Income Tax Appellate Tribunal - Delhi
Acit, New Delhi vs M/S. Sahara India Mass Communication, ... on 18 August, 2017
IN THE INCOME TAX APPELLATE TRIBUNAL
(DELHI BENCH 'D' : NEW DELHI)
BEFORE SHRI R.K. PANDA, ACCOUNTANT MEMBER
and
SHRI KULDIP SINGH, JUDICIAL MEMBER
ITA No.64/Del./2014
(ASSESSMENT YEAR : 2003-04)
ACIT, vs. M/s. Sahara India Mass Communication,
Central Circle 6, 1, Kapoorthala Complex,
New Delhi. Aliganj, Lucknow.
(PAN : AAJFS8722L)
(APPELLANT) (RESPONDENT)
ASSESSEE BY : S/Shri Dinesh Verma and
Hardeep Singh, Advocates
REVENUE BY : Shri Shravan Gotru, Senior DR
Date of Hearing : 13.07.2017
Date of Order : 18.08.2017
ORDER
PER KULDIP SINGH, JUDICIAL MEMBER :
Appellant, Assistant Commissioner of Income-tax, Central Circle 6, New Delhi (hereinafter referred to as 'the Revenue'), by filing the present appeal sought to set aside the impugned order dated 18.10.2013 passed by the Commissioner of Income-tax, Delhi-I, New Delhi, for the Assessment Year 2003-04 on the grounds inter alia that :-
"On the facts and in the circumstances of the case the Ld. CIT(A) has erred in:-2 ITA No.64/Del./2014
1. The order of Ld. CIT (A) is net correct in law and facts.
2. On the facts and the circumstances of the case the Ld. CIT(A) has erred in law in deleting the addition of Rs.29,34,540/- made by AO en account of Excessive Wastage of Newsprint,
3. On the facts and the circumstances of the case the Ld. CIT(A) has erred in law in deleting the addition of Rs.1,45,84,380/- made by AO en account of Employer's and Employees' Contribution to Provident Fund.
4. On the facts and the circumstances of the case the Ld. CIT(A) has erred in law in deleting the addition of Rs.47,715/- made by AO en account of Employer's and Employees' Contribution E.S.I.
5. On the facts and the circumstances of the case the Ld. CIT(A) has erred in law in deleting the addition of Rs. Rs.9,26,458/- made by AO representing contribution made to the Gratuity Fund.
6. On the facts and the circumstances of the case the Ld. CIT(A) has erred in law in deleting the addition of Rs. 3,695/- made by AO on account of 'Repairs to Building.
7. On the facts and the circumstances of the case the Ld. CIT(A) has erred in law in deleting the addition of Rs.8,55,200/- made by AO en account of Prior Period Income.
8. On the facts and the circumstances of the case the Ld. CIT(A) has erred in law in deleting the addition of Rs.5,10,78,366/- made by AO out of Advertisement Expenses.3 ITA No.64/Del./2014
9. On the facts and the circumstances of the case the Ld. CIT(A) has erred in law in deleting the addition of Rs.8,34,951/- made by AO out of Telephone Expenses.
10. On the facts and the circumstances of the case the Ld. CIT(A) has erred in law in deleting the addition of Rs.24,590/- made by AO under the head Business Promotion Expenses.
11. The appellant craves leave to add, amend any/all the grounds of appeal before or during the course of hearing of the appeal."
2. Briefly stated the facts necessary for adjudication of the controversy at hand are : assessee firm is into the business of printing and publication of newspapers, magazines, printing related jobwork advancing of money and trading in consumable products. Assessing Officer noticed that the assessee has claimed excessive wastage of newsprint at 7.61% every year and the excess wastage shown by the assessee was diverted to open market to earn unaccounted income. During assessment proceedings, registration of newspaper intimated to AO that as per newsprint policy regarding allocation of newsprint upto the limit indicated below has been allowed to newspaper as wastage compensation :-
All news papers 7% Magazines with multi-color requirements Additional 1% Stitched Magazines (with trimming) Additional 3% 4 ITA No.64/Del./2014
3. However, AO came to the conclusion that zero wastage machines are available and being used for printing and as such industry wastage at 6% of the total consumption is allowed and remaining 1.61% newsprint consumed i.e. 137 MT found diverted by the assessee and its cost assessed as Rs.29,34,540/- and made addition thereof.
