ORDER SHEET IN HIGH COURT AT CALCUTTA Special Jurisdiction (Income Tax) ORIGINAL SIDE ITA No. 407 of 2004 With ITA No. 88 of 2005 C.I.T. CENTRAL - I Versus J.K. INDUSTRIES LTD. BEFORE: Hon'ble JUSTICE GIRISH CHANDRA GUPTA Hon'ble JUSTICE ARINDAM SINHA Date : 23rd March, 2015. Mr. S.N.Dutta, Adv. for appellant in ITA No. 407 of 2004 Ms. Soma Chatterjee, Adv. for appellant in ITA No. 88 of 2005 Mr. J.P. Khaitan, Senior Advocate with Mr. Sanjay Bhowmick, Adv. and Ms. Priyanka Lahiri, Adv. Court : appeal registered as ITA No. 88 of 2005 arises out of judgment and order passed by learned Income Tax Appellate Tribunal on 15.4.2004 concerning assessment year 1996-97, and appeal registered as ITA No. 407 of 2004 arises out of judgment and order passed by learned Income Tax Appellate Tribunal on 19th September, 2002 concerning assessment year 1987-88. Both appeals are taken up together. question for consideration in ITA No. 88 of 2005 is as follows: Whether on facts and in circumstances of case Tribunal was justified in dismissing appeal of revenue and confirming order of Commissioner of Income Tax (Appeals) deleting disallowance of 2 Rs.18,48,309/- made under section 40A(9) of Income Tax Act, 1961 regarding payment to Laxmipat Singhania Education Foundation ? Whereas question for consideration in ITA No. 407 of 2004 is as follows: Whether on facts and in circumstances, Tribunal is justified in law in holding that payment of Rs.2,54,198/- paid to Laxmipat Singhania Education Foundation does not come within purview of provisions of Section 40A(9) of Income Tax Act, 1961 and in that view deleting disallowance of Rs.2,54,198/- ? Upon comparison of questions, it would appear that question basically is same. What is different is amount involved. Assessing Officer in both cases did not allow deduction on basis that they were not allowable in terms of provisions of section 40A(9) of Income Tax Act, 1961. learned Commissioner of Income Tax (Appeals), however, allowed expenditure following judgment of Kerala High Court in case of CIT vs. Travancore Cochin Chemicals Ltd. reported in 243 ITR 284. Mr. Dutta, learned Advocate appearing for appellant has with some justification argued that Commissioner of Income Tax (Appeals) allowed claim for deduction following judgment of Keraha High Court without realising that on facts no finding had been arrived at to show that expenditure was wholly and exclusively for purpose of benefitting 3 children of employees of assessee. In absence of such finding of facts that expenditure was wholly and solely for purpose of benefitting children of employees of assessee deduction could not have been allowed. KeraLa High Court had considered another judgment wherein 61% of students were children of employees of assessee and assessee had reimbursed 61% of cost of running school. That type of enquiry, Mr. Dutta contended, was never undertaken before allowing expenditure. Mr. Khaitan, learned senior Advocate appearing for Respondent submitted that enquiry had, in fact, been made, but may not be as suggested by Mr. Dutta. He also cited judgment of Supreme Court in case of Sandur Manganese and Iron Ores Ltd. vs. CIT reported in (2012) 349 ITR 386 (SC) and judgment in case of Kennametal India Ltd. vs. CIT reported in (2013) 350 ITR 209 (SC) wherein distinction between contribution and reimbursement was stressed upon. These judgments may be of some assistance in deciding whether deduction claimed by assessee was wholly and solely for purpose of benefiting children of employees of assessee. Therefore, judgment under challenge in both appeals are set aside. matter is remanded to Assessing Officer. He shall give opportunity to assessee to adduce appropriate evidence to show that expenditure claimed was incurred wholly and solely for benefit of employees of assessee. 4 Needless to mention, question shall be considered in accordance with law in light of facts to be found at such enquiry. Both appeals are thus disposed of. (GIRISH CHANDRA GUPTA, J.) (ARINDAM SINHA, J.) km(pa) C.I.T. Central - I v. J.K. Industries Ltd