Mula S.S.K. Ltd., Ahmednagar V. Deputy Commissioner of Income-tax,

ITA 1021/PUN/2014

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 1005 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 5 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-10-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 1992-1993
• Appeal Filed On: 15-05-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DIVYA BAJPAI; HITENDRA NINAWE
• Assessee Lawyers: K SRINIVASAN
• Keywords: Business expenditure

Judgement Text

] IQ.KS ] IQ.KS ] IQ.KS ] IQ.KS IQ.KS IQ.KSIQ.KS IQ.KS IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE . . , , ' # BEFORE SHRI R.K. PANDA, AM AND SHRI VIKAS AWASTHY, JM . / ITA NOS.1021 & 1022/PN/2014 '% % / ASSESSMENT YEARS : 1992-93 & 1994-95 MULA SAHAKARI SAKHAR KARKHANA LTD., AT POST SONAI, TALUKA NEWASA, DISTRICT : AHMEDNAGAR-414 105 PAN NO.AAAAM1145M . / APPELLANT V/S DCIT, AHMEDNAGAR CIRCLE, AHMEDNAGAR . / RESPONDENT / ASSESSEE BY : SHRI K. SRINIVASAN / RESPONDENT BY : SMT. DIVYA BAJPAI & SHRI HITENDRA NINAWE / ORDER PER R.K. PANDA, AM : THE ABOVE 2 APPEALS FILED BY THE ASSESSEE ARE DIRECTED A GAINST THE COMMON ORDER DATED 28-02-2014 OF THE CIT(A)-IT/TP , PUNE RELATING TO ASSESSMENT YEARS 1992-93 & 1994-95 RESPEC TIVELY. SINCE COMMON ISSUES ARE INVOLVED IN BOTH THESE APPEALS, TH EREFORE, / DATE OF HEARING :26.10.2015 / DATE OF PRONOUNCEMENT:26.10.2015 2 ITA NO.1021 & 1022/PN/2014 THESE WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS COMMON ORDER. 2. THE ASSESSEE IN THE GROUNDS OF APPEAL HAS CHALLENGED THE ORDER OF THE CIT(A) IN CONFIRMING THE ADDITION MADE BY THE AO ON ACCOUNT OF COLLECTION TOWARDS AREA DEVELOPMENT FUND AMO UNTING TO RS.6,95,775/- IN A.Y. 1992-93 AND RS.16,44,743/- IN A.Y. 1994-95. 3. FIRST WE TAKE UP ITA NO.1021/PN/2014 FOR A.Y. 1992-93 AS THE LEAD CASE. FACTS OF THE CASE, IN BRIEF, ARE THAT ORIGIN AL ASSESSMENT FOR THE IMPUGNED ASSESSMENT YEAR WAS COMP LETED U/S.143(3) ON 30-09-1994 ON TOTAL INCOME OF NIL AFTER SET OFF OF UNABSORBED LOSSES. WHILE COMPLETING ASSESSMENT THE DEDUC TION ON ACCOUNT OF AREA DEVELOPMENT FUND AT RS.6,95,775/- WAS NO T ALLOWED RELYING ON THE DECISION IN THE CASES OF CIT (UP-II) VS. BAZPUR COOPERATIVE SUGAR FACTORY. IN APPEAL THE CIT(A) UPHELD THE DISALLOWANCE. THE TRIBUNAL SUBSEQUENTLY RESTORED THE ISSU E TO THE FILE OF THE AO TO DECIDE THE ISSUE DENOVO AFTER CONSIDERING THE NATURE OF RECEIPTS AND EXPENDITURE