IGLOO DAIRY SERVICES P. LTD (SUCCESSOR TO BUSINESS OF IMPERIAL COLD STORAGE P. LTD ), MUMBAI V. ACIT 3(2), MUMBAI

CO 167/MUM/2009

• Counselvise Citation: [2012] 122 COUNSELVISE.COM (IT) 7243 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 8 month(s) 29 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 25-05-2012
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: I
• Next Hearing Date: 10-05-2012
• Assessment Year: 2001-2002
• Appeal Filed On: 27-08-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: PARTHASARTHI NAIK
• Assessee Lawyers: YOGESH A THAR
• Keywords: Capital asset; Business income; Bad and doubtful debts; Difference of opinion; Change of opinion
• Section: 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL I BENCH, MUMBAI BEFORE SHRI J. SUDHAKAR REDDY, ACCOUNTANT MEMBER, A ND SHRI R.S. PADVEKAR, JUDICIAL MEMBER ITA NO. 14/MUM./2008 (ASSESSMENT YEAR : 2001-02 ) ASSTT. COMMISSIONER OF INCOME TAX CIRCLE-3(2), AAYAKAR BHAVAN 101, M.K. ROAD, MUMBAI 400 020 .. APPELLANT V/S M/S. IGLOO DAIRY SERVICES P. LTD. (FORMERLY KNOWN AS M/S. IMPERIAL COLD STORAGE P. LTD.) 703, DALAMAL HOUSE 206, NARIMAN POINT MUMBAI 400 021 PAN AAACI1216M .... RESPONDENT CROSS OBJECTION NO.167/MUM./2009 (ARISING OUT OF ITA NO. 14/MUM./2008 ) (ASSESSMENT YEAR : 2001-02 ) ASSTT. COMMISSIONER OF INCOME TAX CIRCLE-3(2), AAYAKAR BHAVAN 101, M.K. ROAD, MUMBAI 400 020 .. APPELLANT V/S M/S. IGLOO DAIRY SERVICES P. LTD. (FORMERLY KNOWN AS M/S. IMPERIAL COLD STORAGE P. LTD.) 703, DALAMAL HOUSE 206, NARIMAN POINT MUMBAI 400 021 PAN AAACI1216M .... RESPONDENT M/S. IGLOO DAIRY SERVICES P. LTD. 2 ITA NO. 6695/MUM./2010 (ASSESSMENT YEAR : 2002-03 ) DY. COMMISSIONER OF INCOME TAX CIRCLE-3(2), AAYAKAR BHAVAN 101, M.K. ROAD, MUMBAI 400 020 .. APPELLANT V/S M/S. IGLOO DAIRY SERVICES P. LTD. (FORMERLY KNOWN AS M/S. IMPERIAL COLD STORAGE P. LTD.) 703, DALAMAL HOUSE 206, NARIMAN POINT MUMBAI 400 021 PAN AAACI1216M .... RESPONDENT CROSS OBJECTION NO.185/MUM./2011 (ARISING OUT OF ITA NO. 6695/MUM./2010 ) (ASSESSMENT YEAR : 2002-03 ) M/S. IGLOO DAIRY SERVICES P. LTD. (FORMERLY KNOWN AS M/S. IMPERIAL COLD STORAGE P. LTD.) 703, DALAMAL HOUSE 206, NARIMAN POINT MUMBAI 400 021 PAN AAACI1216M .. APPELLANT V/S DY. COMMISSIONER OF INCOME TAX CIRCLE-3(2), AAYAKAR BHAVAN 101, M.K. ROAD, MUMBAI 400 020 .... RESPONDENT REVENUE BY : MR. PARTHAS ARTHI NAIK ASSESSEE BY : MR. YOGESH