The West Bengal State Co-Operative Bank Ltd., Kolkata v. ACIT, Circle - 40, Kolkata , Kolkata

ITA 172/KOL/2018 | 2013-2014
Pronouncement Date: 22-11-2019 | Result: Allowed

Appeal Details

RSA Number 17223514 RSA 2018
Assessee PAN AAAAT7072N
Bench Kolkata
Appeal Number ITA 172/KOL/2018
Duration Of Justice 1 year(s) 9 month(s) 19 day(s)
Appellant The West Bengal State Co-Operative Bank Ltd., Kolkata
Respondent ACIT, Circle - 40, Kolkata , Kolkata
Appeal Type Income Tax Appeal
Pronouncement Date 22-11-2019
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted A
Tribunal Order Date 22-11-2019
Date Of Final Hearing 03-09-2019
Next Hearing Date 03-09-2019
Last Hearing Date 08-07-2019
First Hearing Date 13-08-2019
Assessment Year 2013-2014
Appeal Filed On 02-02-2018
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH A KOLKATA BEFORE SHRI S.S.GODARA JUDICIAL MEMBER AND DR. A.L. SAINI ACCOUNTANT MEMBER ITA NO. 172 / KOL / 2018 ASSESSMENT YEAR :2013-14 THE WEST BENGAL STATE CO-OPERATIVE BANK LTD. 24A WATERLOO STREET KOLKATA-700 069 [ PAN NO.AAAAT 7072 N ] V/S . ACIT CIRCLE-40 3 GOVT. PLACE (WEST) SECOND FLOOR KOLKATA- 700 001 PAN NO. /APPELLANT .. / RESPONDENT /BY APPELLANT SHRI N.C. MONDAL FCA /BY RESPONDENT SHRI C.J. SINGH JCIT-SR-DR /DATE OF HEARING 03-11-2019 /DATE OF PRONOUNCEMENT 22-11-2019 / O R D E R PER S.S.GODARA JUDICIAL MEMBER:- THIS ASSESSEES APPEAL FOR ASSESSMENT YEAR 2013-14 ARISES AGAINST THE COMMISSIONER OF INCOME TAX (APPEALS)-2 KOLKATAS OR DER DATED 29.11.2017 PASSED IN CASE NO.10043/CIT(A)-12/KOL/2016-17 INVO LVING PROCEEDINGS U/S 143(3) OF THE INCOME TAX ACT 1961; IN SHORT THE A CT. HEARD BOTH THE PARTIES. CASE FILE PERUSED. 2. THE ASSESSEE PLEADS THE FOLLOWING TWIN SUBSTANTI VE GROUNDS IN ITS INSTANT APPEAL:- 1. THAT ON FACTS OF THE CASE THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-12 KOLKATA WAS WRONG BY NOT CONSIDERING THE FACT OF THE CASE AND BY CONFIRMING THE ADDITION MADE BY THE LEARNED. AO UNDER THE HEAD ITA NO.172/KOL/2018 A.Y. 2 013-14 THE W.B.S.CO-OP.BANK LTD. VS. ACIT CIR-40 KOL. PAGE 2 BAKSHIS OF RS.4 71 378/- AND TIPS & BAKSHIS OF RS.82 750/- WHICH ARE ALLOWABLE EXPENSES UNDER SECTION 37 OF THE INCO ME TAX ACT 1961. 2. THAT ON FACTS OF THE CASE THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-12 KOLKATA WAS WRONG BY NOT CONSIDERING THE FACT OF THE CASE AND EXPLANATION GIVEN BY THE APPELLANT THAT THE EXP ENSES WERE IN THE NATURE OF SALARY/WAGES PAID AS BONUS DURING EID/DUR GA PUJA FESTIVAL TO CASUAL STAFFS LIKE PEON LIFT MAN SECURITY STAFF E TC. EMPLOYED BY THE APPELLANT THROUGH ANOTHER SERVICE PROVIDE WHICH IS ALSO BEING A CO- OPERATIVE SOCIETY AND SUCH EXPENDITURES ARE VERY MU CH INCIDENTAL TO AND FOR THE PURPOSE OF CARRYING ON DAY-TO-DAY BUSIN ESS AND ALLOWABLE UNDER SECTION 37 OF THE INCOME TAX ACT 1961. 