AS DIRECTED BY HONB LE SUPREME COURT IN THE CASE OF SIDDESHWAR SSK LTD. VS. CIT REPORT ED IN 270 ITR 1. THE AO ACCORDINGLY ISSUED NOTICE TO THE ASSESSE E AND AFTER CONSIDERING THE SUBMISSIONS CONCLUDED THAT THE ASESSEE K ARKHANA HAS NOT INCURRED ANY EXPENDITURE OUT OF THE AREA DEVEL OPMENT FUND. HE ACCORDINGLY DID NOT ALLOW ANY DEDUCTION ON ACCO UNT OF AREA DEVELOPMENT FUND. THE CIT(A) VIDE HIS ORDER DATED 11-01- 2009 UPHELD THE VIEW TAKEN BY THE AO. ON FURTHER APPE AL THE TRIBUNAL FOLLOWING THE DECISION IN THE CASE OF LOKNETE BALAS AHEB DESAI SAHAKARI SAKHAR KARKHANA LTD. VS. DCIT REPORTED I N 148 3 ITA NO.1021 & 1022/PN/2014 ITD 0372 (PUNE) DIRECTED THE AO TO DECIDE THE ISSUE AFTER GETTING ANSWERS TO THE FOLLOWING QUESTIONS : 1. WHAT WAS THE EXACT NATURE OF THE SCHEME PARTICULA RLY IN THE LIGHT OF SECTION 79A OF MAHARASHTRA COOPERATIVE SOCIE TIES ACT? 2. WHAT WAS THE OBLIGATION OF THE SUGAR FACTORY IMPOSE D AND ATTACHED WITH THE SAID COLLECTION? 3. WHAT WAS THE RESOLUTION IN EACH CASE BY THE BOARD O F DIRECTORS AND THE MANNER IN WHICH THE RESOLUTION WAS FOLLOWED BY THE SUGAR FACTORY AND FINALLY WHETHER AREA DEVELOPMENT FUND W AS UTILIZED BY SUGAR FACTORIES; AND 4. WHETHER AREA DEVELOPMENT FUND RECEIPTS WERE AT AL L AN INCOME OF THE ASSESSEE SPECIALLY IF IT WAS IMPRESSED WITH A SPECIF IC LEGAL OBLIGATION TO BE SPENT FOR SPECIFIED PURPOSES. 4. THE AO ACCORDINGLY ASKED THE ASSESSEE TO FURNISH TH E INFORMATION IN THE LIGHT OF THE AFORESAID QUESTIONS. AFTER CONSIDERING THE VARIOUS SUBMISSIONS MADE BY THE ASSESSE E THE AO HELD THAT THE COLLECTION TOWARDS AREA DEVELOPMENT FUND B EARS THE CHARACTER OF INCOME AND THEREFORE ADDITION OF RS.6,95,775/- MADE BY THE AO DOES NOT NEED ANY INFERENCE. (SIMILAR DISALLOWANCE HAS BEEN MADE BY THE AO FOR A.Y. 1994-95 AMOUNTING TO RS.16,44,743/-). 5. IN APPEAL THE LD.CIT(A) UPHELD THE ACTION OF THE AO. W HILE DOING SO, HE HELD THAT THE AMOUNTS COLLECTED TOWARDS ARE A DEVELOPMENT FUND CONSTITUTE INCOME IN THE HANDS OF THE ASSESSEE AND IS LIABLE TO BE INCLUDED AS INCOME IN ITS HANDS. WHILE DOIN G SO, HE RELIED ON THE DECISION OF THE PUNE BENCH OF THE TRIBUNA L IN THE CASE OF ASHOK SSK LTD. VIDE ITA NO.406/PN/2009 ORDER DA TED 27- 07-2010 WHEREIN IT HAS BEEN HELD THAT AREA DEVELOPMENT FUND IS TO BE TREATED AS THE RECEIPTS IN THE HANDS OF THE SSK. HE FURTHER NOTED THAT IT IS ALSO CLEAR FROM THE ORDER OF THE STATE G OVERNMENT THAT SUGAR FACTORIES CAN