A. THAR DATE OF HEARING 10.05.2012 DATE OF ORDER 25.05.2012 M/S. IGLOO DAIRY SERVICES P. LTD. 3 O R D E R PER J. SUDHAKAR REDDY REVENUES APPEAL IN ITA NO.14/MUM./2008, IS DIRECTE D AGAINST IMPUGNED ORDER DATED 23 RD OCTOBER 2007, PASSED BY THE COMMISSIONER (APPEALS)III, MUMBAI, FOR ASSESSMENT YEARS 2001-02 , AND REVENUES APPEAL IN ITA NO.6695/MUM./2010, IS DIRECTED AGAINS T THE IMPUGNED ORDER DATED 5 TH APRIL 2010, PASSED BY THE COMMISSIONER (APPEALS)V II, MUMBAI, FOR ASSESSMENT YEAR 2002-03. THE ASSESSEE HAS PREFE RRED CROSS OBJECTIONS WHICH ARE ARISING OUT OF THE AFORESAID REVENUES AP PEALS. AS THE ISSUES WHICH ARISE OUT OF THESE APPEALS ARE COMMON, FOR THE SAKE OF CONVENIENCE, THESE WERE HEARD TOGETHER AND ARE BEING DISPOSED OFF BY W AY OF THIS CONSOLIDATED ORDER. 2. CROSS OBJECTION NO.167/MUM./2009, ARISING OUT OF IT A NO.14/MUM./ 2008, IS BARRED BY LIMITATION WHICH IS FILED WITH A DELAY OF 529 DAYS. THE ASSESSEE FILED AN AFFIDAVIT AS WELL AS AN EXPLANATI ON SEEKING CONDONATION OF DELAY. A NUMBER OF CASE LAWS WERE CITED. 3. THE SOLE REASON GIVEN FOR THE DELAY IN FILING THIS CROSS OBJECTION IS THAT, ON CONSULTATION WITH THE LEARNED COUNSEL FOR THE AS SESSEE, THE ASSESSEE WAS ADVICED TO FILE THIS CROSS OBJECTION, AS THE RE-OPE NING WAS A MERE CHANGE OF OPINION. WE FIND THAT THE LEARNED COUNSEL, WHO APPE ARED BEFORE US, IS THE COUNSEL WHO APPEARED BEFORE THE COMMISSIONER (APPEA LS) ALSO. THUS, THE REASON GIVEN OF BELATED CONSULTATION IS, IN OUR OPI NION, NOT CONVINCING. WE, THUS, HOLD THAT THE ASSESSEE WAS NOT ABLE TO PROPER LY EXPLAIN THE REASONS FOR THE DELAY IN FILING THE CROSS OBJECTION. CONSEQUENT LY, THE GROUNDS RAISED BY THE ASSESSEE IN ITS CROSS OBJECTION NO.167/MUM./200 9, FOR ASSESSMENT YEAR 2001-02, ARE HEREBY DISMISSED. 4. IN THE RESULT, ASSESSEES CROSS OBJECTION IS DISMIS SED. WE NOW TAKE UP REVENUES APPEAL IN ITA NO.14/MUM./2 008, FOR ASSESSMENT YEAR 2001-02. THE FACTS ARE AS FOLLOWS:- M/S. IGLOO DAIRY SERVICES P. LTD. 4 5. THE ASSESSEE, A COMPANY, IS ENGAGED IN THE BUSINESS OF PROVIDING COLD STORAGE SERVICES FOR LIQUID MILK INCLUDING PROVIDIN G PREMISES FOR PASTEURISATION AND PACKING OF MILK PRIOR TO COLD ST ORAGE AT 4 DEGREE CENTIGRADE. THE ASSESSEE CLAIMED DEDUCTION UNDER SE CTION 80IA OF THE INCOME TAX ACT, 1961 (FOR SHORT THE ACT ). THIS DEDUCTION WAS BEING GRANTED BY THE REVENUE FOR THE LAST EIGHT YEARS. TH IS IS THE 