ITO, Chandigarh V. M/s Punjab Agri Export Corporation Ltd., Chandigarh

ITA 1024/CHANDI/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 77124 (ITAT-CHANDIGARH)
• Duration Of Justice: 6 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-05-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 16-12-2015
• Assessment Year: 2010-2011
• Appeal Filed On: 06-11-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: GUNDEEP SINGH
• Keywords: Business income
• 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.1024 /CHD/2013 ASSESSMENT YEAR : 2010-11 & ITA NO.1025 /CHD/2013 ASSESSMENT YEAR : 2008-09 THE INCOME TAX OFFICER, VS. M/S PUNJAB AGRI.EXPOR T CORPORATION LTD., WARD 4(2), PLOT NO.2A, SECTOR 28-A, MADHYA MAR G, (APPELLANT) (RESPONDENT) PAN: AAACP9075F APPELLANT BY : SHRI AKHILESH GUPTA, DR RESPONDENT BY : S/SHRI GUNDEEP SINGH & NEERAJ JAI N DATE OF HEARING : 19.05.2014 DATE OF PRONOUNCEMENT : 29.05.2014 O R D E R PER SUSHMA CHOWLA, J.M. : THESE TWO APPEALS FILED BY THE REVENUE ARE AGAINST THE SEPARATE ORDERS OF THE COMMISSIONER OF INCOME TAX(A PPEALS), CHANDIGARH DATED 05.08.2013 AND 20.08.2013 AGAINST THE ORDER PASSED UNDER SECTION 143(3) OF INCOME TAX ACT, 1961 (IN SHORT 'THE ACT'). 2. THE REVENUE HAS RAISED FOLLOWING COMMON GROUNDS OF APPEAL IN BOTH THE APPEALS, WHICH READ AS UNDER: '1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE CIT(A) HAS ERRED IN ALLOWING APPEAL OF THE ASSESSEE WITHOUT AP PRECIATING THE FACTS OF THE CASE. 2 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE HON'BLE IT AT WAS JUSTIFIED IN ALLOWING THE PERSONA L EXPENSES (LIKE SALARY, WAGES ETC) AND ADMINISTRATIVE EXPENSES (IN CLUDING VEHICLE RUNNING, TELEPHONE, TRAVELLING, ELECTRICITY RENT ETC.) AGAIN ST THE INCOME FROM OTHER SOURCES AND COMMERCIAL/BUSINESS INCOME, WHERE AS PART OF THESE EXPENSES WERE ATTRIBUTED TOWARDS CREATION OF ASSETS OWNED BY OTHER DEPARTMENT WHO HAD GIVEN GRANTS TO THE ASSESSEE. 3. IT IS PRAYED THAT THE ORDER OF THE CIT(A) BE SET ASIDE AND THAT OF THE ASSESSING OFFICER MAY BE RESTORED. 4. THE APPELLANT CRAVES LEAVE TO ADD OR AMEND ANY G ROUNDS OF APPEAL BEFORE THE APPEAL IS HEARD OR DISPOSED OFF. ' 3. BOTH THE APPEALS FILED BY THE REVENUE AGAINST THE S AME ASSESSEE ON SIMILAR ISSUE WERE HEARD TOGETHER AND ARE BEI NG DISPOSED OFF BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. 4. THE LEARNED D.R. FOR THE REVENUE POINTED OUT THAT T HE ISSUE IN THE PRESENT APPEALS IS SQUARELY COVERED BY THE ORDERS OF THE TRIBUNAL IN ASSESSEE'S OWN CASE RELATING TO ASSESSMENT YEARS 20 05-06 AND 2006-07. 