3. AFTER GIVING THOUGHTFUL INSTRUCTION TO RIVAL PLE ADINGS AGAINST AND IN SUPPORT OF THE DISALLOWANCE(S) / ADDITION(S) WE FI ND THE ISSUE(S) TO BE NO MORE RES INTGRA THIS TRIBUNALS CO-ORDINATE BENCHS DECISION IN IT A NO.1471/KOL/2016 ON 09.02.2018 HAD DECIDED BOTH THESE SUBSTANTIVE GR OUNDS IN ASSESSEES FAVOUR AS UNDER:- 2. GROUNDS OF APPEAL RAISED BY THE ASSESSEE READS A S FOLLOWS :- '1. THAT ON FACTS OF THE CASE THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-12 KOLKATA WAS WRONG BY NOT CONSIDERING THE FACT OF THE CASE AND BY CONFIRMING THE ADDITION MADE BY THE LD. ASSESSIN G OFFICER UNDER THE HEAD 'BAKSHIS' OF RS.3 66 554/- AND 'TIPS & BAKSHIS': IF RS.63 050/- WHICH ARE ALLOWABLE EXPENSES UNDER SECTION 37 OF THE INCOME A CT 1961. 2. THAT ON FACTS OF THE CASE THE LD. COMMISSIONER OF INCOME TAX (APPEALS)- 12 KOLKATA WAS WRONG BY NOT CONSIDERING THE FACT O F THE CASE AND EXPLANATION GIVEN BY THE APPELLANT THAT THE EXPENSE S WERE IN THE NATURE OF SALARY/WAGES PAID AS FESTIVAL BONUS DURING EID/DURG A PUJA TO CASUAL STAFFS LIKE PEON LIFT MAN SECURITY STAFF ETC. EMPLOYED B Y THE APPELLANT THROUGH ANOTHER SERVICE PROVIDER WHICH IS ALSO A CO-OPERATI VE SOCIETY AND SUCH EXPENDITURES ARE VERY MU INCIDENTAL TO AND FOR THE PURPOSE OF CARRYING ON DAY TO DAY BUSINESS OF THE APPELLANT AND ALLOWABLE UNDE R SECTION 37 OF THE INCOME TAX ACT 1961. 3. THAT YOUR PETITIONER RESERVES THE RIGHT TO PREFE R FURTHER GROUND(S) AND/OR DELETE/MODIFY GROUND(S)/ARGUMENTS SUBMIT DOCUMENTS BEFORE THE FINAL DISPOSAL OF THIS APPEAL. ' 3. THE ASSESSEE IS A COOPERATIVE SOCIETY CARRYING O N BANKING BUSINESS. IN THE COURSE OF ASSESSMENT PROCEEDINGS U/S 143(3) OF THE INCOME TAX ACT 1961 (ACT) THE AO NOTICED THAT UNDER THE HEAD' OTHER EXPENSES ' THE ASSESSEE HAD CLAIMED A SUM OF RS. 15 29 14 046/-. SCHEDULE-19 IN THE PROFIT A ND LOSS ACCOUNT GIVES A BREAK-UP OF OTHER EXPENSES. ON PERUSAL OF THE BREAK-UP OF OTHER EXPENSES THE AO NOTICED THAT THE ASSESSEE HAD CLAIMED AS DEDUCTION A SUM OF RS.3 66 554/- AND ANOTHER SUM OF RS.63 050/- UNDER THE HEAD ' TIPS AND BAKHSIS ' RESPECTIVELY. THE AO FOUND THAT THE ASSESSEE COULD NOT PRODUCE RELEVANT VOUCHERS AND CO ULD NOT ALSO JUSTIFY THE BUSINESS EXPEDIENCY OF THESE EXPENSES. THE AO THEREFORE DISA LLOWED THE CLAIM OF THE ITA NO.172/KOL/2018 A.Y. 2 013-14 THE W.B.S.CO-OP.BANK LTD. VS. ACIT CIR-40 KOL. PAGE 3 ASSESSEE FOR DEDUCTION OF THE AFORESAID EXPENSES WH ILE COMPUTING INCOME UNDER THE HEAD ' INCOME FROM BUSINESS ' . 