9 TH YEAR OF CLAIMING DEDUCTION 80IA. THE ASSESSING OFFICER DENI ED THE DEDUCTION PARTIALLY ON THE GROUND THAT (I) THE SERVICE CHARGES CREDIT ED WAS ON ACCOUNT OF PASTEURISATION AND PACKING OF MILK AND COLD STORAGE . ACCORDING TO THE PROVISIONS OF THE ACT, IN THE CASE OF ASSESSEE, THE BUSINESS INCOME DERIVED FROM THE ACTIVITY OF COLD STORAGE ALONE QUALIFIED F OR DEDUCTION UNDER SECTION 80IA; (II) IT IS OBSERVED THAT THE ASSESSEE COMPANY HAS TAKEN INTO CONSIDERATION THE SERVICE CHARGES DERIVED FROM PAST EURISATION AND PACKING OF MILK ALSO, FOR COMPUTING DEDUCTION UNDER SECTION 80 IA, THOUGH THE INCOME DERIVED FROM SUCH ACTIVITIES DO NOT QUALIFY FOR THE SAID DEDUCTION; AND (III) HE HELD THAT THE ASSESSEE DOES NOT MAINTAIN SEPARATE B OOKS OF ACCOUNT FOR JOB WORK AND COLD STORAGE. AS THE ASSESSEE IS ELIGIBLE FOR DEDUCTION UNDER SECTION 80IA ONLY ON THE INCOME DERIVED FROM ACTIVITY OF CO LD STORAGE, THE ASSESSING OFFICER DENIED THE EXEMPTION. 6. AGGRIEVED, THE ASSESSEE CARRIED THE MATTER BEFORE T HE FIRST APPELLATE AUTHORITY WHEREIN THE COMMISSIONER (APPEALS) HELD T HAT THE QUANTUM OF SERVICE CHARGES WAS BEING CALCULATED ON THE BASIS O F QUANTUM OF MILK PACKED BUT WAS CHARGED ONLY FOR COLD STORAGE. HE HELD THAT THE ASSESSING OFFICER HAS NOT UNDERSTOOD THE FACT CLEARLY. PACKING AND PASTEU RISATION ARE NOT DONE BY THE ASSESSEE BUT ONLY A PLACE IS GIVEN TO DUDH SUNG H. ON THE GROUND THAT THERE IS NO ELEMENT OF RECEIPT BY THE ASSESSEE OF A NY AMOUNT OTHER THAN COLD STORAGE CHARGES, THE COMMISSIONER (APPEALS) DIRECTE D ALLOWANCE OF THE AMOUNT. AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. 7. BEFORE US, THE LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT ON PERUSAL OF PAGE-14 OF THE ASSESSEES PAPER BOOK, IT CAN BE SEEN THAT THE ASSESSEE HAS RECEIVED SERVICE CHARGES AND FROM PAGE -11, THAT THE AUDITORS M/S. IGLOO DAIRY SERVICES P. LTD. 5 HAVE STATED AT PARA-4(III) THAT THE COMPANY RENDERE D SERVICES TO ITS CUSTOMERS FOR PASTEURISATION AND PACKING OF THE LIQ UID MILK AND COLD STORAGE OF LIQUID MILK AND OTHER GOODS WHICH INDICATE THAT THE ASSESSEE RENDERED SERVICES OF PASTEURISATION AND PACKING OF LIQUID MI LK. HE REFERRED TO PAGE-70 OF THE ASSESSEES PAPER BOOK WHICH IS AT PAGE-2 OF THE AGREEMENT BETWEEN THE ASSESSEE AND THE DUDH SANGH, WHEREIN AT PARA-2 OF THE SAID AGREEMENT PLANS FOR SETTING UP OF A MILK PACKING CENTRE IS RE CORDED. HE FURTHER RELIED ON PARA-(C) AT PAGE-11 OF THE AGREEMENT WHERE CHARGES ARE TO BE LEVIED BASED ON MILK PACKED. HE SUBMITTED THAT THIS IS A CASE WH ERE THE ASSESSEE IS INVOLVED IN PACKING OF MILK. HE ARGUED THAT A BREAK -UP SHOULD BE GIVEN BY THE ASSESSEE AND RELIEF COULD BE GRANTED ONLY TO TH E EXTENT OF CHARGES RELATABLE TO COLD STORAGE. 