RAJASTHAN RAJYA SAHKARI KRAYA VIKRAYA SANGH LTD., Jaipur V. ACIT, Jaipur

ITA 115/JPR/2015

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 5339 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s) 3 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-05-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2011-2012
• Appeal Filed On: 29-01-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V K JAIN CA DHK
• Assessee Lawyers: RAJ MEHRA
• Keywords: Opportunity of being heard; Earning of tax free income; Competent authority
• Section: 143(3); 14A

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR JH EQDQY DS-JKOR] U;KF;D LNL; ,OA JH VH-VKJ-EHUK] YS[KK LNL; DS LE{K BEFORE: SHRI MUKUL K. SHRAWAT, JM & SHRI T.R.MEENA, AM VK;DJ VIHY LA- @ ITA NO. 115/JP/2015 FU/KZKJ.K O'K Z @ ASSESSMENT YEAR : 2011-12 RAJASTHAN RAJYA SAHKARI KRAYA VIKRAYA SANGH LTD., 4 BHAWANI SINGH ROAD, JAIPUR. CUKE VS. ADDL.CIT, RANGE-6, JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ L A-@ PAN/GIR NO.: AAAAR 0279 B VIHYKFKHZ @ APPELLANT IZR;FKHZ @ RESPONDENT VK;DJ VIHY LA- @ ITA NO. 55/JP/2015 FU/KZKJ.K O'K Z @ ASSESSMENT YEAR : 2011-12 DY. COMMISSIONER OF INCOME TAX, CIRCLE-6, JAIPUR. CUKE VS. RAJASTHAN RAJYA SAHKARI KRAYA VIKRAYA SANGH LTD., 4 BHAWANI SINGH ROAD, JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ L A-@ PAN/GIR NO.: AAAAR 0279 B VIHYKFKHZ @ APPELLANT IZR;FKHZ @ RESPONDENT FU/KZKFJRH DH VKSJ LS @ ASSESSEE BY : SHRI RAJ MEHRA (JCIT) JKTLO DH VKSJ LS @ REVENUE BY : SHRI V.K. JAIN (CA) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 08/03/2016. MN?KKS'K .KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 17/05/2016. 2 ITA NO. 115 & 55/JP/2015 RAJASTHAN RAJYA SAHKARI KRAYA VIKRAYA SANGH VS ADDL .CIT VKNS'K@ ORDER PER T.R. MEENA, A.M THESE ARE CROSS APPEALS ONE BY THE ASSESSEE AND ANO THER BY THE REVENUE ARISE AGAINST THE ORDER DATED 19/11/2014 OF THE LEARNED C.I.T.(A)-II, JAIPUR FOR A.Y. 2011-12. THE EFFECTIVE GROUNDS OF BOTH THE APPEALS ARE AS UNDER:- GROUND OF ASSESSEES APPEAL. 1. THAT THE LD CIT(A) ERRED IN SUSTAINING THE DISALLOWANCE TO THE EXTENT OF RS. 4,15,335/- U/S 14A IN THE FACTS OF THE CASE, DISALLOWANCE U/S 14A IS UNJUST AND ADDITION SUSTAINED TO THE EXTENT OF RS. 4,15,335/- DESERVES TO BE DELETED. GROUNDS OF REVENUES APPEAL. 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW THE LD. CIT (APPEALS) ERRED IN DELETING THE ADDITION OF RS. 78,13,039/- MADE BY THE AO BY DISALLOWING DEDUCTION U/S 80P(2)(A)(IV). 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW THE LD. CIT (APPEALS) ERRED IN DELETING THE ADDITION OF RS. 21,15,059/- MADE BY THE AO BY DISALLOWING CONTRIBUTION TO LIC GROUP GRATUITY SCHEME THOUGH THE ASSESSEE FAILED TO PROVE THAT IT IS AN APPROVED GRATUITY SCHEME.. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW THE LD. CIT (APPEALS) HAS ERRED IN DELETIN G 3 ITA NO. 115 & 55/JP/2015 RAJASTHAN RAJYA SAHKARI KRAYA VIKRAYA SANGH VS ADDL .CIT THE ADDITION OF RS. 1,10,416/- MADE BY THE AO ON ACCOUNT OF PRIOR PERIOD EXPENSES. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW THE LD. CIT (APPEALS) HAS ERRED IN DELETING TH E ADDITION OF RS. 10,63,226/- MADE BY THE AO ON ACCOUNT OF INTEREST PAID ON TAX FREE INCOME. 2. THE ASSESSEE IS A COOPERATIVE SOCIETY. IT FILED I TS RETURN ON 30/10/2010 DECLARING INCOME OF RS. 6,86,670/- FOR T HE A.Y. 2011-12. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF MANUFACTU RING AND TRADING OF PESTICIDES, CATTLE FEED AND TRADING OF AGRICULTU RAL PRODUCTS, GAS, FERTILIZERS SEEDS AND OTHER COMMODITIES. THE CASE WAS SCRUTINIZED U/S 143(3) OF THE ACT. THE FIRST GROUND OF THE ASSESSEE S APPEAL AND GROUND NO. 4 OF THE REVENUES APPEAL ARE AGAINST SUSTAININ G THE DISALLOWANCE OF RS. 4,15,335/- MADE U/S 14A OF THE INCOME TAX ACT, 1 961 (IN SHORT THE ACT) AND DELETING THE ADDITION OF RS. 10,63,226/- M ADE BY THE ASSESSING OFFICER ON ACCOUNT OF INTEREST PAID ON TA X FREE INCOME. THE LD ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAS EA RNED A DIVIDEND OF RS. 1,33,96,632/- RECEIVED IN LIEU OF ITS INVESTMEN TS IN VARIOUS COOPERATIVE SOCIETIES. THE ASSESSING OFFICER ASKED T O FURNISH THE DETAILS OF TAX FREE INCOME AND EXPENSES INCURRED FOR EARNIN G THE SAME, WHICH WAS REPLIED BY THE ASSESSEE VIDE LETTER DATED 26/11/ 2013. REPLY OF THE ASSESSEE HAS BEEN REPRODUCED BY THE ASSESSING OFFIC ER ON PAGE NO. 8 4 ITA NO. 115 & 55/JP/2015 RAJASTHAN RAJYA SAHKARI KRAYA VIKRAYA SANGH VS ADDL .CIT OF THE ASSESSMENT ORDER. AFTER CONSIDERING THE ASSE SSEES REPLY, THE LD ASSESSING OFFICER HELD THAT THE ASSESSEE HAS NOT PR ODUCED ANY EVIDENCE THAT NO EXPENDITURE HAS BEEN INCURRED FOR EARNING T HESE DIVIDENDS. THE ASSESSEE HAD TAKEN CREDIT LIMIT FROM THE BANKS. HE HAS GIVEN CHART OF INVESTMENT PORTFOLIO ON PAGE NO. 9 OF THE ASSESSMEN T ORDER AND HELD THAT THE ASSESSEE INVESTMENT PORTFOLIO WAS CHANGING FROM YEAR TO YEAR. MANAGERIAL/STRATEGIC DECISIONS ARE REQUIRED TO DECI DE THE AMOUNT OF INVESTMENT. THEREFORE, THE ASSESSEE HAD INCURRED EX PENDITURE ON MANAGERIAL/ADMINISTRATIVE EXPENSES. THE INVOCATION OF SECTION 14A IS AUTOMATIC AND COMES INTO OPERATION WITHOUT ASSESSMEN T YEAR EXCEPTION AS SOON AS DIVIDEND INCOME IS CLAIMED EXEMPT. DIREC T AND INDIRECT EXPENSES HAVE TO BE DISALLOWED ON EARNING OF THIS IN COME. HE FURTHER RELIED ON THE DECISION IN THE CASE OF CIT VS. UNITE