UTILIZE THE FUND FOR ANY PURPOSE WITH THE 4 ITA NO.1021 & 1022/PN/2014 APPROVAL OF THE DIRECTOR OF SUGAR AND THEREFORE IT CANNOT BE SAID THAT THE RECEIPTS ARE TO BE EARMARKED FOR ANY SPECIFIC P URPOSES. THE SSKS CONCERNED EXERCISE DOMINION OVER THE FUND AND CAN DEAL WITH THE MONEY SUBJECT OF COURCE TO THE GUIDELINES AND R ESTRICTIONS EVOLVED BY THE GOVERNMENT. DISTINGUISHING THE VARIOUS DEC ISIONS CITED BEFORE HIM THE LD.CIT(A) UPHELD THE ACTION OF THE AO IN TAXING THE AREA DEVELOPMENT FUND COLLECTED BY THE ASSESSEE AM OUNTING TO RS.6,95,775/- DURING THE IMPUGNED ASSESSMENT YEAR AND RS.16,44,743/- FOR A.Y. 1994-95. 6. AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE ASSESSEE IS IN APPEAL BEFORE US. 7. THE LD. COUNSEL FOR THE ASSESSEE AT THE OUTSET FILED A COPY OF THE DECISION OF THE PUNE BENCH OF THE TRIBUNAL IN THE CAS E OF LOKNETE BALASAHEB DESAI SAHAKARI SAKHAR KARKHANA LTD. V S. DCIT REPORTED IN 148 ITD 0372 (PUNE) WHEREIN IT HAS BEEN HELD T HAT AMOUNT COLLECTED UNDER THE AREA DEVELOPMENT FUND IS N OT TRADING RECEIPT IN THE HANDS OF THE ASSESSEE WHEN SUCH FUND IS IM PRESSED WITH OBLIGATION TO SPEND SAME FOR SPECIFIED PURPOSES. HE ACCORDINGLY SUBMITTED THAT THIS BEING A COVERED MATTER THE GROUND RAISED BY THE ASSESSEE SHOULD BE ALLOWED. 8. THE LD. DEPARTMENTAL REPRESENTATIVE ON THE OTHER HA ND FAIRLY CONCEDED THAT THE TRIBUNAL HAS DECIDED THE ISSUE IN FAVOU R OF THE ASSESSEE BY THE DECISION OF THE TRIBUNAL. 9. WE HAVE CONSIDERED THE ARGUMENTS MADE BY BOTH THE SIDES. WE FIND AN INDENTICAL ISSUE HAD COME UP BEFORE THE TRIBUNAL IN THE CASE OF LOKNETE BALASAHEB DESAI SAHAKARI SAKHAR KARKHA NA LTD. 5 ITA NO.1021 & 1022/PN/2014 (SUPRA). THE TRIBUNAL AFTER CONSIDERING THE VARIOUS SUBMISSIO NS MADE BY BOTH THE SIDES HELD THAT THE AMOUNT COLLECTED UNDER THE AREA DEVELOPMENT FUND IS NOT TRADING RECEIPT IN THE HAND S OF THE ASSESSEE WHEN SUCH FUND IS IMPRESSED WITH OBLIGATION TO SP END THE SAME FOR SPECIFIED PURPOSES. ACCORDINGLY, THE TRIBUNAL DIREC TED THE AO TO EXCLUDE FULLY THE AMOUNT INCLUDED TOWARDS AREA DEV ELOPMENT FUND IN THE INCOME OF THE ASSESSEE. THE RELEVANT OBSERVATION OF TH E TRIBUNAL FROM PARA 15 ONWARDS READS AS UNDER : 15. BEFORE US THE ARGUMENT OF THE ASSESSEE IS THAT THE C OLLECTION MADE BY THE ASSESSEE TOWARDS THE ADF IS IMPRESSED WITH THE SPECIFIC OBLIGATION TO SPEND THE SAME FOR SPECIFIC PURPOSES. THE DIRECTOR OF SUGAR, MAHARASHTRA STATE VIDE LETTER DATED 