Income Tax Officer-6(2) , Lucknow V. M/s. U.P.State Sugar Corporation Ltd., Lucknow

ITA 114/LKW/2013

• Counselvise Citation: 11423714 RSA 2013
• Duration Of Justice: 1 year(s) 6 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-09-2014
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 03-09-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 04-03-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: K N DIKSHIT
• Keywords: Commercial expediency
• Section: 43B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH A , LUCKNOW BEFORE SHRI S UNIL KUMAR YADAV , JUDICIAL MEMBER AND SHRI. A. K. GARODIA , ACCOUNTANT MEMBER ITA NO. 114/LKW/2013 ASSESSMENT YEAR: 2009 - 10 INCOME TAX OFFICER 6(2) LUCKNOW V. M/S U.P. STA TE SUGAR CORPORATION LTD. VIPIN KHAND, GOMTI NAGAR LUCKNOW PAN: AAACO3394C (APP ELL ANT) (RESPONDENT) ITA NO. 85/LKW/2013 ASSESSMENT YEAR: 2009 - 10 M/S U.P. STATE SUGAR CORPORATION LTD. VIPIN KHAND, GOMTI NAGAR LUCKNOW V. INCOME TAX OFFICER 6(2) LU CKNOW PAN: AAACO3394C (APP ELL ANT) (RESPONDENT) DEPARTMENT BY : SHRI. K. N. DIKSHIT, CIT (DR) ASSESSEE BY: SHRI. ABHINAV MEHROTRA, ADVOCATE DATE OF HEARING: 03 09 2014 DATE OF PRONOUNCEMENT: 16 0 9 2014 O R D E R PER SUNIL KUMAR YADAV: THES E CROSS - APPEALS ARE PREFERRED BY THE ASSESSEE AS WELL AS THE REVENUE AGAINST THE ORDER OF THE LD. CIT(A) . 2 . THE GROUNDS RAISED BY THE REVENUE ARE AS UNDER: - 1 . THE COMMISSIONER OF INCOME - TAX (APPEAL) - II, LUCKNOW HAS ERRED IN LAW AND ON FACTS IN DELETING THE A DDITIONS MADE U/S 43B AT RS.19,91,08,650/ - IGNORING THE FACTS THAT THE ASSESSEE COULD NOT PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 2 - : FURNISHED ANY PROOF OF ITS PAYMENT DURING THE YEAR OR BEFORE DUE DATE OF FILING OF RETURN HENSE , THE EXPENSES COULD NOT BE ALLOWABLE TO THE ASSESSEE. 2 . THE COMMISSIONER OF TNCOME - TAX(APPEAL) - LI, LUCKNOW HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADD ITIONS MADE U/S 2(24)(X) AT RS. 1,33,66,943 / - IGNORING THE FACTS THAT THE ASSESSEE COULD NOT FURNISHED ANY PROOF REGARDING ITS PAYMENT DURING THE YEAR OR BEFORE DUE DATE OF FILING OF RETURN HENCE, THE PROVIDENT FUND NOT PAID BY THE ASSESSEE HAS RIGHTLY BEEN ADDED T O THE INCOME OF THE ASSESSEE. 3 . THE GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER: - 1 . THE LD. C.I.T. (APPEAL) - II LUCKNOW ERRED ON FACTS AND IN LAW IN CONFIRMING THE ADD ITION O F RS. 27,88,902 / - UNDER THE HEAD CANE DEVELOPMENT EXPENSES. 2 . LD. C.I.T (APPEAL) - II LUCKNOW DID NOT APPRECIATED THAT CANE DEVELOPMENT EXPENSES ARE SOLELY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS. 4 . DURING THE COURSE OF HEARING OF THE APPEALS, THE L D. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT THE GROUNDS RAISED IN REVENUES APPEAL ARE SQUARELY COVERED AGAINST THE ASSESSEE BY THE ORDER OF THE TRIBUNAL IN THE ASSESSEES OWN CASE IN I.T.A. NO.477 TO 479/LKW/2013. 