4. ON APPEAL BY THE ASSESSEE THE CIT(A) CONFIRMED T HE ORDER OF THE AO. BEFORE CIT(A) THE ASSESSEE POINTED OUT THAT THE PAYMENT OF BAKSHIS AND TIPS WAS MADE TO CASUAL WORKERS LIKE WATER BOYS CANTEEN BOYS SECUR ITY STAFFS ETC DURING DURGA PUJA IN THE NATURE OF EX-GRATIA/BONUS AND THE SAID PAYME NTS ARE IN THE NATURE OF CONTRACTUAL OBLIGATION THOUGH UNWRITTEN. THE ASSESS EE POINTED OUT THAT SUCH EXPENSES WERE BEING PAID SINCE LONG AND WAS PART OF THE SALARY/WAGES. THE ASSESSEE SUBMITTED THAT THE PAYMENTS WERE NOT VOLUN TARY BUT OBLIGATORY. THE ASSESSEE ALSO POINTED OUT THAT THE SERVICE OF THE D AILY/ CASUAL WORKERS WERE NECESSARY FOR NORMAL AND SMOOTH CONDUCT OF DAY TO D AY BUSINESS OF THE ASSESSEE. BY LONG USAGE IT HAS BECOME A CUSTOM IN THE BUSINES S OF THE ASSESSEE. THE ASSESSEE ALSO POINTED OUT THAT PAYMENTS WERE MADE F ROM HEAD OFFICE REGIONAL OFFICE AND 44 BRANCHES OF THE ASSESSEE LOCATED IN DIFFEREN T PARTS OF WEST BENGAL AND VOUCHERS WERE KEPT IN THE CONCERNED BRANCH. THE NON PRODUCTION OF VOUCHERS AT THE TIME OF THE PROCEEDINGS IS BECAUSE OF THE FACT THAT SUFFICIENT TIME WAS NOT ALLOWED BY THE AO TO PRODUCE THE SAME. THE ASSESSEE FILED SOME SAMPLE VOUCHERS AT THE HEAD OFFICE LEVEL TO JUSTIFY ITS CLAIM FOR THE DEDUCTION OF THE ABOVE. 5. THE CIT(A) HOWEVER DID NOT AGREE WITH THE SUBMIS SIONS OF THE ASSESSEE. HE FOUND THAT ON A SIMILAR ISSUE FOR A.Y.2010-11 HE HAD UPHE LD SIMILAR ADDITION MADE BY THE AO AND FOUND NO GROUNDS TO INTERFERE WITH THE ORDER OF THE AO. 6. AGGRIEVED BY THE ORDER OF THE CIT(A) THE ASSESSE E HAS PREFERRED THE PRESENT APPEAL BEFORE THE TRIBUNAL. 7. AT THE TIME OF HEARING THE ID. COUNSEL FOR THE A SSESSEE FILED BEFORE US A COPY OF THE ORDER OF ITAT B ' BENCH IN ASSESSEE'S OWN CASE FOR A.Y. IN ITA NO.746/K0L/2013 ORDER DATED 30.11.2017. IN THE AFORESAID ORDER THIS TRIBUNAL CAME TO THE CONCLUSION THAT ON IDENTICAL FACTS THAT THE EXPENDITURE WAS AL LOWABLE AS DEDUCTION. THE FOLLOWING WERE THE RELEVANT OBSERVATIONS OF THE TRIBUNAL.:- ' 6. GROUND NO 2 AND 3 IS AGAINST THE DISALLOWANCE OF EXPENDITURE OF AN AMOUNT PAID AS TIPS & BAKSIS BY THE BANK TO CASUAL WORKERS ON FESTIVE OCCASION. THE ASSESSEE SUBMITS THAT THESE PAYMENTS WERE MADE TO CASUAL WORKERS LIKE WATER BOYS CANTEEN BOYS SECURITY STA FFS ETC. DURING ANNUAL FESTIVALS LIKE DURGA PUJA AND EID. IT WAS SUBMITTED THAT THE PAYMENT IS IN THE NATURE OF EX-GRATIA/BONUS. THE BREAK-UP OF THESE PA YMENTS AS MADE BY DIFFERENT BRANCHES OF THE BANK WAS GIVEN. THESE PAY MENTS WERE AUTHORISED BY APPROPRIATE RESOLUTIONS OF THE BOARD OF DIRECTOR OF THE BANK. THE ASSESSING OFFICER AS WELL AS THE LD. CIT(A) DID NOT ALLOW THI S EXPENDITURE ON THE GROUND THAT THERE WAS NO COMMERCIAL EXPEDIENCY BEHIND INCU RRING