A.P. State Agro Industries Development Corpn Ltd., Hyderabad V. Dy.CIT, Circle 1(1), Hyderabad

CO 19/HYD/2014

• Counselvise Citation: [2015] 123 COUNSELVISE.COM (IT) 0221 (ITAT-HYDERABAD)
• Duration Of Justice: 9 month(s) 11 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 02-01-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2004-2005
• Appeal Filed On: 21-03-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: D SUDHAKAR RAO
• Assessee Lawyers: S RAMA RAO
• Section: 143(3); 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES B : HYDERABAD BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER ITA.NO.1684/HYD/2013 ASSESSMENT YEAR 2004-2005 THE DCIT, CIRCLE 1(1) HYDERABAD. VS. M/S. A.P. STATE AGRO INDUSTRIES DEVELOPMENT CORPN. LTD., HYDERABAD. PAN AABCA7378R (APPELLANT) (RESPONDENT) CROSS OBJECTION NO.19/HYD/2014 ARISING OUT OF ITA.NO.1684/HYD/2013 ASSESSMENT YEAR 2004-2005 M/S. A.P. STATE AGRO INDUSTRIES DEVELOPMENT CORPN. LTD., HYDERABAD. PAN AABCA7378R VS. THE DCIT, CIRCLE 1(1) HYDERABAD. (CROSS OBJECTOR) (RESPONDENT) FOR REVENUE : MR. D. SUDHAKAR RAO FOR ASSESSEE : MR. S. RAMA RAO DATE OF HEARING : 11.12.2014 DATE OF PRONOUNCEMENT : 02 .01.2015 ORDER PER B. RAMAKOTAIAH, A.M. THE APPEAL BY REVENUE IS AGAINST THE ORDER OF LD. CIT(A)-II, HYDERABAD DATED 24.09.2013. ASSESSEE RAI SED CROSS OBJECTIONS MAINLY IN SUPPORT OF THE ORDER OF LD. CI T(A) WHILE ALSO CONTENDING THAT LD. CIT(A) OUGHT TO HAVE HELD THAT THE AMOUNTS DISALLOWED ARE ALLOWABLE AS DEDUCTION. 2 ITA.NO.1684/HYD/2013 M/S. AP STATE AGRO INDUSTRIES DEVELOPMENT CORP. LTD ., HYDERABAD. 2. BRIEF FACTS OF THE CASE ARE THAT ASSESSEE IS A PUBLIC SECTOR UNDERTAKING OWNED BY GOVERNMENT OF ANDHRA PR ADESH. IT HAS FILED RETURN OF INCOME WHICH WAS SCRUTINIZED UNDER SECTION 143(3) DATED 31.08.2006. A.O. EXAMINED THE CLAIM OF DEDUCTION UNDER SECTION 35DDA NOT ONLY IN THIS YEAR BUT ALSO OF EARLIER YEARS AND MADE DISALLOWANCE OF AN AMOUNT OF RS.3,83,768. THIS ISSUE WAS SUBJECT MATTER OF APPEA L BEFORE THE LD. CIT(A)-II, HYDERABAD WHO CONFIRMED DISALLOW ANCE MADE BY A.O. VIDE HIS ORDER DATED 02.01.2008. HOWEVER, A .O. VIDE ORDER UNDER SECTION 154 DATED 08.04.2009 DISALLOWED EX-GRATIA PAYMENT OF RS.1,09,96,117 AND RS.42,075 ON THE GROU ND THAT THESE PAYMENTS RELATE TO A.YS. 1998-99 AND 1999-200 0 RESPECTIVELY AND THE PROVISION OF SECTION 35DDA ARE APPLICABLE ONLY W.E.F. 01.04.2001 I.E., FOR A.Y. 2001-2002. AG GRIEVED, OF