4. AO further made addition of Rs.1,45,84,380/- on account of employers and employees contribution to provident fund on the ground that since the assessee is not maintaining recognized provident fund, the question of crediting the sum to the employees account in the relevant fund does not arise and treated the employees contribution as income of the assessee and disallowed the deduction thereof.
5. AO also made addition of Rs.47,715/- and Rs.9,26,458/- on the ground that ESI contribution and contribution to the gratuity fund respectively by employees and employers have been made beyond the due dates.
6. AO also disallowed the amount of Rs.3,695/- claimed as deduction by the assessee incurred by its NOIDA unit of assessee on the ground that the assessee has never undertaken to bear the cost of repairs to the premises.
5 ITA No.64/Del./2014
7. AO further made an addition of Rs.8,55,200/- from the prior period expenses on the ground that the same has not been taxed in the period to which it relates and as such, it will form the taxable income during the year under assessment. AO further made addition of Rs.5,11,24,476/- claimed by the assessee as advertisement expenses on account of cricket matches sponsored by the Sahara on the ground that the assessee has not established any direct nexus with the business/sales.
8. AO further made addition of Rs.8,34,957/- claimed by the assessee on account of telephone expenses on the ground that the revised telephone bill relied upon by the assessee are not in the name of assessee. AO further made addition of Rs.24,590/- by disallowing the deduction out of business promotion expenses by treating various items gifted by the assessee in the nature of capital expenditure.
9. Assessee carried the married by way of an appeal before the ld. CIT (A) who has partly allowed the appeal. Feeling aggrieved, the Revenue has come up before the Tribunal by way of challenging the impugned order passed by ld. CIT.
10. We have heard the ld. Authorized Representatives of the parties to the appeal, gone through the documents relied upon and 6 ITA No.64/Del./2014 orders passed by the revenue authorities below in the light of the facts and circumstances of the case.
GROUND NO.1
11. Ground No.1 is general in nature and do not require any adjudication.
GROUND NO.2
12. Ld. AR for the assessee contended that this issue is covered in favour of the assessee by the order passed by the Tribunal. Perusal of the order passed by the coordinate Bench of the Tribunal, available at pages 128 to 135 of the paper book, relevant page 134, in assessee's own case for AY 1994-95 apparently shows that this issue has been terminated in favour of the assessee. Order passed by the Tribunal dated 29.05.2009 has been confirmed by the Hon'ble Delhi High Court by returning the following findings :-
"7. Having considered the rival submissions of learned counsel for the parties and on perusal of tile entire records, particularly, the orders of the authorities below we are of the considered view that the CIT(A) accepted that the assessee was maintaining quantitative records of wastage but he allowed the wastage @ 7%, We could not persuade ourselves to the reasoning given by the authorities below In respect of restricting the wastage to 6% or 7% when the assessee was able to demonstrate that the reasons of wastage were various and in such circumstances standard of 7% wastage rate prescribed by Registrar of Newspaper could not be applied. In fact, standard of 7% may be for the purpose of raising the demand of 7 ITA No.64/Del./2014 newsprint, but the amount of wastage would depend upon various factors including the location of office, printing units, godowns, etc. Otherwise also it is a clear finding of fact and we not see any perversity of illegality in the order of the Tribunal."
13. Following the decision rendered by coordinate Bench of the Tribunal affirmed by the Hon'ble Delhi High Court in assessee's own case for AY 2994-95, there is no illegality or perversity in the findings returned by ld. CIT (A), hence ground no.1 is determined against the Revenue.
GROUNDS NO.3 & 4
14. Undisputedly, the ld. CIT (A) decided this issue in favour of the assessee by following his own order passed for AY 2001-02, available at pages 46 to 49 of the paper book, which was passed by ld. CIT (A) by relying upon the order passed by coordinate Bench of the Tribunal in assessee's own case for AY 2003-04 in ITA No.1568/Del/2007 dated 24.10.2008, copy available at pages 670 to 680 of the paper book.