D GENERAL TRUST 200 ITR 488 (SC) AND OTHER CASES ALSO AND HELD THAT ALL EXPENSES CONNECTED WITH THE EXEMPT INCOME HAVE TO BE NECESSARILY DISALL OWED REGARDLESS OF WHETHER THEY ARE DIRECT OR INDIRECT, FIXED OR VARIAB LE AND MANAGERIAL OR FINANCIAL IN ACCORDANCE WITH LAW. THEREFORE, HE MADE DISALLOWANCE UNDER RULE 8D OF THE INCOME TAX RULES, 1962 (IN SHOR T THE RULES) AND MADE ADDITION OF RS. 14,87,561/- U/S 14A OF THE ACT . 5 ITA NO. 115 & 55/JP/2015 RAJASTHAN RAJYA SAHKARI KRAYA VIKRAYA SANGH VS ADDL .CIT 3. BEING AGGRIEVED BY THE ORDER OF THE ASSESSING OF FICER, THE ASSESSEE CARRIED THE MATTER BEFORE THE LD CIT(A), WHO HAD PARTLY ALLOWED THE ASSESSEES APPEAL BY OBSERVING THAT THE APPELLANT HAD STATED THAT IT HAD SUFFICIENT INTEREST FREE FUNDS TO THE TUNE OF RS. 54 CRORES ON ACCOUNT OF SHARE CAPITAL AND RESERVES AND SURPLUS. THEREFORE, NO DISALLOWANCE OUT OF INTEREST CAN BE MADE. THE INTE REST FREE FUND EXCEED THE INVESTMENT IN THE TAX FREE SECURITIES IN VIEW OF THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS HDFC BANK (INCOME TAX APPEAL NO. 330 OF 2012 DATED 23/07/2012 ) IN WHICH THE DECISION IN THE CASE OF RELIANCE UTILITIES & POWER L TD. (2009) 313 ITR 340 (BOM) HAS BEEN FOLLOWED. THEREFORE, HE DELETED TH E DISALLOWANCE OF INTEREST EXPENSES AT RS. 10,63,226/-. HE FURTHER OBSERVED THAT AS REGARDS THE DISALLOWANCE OF HALF PERCENT OF THE AVE RAGE VALUE OF TAX FREE INVESTMENTS, IT IS NOT POSSIBLE THAT NO EXPEND ITURE WOULD BE INCURRED IN RELATION TO SUCH INVESTMENTS. THE LD ASS ESSING OFFICER MENTIONED THAT VALUE OF THE INVESTMENT WAS CHANGING YEAR AFTER YEAR AND HUGE AMOUNT OF DIVIDEND EARNED BY THE ASSESSEE, WHICH WOULD REQUIRE MAN POWER RESOURCES TO BE DEPLOYED. THE ASSES SEE HAS NOT BEEN ABLE TO STATE THE EXPENDITURE, WHICH IS RELATAB LE TO THE EARNING OF THE INCOME. HE AGREED WITH THE APPELLANT THAT PROVIS IONS OF RULE 8D OF 6 ITA NO. 115 & 55/JP/2015 RAJASTHAN RAJYA SAHKARI KRAYA VIKRAYA SANGH VS ADDL .CIT THE RULES CANNOT BE APPLIED TO INCOME, WHICH IS NOT EXEMPTED BUT DEDUCTIBLE U/S 80P OF THE ACT. HOWEVER, THE PRINCIPL E TO DETERMINE THE EXPENDITURE RELATABLE TO SUCH INVESTMENTS WOULD REMA IN THE SAME. THEREFORE, THE ADDITION ON ACCOUNT OF DISALLOWANCE OF EXPENDITURE OF RS. 4,15,335/- HAD BEEN UPHELD. 