ACIT, Chandigarh V. M/s Pb. State Co-op Supply & Marketing Federation Ltd., Chandigarh

ITA 1011/CHANDI/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 64071 (ITAT-CHANDIGARH)
• Duration Of Justice: 2 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-12-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 05-10-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: JYOTI KUMARI
• Assessee Lawyers: R K GOEL
• Keywords: Business expenditure
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH A, CHANDIGARH BEFORE SHRI T.R.SOOD, ACCOUNTANT MEMBER AND MS. SUSHMA CHOWLA, JUDICIAL MEMBER ITA NO. 1011/CHD/2012 (ASSESSMENT YEAR : 2009-10) THE A.C.I.T., VS. PB. STATE CO-OP SUPPLY & CIRCLE 4(1), MARKETING FEDERATION LTD., CHANDIGARH. PLOT NO.4, SECTOR 35B, CHANDIGARH. PAN: AAAAT3454G (APPELLANT) (RESPONDENT) APPELLANT BY : SMT.JYOTI KUMARI, DR RESPONDENT BY : SHRI R.K.GOEL DATE OF HEARING : 13.12.2012 DATE OF PRONOUNCEMENT : 18.12.2012 O R D E R PER SUSHMA CHOWLA, J.M, : THE APPEAL FILED BY THE REVENUE IS AGAINST THE ORDE R OF THE COMMISSIONER OF INCOME-TAX (APPEALS), CHANDIGARH DA TED 13.07.2012 RELATING TO ASSESSMENT YEAR 2009-10 AGAINST THE ORD ER PAPSPSED U/S 143(3) OF THE INCOME TAX ACT, 1961 (IN SHORT THE A CT). 2. THE GROUNDS OF APPEAL RAISED BY THE REVENUE READ S AS UNDER: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD. CIT(A) HAS ERRED IN ALLO WING APPEAL OF THE ASSESSEE WITHOUT APPRECIATING THE FACTS O F THE CASE. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD. CIT(A) HAS ERRED IN DELETING THE INT EREST OF RS.17,01,32,989/-ON THE AMOUNT RECEIVABLE FROM PUNJ AB GOVERNMENT WHILE PAYING INTEREST ON LOANS RAISED TO RUN THE BUSINESS. 2 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD. CIT(A) HAS ERRED IN DELETING THE INTE REST OF RS.91,93,68,719/-ON THE AMOUNT RECEIVABLE FROM FCI WHILE PAYING INTEREST ON LOANS RAISED TO RUN THE BU SINESS. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND, IN LAW, THE CIT(A) HAS ERRED IN DELETING THE ADDITI ON OF RS.L6,98,046/-MADE BY THE ASSESSING OFFICER ON ACCO UNT OF ADVERTISEMENT EXPENSES CLAIMED AS THERE WERE NO BUSINESS EXIGENCIES FOR INCURRING SUCH EXPENDITUR E. 5. IT IS PRAYED THAT THE ORDER OF THE LD. CIT (A) BE S ET ASIDE AND THAT OF ASSESSING OFFICER MAY BE RESTORED. 6. THE APPELLANT CRAVES LEAVE TO ADD OR AMEND ANY GROU NDS OF APPEAL BEFORE THE APPEAL IS HEARD OR IS DISPOSED OFF. 3. THE LEARNED A.R. FOR THE ASSESSEE MOVED AN APPLI CATION FOR ADJOURNMENT WHICH WAS REFUSED AS THE ISSUE STANDS C OVERED BY THE ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE IN THE EARLI ER YEARS . 