5 . SO FAR AS THE ASSESSEES APPEAL IS C ONCERNED, IT WAS CONTENDED THAT THIS GROUND IS ALSO COVERED BY THE SAID ORDER OF THE TRIBUNAL, IN WHICH THE ISSUE WAS RESTORED TO THE FILE OF THE ASSESSING OFFICER FOR FRESH ADJUDICATION AFTER VERIFYING THE NATURE OF EXPENSES INCURRED BY THE ASSESSEE. 6 . THE CONTENTIONS OF THE LD. COUNSEL FOR THE ASSESSEE ARE NOT DISPUTED BY THE REVENUE. PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 3 - : 7 . HAVING CAREFULLY EXAMINED THE ORDER OF THE TRIBUNAL REFERRED TO ABOVE, WE FIND THAT THE GROUNDS OF APPEAL RAISED IN REVENUES APPEAL ARE SQUARELY COVERED BY THE ORDER OF THE T RIBUNAL. THE RELEVANT PORTION OF THE ORDER OF THE TRIBUNAL IS EXTRACTED HEREUNDER FOR THE SAKE OF REFERENCE: - 9. THE THIRD ISSUE IS REGARDING ALLOWABILITY OF EXPENSES U/S 43B OF THE ACT IN RESPECT OF EMPLOYEES CONTRIBUTION TO PF. THIS ISSUE HAS BEEN R AISED BY THE ASSESSEE AS PER GROUND NO. 1 IN I.T.A. NO.353, 114 AND 113. IT IS SUBMITTED BY LEARNED A.R. OF THE ASSESSEE THAT THIS ISSUE IS COVERED BY THE TRIBUNAL DECISION RENDERED IN THE CASE OF ACIT VS. INDIAN FARMER FERTILISERS COOP. LTD. IN I.T.A. NO .3350/DEL/2009 AND 1194/DEL/2011 DATED 31/05/2011. HE ALSO SUBMITTED THAT THE COPY OF THE ORDER IS AVAILABLE ON PAGE NO. 17 TO 22 OF THE PAPER BOOK IN I.T.A. NO.114/LKW/2013. 10. AS AGAINST THIS, LEARNED D.R. OF THE REVENUE SUBMITTED THAT THERE IS NO EVI DENCE OF PAYMENT AND THEREFORE, DEDUCTION IS NOT ALLOWABLE. IN THE REJOINDER, IT WAS SUBMITTED BY LEARNED A.R. OF THE ASSESSEE THAT THE MATTER MAY BE SENT BACK TO THE ASSESSING OFFICER FOR VERIFICATION OF PAYMENT. 11. WE HAVE CONSIDERED THE RIVAL SUBMIS SIONS. WE FIND THAT IT IS NOTED BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER THAT THE ASSESSEE COULD NOT PROVE AND EXPLAIN THE PAYMENT OF EMPLOYEES CONTRIBUTION TO RESPECTIVE FUND ACCOUNT WITHIN THE TIME AND THEREFORE, HE MADE THE ADDITION U/S 2 (24) (X) READ WITH SECTION 36(1)(V) OF THE ACT. IN THE LIGHT OF THESE FACTS, WE EXAMINE THE APPLICABILITY OF THE TRIBUNAL DECISION. THE RELEVANT PARAS OF THE TRIBUNAL DECISION ARE PARA NO. 2 TO 5, WHICH ARE REPRODUCED BELOW FOR THE SAKE OF READY REFERENCE: 2. THE FIRST ISSUE FOR CONSIDERATION RELATES TO DELETING THE ADDITION OF RS 13,03,74.047/ - MADE U/S 43B OF THE ACT. THE FACTS OF THE CASE STALED IN BRIEF ARC THAT THE AO PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 4 - : FROM TAX AUDIT REPORT FOUND THAT A SUM OF RS.23,98,96,527/ - HAS BEEN SHOWN PAYAHLC A S ON 31.3.06. THE TAX AUDIT REPORT ALSO STATED THAT A SUM OF RS.13,03,74,047/ ON ACCOUNT OF PAYMENTS OF THESE LIABILITIES HAD BEEN ADDED BACK AND THE BALANCE AMOUNT OF RS.10,95,22,480/ - . THE ASSES SEE WAS REQUIRED TO PRODUCE EVIDENCE FOR PAYMENT OF LIABILI TIES. HOWEVER, SINCE ASSES SEE DID NOT FILE ANY EVIDENCE, HE DISALLOWED THE AMOUNT OF RS.13,03,74,047/ - U/S 43B OF THE ACT. 3. ON APPEAL, IT WAS SUBMITTED THAT THE STATUTORY DUES PAYABLE ON 31.3.2006 AT RS.13,03,74,047/ - WERE PAID BEFORE FURNISHING/FILING OF INCOME - TAX RETURN TOR ASSESSMENT YEAR 2006 - 07. THE AMOUNT AS WELL AS SUBSEQUENT DATES OF DEPOSITS OF THESE PAYMENTS HAVE BEEN VERIFIED AND CERTIFIED BY THE TAX AUDITORS. THE CIT(A) DELETED THE ADDITION ON THE GROUND THAT AO WAS REQUIRED TO ALLOW THE DE DUCTION U/S 43K ON THE BASIS OF VERIFICATION AND CERTIFICATION OF TAX AUDITORS AS FILED IN FORM 3CD ALONG WITH THE RETURN OF INCOME. 