SUCH ORDER, ASSESSEE PREFERRED APPEAL BEFORE THE LD . CIT(A). LD. CIT(A) CONSIDERED SUBMISSIONS AND ALSO THE FACT THA T ISSUES WERE CONSIDERED IN THE ORDER UNDER SECTION 143(3) H ELD THAT A.O. CANNOT RECTIFY ORDER UNDER SECTION 154. LD. CI T(A) ORDER IN PARA 6 IS AS UNDER : 6. THE CRUX OF THE ISSUE IS, ACCORDING TO THE A.O. IF THE PAYMENT RELATE TO A.Y. 2004-05, THEN ONLY IT IS ALL OWABLE U/S.35DDA. ACCORDING TO THE APPELLANT, EVEN IF THE EXPENDITURE PERTAIN TO EARLIER YEARS, IT CAN STILL BE CLAIMED. IT IS LEGALLY WELL SETTLED THAT THE DEBATABLE ISSUE S AND ISSUES WHICH ARE PRONE TO MULTIPLE INTERPRETATIONS CANNOT BE RECTIFIED U/S.154. EVEN OTHERWISE, IDENTICAL ISS UE WAS ALREADY CONSIDERED BY THE CIT(A), WHEREIN 1/5 TH OF CLAIM OF LEAVE ENCASHMENT AND GRATUITY WERE HELD ALLOWABL E. IT IS LEGALLY WELL SETTLED PRINCIPLE THAT ANY ISSUE WH ICH IS SUBJECT MATTER OF APPEALS CANNOT BE CONSIDERED U/S. 154. FURTHER, 1/5 TH OF EX-GRATIA WAS ALREADY ALLOWED IN EARLIER ASSESSMENT YEARS IN A.Y. 2002-03. KEEPING ALL THESE FACTS IN VIEW, I CONSIDER THE ISSUE IS NOT IN THE DOMAIN OF SECTION 154 OF I.T. ACT. THEREFORE, DISALLOWANCE OF EX-GRAT IA IS NOT UPHELD. 3 ITA.NO.1684/HYD/2013 M/S. AP STATE AGRO INDUSTRIES DEVELOPMENT CORP. LTD ., HYDERABAD. 3. AFTER CONSIDERING THE RIVAL CONTENTIONS, WE DO NOT SEE ANY MERIT IN REVENUE APPEAL. AS CAN BE SEEN FRO M THE ASSESSMENT ORDER PASSED IN THIS REGARD, A.O. VIDE P ARAS 2 AND 3 DISCUSSED PROVISIONS OF SECTION 35DDA, CLAIMS MAD E BY ASSESSEE AND DISALLOWED AN AMOUNT OF RS.3,83,768 WH ICH WAS CONFIRMED BY LD. CIT(A). IN VIEW OF THIS, PRESENT A .O. IS NOT COMPETENT TO MODIFY ORDER UNDER SECTION 154 ON A DI FFERENT INTERPRETATION. THEREFORE, WE SUPPORT THE ORDER OF LD. CIT(A) AND DISMISS REVENUE GROUNDS. SINCE, CROSS-OBJECTION IS IN SUPPORT OF LD. CIT(A) ORDER, CROSS OBJECTION BECOME S ACADEMIC IN NATURE. HENCE, THE SAME IS DISMISSED. 4. IN THE RESULT, BOTH APPEAL OF THE REVENUE AND CROSS OBJECTION OF THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 02.01.2015. SD/- SD/- (SAKTIJIT DEY) (B.RAMAKOTAIAH) JUDICIAL MEMBER ACCOUNTANT MEMBER HYDERABAD, DATED 02 ND JANUARY, 2015 VBP/- COPY TO 1. THE DCIT, CIRCLE 1(1), 4 TH FLOOR, AAYAKAR BHAVAN, BASHEERBAGH, HYDERABAD. 2. M/S. A.P. STATE AGRO INDUSTRIES DEVELOPMENT CORPN. LTD., 504, HERMITAGE OFFICE COMPLEX, HILL FORT ROAD, HYDE RABAD. 3. CIT(A)-II, HYDERABAD. 4. CIT-I, HYDERABAD 5. D.R. ITAT B BENCH, HYDERABAD.