4. WE HAVE PERUSED THE RECORD AND FOUND THAT THE TR IBUNAL IN ITA NOS.802 & 875/CHD/2009 RELATING TO ASSESSMENT YEAR 2006-07 VIDE ORDER DATED 30.6.2010 AND THEREAFTER IN ITA NOS. 548 & 57 9/CHD/2011 RELATING TO ASSESSMENT YEAR 2007-08 VIDE ORDER DATED 30.9.20 11 HAD ADJUDICATED IDENTICAL ISSUES RAISED BEFORE US. THE CIT (APPEAL S) IN DECIDING THE APPEAL RELATING TO THE CAPTIONED ASSESSMENT YEAR HA S IN TURN RELIED UPON THE ORDERS OF THE TRIBUNAL IN THE PRECEDING YEARS A ND ALLOWED THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE. THE REVE NUE IS IN APPEAL AGAINST THE SAME. WE PROCEED TO DECIDE THE APPEAL OF THE REVENUE IN PARAS HEREIN BELOW. 5. THE GROUND NO.1 RAISED BY THE REVENUE IS GENERAL AND THE SAME IS DISMISSED. 6. THE ISSUE IN GROUND NOS. 2 AND 3 IS AGAINST THE ADDITION OF INTEREST CHARGED ON AMOUNT RECEIVABLE FROM PUNJAB GOVERNMENT AND FCI. THE FACTS RELATING TO THE ISSUE ARE THAT THE ASSESSEE H AD SHOWN THE AMOUNT RECEIVABLE BOTH FROM PUNJAB GOVERNMENT AND FCI. TH E PLEA OF THE 3 ASSESSEE THAT THE SAID AMOUNTS WERE RECEIVABLE ON A CCOUNT OF BUSINESS TRANSACTED DURING THE YEAR, WAS REJECTED BY THE ASS ESSING OFFICER. THE ASSESSEE HAD SHOWN RECOVERY OF RS.2,43,04,61,285/- FROM STATE GOVERNMENT. THE ASSESSING OFFICER WAS OF THE VIEW THAT THE ASSESSEE WAS NOT DOING ANY BUSINESS WITH THE PUNJAB STATE GO VERNMENT, INSTEAD HAD PAID AMOUNT ON BEHALF OF THE STATE GOVERNMENT, WHICH WAS SHOWN RECOVERABLE IN FORM OF ID CESS, GUARANTEE FEE, PADD Y CLAIM OUT OF TURN RATION OF PADDY. THE ASSESSING OFFICER OBSERVED TH AT THE ASSESSEE HAD DIVERTED ITS FUNDS TO STATE GOVERNMENT INTEREST FRE E AND AT THE SAME TIME WAS PAYING INTEREST TO VARIOUS BANKS ON LOANS RAISE D BY IT. THE ASSESSING OFFICER FURTHER OBSERVED THAT EVEN THE ST ATE GOVERNMENT CHARGES COSTS/INTEREST FROM THE MARKFED. APPLYING THE RATIO LAID DOWN BY THE HON'BLE PUNJAB & HARYANA HIGH COURT IN ABHIS HEK INDUSTRIES LTD. VS. CIT [(286 ITR 1)(P&H)], IN THE ABSENCE OF ANY C OMMERCIAL EXPEDIENCY, THE ASSESSING OFFICER HELD THAT THE INT EREST @ 7% ON THE ABOVESAID ADVANCES AMOUNTING TO RS.17,01,32,289/- W AS TO BE DISALLOWED. THE CIT (APPEALS) ALLOWED THE CLAIM OF THE ASSESSEE FOLLOWING THE ORDER OF THE TRIBUNAL RELATING TO ASS ESSMENT YEAR 2006-07. THE RELEVANT EXTRACT OF THE ORDER OF THE TRIBUNAL I S REPRODUCED UNDER PARA 4.2 OF THE ORDER OF THE CIT (APPEALS). 7. WE FIND THAT THE ISSUE RAISED IN THE PRESENT GRO UNDS OF APPEAL IS IDENTICAL TO THE ISSUE RAISED BEFORE THE TRIBUNAL I N ASSESSEES OWN CASE IN APPEALS FILED BY THE REVENUE RELATING TO ASSESSM ENT YEARS 2006-07 AND 2007-08. 8. IN THE PRESENT FACTS AND CIRCUMSTANCES THE ISSUE BEING IDENTICAL TO THE ISSUE RAISED BEFORE THE TRIBUNAL IN ASSESSMENT YEAR 2006-07 AND THE CIT (APPEALS) IN THE PRESENT CASE HAVING FOLLOWED T HE ABOVE SAID RATIO, 4 WE ARE IN AGREEMENT WITH THE ORDER OF THE CIT(A). U PHOLDING THE SAME WE DISMISS GROUND NO.4 RAISED BY THE REVENUE. 