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TMI Blog2020 (2) TMI 1230X X X X Extracts X X X X X X X X Extracts X X X X ..... nses are genuine. All TDS have been deducted on the salary and paid to the Government. All the employees have worked for assessee. It is, therefore, clear that assessee incurred the salary expenses which are exclusively for the purpose of business activities. No case is made out by the A.O. by making salary payment, if the same is offence or which is prohibited by Law. Therefore, Explanation-1 to Section 37 would not be attracted in the case of assessee, which is contended in the grounds of appeals by the Revenue. There is, thus, no justification to interfere with the Orders of the Ld. CIT(A). We confirm his finding and dismissed the appeal of the Revenue. - ITA.Nos.505 & 1013/Del./2017 - - - Dated:- 26-2-2020 - Shri Bhavnesh Saini, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... p limit for making the payments. The Corporation has transferred all excess expenses of ₹ 178.33 lakhs to Schedule- O of Income and Expenditure Account and added it in the above figure of ₹ 177.86 lakhs pertaining to NRSC. It is noted that assessee-company has been following the policy since long by maintaining the books of IPP and TPP separately, wherein un-spent money received in grant has always been shown as liabilities being advance from the Government and no profit is shown in the books of the Company. Further, it is clearly mentioned in the terms and conditions of sanction order that higher expenditure projected by the Company under these may be allocated to New Activities Head. However, the assessee company has debited ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mployees of the Corporation have fully designated to the said promotion activities. All the employees had been carrying both NRDC and other promotional activities. The Corporation was apportioning man-power cost of some employees to the said projects, including all other direct and indirect expenses pertaining to the said projects. The assessee has been consistently following the policy. The Government grants relating to specific assets have been shown as a deduction from the gross value of the assets concerned, in arriving at their book value and the related assets have been shown in the balance-sheet at a nominal value. Yearly grants-in-aid from the Government of India for the activities of IPP and TPP relating to revenue have been recogn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rnment of India have no impact on the profitability of the Corporation and grants have been utilised as per the directions of the Government. The excess grant lying with the assessee is shown as liability which is adjusted from the next year grant. Further Corporation had requested the Government of India to clarify the stand that whether Corporation can recover this amount. The Ministry vide letter Dated 05.03.2014 had very clearly specified that man power cost over and above the sanctioned limit has to be borne by the Corporation only. Further it is clear from the Order of the A.O. itself that A.O. has passed order without even seeing the ledgers provided, if he would has made any effort to saw the ledgers, he may be able to understand th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id parent Ministry. Ministry vide their letter dated 05th March 2014, have clarified the manpower cost over and above the capping should be borne by NRDC. The corporation is receiving grants on annual basis and the said grants should be used by corporation in accordance with the directions of the government. The grants had to be used in line with the directions of the government and an excess grant received is shown as liability, The company had followed the said practice earlier also and had also been assessed accordingly. There is no reason and justification in change in stand of Assessing officer. Further the observation of the Assessing officer that position would have changed had the Assessee followed the same policy hitherto co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t year, A.O. has accepted the same claim of the assessee without any objection. Therefore, when same policy have been followed by the assessee and accepted by the A.O, he should not have taken a different stand. Further assessee has made it very specifically clear that salary is paid to all old employees who worked for the assessee and expenses are genuine. All TDS have been deducted on the salary and paid to the Government. All the employees have worked for assessee. It is, therefore, clear that assessee incurred the salary expenses which are exclusively for the purpose of business activities. No case is made out by the A.O. by making salary payment, if the same is offence or which is prohibited by Law. Therefore, Explanation-1 to Section ..... X X X X Extracts X X X X X X X X Extracts X X X X
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