15. Perusal of the order passed by coordinate Bench of the Tribunal in assessee's own case for AY 2003-04 apparently shows that the identical issue was dealt with and decided in favour of the assessee by returning the following findings :-
"10. We have considered the rival submissions and also perused the relevant material on record.8 ITA No.64/Del./2014
As per clause (ii) of sub-section (25) of section 10, any income received by the trustees on behalf of a recognized provident fund is exempt from tax. Definition of a "recognized provident fund"
is given in section 2(38) which reads as under :-
"2 In this Act, unless the context otherwise requires, -
"(38) "recognized provident fund" means a provident fund which has been and continues to be recognized by the Chief Commissioner or Commissioner in accordance with the rules contained in Part A of the Fourth Schedule, and includes a provident fund established under a scheme framed under the Employees' Provident Fund Act, 1952 (19 of 1952)"
"11. A perusal of the definition given in section 2(38) as above shows that a provident fund which has been or continues to be // recognized by the Chief Commissioner or the Commissioner in accordance with the rules contained in Part A of the Fourth Schedule is said to be a "recognized provident fund" as per the first limb of the definition given in section 2(38). Further, as per the second limb of the definition, a recognized provident fund also includes a provident fund established under a scheme framed under the Employees' Provident Fund Act, 1952. The definition given in section 2(38) thus is an inclusive definition and as per the second limb of the said definition which is independent of the first limb, it includes a provident fund established under a scheme framed under the Employees' Provident Fund Act, 1952. It is pertinent to note here that the condition of recognition of the fund by the Chief Commissioner or Commissioner as stipulated in the first limb is consciously absent in the second limb which clearly depicts that such recognition is not a condition precedent for a 9 ITA No.64/Del./2014 provident fund established under a scheme framed under the Employees' Provident Fund Act. 1952 to be a "recognized provident fund"
within the meaning of section 2(38), We, therefore, find no merit in the contention raised by the learned DR that such recognition by the Chief CIT or CIT is required even in case of a provident fund established under a scheme framed under the Employees' Provident Fund Act, 1952. In our opinion, a reading of the provisions of section 2(38) defining "recognized provident fund" especially the second limb thereof clearly shows that a provident fund established under a scheme framed under the Employees' Provident Fund Act, 1952 has to be regarded as a recognized provident fund irrespective of whether the same has been recognized by the Chief Commissioner or Commissioner or not as rightly held by the learned CIT(A). Since the provident fund of the assessee-trust in respect of other concerns was undisputedly established under a scheme framed under the Employees' Provident Fund Act, 1952, we are of the view that the same was a recognized provident fund within the meaning of section 2(38) even without recognition by the Chief CIT or CIT and any income received by the trustees on behalf of the said fund was exempt from tax as per clause (ii) of sub-section (25) of section 10. In that view of the matter, we uphold the impugned order of the learned CIT(A) deleting the addition of Rs.32,84,310 made by the Assessing Officer to the total income of the assessee on account of income earned by the assessee from provident fund contributions from other concerns holding that the same was exempt under section 10(25) and dismiss this appeal filed by the Revenue."
16. The assessee has given complete details of the contribution made by the employer for the relevant assessment year, which is available at pages 168 to 176 of the paper book, and the entire 10 ITA No.64/Del./2014 payment is proved to have been made through cheque / demand draft as is evident from the books of account of the NOIDA unit. So, following the decisions rendered by the coordinate Bench in assessee's own case for AY 2003-04, grounds no.3 & 4 are determined against the Revenue.