4. NOW THE ASSESSEE IS IN APPEAL BEFORE US. THE LD A R OF THE ASSESSEE HAS REITERATED THE ARGUMENTS MADE BEFORE T HE LD CIT(A) AND ARGUED THAT THE HONBLE ITAT ALREADY DECIDED THIS IS SUE IN FAVOUR OF THE ASSESSEE IN PRECEDING YEAR. SECTION 14A IS NOT APPL ICABLE IN THIS CASE AS THE ASSESSEE HAD NOT INCURRED ANY EXPENDITURE ON EA RNING OF DIVIDEND FROM COOPERATIVES. THE INVESTMENT IS OUT OF OWN FUND S AND THERE IS NO EXPENSES INCURRED FOR EARNING THIS INCOME. FOR ANY DISALLOWANCE U/S 14A OF THE ACT, THERE HAS FIRST TO BE A FINDING OF INCURRING OF EXPENDITURE FOR EARNING EXEMPT INCOME. THE OWNED FUN DS ARE MUCH IN EXCESS OF THE INVESTMENT AND THE ASSESSEE EVEN HAD FURTHER SURPLUS FUNDS WHICH ARE INVESTED IN FIXED DEPOSITS OF BANKS, THE INTEREST INCOME FROM WHICH FORMS PART OF INTEREST RECEIVED CREDITED TO P&L ACCOUNT. THE INTEREST INCOME WAS EVEN MORE IN EARLIER YEARS. HE R ELIED ON THE DECISION IN THE CASE OF CIT VS HERO CYCLES LTD. 323 ITR 518 (P&H) 7 ITA NO. 115 & 55/JP/2015 RAJASTHAN RAJYA SAHKARI KRAYA VIKRAYA SANGH VS ADDL .CIT WHEREIN THE ASSESSEE HAD EARNED DIVIDEND INCOME ONLY FROM THREE COMPANIES AND THERE WAS NO FACT OF HAVING INCURRED A NY EXPENDITURE FOR PURPOSE OF EARNING DIVIDEND INCOME, DISALLOWANCE MADE U/S 14A WAS LIABLE TO BE DELETED, FOR WHICH HE RELIED ON THE DECISION IN THE CASE OF CIT VS RELIANCE INDUSTRIES LTD. (2010) 8 TAXMANN. COM 218 (BOM). IT IS FURTHER ARGUED THAT NO DISALLOWANCE CAN BE MADE U /S 14A ON WHICH DEDUCTION U/S 80P HAS BEEN ALLOWED. THE ASSESSEE RELI ED ON THE DECISION IN THE CASE OF CIT VS KRIBHCO 349 ITR 618 (D EL), CIT VS BANASKANTHA DISTRICT COOP. MILK PRODUCERS UNION,223 TAXMAN 501 (GUJ). HE FURTHER RELIED ON THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS HDFC BANK LTD. 366 ITR 505 (BOM ) FOLLOWING DECISION IN THE CASE OF RELIANCE UTILITIES & POWER L TD. 313 ITR (BOM) AND CIT VS HERO CYCLES LTD. (SUPRA). THERE SHOULD BE INCURRENCE OF DIRECT EXPENDITURE AND THE ASSUMPTION BY THE A.O. T HAT SOME ADMINISTRATIVE (MANAGERIAL/CLERICAL) EXPENSES WOULD HAVE BEEN INCURRED IN DEPOSITING DIVIDEND WARRANT OR TAKING INVESTMENT DECISIONS IN HYPOTHETICAL. THE ALLEGATION THAT INVESTMENT PORTFOL IO IS CHANGING FROM YEAR TO YEAR IS BASELESS. NO SHAREHOLDING HAS BEEN TRANSFERRED DURING LAST 4-5 YEARS AND ONLY INVESTMENT MADE WHEREVER OPP ORTUNITY AVAILABLE IN EXISTING COOPERATIVE SOCIETIES OUT OF ACCUMULATED DIVIDEND 8 ITA NO. 115 & 55/JP/2015 RAJASTHAN RAJYA SAHKARI KRAYA VIKRAYA SANGH VS ADDL .CIT INCOME. THE LD AR ALSO DRAWN A CHART SHOWING INVESTM ENT MADE IN LAST 5 YEARS FOR INVESTMENT AND DIVIDEND EARNED. THE REFORE, HE PRAYED TO DELETE THE REMAINING ADDITION. 5. AT THE OUTSET, THE LD DR HAS VEHEMENTLY SUPPORTE D THE ORDER OF THE ASSESSING OFFICER AND ARGUED THAT FOR EARNING O F ANY INCOME, THE ASSESSEE SHOULD HAVE INCURRED THE EXPENDITURE BUT N O DISALLOWANCE HAS BEEN MADE BY THE ASSESSEE ITSELF. 6. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. IT IS UNDISPUTED FACT THAT THE ASSESSEE HAS SHARE CAPITAL AND RESERVE AND SURP LUS AT MORE THAN RS. 54 CRORES. THE INVESTMENT WITH COOPERATIVE SOCIET Y WAS RS. MORE THAN 9.3 CRORES. RULE 8D OF THE RULES APPLIED BY TH E ASSESSING OFFICER IS NOT APPLICABLE WHERE THE ASSESSEE CLAIMED DEDUCTION U/S 80P OF THE ACT AS HELD BY THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS KRIBHCO (SUPRA). THE HON'BLE BOMBAY HIGH COURT S DECISION IN CASE OF RELIANCE UTILITIES (SUPRA) IS ALSO APPLICABLE IN THE CASE OF ASSESSEE AS THE ASSESSEE HAS MORE FUND THAN INVESTMENT MADE WITH THE COOPERATIVE SOCIETIES WHEREVER DIVIDEND RECEIVED. IN PAST ALSO, THESE INVESTMENTS WERE THERE BUT NO DISALLOWANCE HAD BEEN MADE BY THE A SSESSING OFFICER U/S 14A OF THE ACT. THE INTEREST EXPENSES WER E LESS THAN 9 ITA NO. 115 & 55/JP/2015 RAJASTHAN RAJYA SAHKARI KRAYA VIKRAYA SANGH VS ADDL .CIT INTEREST RECEIVED BY THE APPELLANT. THE CASE LAWS REF ERRED BY THE ASSESSEE I.E. DECISION IN THE CASE OF CIT VS BANASKA NTHA DISTRICT COOP. MILK PRODUCERS UNION (SUPRA) ALSO SQUARELY APPLICAB LE WHEREIN IT HAS BEEN HELD THAT SECTION 14A IS NOT APPLICABLE WHERE D EDUCTION CLAIMED U/S 80A TO 80U UNDER CHAPTER VIA OF THE ACT. THEREFO RE, WE ALLOW THE ASSESSEES APPEAL ON THIS GROUND AND DISMISS THE RE VENUES GROUND NO. 4. 7. NOW WE TAKE FIRST GROUND OF REVENUES APPEAL, WHICH IS AGAINST ALLOWING THE DEDUCTION U/S 80P AT RS. 78,13,039/- BY THE LD CIT(A). THE LD ASSESSING OFFICER HAS OBSERVED THAT THE ASSESSEE HAD CLAIMED DEDUCTION U/S 80P(2)(A)(IV) FOR SUPPLY OF FERTILIZE R AND SEEDS TO THE MEMBERS. THE ASSESSEE SUBMITTED BEFORE THE LD ASSESS ING OFFICER THAT FERTILIZERS AND SEEDS ARE AGRICULTURAL INPUTS AND A RE COVERED BY SECTION 80P(2)(A)(IV) OF THE ACT. THE ASSESSEES CLAIM IS SQ UARELY COVERED BY THE VARIOUS DECISIONS OF THE HONBLE ITAT. AFTER CON SIDERING THE ASSESSEES REPLY, THE LD ASSESSING OFFICER HELD THA T THE DEPARTMENT HAD CONSISTENTLY DENIED CLAIM U/S 80P OF THE ACT. THE AS SESSEE HAS FAVORABLE DECISION BUT WHICH HAS BEEN CHALLENGED BEF ORE THE RAJASTHAN HIGH COURT. THEREFORE, HE MADE ADDITION. 10 ITA NO. 115 & 55/JP/2015 RAJASTHAN RAJYA SAHKARI KRAYA VIKRAYA SANGH VS ADDL .CIT THE LD CIT(A) ALLOWED THE APPEAL BY OBSERVING THAT TH E ASSESSEES ISSUE IS COVERED BY THE ORDER OF THE HON BLE ITAT IN ASSESSEES OWN CONTINUOUSLY FROM A.Y. 2003-04 TO 201 0-11. HE HAS REPRODUCED ORDER OF ITAT ON PAGE NO. 3 AND 4 OF THE APPEAL ORDER AND ALLOWED THE APPEAL. THE LD DR HAS VEHEMENTLY SUPPORTED THE ORDER OF THE ASSESSING OFFICER AND THE LD AR OF THE ASSESSEE HAS REITERATE D THE ARGUMENTS MADE BEFORE THE LD CIT(A) AND PRAYED TO CONFIRM THE ORDER OF THE LD CIT(A). THE COORDINATE BENCH HAS DECIDED THE ASSESSEES OWN CASE IN ITA NO. 1042/JP/2010 FOR A.Y. 2007-08 VIDE ORDER DA TED 