8. ON GROUNDS NO.2 AND 3, THE LEARNED DEPARTMENTAL REP RESENTATIVE RELIED ON THE FINDINGS OF THE ASSESSING OFFICER. 9. LEARNED COUNSEL FOR THE ASSESSEE, ON THE OTHER HAND , TOOK THIS BENCH TO THE VARIOUS CLAUSES OF THE AGREEMENT AS WELL AS THE SUPPLEMENTARY AGREEMENT TO DEMONSTRATE THAT THE ASSESSEE HAS NOTH ING TO DO WITH PACKING OR PASTEURISATION OF MILK. HE READ VARIOUS CLAUSES OF THE AGREEMENT AND SUBMITTED THAT IT IS THE DUDH SUNGH WHICH PURCHASED THE PACKING MACHINERY, EMPLOYED ITS WORKERS, GOT THE MILK PACKED AND THERE AFTER, SUCH PACKED MILK WAS HANDED OVER TO THE ASSESSEE FOR STORAGE. HE POI NTED OUT THAT SIMILAR IS THE ACTIVITY OF PASTEURISATION. 10. ON THE ISSUE OF LEVY OF CHARGES, HE POINTED OUT THA T IT WAS JUST A UNIT OF MEASUREMENT. HE ALSO DREW THE ATTENTION OF THE BENC H TO THE CERTIFICATE GIVEN BY DUDH SUNGH WHICH IS PLACED AT PAGE-116 OF THE PAPER BOOK. HE RELIED ON THE FINDINGS OF THE COMMISSIONER (APPEALS ). ON FACTS, THE ASSESSEE HAS NO INCOME WHATSOEVER FROM PACKING OF MILK AND P ASTEURISATION OF MILK. 11. ON GROUNDS NO.2 AND 3, HE RELIED ON THE ORDER OF TH E COMMISSIONER (APPEALS). M/S. IGLOO DAIRY SERVICES P. LTD. 6 12. RIVAL CONTENTIONS HEARD. ON A CAREFUL CONSIDERATION OF THE FACTS AND CIRCUMSTANCES OF THE CASE AND ON A PERUSAL OF THE P APERS ON RECORD, WE FIND THAT THE AGREEMENT DATED 11 TH MAY 1992, BETWEEN THE ASSESSEE AND KOLHAPUR SAHAKARI DUDH UDPADAK SUNGH LTD. (FOR SHOR T DUDH SUNGH ) IS PLACED AT PAGES-69 TO 90 OF THE PAPER BOOK. THE SUP PLEMENTARY AGREEMENT IS FROM PAGE-91 TO 115 OF THE PAPER BOOK. A PERUSAL OF THIS AGREEMENT CLEARLY DEMONSTRATES THAT THE ASSESSEE IS ONLY INVO LVED IN COLD STORAGE ACTIVITY. DUDH SUNGH INSTALLED ITS OWN MACHINERY FO R MILK PACKING. THE CONTRACTUAL OBLIGATION OF THE ASSESSEE IS ONLY TO S TORE THE CHILLED MILK AND TO RENDER EFFICIENT STORING FACILITY. 