28-03-197 4 INFORMED THE MAHARASHTRA RAJYA SAHAKARI SAKHAR KARKHANA SANGH LTD . (FEDERATION OF THE SUGAR FACTORIES) THAT IN THE MINISTERS COMMITTE E MEETING HELD ON 27-08-1973, A DECISION WAS TAKEN THAT THE CO-OPERA TIVE SUGAR FACTORIES SHOULD DEDUCT ADF FROM THE FINAL CANE PRICE AT RS.1/- PER M.T. FROM MEMBERS AND NON-MEMBERS AND THE FACTORIES HA VE BEEN ADVISED NOT TO UTILIZE THE FUND UNLESS SPECIFIC PERMISSIO N OF THIS DIRECTORATE IS OBTAINED. IN THE SAID LETTER THE VIEW OF THE SUGAR FACTORIES WERE ALSO CALLED FOR. SO THIS IS A BEGINNIN G WHEN THE GOVT. MACHINERY STARTED TO HAVE THE CONTROLLED AND THE COL LECTIONS MADE BY THE SUGAR FACTORIES TOWARDS ADF. THE NATIONAL CO-OP ERATIVE DEVELOPMENT CORPORATION (SUGARCANE DIVISION), NEW DE LHI VIDE LETTER DATED 28-04-1977 ISSUED TO ALL THE CO-OPERATIVE SUGAR FACTORIES HAD MADE A DIFFERENCE IN RESPECT OF AREA DEVELOPMENT PRO GRAMME. IT IS IMPRESSED IN THE SAID LETTER THAT THE SUGAR CO-OPERAT IVES ARE INVOLVED IN CANE DEVELOPMENT PROGRAMME IN THE AREA OF OPERAT ION BUT AT THE SAME TIME THE OTHER MAJOR CROPS IN THE AREA ALSO SHOULD BE SUPPORTED. IT WAS ALSO IMPRESSED THAT THE FUNDS CAN BE UTILIZED FOR THE IRRIGATION FACILITIES, EDUCATIONAL AND MEDICAL SERVICE, ANIMAL H USBANDRY AND POULTRY PROGRAMMES AND GENERAL SERVICES LIKE CONTRIBUT ION TOWARDS HOUSING TO THE HOMELESS POOR PEOPLE, PROVIDING RELIEF FOR DIFFERENT NATIONAL CALAMITIES ETC. DEPARTMENT OF CO-OPERATION AND TEXTILE, GOVT. OF MAHARASHTRA ISSUED ORDER DATED 18-09-1989 U/S. 79A O F THE MCS ACT AND GAVE THE DIRECTIONS IN RESPECT OF THE MODALITY OF THE COLLECTION OF THE FUND AND ITS USES. THE SUGAR CO-OPERATIVES WERE DI RECTED THAT THE DEDUCTIONS MADE TOWARDS THE ADF ARE TO BE GENERALLY U SED IN ACCORDANCE TO THE GUIDELINES FROM TIME TO TIME ISSUED BY NATIONAL CO- OPERATIVE DEVELOPMENT CORPORATION (NCDC), NEW DELHI AS WELL AS BY THE GOVT. FOR FOLLOWING PURPOSES AS PER PRIORITY DECID ED BY THE BOARD OF DIRECTORS OF THE FACTORY: (A). AGRICULTURAL DEVELOPMENT AND CANE DEVELOPMENT. (B). WATER SUPPLY AND IRRIGATION, MINOR IRRIGATION AND KT WEIRS, INCLUDING IN PARTNERSHIP OR OTHERWISE WITH THE GOVERNMENT (NO TE FOR KT WEIRS FOLLOW ORDER OF THE GOVERNMENT ISSUED BY IRRIGATION DEPT. SR. NO. 6 ITA NO.1021 & 1022/PN/2014 1088/636/88/LI-1 DATED 31/7/1988 AND ORDERS ISSUED FROM TIME TO TIME BY THAT DEPT.) (C). EDUCATIONAL OR CULTURAL PROGRAMMES, MEDICAL AS SISTANCE, SOCIAL SECURITY PROGRAMMES