4. BEFORE US, LD. CIT(DR) SUPPORTED THE ORDER OF THE AO. ON THE OTHER HAND, LD. AR OF THE ASSESSEE RELIED ON THE ORDER OF THE C1T(A). 5. WE HAVE HEARD BOTH THE PARTIES. THE ASSESSEE IS A MULTI STATE COOPERATIVE SOCIETY HAVING ITS SALES OFFICE SPREAD ALL OVER INDIA AND ITS ACCOUNTS ARC DECENTRALIZED. THE TAX AUDIT REPORT IN FORM 3CD IS COMPILED ON THE BASIS OF TAX AUDIT REPOR TS RECEIVED FROM VARIOUS BRANCH AUDITORS IN FORM 3CD. ON IDENTICAL ISSUE, FOR ASSESSMENT YEAR 2004 - 05, THE AO DISALLOWED THE PAYMENT U/S 43 B, BUT THE SAME WAS ALLOWED BY THE C1T(A) ON THE GROUND THAT THE DATES OF DEPOSITS HAVE BEEN VERIFIED AND PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 5 - : CERTIFIED BY THE TAX AUDITORS OF THE ASSES SEE AND THE CERTIFICATE OF TAX AUDITORS WAS ALREADY AVAILABLE WITH THE AO. THE IT AT VIDE ORDER DATED 16.1.2009 UPHELD THE ORDER OF CIT(A). WE HAVE GONE THROUGH THE ORDER FOR ASSESSMENT YEAR 2004 - 05 IN I.T.A. NO.244/DEL./08 DATED 16.1.2009 IN ASSESSEES OWN CASE. IT AT, DELHI BENCH 'D' HAS ALLOWED THE ISSUE IN FAVOUR OF THE ASSESSEE BY HOLDING THAT THE PAYMENTS HAVE BEEN MADE BEFORE DUE DATE FOR FILING OF RETURN OF INCOME. THE CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION. F ROM THE TAX AUDIT REPORT, WE ALSO FIND THAT AMOUNT OF RS.13,03.74,047/ - HAS BEEN SHOWN AS PAID ON OR BEFORE DUE DATE FOR FURNISHING RETURN OF INCOME FOR THE PREVIOUS YEAR U/S 139(1) OF THE ACT. FORM 3CD HAS BEEN PREPARED AND SIGNED BY RAJNISH & ASSOCIATES, CA. THE ACCOUNTS OF THE ASSESSEE HAVE BEEN AUDITED BY STATUTORY AUDITORS. THE ASSESSEE HAD FILED THE DETAILS OF PAYMENT OF RS.13,03,74,047/ - . THE ASSESSEE IS ENTITLED FOR DEDUCTION U/S 43B OF THE ACT IN RESPECT OF AMOUNT OF RS.13,03,74,047/ - . ACCORDING LY, WE DO NOT FIND ANY INFIRMITY IN THE ORDER PASSED BY THE CIT(A) DELETING THE ADDITION MADE U/S 43B OF THE ACT. 11.1 FROM THE ABOVE PARAS OF THE TRIBUNAL ORDER, WE FIND THAT THIS TRIBUNAL DECISION IS REGARDING THE ADDITION MADE BY THE ASSESSING OFFICER U/S 43B OF THE ACT WHEREAS IN THE PRESENT CASE, THE ADDITION WAS MADE U/S 2 (24) (X) READ WITH SECTION 36(1)(V) OF THE ACT. HENCE, THIS TRIBUNAL DECISION IS NOT APPLICABLE IN THE FACTS OF THE PRESENT ISSUE. SINCE THE ASSESSEE COULD NOT ESTABLISH THAT TH E EMPLOYEES CONTRIBUTION TO PF WAS PAID WITHIN THE STATUTORY TIME ALLOWED UNDER PF ACT, DISALLOWANCE MADE BY THE ASSESSING OFFICER IS JUSTIFIED AND HENCE, THIS ISSUE IS DECIDED AGAINST THE ASS ESSEE IN ALL THE THREE APPEALS. PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 6 - : 8 . SINCE THE TRIBUNAL HAS TAKEN A PARTICULAR VIEW IN THE SIMILAR SET OF FACTS, WE FIND NO REASON TO TAKE A CONTRARY VIEW IN THIS REGARD. ACCORDINGLY, FOLLOWING THE SAME, WE DECIDE THIS ISSUE AGAINST THE ASSESSEE. THEREFORE, WE SET ASIDE THE ORDER OF THE LD. CIT(A) AND RESTORE THAT OF T HE ASSESSING OFFICER ON THIS ISSUE. 