9. THE ISSUE RAISED VIDE GROUND NO.3 IS IN CONNECTI ON WITH THE INTEREST CHARGED ON THE AMOUNT RECEIVABLE FROM FCI. THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS NOTED THAT GUARANT EE FEE, INTEREST STRUCTURE DEVELOPMENT, CESS AND SUCH OTHER LIABILIT IES OF FCI WERE BORNE BY THE ASSESSEE AND THE AMOUNT RECOVERABLE FROM FCI WAS ALSO INCREASING. ON THE OTHER HAND, THE ASSESSEE WAS PA YING INTEREST BY RAISING LOANS TO RUN THE BUSINESS. THE ASSESSING O FFICER DISALLOWED THE INTEREST @ 7% ON ADVANCE OF 13,13,38,38,843/- AMOUN TING TO RS.91,93,68,719/- AND ADDED THE SAME TO THE INCOME OF THE ASSESSEE. THE FACTS IN THE PRESENT CASE ARE IDENTICAL TO THE FACTS RELATING TO ASSESSMENT YEARS 2006-07 & 2007-08 AND FOLLOWING TH E ORDER OF THE TRIBUNAL (SUPRA) IN ASSESSEES OWN CASE, THE ORDER OF CIT (APPEALS) IS UPHELD. THE CIT(APPEALS) HAD DECIDED THE ISSUE IN LINE WITH THE ISSUE RAISED IN RELATION TO THE AMOUNT DUE FROM STATE GOV ERNMENT. FOLLOWING THE RATIO LAID DOWN BY THE TRIBUNAL AS REFERRED TO BY US IN PARAS HEREINABOVE, WE ARE IN AGREEMENT WITH THE ORDER OF THE CIT(APPEALS) AND DISMISS THE GROUND NO.3 OF APPEAL RAISED BY THE REV ENUE. 10. THE ISSUE IN GROUND NO.4 RAISED BY THE REVENUE IS AGAINST THE DELETION OF ADDITION OF RS.16,98,046/-. THE ASSESS ING OFFICER ON PERUSAL OF THE ADVERTISEMENT EXPENSES WHICH ARE INCORPORATE D UNDER PARA 2 OF THE ASSESSMENT ORDER OBSERVED THAT THOUGH THE TRIBUNAL HAD ALLOWED THE CLAIM IN PRECEDING YEAR, THE DEPARTMENT HAD PREFERR ED APPEAL BEFORE THE HON'BLE HIGH COURT. ACCORDINGLY, A SUM OF RS. 16,9 8,046/- WAS DISALLOWED BY THE ASSESSING OFFICER. THE CIT(APPEA LS) NOTED THAT SIMILAR ISSUE AROSE BEFORE THE TRIBUNAL IN ASSESSME NT YEAR 2007-08 IN ITA NO.548 & 579/CHD/2011 AND VIDE ORDER DATED 30.0 9.2011 THE 5 EXPENDITURE WAS ALLOWED AS BUSINESS EXPENDITURE. P ARA 22 OF THE ORDER OF THE TRIBUNAL READS AS UNDER: 22. WE FIND THAT THE PRESENT ISSUE RAISED VIDE GRO UND NO.6 IS IDENTICAL TO THE ISSUE RAISED BEFORE THE TRIBUNAL IN ASSESSMENT YEAR 2005-06 AND FOLLOWING THE RATIO LAID DOWN BY THE TRIBUNAL WE UPHOLD THE ORDER OF THE CIT(APPEALS). FOR THE SAKE OF BREVITY WE ARE NOT REPRODUCING THE EXTRACT OF THE ORDER OF THE TRIBUNAL WHICH IS INCORPORATED AT PAGES 12 AND 13 OF THE APPELLATE ORDER THOUGH A REFERENCE IS BEING MADE TO THE SAME. GROUND NO.6 RAISED BY THE REVENUE IS THUS DISMISSED. 11. THE ISSUE IN THE PRESENT APPEAL IS IDENTICAL TO THE ISSUE RAISED IN THE EARLIER YEARS AND FOLLOWING THE RATIO LAID DOWN BY THE TRIBUNAL IN ASSESSEES OWN CASE WE DISMISS GROUND NO.4 RAISED B Y THE REVENUE. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMIS SED. ORDER PRONOUNCED IN THE OPEN COURT ON 18 TH DAY OF DECEMBER, 2012. SD/- SD/- (T.R.SOOD) (SUSHMA CHOWLA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 18 TH DECEMBER, 2012 *RATI* COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT(A)/TH E CIT/THE DR. ASSISTANT REGISTRAR, ITAT, CHANDIGARH