AND SANATORIUMS. (D). DAIRY AND POULTRY FARMING (E). FINANCIAL ASSISTANCE FOR DROUGHT RELIEF, NATUR AL CALAMITIES AND VARIOUS ECONOMIC DEVELOPMENT PROGRAMMES IMPLEMENTED BY CENT RAL AND STATE GOVERNMENTS AS PER THEIR POLICIES. (F). FOR PURPOSES (A) TO (E) ABOVE BUT OUTSIDE AREA OF OPERATION AND FINANCIAL ASSISTANCE FOR OTHER SPECIFIED PROGRAMMES . (G. PROGRAMMES FOR BENEFIT OF MEMBERS. 16. THE SUGAR FACTORIES WERE DIRECTED TO COMPLY THE FOLLOWING TERMS AND CONDITIONS: (A). MEMBERS SHOULD BE INFORMED IN GENERAL MEETING AS TO HOW AND FOR WHAT PURPOSES THE DEDUCTIONS ARE PLANNED TO BE USED AND APPROVAL FOR THE MEETING BE OBTAINED. (B). THE FUNDS SO COLLECTED SHALL BE SPENT BY THE B OARD OF DIRECTORS AS PER THE POLICY APPROVED IN THE GENERAL MEETING. FOR SP ENDING MONEY PERSONALLY FOR AN INDIVIDUAL, PRIOR PERMISSION OF D IRECTOR OF SUGAR MAY BE TAKEN. HOWEVER, IF A PERSON SUFFERS DAMAGE IN N ATURAL CALAMITIES, THE BOARD OF DIRECTORS CAN UTILIZE THESE FUNDS ON T HE BASIS OF A CERTIFICATE FROM LOCAL REVENUE OFFICER NOT BELOW TH E RANK OF A TAHSILDAR. (C). THE SAID FUND, AS FAR AS POSSIBLE, BE USED WIT HIN ONE YEAR FROM THE TIME THEY ARE CREDIT WITH THE FACTORY. IF FOR ANY REASO N THEY CANNOT BE SO UTILIZED, THEY MAY BE UTILIZED IN NEXT YEAR. (D). SEPARATE ACCOUNT BE MAINTAINED FOR THIS FUND A ND THE SAME SHOULD BE GOT AUDITED FROM THE AUDITOR. (E). EVERY YEAR INFORMATION ON UTILIZATION OF THIS FUND SHOULD BE SUBMITTED TO THE DIRECTOR OF SUGAR, GOVERNMENT OF MAHARASHTRA , PUNE. (F). IF THE FUNDS ARE TO BE USED OUTSIDE AREA OF OP ERATION OR AS AN EXCEPTION FOR A PURPOSE NOT APPROVED BY THE GENERAL MEETING, PRIOR PERMISSION OF DIRECTOR OF SUGAR SHOULD BE OBTAINED. (G). IF THE FUND IS TO BE UTILIZED FOR A PURPOSE NO T SPECIFIED IN THE BY LAWS, PERMISSION OF DIRECTOR OF SUGAR SHOULD BE OBTAINED. 17. IN SUM AND SUBSTANCE THE DIRECTOR OF SUGAR, GOVT. OF MAHARASHTRA WAS THE SUPERVISING AUTHORITY ON THE COLLEC TION AND USE OF ADF. WE HAVE PERUSED THE ANNUAL STATEMENTS OF THE AC COUNT AND WE FIND THAT THE ASSESSEE HAS TRANSFERRED THE FUND IN THE BA LANCE SHEET UNDER SPECIFIC HEAD I.E. AREA DEVELOPMENT FUND. WE ALSO FIND THAT THE ASSESSEE SUGAR FACTORY HAS TO GET THE APPROVAL OF THE MEM BERS OF THE ASSESSEE SOCIETY IN THE ANNUAL GENERAL MEETING AND THEN ONLY THE ADF CAN BE UTILIZED. THE ASSESSEE HAS FILED SOME OF THE RESOL UTION IN THE COMPILATION FROM WHICH IT IS SEEN THAT THE ADF IS USED FOR GIVING INCENTIVE FOR PRIMARY SCHOOL, INCENTIVE FOR WRESTLERS, HELP TO PERSONS AFFECTED BY FIRE, INCENTIVE FOR WAGE, ROAD DEVELOPM ENTS, MEDICAL ASSISTANCE, SUBSIDIARY FOR DIGGING WELLS, ASSISTANCE FOR GRO UP MARRIAGES ETC. IN THIS CASE, THE ASSESSEE HAS NOT KEPT THE AMOUNT DEDUCTED FROM THE BILLS PAYABLE TO THE MEMBERS AND NON-MEMBERS IN SEP ARATE BANK ACCOUNT BUT SEPARATE ACCOUNT IS MAINTAINED IN THE BOO KS. WE HAVE TO KEEP IN MIND THAT IN RESPECT OF THE NATURE OF THIS FU ND THE HON'BLE SUPREME COURT HAS ALREADY OBSERVED THAT PURPOSES FOR WH ICH THIS FUND IS UTILIZED I.E. ADF IS UNCONNECTED WITH THE GROWTH O F SUGAR FACTORY AND THIS FUND IS PROMOTED FOR SOCIO-ECONOMIC DEVELOPMENT IN THE AREA OF OPERATION AND THIS FUND IS DISTINCT FROM THE CANE DEVE LOPMENT FUND. 7 ITA NO.1021 & 1022/PN/2014 18. NOW THE QUESTION BEFORE US IS WHETHER THIS COLLECTI ON MADE TOWARDS ADF BY THE ASSESSEE SUGAR FACTORY IS IMPRESSED WIT H THE SPECIFIC OBLIGATION OR ASSESSEE HOLD THIS MONEY AS A TRUSTE E AS HELD IN THE CASE OF BIJLEE COTTON MILLS (P.) LTD. (SUPRA)? OU R ANSWER IS YES. IN THIS CASE, EVEN IF INITIALLY IT WAS BY WAY OF DISCRETIO N THE SUGAR CO- OPERATIVE FACTORIES WERE COLLECTING THE FUND AND SPEN DING THE SAME ON THE DIFFERENT PROJECTS UNDERTAKEN IN THE AREA OF OPE RATION BUT SUBSEQUENTLY THE COLLECTION AND USE OF FUND WAS REGULAT ED BY THE INTERVENTION OF THE GOVT. BY ISSUING THE ORDER U/S. 79 A OF THE MAHARASHTRA CO-OPERATIVE SOCIETY ACT. THE ASSESSEE HAS MAINTAINED THE SEPARATE ACCOUNT IN RESPECT OF THIS FUND AND AS PER THE STATEMENT FILED BEFORE US IT IS SEEN THAT THE ASSESSEE SUGAR FACTORY IS UTILIZING THE ADF ON DIFFERENT PROJECTS AS PER THE APPROVAL GIVEN I N THE ANNUAL GENERAL MEETING (AGM). THE ASSESSEE HAS TO SUBMIT THE R EPORT EVERY YEAR IN RESPECT OF THE COLLECTION AND UTILIZATION OF THE AMOUNT UNDER THE ADF TO THE GOVERNMENT. NOWHERE, IT IS THE CASE O F THE REVENUE THAT ANY MONEY IS DIVERTED BY THE ASSESSEE SUGAR FACTORY FOR ANY OTHER PURPOSE OTHER THAN APPROVED IN THE AGM OF THE MEMBER S. MERELY BECAUSE THE AMOUNT COLLECTED IS NOT KEPT SEPARATELY I N THE BANK ACCOUNT, THE CHARACTER OF THE AMOUNT WILL NOT CHANG E AS HELD IN THE CASE OF BIJLEE COTTON MILLS (P.) LTD. (SUPRA). AS SUBMITTE D BEFORE US THE ASSESSEE IS REQUIRED TO SUBMIT THE AUDITORS REPORT TO THE DIRECTOR OF SUGAR, GOVT. OF MAHARASHTRA EACH YEAR SHOWING THE OP ENING BALANCE OF THE ADF, AMOUNT COLLECTED DURING THE