5. THE BRIEF FACTS IN THE CASE ARE THAT THE ASSESSEE H AD FURNISHED RETURN OF LOSS DECLARING TOTAL LOSS AT RS.9,88,167/-. THE AS SESSING OFFICER NOTED THAT THE ASSESSEE WAS DECLARING THREE TYPES OF INCOME I. E. FROM SALE OF AGRICULTURAL PRODUCTS, OTHER INCOME AND INTEREST IN COME ON DEPOSITS. THE MAIN INCOME DECLARED BY THE ASSESSEE WAS INTEREST I NCOME EARNED ON SURPLUS FUNDS WHICH IN TURN WERE DEPOSITED IN BANKS AS FDRS . DURING THE EARLIER YEARS ALSO SIMILAR INTEREST INCOME WAS EARNED BY TH E ASSESSEE AND THE SAME WAS ASSESSED AS INCOME FROM OTHER SOURCES AND ONLY EXPENSES ALLOWABLE UNDER SECTION 57(III) OF THE ACT WERE ALLOWED AGAIN ST THE SAME. THE ASSESSING OFFICER FURTHER NOTED THAT SIMILAR INCOME WAS DECLARED BY THE ASSESSEE IN ASSESSMENT YEAR 2006-07 AND THE ASSESSI NG OFFICER COMPUTED BUSINESS INCOME BY APPLYING NET PROFIT RATE OF 10% TO THE BUSINESS RECEIPTS. 3 THE TRIBUNAL IN ITA NO.867/CHD/2009 RELATING TO ASS ESSMENT YEAR 2006-07 VIDE ORDER DATED 31.12.2009 IN TURN RELYING UPON TH E ORDER OF THE TRIBUNAL IN ITA NO.263/CHD/2008 RELATING TO ASSESSMENT YEAR 200 5-06 VIDE ORDER DATED 30.6.2008 DISMISSED THE APPEAL OF THE REVENUE. HOW EVER, SINCE THE REVENUE WAS IN APPEAL BEFORE THE HON'BLE PUNJAB & HARYANA H IGH COURT, SHOW CAUSE NOTICE WAS ISSUED BY THE ASSESSING OFFICER TO THE A SSESSEE JUSTIFYING AS TO WHY THE EXPENDITURE CLAIMED BY IT SHOULD BE ALLOWED AGAINST THE INCOME FROM OTHER SOURCES. THE CIT (APPEALS) ALLOWED THE CLAIM OF THE ASSESSEE. 6. WE FIND THAT SIMILAR ISSUE OF ALLOWABILITY OF EX PENDITURE IN THE HANDS OF THE ASSESSEE AROSE BEFORE THE TRIBUNAL IN ITA NO .867/CHD/2009 AND VIDE ORDER DATED 31.12.2009 THE TRIBUNAL OBSERVED AS UND ER: 4. SIMILAR ISSUE OF COMPUTING DEDUCTION U/S 80 P(2 )(D) OF THE ACT AROSE IN ASSESSEES OWN CASE RELATING TO ASSESSMENT YEARS 2004-05 & 2005-06 AND THE TRIBUNAL VIDE CONSOLIDATED ORDER DA TED 31.10.2008, THE ISSUE HAS BEEN RESTORED BACK TO THE FILE OF THE ASS ESSING OFFICER FOR FRESH ADJUDICATION IN ACCORDANCE WITH LAW BY HOLDIN G AS UNDER:- 5. THE NEXT GROUND I.E. GROUND NO. 3 IS THAT THE LEARNED FIRST APPELLATE AUTHORITY IS NOT JUSTIFIED IN REDUC ING THE DEDUCTION CLAIMED U/S 80-P(2) (D) AFTER DEDUCTING 5 % EXPENSES WHICH IS AGAINST THE LAW AND HAS TO BE COM PUTED UNDER THE PROPER HEAD. DURING ARGUMENTS, THE CLAIM OF THE ASSESSEE IS THAT THE ASSESSEE CLAIMED DEDUCTION ON ACCOUNT OF DIVIDENDS RECEIVED FROM COOPERATIVE SOCIETIES AM OUNTING TO RS.2,39,42,070/- AND THE ASSESSEE CLAIMED 100% DEDUCTION ON ACCOUNT OF DIVIDEND. ON QUESTIONING BY THE DEPARTMENT THE ASSESSEE CLAIMED THAT SINCE