THIS EXPENDITURE AND THAT THE EXPLANATION IS NOT SATISFACTORY. THE I D. COUNSEL FOR THE ASSESSEE THE DISALLOWANCE IS BAD IN LAW THE ASSESSEE HAS PRO DUCED SUFFICIENT EVIDENCE IN THE FORM OF VOUCHERS AND RECEIPTS IN EVIDENCE OF ANY PAYMENT OF TIPS & BAKSIS. PAYMENTS WERE MADE BY THE HEAD OFFICE REGI ONAL OFFICES AS WELL AS 44 BRANCHES SITUATED IN DIFFERENT PARTS OF WEST BEN GAL. SUCH PAYMENTS ARE MADE AFTER DUE AUTHORIZATION FROM THE MANAGEMENT. T HE REVENUE AUTHORITIES WERE WRONG IN COMING TO A CONCLUSION THAT THERE IS NO COMMERCIAL EXPEDIENCY IN MAKING THESE PAYMENTS. THE DISALLOWANCE ARBITRAR ILY UNJUSTIFIED. HENCE WE ALLOW THIS GROUND OF THE ASSESSEE. ' 8. THE DR POINTED OUT THAT NO EVIDENCE WHATSOEVER W AS FILED BEFORE THE AD. THEREFORE ORDER OF THE CIT(A) SHOULD BE SUSTAINED. THE ID. DR ALSO PLACED RELIANCE ITA NO.172/KOL/2018 A.Y. 2 013-14 THE W.B.S.CO-OP.BANK LTD. VS. ACIT CIR-40 KOL. PAGE 4 ON THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF CIT VS CALCUTTA AGENCIES 19 ITR 191 (SC). 9. WE HAVE PERUSED THE DECISION OF THE HON'BLE SUPR EME COURT AND ARE OF THE VIEW THAT THE SAME IS NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE. THE SAID DECISION ON THE JURISDICTION OF THE HON'BLE HIGH COURT IN A REF ERENCE U/S 66(1) OF THE I.T. ACT 1962 AND WAS HELD TO BE ADVISORY IN NATURE. THE COURT HE LD THAT ON FACTS THE DECISION OF THE TRIBUNAL IS FINAL UNLESS ITS CONCLUSION ARE BASED O N NO EVIDENCE. IN THE PRESENT CASE THE PLEA OF THE ASSESSEE IS BASED ON THE EXISTING C USTOMS AND PRACTICE PREVALENT FOR A LONG TIME. THIS WAS ACCEPTED BY THE TRIBUNAL IN A .Y.2009-10. MOREOVER THE VOUCHERS WERE FILED BEFORE THE CIT(A) WHICH WERE OM ITTED TO BE CONSIDERED BY THE CIT(A). IN THESE CIRCUMSTANCES WE ARE OF THE VIEW T HAT THE DECISION RENDERED BY THE TRIBUNAL ON IDENTICAL FACTS SHOULD BE FOLLOWED. RES PECTFULLY FOLLOWING THE DECISION OF THE TRIBUNAL WE DIRECT THAT THE IMPUGNED ADDITION M ADE BY THE AO BE DELETED . 4. THE REVENUE FAIR ENOUGH IN NOT PIN-POINTING ANY DISTINCTION ON FACTS OR LAW IN TWIN ASSESSMENT YEARS. WE THEREFORE ACCEPT A SSESSEES BOTH SUBSTANTIVE GROUNDS RAISED IN THE INSTANT APPEAL. 5. THIS ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT 22/ 11/2019 SD/- SD/- ( &) (( &) ( A.L.SAINI) (S.S.GODARA) (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) KOLKATA *DKP )- 22 / 11 /201 9 / COPY OF ORDER FORWARDED TO:- 1. /APPELLANT-THE WEST BENGAL STATE CO-OP. BANK LTD. 2 4A WATERLOO STREET KOLKATA-700 069 2. /RESPONDENT-ACI CIR-40 3 GOVT. PLACE (W) 2 ND FLOOR KOLKATA-001 3. 4 5 / CONCERNED CIT KOLKATA 4. 5- / CIT (A) KOLKATA 5. 8 ((4 4 / DR ITAT KOLKATA 6. = / GUARD FILE. BY ORDER/ /TRUE COPY/ 4