9 . THE GROUNDS RAISED IN ASSESSEE S APPEAL ARE ALSO SQUARELY COVERED BY THE AFORESAID ORDER OF THE TRIBUNAL. THE RELEVANT OBSERVATIONS OF THE TRIBUNAL ARE EXTRACTED HEREUNDER: - 6. THE SECOND ISSUE IS REGARDING DISALLOWANC E OF CANE DEVELOPMENT EXPENSES. THIS ISSUE HAS BEEN RAISED BY THE ASSESSEE AS PER GROUND NO. 4, 5 & 6 IN I.T.A. NO.477 AND GROUND NO. 2 IN I.T.A. NO.479 AND 582 FOR THE ASSESSMENT YEAR 2007 - 08, 2008 - 09 AND AS PER GROUND NO. 1 IN I.T.A. NO.583 & 85. IT WA S SUBMITTED BY LEARNED A.R. OF THE ASSESSEE THAT IN I.T.A. NO.479/LKW/2011, THE TRIBUNAL HAS RESTORED THE MATTER BACK TO THE FILE OF THE ASSESSING OFFICER WITH THE DIRECTION TO READJUDICATE THE ISSUE AFRESH AFTER MAKING NECESSARY VERIFICATION WITH REGARD T O THE NATURE OF EXPENSES INCURRED BY THE ASSESSEE. IT WAS HELD BY THE TRIBUNAL THAT IF THE EXPENSES ARE INCURRED FOR COMMERCIAL EXPEDIENCY, THE SAME MAY BE ALLOWED. THE ORDER OF THE TRIBUNAL I.E. I.T.A. NO.477/LKW/2013 IS AVAILABLE ON PAGE NO. 70 TO 72 O F THE PAPER BOOK. 7. LEARNED D.R. OF THE REVENUE SUPPORTED THE ORDER OF LEARNED CIT(A). 8. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FIND THAT IN ASSESSMENT YEAR 2003 - 04 IN ASSESSEES OWN CASE, THE MATTER WAS RESTORED BACK BY THE TRIBUNAL TO THE ASSE SSING OFFICER FOR FRESH DECISION AFTER NECESSARY VERIFICATION REGARDING NATURE OF EXPENSES AND THE ASSESSING OFFICER WAS DIRECTED THAT IF IT IS FOUND THAT THE EXPENSES ARE INCURRED FOR COMMERCIAL EXPEDIENCY THEN THE SAME MAY BE ALLOWED. ACCORDINGLY, IN TH E PRESENT YEARS ALSO, THIS ISSUE IS RESTORED TO THE FILE OF THE ASSESSING OFFICER FOR FRESH DECISION AFTER PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 7 - : VERIFYING THE NATURE OF EXPENSES INCURRED BY THE ASSESSEE AND IF IT IS FOUND THAT THE EXPENSES ARE INCURRED FOR COMMERCIAL EXPEDIENCY, THE SAME MAY B E ALLOWED. 10 . IN THE EARLIER YEAR, THE ISSUE WAS RESTORED TO THE FILE OF THE ASSESSING OFFICER FOR RE - ADJUDICATION AFTER VERIFYING THE NATURE OF EXPENSES INCURRED BY THE ASSESSEE . SINCE THE MATTER HAS BEEN RESTORED TO THE ASSESSING OFFICER IN EARLIER YEAR, WE SET ASIDE THE ORDER OF THE LD. CIT(A) ON THIS ISSUE IN THIS YEAR ALSO AND RESTORE THE MATTER TO THE ASSESSING OFFICER FOR VERIFICATION IN TERMS INDICATED IN THE AFORESAID ORDER. ACCORDINGLY, THE GROUNDS RAISED BY THE ASSESSEE ARE DISPOSED OF. 11 . IN THE R ESULT, APPEAL OF THE REVENUE IS ALLOWED AND THAT OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER WAS PRONOUNCED IN THE OPEN COURT ON THE DATE MENT I ONED ON THE CAPTION PAGE. SD/ - SD/ - [ A. K. GARODIA ] [ S UNIL KUMAR Y ADAV ] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 16 TH SEPTEMBER , 2014 JJ: 0309 COPY FORWARDED TO: 1 . APPELLANT 2 . RESPONDENT 3 . CIT(A) 4 . CIT 5 . DR ASSISTANT REGISTRAR PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ )