TaxTMI 
TaxTMI 
2021 (3) TMI 257
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....Ministry of heavy industry, the expenses are exclusively for the purpose of business and in accordance with provisions of section 37 of the Act. (iii) That even otherwise, there being no dispute about genuineness of the expenses and same being incurred for the purpose of business, the impugned disallowance is on illegal and arbitrary basis without appreciating the facts of the case. 2.(i) That on the facts and circumstances of the case, the CIT(A) was not justified in confirming addition of Rs. 201.66 crores as deemed income on mobilization advance even though no such income had accrued or received. (ii) That in the absence of any legal or statutory right or acceptance of claim by other party, there is no case of any such income in the light of principle laid down by Supreme Court in the case of Excel Industries Ltd.(2013)358 ITR 295. (iii) That alleged claims is of contingent nature and there is no justification for any addition on factual or legal basis. (iv) That in any case, the impugned addition is in total disregard to decision of Hon'ble Delhi High Court in appellant's own case for AY 2008-09 wherein deletion of identical addition....
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....ia Institute of Transport Development (AITD) at Dwarka, New Delhi. (vii) Maintenance of Media Verge, C.R. Avenue, Kolkata. 15. Perusal of the assessment orders goes to prove that AO has mechanically disallowed the claim of expenditure made by the assessee company towards Corporate Social Responsibility (CSR) and sustainable development without analyzing the fact that assessee company being a Government undertaking is required to incur such expenses as per guidelines issued by the Department of Public Enterprises by undertaking social welfare activities under the social security scheme. Assessee company has however claimed these expenses as business expenditure permissible under the Act. 16. It is contended by the ld. AR for the assessee that identical claim of CSR expenses has been duly accepted by the Revenue in the earlier years and there is no change in the facts and circumstances of case. Neither AO nor ld. DR for the Revenue has controverted this fact. 17. AO has disallowed claim of the assessee company qua CSR expenditure by misinterpreting the provisions contained under section 37(1) of the Act by observing that since CSR expenditure is no....
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....r the society and the State. By making payment of service charge, the respondent company has discharged only the obligation under Government orders. It cannot carryon business by violating Government orders and remain as a defaulter to the Government. 9.6 The ITAT Mumbai bench in the case of Hindustan Petroleum Corporation Ltd. (96 ITD 186) had held CSR expenditure incurred by Government Undertaking is an allowable deduction. The relevant finding of the ITAT Mumbai Benches reads as follows:- "Expenditure incurred by assessee, a company owned by the Government of India and working under its control and directions, towards implementation of 20 point programme as per specific directions of the Government though voluntary in nature and not forced by any statutory obligation, is allowable as business expenditure. Merely because an expenditure is in the nature of donation, it does not cease to be an expenditure deductible under s. 37(1)." 9.7 The Commissioner of Income tax had mentioned in his order that "the Apex Court (313 ITR 334 SC) CIT Vs Madras Refineries Ltd., while hearing the allowability of CSR expenses observed that neither the High Court nor the Tri....
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.... expenditure on 20-Point Programme was incurred in view of specific directions of the Government of India. It could not but be in the business interest of the assessee to abide by the directions of the Government of India which also owned the assessee. Further, the expenditure incurred for the implementation of 20- Point Programme was solely for the welfare of the oppressed classes of society, for which even the Constitution of India sanctions positive discrimination and for contribution to all around development of villages, which has always been the central theme of Government's development initiatives. An expenditure of such a nature cannot but be, 'a concrete expression of care and concern for the society at large and an expenditure to discharge the responsibilities of a 'good corporate citizen which brings goodwill of with the regulatory agencies and society at large, thereby creating an atmosphere in which the business can succeed in a greater measure with the aid of such goodwill'. [Para 9] Just because the expenditure was voluntary in nature and was not forced on the assessee by a statutory obligation, it could not cease to be a business expenditure....
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....nced that as the amount has not been crystallized the same cannot be treated as income in the hands of the assessee. The assessee being a Government undertaking has been following a) system of accounting as per which all items of income and expenditure are treated as accrued only after the approval is granted by competent authority. This system has been followed consistently in respect of both income and expenditure items which has not been disputed by the Revenue in any of the preceding years. Therefore, we are of the considered opinion that the addition confirmed by the ld. CIT(A) is without any basis and needs to be deleted. Accordingly, this ground of the assessee is allowed." 3. It is urged by the revenue that the ITAT's reasoning is flawed. The learned counsel contends that rights of the assessee to receive the amount from RPCL had accrued which meant that appropriate recognition of the revenue had to be reflected. It was submitted that arbitrability of the dispute was questioned as there could be no doubt that under the contract, the mobilization advance was given by the assessee and therefore it was entitled to the interest. 4. I....
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....irst appellate authority, we allow ground No. 2 of the appeal of the assessee." 14. Relevant findings in A.Y 2010-11 read as under: "14. We have considered the rival arguments made by both the sides and perused the orders of the authorities below. We find the Assessing Officer in the instant case applying the provisions of section 14 A r.w. Rule 8D disallowed an amount of Rs. 17,80,998/- being the expenditure incurred for earning the tax free income of Rs. 1,02,89,859/-. We find the Ld. CIT(A) sustained the disallowance so made by the Assessing Officer. It is the submission by the Ld. Counsel for the assessee that the Assessing Officer has not recorded his satisfaction for making the disallowance. We find identical issue had come up before the Tribunal in assessee's own case for A.Y.2009-10. We find the Tribunal vide ITA No.2826/Del/2014 order dated 24.04.2017 while deleting the disallowance has observed as under :- 13. "We have carefully considered the rival contention and also perused the orders of the lower authorities. During the course of assessment proceedings the assessee was asked that why provisions of Rule 8D should not be applied for disallowing some....