YEAR AND UTILI ZED DURING THE YEAR (PAGE NO. 29 OF THE COMPILATION). WE, THEREFORE, H OLD THAT THE COLLECTION MADE BY THE ASSESSEE TOWARDS THE ADF BY WAY O F DEDUCTION MADE FROM THE SUGARCANE BILLS PAYABLE TO THE MEMBERS A ND NON- MEMBERS IS IMPRESSED WITH AN OBLIGATION TO SPEND THE SAME FOR THE SPECIFIED PURPOSES AND THE PERSONS/MEMBERS PAYING CONTRI BUTION TO ADF ARE AWARE BEFORE THE DEDUCTION IS MADE THAT FOR WHAT PURPOSE THE ASSESSEE CO-OPERATIVE FACTORY IS COLLECTING THE SAID FUN D AND WHERE THE FUND WILL BE UTILIZED. IN OUR HUMBLE OPINION THE A SSESSEES ROLE IS LIKE A TRUSTEE OF THE AREA DEVELOPMENT FUND. WE, ACCORDI NGLY, DECIDE THIS ISSUE IN FAVOUR OF THE ASSESSEE. IT WAS SUBMITTED BEFORE U S THAT THE DEPARTMENT HAS ALLOWED THE EXPENDITURE INCURRED BY T HE ASSESSEE OUT OF THE ADF ON THE ACTUAL BASIS TREATING THE SAME AS A B USINESS EXPENSES. AS WE HAVE HELD THAT THE AMOUNT COLLECTED U NDER THE ADF IS NOT A TRADING RECEIPT IN THE HANDS OF THE ASSESSEE HENC E, THE DEDUCTION GIVEN BY THE ASSESSING OFFICER IN THE RESPECTIVE ASSESSMENT YEARS TOWARDS ADF IS TO BE WITHDRAWN. THE ASSESSING OFFICER IS ACCORDINGLY DIRECT TO EXCLUDE FULLY THE AMOUNT INCLUDED TOWARDS AREA DEVELOPMENT FUND IN THE INCOME OF THE ASSESSEE AND ALSO TO WITHDRAW THE AMOUNT ALLOWED AS A BUSINESS EXPENDITURE T OWARDS ADF. ACCORDINGLY THE ASSESSEE SUCCEEDS ON THIS ISSUE. 10. RESPECTFULLY FOLLOWING THE DECISION OF THE TRIBUNAL IN THE CASE CITED (SUPRA) AND IN ABSENCE OF ANY CONTRARY MATERIAL BRO UGHT TO OUR NOTICE, WE HOLD THAT THE AMOUNT COLLECTED UNDER THE AREA DEVELOPMENT FUND IS NOT A TRADING RECEIPT IN THE HANDS O F THE ASSESSEE. THE AO IS ACCORDINGLY DIRECTED TO DELETE THE ADDITION OF 8 ITA NO.1021 & 1022/PN/2014 RS.6,95,775/- AND RS.16,44,743/- MADE IN A.YRS. 1992-93 & 1 994- 95 RESPECTIVELY. WE HOLD AND DIRECT ACCORDINGLY. THE GR OUNDS RAISED BY THE ASSESSEE ARE ACCORDINGLY ALLOWED. 11. IN THE RESULT, BOTH THE APPEALS FILED BY THE ASSESSEE ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT AT THE TIME OF HE ARING ITSELF, I.E. ON 26-10-2015. SD/- SD/- ( VIKAS AWASTHY ) ( R.K. PANDA ) JUDICIAL MEMBER ACCOUNTANT MEMBER IQ.KS PUNE ; # DATED :26 TH OCTOBER, 2015. LRH'K ( )'+ , / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. CIT(A) - IT/TP, PUNE 4. 5. 6. CIT-IT/TP, PUNE ' *, *, IQ.KS / DR, ITAT, B PUNE; / GUARD FILE. / BY ORDER , ' ' //TRUE COPY// / * / SR. PRIVATE SECRETARY *, IQ.KS / ITAT, PUNE