the employees' construction to PF & ESI beyond the prescribed time limite provided in respective Acts.
(iii) Whether on the facts in the circumstances of the case and in law the ld. CIT(A) was justified in holding that employee's contribution to PF &ESI are governed by the provision of section 43B and not by section 36(1)(va) r.w.s. 2(24)(x) of the I. T. Act.
(iv) The appellant craves its rights to add, amend or alter any of the grounds on or before the hearing."
12. Ground No. (i) is regarding disallowance made by the AO on account of contribution to State Renewal Fund which was allowed by the ld. CIT(A).
12
ITA No.548 & 182/JP/2018 Rajasthan State Road Dev. & construction Cor. Ltd. vs. ACIT
13. We have heard the ld. DR as well as the ld. AR and considered the relevant material on record. At the outset we note that this Tribunal in assessee's own case for the assessment year 2012-13 in ITA No. 123/JP/2017 order dated 10.04.2017 has considered this issue in para 4 as under:-
"4. Ground no. 1, is against deletion of disallowance of Rs. 20 lakhs made on account of contribution to State Renewal Funds. We find that the similar issue has been decided in favour of the assessee by the judgment of the Hon'ble Rajasthan High Court rendered in the case of CIT vs. Rajasthan State Seeds Corporation Ltd. 386 ITR 267. Respectively following the Judgment of the High Court, we do not see any reason to interfere into the order of the ld. CIT (A), therefore, same is hereby affirmed. Therefore, the ground raised by the Revenue is dismissed."
Thus, it is clear that the issue is covered by the decision of Hon'ble Jurisdictional High Court in case of CIT vs Rajasthan State Seeds Corporation Ltd. 386 ITR 267. Hence, by following decision of Hon'ble jurisdictional High Court in case of CIT vs Rajasthan State Seed Corporation Ltd. (supra) as well as the decision of this Tribunal in assessee's own case for assessment year 2012-13 we do not find any error or illegality in the impugned order of the ld. CIT(A) qua this issue. 13
ITA No.548 & 182/JP/2018 Rajasthan State Road Dev. & construction Cor. Ltd. vs. ACIT
14. Ground Nos. (ii) &(iii) are regarding disallowance made by the AO on account of contribution to PF & ESI beyond the prescribed time limit provided in the respective Acts which was deleted by the ld. CIT(A).
15. We have heard the ld. DR as well as the ld. AR and considered the relevant material on record. At the outset we note that this issue is no longer res integra as settled by the series of decisions of Hon'ble Jurisdictional High Court including the decisions in case of Jaipur Vidhyut Vithran Nigam Ltd, 265 CTR 62 (Raj.) as well as in case of CIT vs. State Bank of Bikaner & Jaipur (2014) 99 DTR 131. Accordingly, in view of the binding precedent of Hon'ble Jurisdictional High Court, we do not find any error or illegality in the impugned order of the ld. CIT(A) allowed the claim of the assessee.
In the result, the appeal of the assessee is allowed and appeal of the Revenue is dismissed.
Order pronounced in the open court on 24/07/2018.
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(Bhagchand) (Vijay Pal Rao)
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ITA No.548 & 182/JP/2018
Rajasthan State Road Dev. & construction Cor. Ltd. vs. ACIT *Santosh.
vkns'k dh izfrfyfi vxzfs 'kr@Copy of the order forwarded to:
1. vihykFkhZ@The Appellant- Rajasthan State Road Development & Construction Corporation Ltd., Jaipur.
2. izR;FkhZ@ The Respondent- ACIT/ DCIT, Circle-6, Jaipur.
3. vk;dj vk;qDr@ CIT
4. vk;dj vk;qDr@ CIT(A)
5. foHkkxh; izfrfuf/k] vk;dj vihyh; vf/kdj.k] t;iqj@DR, ITAT, Jaipur.
6. xkMZ QkbZy@ Guard File {ITA No. 548 &182/JP/2018} vkns'kkuqlkj@ By order, lgk;d iathdkj@Asst. Registrar 15