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TMI Blog2013 (9) TMI 557X X X X Extracts X X X X X X X X Extracts X X X X ..... g stocks which is more than 60 days and 120 days respectively for beer & IMFL @ Rs.2/- per case per day. During the year, the assessee Company has sold unapproved brands for Rs.19,81,205/- which was contrary to liquor supply policy 2007. On account of sale of unapproved brands, Demurrage charges of Rs.7,70,806/- were not credited to the profit & loss account, thereby the profits of the Company were understated by Rs.7,70,806/- Consequently, the AO added the said sum of Rs.7,70,806/- to the total income of the assessee. As per the terms & conditions of liquor supply policy of 2006-07, the manufacturer/supplier places an offer to supply liquor based on the demand prevailing in the respective locations. Therefore, an order for supply (OFS) is issued to the manufacturer/supplier. Goods supplied against OFS are stacked in the depots of the corporation which is insured by RSBCL. Manufacturer/suppliers undertake the responsibility for creating demand for the goods supplied to the corporation. Payment for the stock supplied is made at prevailing rates, after sale of such supplies. Stocks remained unsold after a specified period in the depot of the corporation are subject to levy of demurra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evidence that who were the alleged manufacturers/suppliers against whom demurrage charges of Rs.7,70,806/- were levied and how they were no longer associated with the appellant. The appellant being a state govt. undertaking would have made all efforts for recovery. The appellant has also failed to substantiate its claim that charging of demurrages charges was a unilateral act and at rates not offered by the manufacturers/suppliers. There is no ostensible reason as to why demurrage charges were levied by the appellant at its own rates and why no recovery could be made. Since the demurrage charges had been levied, the auditors thought it prudent to comment that it was not credited to the profit & loss account and therefore profits of the appellant were understated to that extent. The Income Tax Act is not concerned whether sale of unapproved brands was in contravention of liquor supply policy of 2006-07 or not. The fact that sale of Rs.19,81,205/- for unapproved brands was made, is not disputed therefore the appellant had rightly levied demurrage charges for slow moving stock and it constituted income in the hands of appellant. Accordingly the arguments of the appellant are rejected ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated and registered their brands to Corporation, leaves no option to corporation, but to exempt the demurrage charges, if any. 6. On the other hand the ld. D/R supported the order of authorities below: 7. We have heard both the parties. The assessee is following the mercantile system of accounting. In this system, one has to ascertain as to whether any item of profit or expenditure has accrued or not. An entry in the books of account is not conclusive to decide the issue. Sutlej Cotton Mills Ltd. V CIT 116 ITR 1 (S.C.) CIT V Shoorgi Vallabhdass arcl Co. 46 ITR 144 (S.C.) CIT V India Discount Co. Ltd. 75 ITR 191 (S.C.) Tuticorin Alkali and chemicals and Fertilisers Ltd. V CIT 227 ITR 172 (S.C.) 8. Hence the contention of the ld. A/R is not acceptable that amount can not be added as the amount is not credited in Profit and Loss account. If a receipt has accrued but not shown in the books then it does not mean that such accrual of money is not to be considered for income. When a person gets a right to claim debt from others then such debt stand accrued. In the case of Naptha Jhakri Joint Venture V ACIT 5 ITR (Trib) 75 (Mumbai) , it was held that refund of terminal excise duty a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny reasonable amount was within the jurisdiction of State Authorities i.e. Excise Department and levy fee cannot be termed as application of income or dividend. This is purely a business expenditure and has to be allowed in view of provision of section 37 (1) of the Act. The AO has made an objection that privilege fee was not paid against any agreement entered between assessee company and the Government of Rajasthan. It is not necessary that any fee is to be paid under any MOU. The assessee company in which the main stake holders are Government of Rajasthan, was allowed to manufacture and vend liquor after fixing the privilege fee which was agreed by the assessee and was paid accordingly. Firstly, it was levied on an excess amount, thereafter on representation of assessee company it was reduced to Rs.12.50 crores and the same was paid by the assessee to start its business activity. It is further seen that the privilege fee was compulsory to start the business activity. In our considered view, the levy of privilege fee is like license fee to start the business, otherwise the assessee could not have started the manufacturing and vend the liquor. The assesee has earned a huge profit e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under section 30 and 42 (c) of the Rajasthan Excise Act 1950, the competent authority under the said Act has levied a privilege fees of Rs.15 Crores for FY 2006-07 vide its order No.F.4(5)FD/Ex/2005 dated 28.3.2007 upon the appellant company in lieu of granting the said privilege. In view of these facts and following the order of Hon'ble Tribunal, Jaipur for AY 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 Tribunal in the case of the assessee for earlier years and hence we decline to interfere in the finding of ld. CIT (A). 16. The second grievance of the revenue is that ld. CIT (A) has erred in: Deleting addition of Rs.7,61,177/- made on account of depositing the PF/ESI payment beyond the prescribed time despite the fact that as per section 36(1)(va) employees contribution should have been deposited in time as prescribed in the relevant law. Section 43B permits delayed payment if paid before filing of ROI as per section 139(1) in case of employer's contribution not in the case of employee's contribution. 17. This issue also stand ..... X X X X Extracts X X X X X X X X Extracts X X X X
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