13. COMING TO THE ACTIVITY OF PACKING AT CLAUSE A3 AT PAGE-5, IT IS CLEARLY STATED THAT DUDH SUNGH SHALL PROVIDE AND INSTALL AT ITS OWN COST OF DIARY RELATED EQUIPMENT SUITABLE FOR PACKING. THESE ARE T HE PROPERTY OF DUDH SUNGH, THE FUNCTIONAL RESPONSIBILITIES ARE GIVEN IN CLAUSE (B) FROM PAGES-6 TO 9 OF THE AGREEMENT. EVEN IN THE SUPPLEMENTARY AGREE MENT, THE EQUIPMENT REQUIRED FOR PASTEURISATION MILK IS OF DUDH SUNGH. THUS, AT PAGE-8 / PARA-C- 10 OF THE SUPPLEMENTARY AGREEMENT, IT IS HELD AS FO LLOWS:- C-10 THE DUDH SUNGH WILL RECEIVE, HANDLE, PASTEURIS E, PACK, STORE AND DISTRIBUTE MILK AND ENGAGE LABOUR TO DO SO EITH ER DIRECTLY OR THROUGH ITS OWN CONTRACTORS AT ITS OWN COST, PROFIT , LOSS, BENEFIT AND CONSEQUENCE. 14. THUS, THE FUNCTIONS OF DUDH SUNGH AND THE ASSESSEE ARE DEFINED IN CLEAR TERMS VIDE THESE AGREEMENTS. AS FAR AS CLAUSE ON CHARGES IS CONCERNED, IT IS ONLY THE METHODOLOGY DEVISED FOR QUANTIFYING THE CHARGES AND IT DOES NOT INDICATE THAT THE ASSESSEE IS RENDERING SERVICE S OTHER THAN COLD STORAGE. THUS, WE UPHOLD THE FINDINGS OF THE FIRST APPELLATE AUTHORITY AND DISMISS THE GROUND RAISED BY THE REVENUE. 15. COMING TO GROUND NO.2, WHICH IS ON THE ISSUE OF SEC OND NOTICE UNDER SECTION 148 OF THE ACT, WE UPHOLD THE FINDINGS OF T HE FIRST APPELLATE AUTHORITY. WHEN THE ASSESSMENT IS ALREADY RE-OPENED, NO SECOND NOTICE CAN BE ISSUED. THUS, THIS GROUND IS DISMISSED. M/S. IGLOO DAIRY SERVICES P. LTD. 7 16. ON GROUND NO.3, THE COMMISSIONER (APPEALS), VIDE PA RA-2/PAGE-4, HELD AS FOLLOWS:- 2. THE SECOND GROUND OF APPEAL IS AGAINST THE FINDI NG OF THE ASSESSING OFFICER THAT INCOME DERIVED FROM REDEMPTION OF UNIT S OF MUTUAL FUNDS IS REQUIRED TO BE TAXED AS INCOME UNDER THE HEAD OTHE R SOURCES. THE ASSESSING OFFICER HAS NOT GIVEN ANY DETAILED REASON S FOR ARRIVING AT THIS CONCLUSION. HE HAS SIMPLY OBSERVED IN THE ORDER THA T SUCH AN INCOME BEARS THE CHARACTER OF INTEREST AND AS SUCH HAS TO BE BROUGHT TO TAX UNDER THE HEAD INCOME FROM OTHER SOURCES. I AM NO T IN AGREEMENT WITH THE ARGUMENTS OF THE AO. WHAT IS UNDER CONSIDE RATION ARE A CAPITAL ASSET, TRANSFER THEREOF RESULTING INTO CAPI TAL GAINS. MOREOVER, THIS ISSUE IS ARISING FROM THE SECOND NOTICE U/S. 1 48 WHICH I HAVE ALREADY HELD TO BE NOT A VALID NOTICE. THE ASSESSIN G OFFICER IS THEREFORE DIRECTED NOT TO TREAT THE INCOME AS INTEREST TAXABL E UNDER THE HEAD INCOME FROM OTHER SOURCES. THE INCOME SHALL CONTI NUE TO BE TAXED AS CAPITAL GAINS AS CLAIMED BY THE APPELLANT. 17. WE AGREE WITH THE AFORESAID FINDINGS OF THE COMMIS SIONER (APPEALS) AND DISMISS THE GROUND RAISED BY THE REVENUE. 