Income Tax Appellate Tribunal - Jaipur
Jaipur Mineral Development Syndicate ... vs Deputy Commissioner Of Income Tax, ... on 29 March, 2019
vk;dj vihyh; vf/kdj.k] t;iqj U;k;ihB] t;iqj
IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCH 'B' JAIPUR
Jh fot; iky jko] U;kf;d lnL; ,oa Jh foØe flag ;kno] ys[kk lnL; ds le{k
BEFORE: SHRI VIJAY PAL RAO, JM & SHRI VIKRAM SINGH YADAV, AM
vk;dj vihy la-@ITA No. 1087/JP/2018
fu/kZkj.k o"kZ@Assessment Year : 2014-15
Jaipur Mineral Development Syndicate cuke The DCIT,
Pvt. Ltd., Jaipur Vs. Circle-2, Jaipur
LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: AACCJ0074C
vihykFkhZ@Appellant izR;FkhZ@Respondent
fu/kZkfjrh dh vksj l@
s Assessee by : Shri A. B. Dangayach (CA)
jktLo dh vksj ls@ Revenue by : Shri K. C. Meena (Addl. CIT)
lquokbZ dh rkjh[k@ Date of Hearing : 26/03/2019
mn?kks"k.kk dh rkjh[k@Date of Pronouncement: 29/03/2019
vkns'k@ ORDER
PER: VIKRAM SINGH YADAV, A.M. This is an appeal filed by the assessee against the order of ld. CIT(A)-1, Jaipur dated 20.07.2018 wherein the sole ground of appeal relates to disallowance of Rs. 81,986/- paid to security contractors for payment of bonus to the security staff employes at the assessee's mines and other business premises.
2. Briefly stated, the facts of the case are that the assessee is engaged in open mining and it is excavating/extracting soapstone lumps from mining lease area which has been given on lease by the Government of Rajasthan. During the year under consideration, the Assessing Officer observed that the assessee has shown an amount of Rs. 1,13,968/- as prior period expenditure in its profit/loss account which has been claimed for tax purposes in its return of ITA No. 1087/JP/2018 Jaipur Mineral Development Syndicate Pvt. Ltd., Jaipur Vs. The DCIT, Jaipur income. Hence, being a prior period expenditure, the same was disallowed by the Assessing Officer.
3. On appeal, the ld. CIT(A) observed that the said amount of Rs. 1,13,968/- consists of bonus payment of Rs. 81,986/- and arrears of wages amounting to Rs. 31,982/-. As far as arrears of wages of workers was concerned, it was stated by the ld. CIT(A) that the bill of wages was received by the assessee from the contractor on 29.11.2013, therefore, liability to pay arrear of wages was crystallized during the year under consideration. Hence, the addition of Rs. 31,982/- was deleted. As far as the bonus payment of Rs. 81,986/- was concerned, the ld. CIT(A) observed that the bills in respect of bonus were received on 22.06.2013 and 29.11.2013 and were settled during the year under consideration. However, given that these payments were made to Marines Security Services and Diamond Security Service for providing security services to the assessee, it is not clear whether the assessee was liable for payment of bonus thereof. Further, the assessee has failed to provide any documentary evidence to substantiate such claim. Accordingly, the addition of Rs. 81,986/- was confirmed.
4. Against the aforesaid findings of the ld CIT(A), the assessee is in appeal before us. During the course of hearing, the ld AR submitted that the said amount relates to bonus payments to Marines Security and Diamond Security Services for security staff employed at Dagota Mines and at office premises of the assessee. It was submitted that bonus payments for Dagota Mines were disputed and were settled in accounting year 2013-14 relevant to the AY 2014-
15. Regarding bonus payment in respect of Bapi Grinding Unit for accounting Year 2012-13, the bill was submitted to the assessee company on 20.11.2013. It was accordingly submitted that the lower authorities were not justified in 2 ITA No. 1087/JP/2018 Jaipur Mineral Development Syndicate Pvt. Ltd., Jaipur Vs. The DCIT, Jaipur rejecting the claim of the assessee since the liability was disputed earlier and has only crystallized and settled during the year.
5. The ld. DR is heard who has relied on the findings of the lower authorities.
6. We have heard the rival contentions and perused the material available on record. It is not under dispute that the assessee has hired the services of two security agencies for providing security service and staff at its mines and other business establishment. The AO has disallowed the arrear of wages as well as bonus holding it as prior period expenditure. The ld CIT(A) has allowed the arrears of wages holding that the liability has crystallized during the year, however, the disallowance of bonus payment was sustained. To our mind, the liability towards both salary and bonus are arising out of assessee's contractual relationship with the two security agencies. Therefore, where the amounts were disputed in the past and bills have been received during the year, the liability towards the expenditure has arisen and crystallized during the year and the same should be allowed for tax purposes. It is not under dispute that the payment has been made for the purposes of provision of security services and has thus been incurred for the purposes of the business. Regarding the ld CIT(A) contention as to whether the assessee is liable for bonus or not is not clear, the question is where the assessee is carrying out mining and other activities and hires the service of security staff through a security agencies, such security agency is required to pay bonus under a statue, it will recover the bonus from the assessee only and as far as assessee is concerned, the liability is contractual and where the same has crystallized during the year, the same is allowable for tax purposes. In light of above discussions, the disallowance so made is hereby directed to be deleted.
3 ITA No. 1087/JP/2018Jaipur Mineral Development Syndicate Pvt. Ltd., Jaipur Vs. The DCIT, Jaipur In the result, appeal of the assessee is allowed.
Order pronounced in the Open Court on 29/03/2019.
Sd/- Sd/-
¼fot; iky jko½ ¼foØe flag ;kno½
(Vijay Pal Rao) (Vikram Singh Yadav)
U;kf;d lnL;@Judicial Member ys[kk lnL;@Accountant Member
Tk;iqj@Jaipur
fnukad@Dated:- 29/03/2019
*Ganesh Kr.
vkns'k dh izfrfyfi vxzfs 'kr@Copy of the order forwarded to:
1. vihykFkhZ@The Appellant- Jaipur Mineral Development Syndicate Pvt. Ltd., Jaipur
2. izR;FkhZ@ The Respondent- The DCIT, Circle-2, 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. 1087/JP/2018} vkns'kkuqlkj@ By order, lgk;d iathdkj@Asst. Registrar 4