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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 ..... re - exclusive privilege for wholesale trade of Indian made Foreign Liquor Beer - Held that:- The issue is whether the fee paid is for the purpose of business or not. If it is in conteravention of provisions of Excise Act, the Excise Authority will take appropriate action, but if the same is paid for business purpose, then the payment cannot be held as in genuine or held as not allowable in view of provisions of section 37 (1) of the Act. It is further seen that even there is no contravention in paying the privilege fee as the fee is paid under section 24 of the Excise and the provisions of section 28, 29 are not applicable as they are on separate aspect - held as business expenditure - Decided in favour of assessee. - ITA No.540/JP/2010, ITA No.545/JP/2011 - - - Dated:- 21-10-2011 - Shri R. K. Gupta And Shri N. L. Kalra,JJ. For the Petitioner : Shri Anurag Kalawatia For the Respondent : Shri Subhash Chandra ORDER Per Shri N. L. Kalra, A.M. The assessee as well as the revenue has filed appeal against order of ld. CIT (A)- II, Jaipur dated 22.03.2011. First we will take up appeal of the assessee. 2. The only grievance of the assessee is that ld. CIT (A) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs/suppliers are no longer associated and registered their brands to the corporation exempted the demurrage charges of Rs.7,70,806/- and therefore it was not credited to the Profit Loss Account as stated in Annexure-1 to the Annual Report Page 32 at Sr. No.(f) and the same is reproduced herein below for the sake of ready reference:- Refer Note No.08 in Notes on accounts, during the year company has sold unapproved brands for Rs.19,81,205/- which is contrary to LSP 2007. Demurrage charges of Rs.7,70,806/- are not credited to profit loss account on sale of unapproved brands. Thus the profit are understated by Rs.7,70,806/- and consequently Loans and advances are understated by Rs.5,00,080/- and current liabilities are overstated by Rs.2,70,726/- Demurrage charge, if any, up to 31.3.06 on these brands were recovered. Considering slow moving nature of these brands and respective manufacturers are no longer associated and registered their brands to Corporation, leaves no option to corporation, but to exempt the demurrage charges, if any. 4. The ld. CIT (A) has confirmed the addition after observing as under: I have duly considered the submissions of the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 demurrage charge which is debited/recovered from the manufacturers from time to time. The corporation had charged Rs.3,52,76,02 towards Demurrage from the suppliers for the default for non-moving stock which has shown in the Profit Loss account for the period ending on 31.3.2007. The sale of unapproved brands refers to the sale of brands carried over from F.Y. 05-06, of which the rate was not offered by the concerned supplier, rather the rate was decided by corporation, at its own the stock sold is shown against this category. The corporation considering the slow moving nature of these brands and also that the respective manufacturers/suppliers of such old stock were no longer associated and registered their brands with the Corporation exempted the demurrage charges of Rs.7,70,806/- and therefore not credited the same to the Profit Loss Account as stated in Annexure-2 at point no.(f) to the Annual Report at page No.35 and the same is reproduced herein below for the sake of ready reference ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s per policy, demurrage charge was receivable. If after accrual the income is waived then such waiver is to be examined as to whether the same satisfies the requirement of section 37. If the amount receivable from the parties is not received or is writt off in the books then the same can be claimed as bad debt u/s 36 (1)(vii). 10. The auditor has pointed out that due to not making such entry of demurrage charges in profit and loss account, then loans and advances are understated by Rs.5,00,080/- and liability overstated by Rs.2,70,726/-. It means that assessee has to pay Rs.2,70,726/- to those parties from whom demurrage was to charged. Hence to this extent, the assessee can recover through journel entry without writing off debt unless demurrage is waived by Board of Directors and allowed by revenue u/s 37 of the I.T. Act. 11. Considering the above factual position. We hold that ld. CIT (A) was justified in confirming the addition of Rs.7,70,606/-. 12. Now we will take up the appeal of the revenue the first grievance of the revenue is that ld. CIT (A) has erred in deleting the addition of Rs.15 Crores made by the A.O. by disallowing the payment of privilege fee without apprec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vied by the Excise Commissioner but is levied on behalf of the Excise Department. Excise Department is not a shareholder in the assessee company y as the shareholder is the Rajasthan Government. Therefore, this objection of the department also does not hold good. The ld. D/R has also stated that fee paid by assessee is in contravention of section 29 of Excise Act is not the issue here. The issue is whether the fee paid is for the purpose of business or not. If it is in conteravention of provisions of Excise Act, the Excise Authority will take appropriate action, but if the same is paid for business purpose, then the payment cannot be held as in genuine or held as not allowable in view of provisions of section 37 (1) of the Act. It is further seen that even there is no contravention in paying the privilege fee as the fee is paid under section 24 of the Excise and the provisions of section 28, 29 are not applicable as they are on separate aspect. We have gone through the other case laws, relied upon by ld. A/R and found that they also support the case of the assessee. In view of the above facts and circumstances, we hold that privilege fee paid by assessee is allowable as business ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot to be allowed as the same has not been paid within the stipulated time as provided in respective Act of PF and ESI. The ld. CIT(A) confirmed the action of the A.O. 3.3 We have heard both the parties. Hon ble Apex Court in the case of CIT vs Alom Extrusions Ltd., 319 ITR 306 has held that the proviso introduced by the Finance Act, 2003 is curative in nature and is retrospective. However, we are concerned with the assessment year 2007- 08. The Hon ble Apex Court has referred to the explanation given in Section 36(1)(v)(a) of the Act. The issue of employee s contribution covered u/s 43B has been considered by the Hon ble Karnataka High Court in the case of CIT vs Sabri Enterprises, 298 ITR 141. The Hon ble Apex Court has upheld the decision of Hon ble Karnataka High Court in the case of CIT vs Sabri Enterprises (supra) while deciding the appeal in the case of CIT vs Alom Extrusions Ltd. (supra). The Hon ble Apex Court has dismissed the SLP in the case of CIT Vs Vinay Cement 313 ITR 1 (St.). While dismissing the SLP, the Hon ble Apex Court has referred to decision of Hon ble Gauhati High Court in the case of CIT vs George Williamson (Assam) Ltd., 284 ITR 619. In the case before Ho ..... X X X X Extracts X X X X X X X X Extracts X X X X
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