IT IS A BUSINESS INCOME, THEREFORE, EXPENSES CANNOT BE APPORTIONED. THE LEARNED ASSESSING OFFICER DISALLOWED 20% OF THE EXP ENSES, WHICH COMES TO RS. 47,88,414/-. THE ARGUMENT ON BE HALF OF THE ASSESSEE IS THAT NEITHER THE ASSESSEE HAS TAKEN ANY LOAN, THEREFORE, THERE IS NO QUESTION OF ANY DIRECT EXPEN SES TO THIS ACTIVITY, SO NO INDIRECT EXPENSES ARE TO BE ADJUS TED. RELIANCE WAS PLACED IN 189 ITR 89(P&H). ON THE OTH ER HAND, THE LEARNED DR CONTENDED THAT IT REQUIRES- EXAMINATION PURSUANCE TO RULE 8-D OF THE RULES. RE LIANCE WAS ALSO PLACED IN THE CASE OF ACIT VS. CITICORP FI NANCE INDIA LTD (108 ITD 457)(MUM). BOTH THE LEARNED REPRESENTATIVES AGREED THAT THIS ISSUE MAY BE SENT TO THE FILE OF THE LEARNED ASSESSING OFFICER FOR FRESH ADJUDICA TION IN ACCORDANCE WITH LAW. IN VIEW OF THESE FACTS, THIS GROUND IS SENT TO THE FILE OF THE LEARNED ASSESSING OFFICER T O EXAMINE THE CLAIM OF THE ASSESSEE/REVENUE AND THEN DECIDE I N 4 ACCORDANCE WITH LAW. THIS WILL ALSO COVER GROUND N O.3 OF THE APPEAL OF THE REVENUE (ITA NO. 575/CHD/2008). NEEDLESS TO MENTION HERE THAT DUE OPPORTUNITY OF BE ING HEARD BE PROVIDED TO THE ASSESSEE. THE ASSESSEE I S ALSO AT LIBERTY TO FURNISH EVIDENCE, IF ANY, TO SUBSTANTIAT E ITS CLAIM, THEREFORE, THESE GROUNDS OF THE ASSESSEE / REVENUE ARE ALLOWED FOR STATISTICAL PURPOSES ONLY. 5. THE ISSUE ARISING IN THE PRESENT APPEAL IS IDENT ICAL TO THE ISSUE RAISED IN THE EARLIER YEARS AND FOLLOWING THE RULES OF CONSISTENCY, WE REMIT THIS ISSUE BACK TO THE FILE OF THE ASSESSING OFFICER FOR FRESH ADJUDICATION IN ACCORDANCE WITH LAW. A REASONABLE OPPORTUNITY OF HEARING SHALL BE AFFORDED TO THE ASSESSEE AND THE G ROUND OF APPEAL RAISED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL P URPOSES. 6. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 7. THE ISSUE ARISING BEFORE US IS IDENTICAL TO THE ISSUE BEFORE THE TRIBUNAL IN ASSESSMENT YEARS 2005-06 AND 2006-0 7 AND FOLLOWING THE PARITY OF REASONING WE HOLD THAT THE ASSESSEE IS ENTITLED TO THE CLAIM OF EXPENDITURE. ACCORDINGLY , THE GROUNDS OF APPEALS RAISED BY THE ASSESSEE IN BOTH THE ASSES SMENT YEARS ARE DISMISSED AS THE FACTS AND ISSUE IN BOTH THE YE ARS ARE SAME. 8. IN THE RESULT, THE APPEALS FILED BY THE REVENUE FOR ASSESSMENT YEARS 2010-11 AND 2008-09 ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 29 TH DAY OF MAY, 2014. SD/- SD/- (T.R.SOOD) (SUSHMA CHOWLA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 29 TH MAY, 2014 *RATI* COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT(A)/TH E CIT/THE DR. ASSISTANT REGISTRAR, ITAT, CHANDIGARH 5