GROUND NO.5
17. CIT (A) deleted the addition of Rs.9,26,458/- made by the AO representing contribution made to the gratuity fund on the ground that the amount was deposited prior to the date of filing of the return u/s 139 of the Income-tax Act, 1961 (for short 'the Act') of the relevant assessment year. It is the settled principle of law that once the amount on account of gratuity fund is deposited though late but prior to the date of filing of the return u/s 139 for the relevant assessment year as per provisions of section 43B w.e.f. 01.04.2004 of Finance Act, 2003, the same cannot be disallowed. Reliance in this regard is placed on the decision rendered by Hon'ble Supreme Court in Allied Motors Private Limited vs. Commissioner Of Income Tax - 224 ITR 677(SC), available at page 650 of the paper book. So, following the decision rendered by Hon'ble Supreme Court in Allied Motors Private Limited (supra), the ld. CIT (A) has rightly deleted the addition. Hence, Ground No.5 is determined against the Revenue. 11 ITA No.64/Del./2014 GROUND NO.6
18. Ld. CIT (A) deleted the addition of Rs.3,695/- made by the AO on account of repairs to the building on the ground that the agreement do not cover inside day to day repairs. However, the ld. CIT (A) by following the earlier decision of the Revenue for AYs 2004-05 and 2005-06 deleted the same by holding that there is no change in the facts and circumstances of the case. So, keeping in view the quantum of expenditure claimed on account of repair of the building and in view of rule of consistency, we find no ground to interfere into the findings returned by ld. CIT (A). Hence, ground no.6 is determined against the Revenue. GROUND NO.7
19. Ld. CIT (A) deleted the addition of Rs.8,55,200/- made by the AO on account of prior period income. Again, by following the rule of consistency, the same prior period income was allowed in assessee's own case for AY 2002-03. Even otherwise, it would amount to double taxation. Moreover, when total expenses of the prior period stood added back in the income and expenditure claimed were NET of prior period income, the addition thereof would amount to double taxation. So, in these circumstances, ld. CIT (A) has rightly deleted the addition and finding no illegality or 12 ITA No.64/Del./2014 perversity in the findings returned by the ld. CIT (A), ground no.7 is determined against the Revenue.
GROUND NO.8
20. Ld. CIT (A) deleted the addition of Rs.5,10,78,366/- made by the AO on account of advertisement expenses by following order passed by the ld. CIT (A) in assessee's own case for AYs 2005-06 and 1996-97 by following the rule of consistency. This settled position of rule of consistency applied by the Revenue authorities in assessee's case qua advertisement expenses has not been controverted by the ld. DR. Hence, we find no illegality or perversity in the findings returned by ld. CIT (A) and consequently, ground no.8 is determined against the Revenue. GROUND NO.9
21. Ld. CIT (A) deleted the addition of Rs.8,34,951/- made by the AO on account of telephone expenses by following his own order in assessee's own case for AY 2005-06 and order passed by the Tribunal in the case of sister concern of the assessee, namely, M/s. Chabbi Advertising in ITA No.542/Del/2009 for AY 2003-04, available at pages 114 to 120 of the paper book. In the said case, the Tribunal dealt with identical issue and decided the same in favour of the assessee by holding that just because the telephone is registered in another name does not mean that the assessee has not 13 ITA No.64/Del./2014 used the same. Moreover when Revenue is allowing such expenses in assessee's own case in earlier years, the rule of consistency is to be followed. So, we find no illegality or perversity in the findings returned by the ld. CIT (A) and consequently ground no.9 is determined against the Revenue.
GROUND NO.10
22. The ld. CIT (A) deleted the addition of Rs.24,590/- made by the AO under the head 'business promotion expenses' by following the decisions rendered by CIT (A) in assessee's own case for AY 2004-05 who has passed the same by following the Tribunal's case for AY 11994-95 in ITA No.465/Del/2001 dated 29.05.2009, copy of order is available at pages 128 to 135 of the paper book. So, we are of the considered view that by following the rule of consistency and order passed by the Tribunal, ld. CIT (A) has rightly deleted the addition of Rs.24,590/-, hence ground no.10 is determined against the Revenue.
23. Resultantly, the appeal of the Revenue is dismissed. Order pronounced in open court on this 18th day of August, 2017.
Sd/- sd/-
(R.K. PANDA) (KULDIP SINGH)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Dated the 18th day of August, 2017
TS
14 ITA No.64/Del./2014
Copy forwarded to:
1.Appellant
2.Respondent
3.CIT
4.CIT(A)-1, New Delhi.
5.CIT(ITAT), New Delhi. AR, ITAT
NEW DELHI.