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P a g e 1 | 52 OPGC Per Bench These are cross appeals filed by the revenue and assessee against the separate orders of the ld CIT(A)-1, Bhubaneswar for the assessment years 2010- to 2012-13. The assessee has also filed cross objection for the assessment year 2011-12 and also appeals for the assessment years 2009- 10, 2013-14 & 2014-15, respectively.

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19. The next issue is against the action of the ld CIT(A) in deleting the disallowance of Rs.1,05,18,000/- in regard to peripheral development expenses.

20. It was submitted by ld CIT DR that the expenses have not been routed through the Rehabilitation Periphery Development Advisory Committee(RPDAC). It was the submission that the amount had to be spent through the district committee, which has also not been done. He submitted that the expense was not done within 50 kmgs range of the business establishment of the assessee. It was further submitted that there was no direct nexus with the business activity of the appellant nor there was any business expediency. It was the submission that necessary vouchers had not been produced before the AO. Ld CIT DR placed reliance on the decision of the Co-ordinate Bench of Hyderabad Bench of this Tribunal in the case of NMDC Ltd DCIT, 86 taxmann.com 55 (Bang) wherein, it has been held that the said expenditure was not allowable as no attempt had been made by the assessee to discharge the onus that the said expenditure was incurred out of business expediency. He further placed reliance on the decision of this Tribunal in the assessee's own case for the assessment year 2007-08, 2008-09 & 2009-10 in ITA No.544/CTK/12, ITA No.612/CTK/12 and ITA No.77/CTK/2013 order dated 22.10.2014 as also the decision in assessee's own case for the assessment year 2004-05 in ITA No.271/CTK/10 dated 25.5.2012 to submit that the expenditures have not P a g e 24 | 52 OPGC been incurred within 50 kms range of the assessee business activity and consequently, it was his submission that the order of the ld CIT(A) was liable to be reversed. It was further submitted that the total disallowance made by the AO was to an extent of Rs.1,05,18,000/- but the ld CIT(A) restricted the disallowance to Rs.20,40,540/-. He disallowed the expenditure mentioned in para 9.2 for the assessment year 2010-11. It was the submission that against the confirmation of disallowance to the extent of Rs.20,40,540/-, the assessee is also in appeal .

22. We have considered the rival submissions. A perusal of the assessment order shows that the Assessing Officer has disallowed the said expenses under CSR on the ground that though the assessee has claimed that the said expenses are directly related to business but had been able to P a g e 25 | 52 OPGC support the same with supporting vouchers. Ld CIT DR has drawn conclusion from the said sentence that evidences have been produced. A perusal of the said sentence clearly shows that the Assessing Officer has doubted the said expenditure because no supporting evidence to show that the said expenses related to the business of the assessee was produced and not incurring of the expenditure. A perusal of the disallowance as confirmed by the ld CIT(A) also clearly shows that the financial assistance to red cross is clearly under the five heads mentioned in the CSR most specifically under the head "Health". In respect of the sports expenses, the said expenses are allowable under the head of "Health" as also the "Education". There is a saying "All work and no play make Jack a dull boy". A perusal of the chart shown by the assessee at pages 71-76 also clearly shows that the expenses have been incurred at Jharsuguda and around Jharsuguda. Thus, it is clearly within 50 kms range of the assessee's business premises. This being so, we are of the view that the findings of the Co-ordinate Bench of this Tribunal in assessee's case for the assessment years 2007-08, 2008-09 and 2009-10 nor the decision of the Co-ordinate Bench of this Tribunal for the assessment year 2005-06, wherein, the disallowance has been confirmed on account of incurrence of expenditure beyond 50 kms range would apply to the facts in the present case. Consequently, ground No.4 of the revenue stands dismissed and Ground raised by the assessee stands partly allowed insofar as the P a g e 26 | 52 OPGC disallowance as made by the ld CIT(A) is to be reduced by the disallowance of financial assistance to Red cross of Rs.1,10,000/- and sports expenses of Rs.37,000/-. Consequently, Ground of the assessee is partly allowed.

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44. We have considered the rival submissions. At the outset, it is an admitted fact that this amount which has been claimed as a provision during the relevant assessment year has been paid in the immediately succeeding assessment year. The minor portion of the said amount which was not paid has been offered to tax. Now the question arises as to whether the said amount is a contingent liability and clearly a provision and whether the liability has been computed on a scientific basis. A perusal of the decision of the Hon'ble Madras High Court in the case of Forbes Campbell Finance Ltd (supra) relied on by ld CIT DR would not apply to the facts of the present case as in that case 60% of the provision remained unpaid even after two years. In those circumstances, the Hon'ble Madras High Court took the view that the calculation was unscientific. Out of amount of Rs.2,20,00,000/- during the relevant assessment year, the assessee has reversed an amount of Rs.36,00,000/- during the immediately succeeding assessment year and the balance full amount has been paid. A perusal of the computation as has been placed before us, shows that the 4th portion of the computation being 15% is on the basis of committee evaluation. This committee evaluation is a variable. The past performance is a settled matter and therefore, it is not variable, qualification is a settled matter and it will not be variable. Computation through assessment is comparison between the assessee's self proposal and the actual attainment, which is also not variable. Thus, out of 100% only 15% is at most a P a g e 37 | 52 OPGC variable if at all. Thus, it cannot be said that the computation of the incentive is totally unscientific neither can be said that the computation is purely unscientific because of the variable 15% being from committee evaluation. The scientific portion being substantially higher, we have to assume that the computation is scientific one. Further perusal of the decision of the Hon'ble Supreme Court in the case of Bharat Earth Movers (supra) provides that if a business liability has definitely arisen in the accounting year, the deduction should be allowed although the liability may have to be quantified and discharged at a future date. The incentive computation primarily has definitely arisen during the year because it is performance based incentive. 85% of the performance incentive is also clearly computable. 15% is variable depending on the committee evaluation could be a delayed position. It is only quantification of 15% that could vary. Therefore, we are of the view that in view of the principles laid down by the Hon'ble Supreme Court in the case Bharat Earthmovers (supra), the performance incentive is an allowable expenditure and the AO is directed to allow the claim of performance incentive as paid by the assessee. Consequently, this ground of the assessee is allowed.