Cit v. Rajasthan State Beverages Corpn. Ltd.

Shri Laliet Kumar, J.M.:— This is an appeal filed by the Revenue against the order of ld. CIT (A)-II, Jaipur dated 08.10.2013 for the A.Y. 2010-11. The grounds raised in the appeal are as under:—

(1) Whether on the facts and in the circumstances of the case and in law the ld. CIT (Appeals) has erred in deleting the addition of Rs. 24 crores made by the AO by disallowing the payment of Privilege Fees without appreciating the fact that said payment was application of income or appropriation of profit and also the fact that these expenses are of capital nature.

(2)(a) Whether on the facts and in the circumstances of the case and in law the ld. CIT (Appeals) has erred in deleting addition of Rs. 22,23,566/- made for depositing the employees' Contribution to PF beyond the prescribed time limit provided in the respective Acts.

(b) Whether on the facts and in the circumstances of the case and in law the ld. CIT (Appeal) has erred in holding that employees contribution to PF are governed by the provision of section 43B and not by section 36(1)(va) r.w.s. 2(24)(x) of I.T. Act.

2. Brief facts of the case are that the assessee is a concern of Government of Rajasthan engaged in the business of manufacturing and trading of IMFL/Beer in the State of Rajasthan. The assessee Corporation has paid a sum of Rs. 24 cores to the Government of Rajasthan as Privileges fees. The AO disallowed the same and added to the income of the assessee on the ground that the payment of privilege fees by paying out of the receipts is an appropriation of profit as same is paid to State Government merely as distribution on profit being State Govt. undertaking. This is in the nature of business expenditure and is allowable u/s. 37(1) of the IT Act. The ld. CIT (A) discussed the issue of privilege fees in his order at para 2.3 of his order. The issue is covered by the decisions of ITAT Jaipur Bench in the assessee's own case for the earlier assessment years wherein the ITAT has allowed the privilege fees paid to the State Government has been allowed. Thus, the ld. CIT (A) observed that the issue involved in the year under consideration is squarely covered in favour of the assessee and directed the AO to allow the privilege fees as revenue expenditure.

3. Being aggrieved, the revenue is in appeal before us.

4. We have heard the rival contentions and perused the material available on record. The ground pertains to payment of Privilege fees has been allowed as revenue expenditure by this Bench of the Tribunal in the matter of Rajasthan State Beverages Corporation Ltd. in ITA No. 540/JP/2011 for the A.Y. 2007-08 and also in ITA No. 166/JP/2012 for the A.Y. 2008-09. The relevant finding of the Tribunal for the A.Y. 2007-08 vide its order dated 21.10.2011 in ITA No. 540/JP/2011 is reproduced as under:—

“14. The ld. CIT(A) after considering the observation deleted the addition after observing as under:—

In the present case the assessee company was granted exclusive privileges for wholesale trade of Indian made Foreign Liquor and Beer in the state of Rajasthan for the financial year 2006-07 under the provisions of the Rajasthan Excise Act, 1950 by competent authority under the said Act. In exercise of its powers u/s. 30 and 42© of the Rajasthan Excise Act, 1950, the competent authority under the said Act has levied a privileges fees of Rs. 15 crores for financial year 2006-07 vide its order No. F. 4(5)/FD/Ex/2005 dated 28-03-2007 upon the assessee company in lieu of granting the said privileges. In view of these facts and following the order of Hon'ble Tribunal for assessment year 2006-07, I direct the AO to delete the addition of Rs. 15 crores. This ground of appeal is allowed.

15 After hearing both the parties, we feel that issue before us stands covered by the order of the Tribunal in the case of the assessee for earlier years and hence we decline to interfere in the finding of the ld. CIT(A).”

The above referred paras 14 & 15 of the Tribunal's order in ITA No. 540/JP/2011 for A.Y. 2007-08 has also been relied upon by the Tribunal while deciding the appeal of the assessee for the subsequent assessment year 2008-09 in ITA No. 166/JP/2012 decided on 28.11.2014.

5. We have heard rival contentions and perused the material available on record. In respect of the issue pertains to payment of Privilege fees of Rs. 24,00,00,000/- paid to the State Government, we find that the issue is squarely covered by the decision of this Bench (supra) in earlier years. Respectfully following the earlier decisions of the Tribunal on the same issue, this ground of the Revenue is dismissed.

6. With regard to ground no. 2(a) and 2(b) relating to deletion of addition of Rs. 22,23,566/- in respect of depositing the ESI and PF, the ld. D/R has relied upon the order of AO. However, ld. CIT (A) has allowed the payment of ESI and PF contributions vide para 3.3 of his order following the order of his predecessor for the A.Y. 2008-09. The ld. Counsel for the assessee contended that the assessee deposited the payment of PF and ESI before the due date of filing of return for the impugned assessment year which is in accordance with the provisions of section 43B of the Act. The ld. Counsel for the assessee relied upon the decision of Apex Court in the matter of CIT v. Vinay Cement, 213 CTR 268 and also relied upon the Judgment in the case of Commissioner Of Income-Tax v. P.M Electronics Ltd., 313 ITR 161, CIT v. AIMIL Ltd., 321 ITR 508

7. We have herd rival contentions and perused the material on record. We find that the judgment of Hon'ble Supreme Court (supra) is squarely applicable to the question raised in ground no. 2(a) and 2(b) in favour of the assessee. Moreover, the issue raised by the revenue in respect of ground no. 2(a) and 2(b) were also raised in the earlier years and the decision of this Bench of the Tribunal is also available in this regard, in favour of the assessee. Hence, the grounds raised by the revenue are devoid of any merit and, therefore, the same are dismissed.

8. In the result, Revenue's appeal is dismissed.