18. IN THE RESULT, REVENUES APPEAL IS DISMISSED. WE NOW TAKE UP REVENUES APPEAL IN ITA NO.6695/MUM. /2010, FOR ASSESSMENT YEAR 2002-03. 19. THE SOLE GROUND RAISED BY THE REVENUE IS WHETHER OR NOT THE COMMISSIONER (APPEALS) WAS JUSTIFIED IN DELETING TH E DISALLOWANCE OF CLAIM MADE BY THE ASSESSEE UNDER SECTION 80IA OF ` 78,25,872. 20. THE FACTS OF THIS GROUND ARE SIMILAR TO THE FACTS O F THE GROUND DECIDED BY US IN THE REVENUE IN ITA NO.14/MUM./2008, FOR AS SESSMENT YEAR 2001- 02. CONSISTENT WITH THE VIEW TAKEN THEREIN, WE UPHO LD THE FINDINGS OF THE COMMISSIONER (APPEALS) AND DISMISS THE GROUND RAISE D BY THE REVENUE. 21. IN THE RESULT, REVENUS APPEAL IS DISMISSED. WE NOW TAKE UP ASSESSEES CROSS OBJECTION NO.185/MU M./2011, ARISING OUT OF REVENUES APPEAL IN ITA NO.6695/MUM. /2010, FOR ASSESSMENT YEAR 2002-03. M/S. IGLOO DAIRY SERVICES P. LTD. 8 22. AFTER HEARING BOTH THE PARTIES, WE FIND THAT THE AS SESSMENT ORDER WAS RE-OPENED AFTER PROCESSING THE RETURN OF INCOME UND ER SECTION 143(1) OF THE ACT. THE ASSESSEES ARGUMENT THAT THERE IS A CHANGE IN OPINION CANNOT BE ENTERTAINED IN VIEW OF THE JUDGMENT OF HON'BLE SUPR EME COURT IN ACIT V/S RAJESH JHAVERI STOCK BROKERS P. LTD., [2007] 291 IT R 500 (SC). THE HON'BLE SUPREME COURT HELD AS FOLLOWS:- HELD, ACCORDINGLY, THAT THE ASSESSING OFFICER HAD J URISDICTION TO ISSUE NOTICE UNDER SECTION 148 FOR BRINGING TO TAX INCOME ESCAPING ASSESSMENT IN AN INTIMATION UNDER SECTION 143(1)(A) ON THE GROUND THAT THE CLAIM FOR BAD DEBTS BY THE ASSESSEE WAS NO T ACCEPTABLE AS THE CONDITIONS FOR ALLOWANCE SPECIFIED IN SECTION 36(1) (VII) AND (2) WERE NOT FULFILLED. DECISION OF THE GUJARAT HIGH COURT IN RAJESH JHAVER I STOCK BROKERS P. LTD. V. ASST. CIT [2006] 284 ITR 593 REVERSED. 23. RESPECTFULLY FOLLOWING THE AFORESAID JUDGMENT OF TH E HON'BLE SUPREME COURT, WE DISMISS THE GROUND RAISED BY THE ASSESSEE IN ITS CROSS OBJECTION. 24. IN THE RESULT, ASSESSEES CROSS OBJECTION IS DISMIS SED. ORDER PRONOUNCED IN THE OPEN COURT ON 25 TH MAY 2012 SD/- R.S. PADVEKAR JUDICIAL MEMBER SD/- J. SUDHAKAR REDDY ACCOUNTANT MEMBER MUMBAI, DATED: 25 TH MAY 2012 COPY TO : (1) THE ASSESSEE; (2) THE RESPONDENT; (3) THE CIT(A), MUMBAI, CONCERNED; (4) THE CIT, MUMBAI CITY CONCERNED; (5) THE DR, I BENCH, ITAT, MUMBAI. TRUE COPY BY ORDER PRADEEP J. CHOWDHURY ASSISTANT REGISTRAR SR. PRIVATE SECRETARY ITAT, MUMBAI BENCHES, MUMBAI