04/2/2011 AND IN ITA NO. 702/JP/2009 ORDER DATED 16/07/2010 FOR A.Y. 2006-07 AND HELD THAT THE ISSUE HAS BEEN DECIDED IN FAVOUR OF T HE ASSESSEE IN A.Y. 2003-04 AND 2005-06 AND THE LD CIT(A) WAS JUSTIFIED I N DIRECTING THE ASSESSING OFFICER TO ALLOW DEDUCTION U/S 80P OF THE ACT. BY RESPECTFULLY FOLLOWING THE DECISION OF THE COORDINATE BENCH, WE DI SMISS THE REVENUES GROUND NO.1 OF THE APPEAL AS THE ISSUE IS IDENTICAL TO THE EARLIER YEAR. 8. GROUND NO. 2 IS AGAINST DELETING THE ADDITION OF RS. 21,15,059/- BY DISALLOWING CONTRIBUTION TO LIC GROUP GRATUITY SC HEME. THE LD 11 ITA NO. 115 & 55/JP/2015 RAJASTHAN RAJYA SAHKARI KRAYA VIKRAYA SANGH VS ADDL .CIT ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAD MA DE PAYMENT OF RS. 21,15,059/- TO LIC TOWARDS PREMIUM OF GROUP GRATUITY SCHEME. HE GAVE REASONABLE OPPORTUNITY OF BEING HEARD, WHICH WAS AVAI LED BY THE ASSESSEE. THE ASSESSEES REPLY HAS BEEN REPRODUCED O N PAGE NO. 2AND 3 OF THE ASSESSMENT ORDER. AFTER CONSIDERING THE AS SESSEES REPLY, IT HAS BEEN HELD THAT THE ASSESSEE HAS NOT PRODUCED ANY EV IDENCE THAT ITS GROUP GRATUITY SCHEME IS AN APPROVED GRATUITY SCHEM E, WHICH IS MANDATORY. THEREFORE, HE MADE ADDITION. IN FIRST APPEAL, THE LD CIT(A) HAD DELETED THE ADDI TION BY OBSERVING THAT THIS ISSUE IS ALSO COVERED BY THE EA RLIER ORDER OF THE ASSESSEE FOR A.Y. 2005-06 TO 2010-11. HE HAS REPROD UCED THE ORDER OF THE ITAT AT PAGE 6 OF THE APPEAL ORDER AND ALLOWED TH E ASSESSEES APPEAL. THE LD DR HAS VEHEMENTLY SUPPORTED THE ORDER OF THE ASSESSING OFFICER AND THE LD AR OF THE ASSESSEE HAS REITERATE D THE ARGUMENTS MADE BEFORE THE LD CIT(A) AND PRAYED TO CONFIRM THE ORDER OF THE LD CIT(A). THE COORDINATE BENCH HAS DECIDED THE ASSESSEES OWN CASE IN ITA NO. 1042/JP/2010 FOR A.Y. 2007-08 VIDE ORDER DA TED 04/2/2011 AND IN ITA NO. 702/JP/2009 ORDER DATED 16/07/2010 FOR A .Y. 2006-07 AND 12 ITA NO. 115 & 55/JP/2015 RAJASTHAN RAJYA SAHKARI KRAYA VIKRAYA SANGH VS ADDL .CIT HELD THAT THE ISSUE HAS BEEN DECIDED IN FAVOUR OF T HE ASSESSEE IN A.Y. 2003-04 AND 2005-06 AND THE LD CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION OF RS. 21,15,059/-. BY RESPECTFULLY FOLLOWI NG THE DECISION OF THE COORDINATE BENCH, WE DISMISS THE REVENUES GROUND N O.2 OF THE APPEAL AS THE ISSUE IS IDENTICAL TO THE EARLIER YEAR. 9. GROUND NO. 3 IS AGAINST ALLOWING THE PRIOR PERIOD EXPENSES OF RS. 1,10,414/-. THE LD ASSESSING OFFICER OBSERVED THAT T HE ASSESSEE HAD DEBITED AN AMOUNT OF RS. 10,40,147/- TOWARDS EXPENDI TURE, WHICH PERTAINED TO PRIOR PERIOD EXPENSES, OUT OF THIS THE ASSESSEE HAD ADDED BACK RS. 9,35,731/- IN THE COMPUTATION OF INCOME BU T REMAINING EXPENSES OF RS. 1,10,416 HAD NOT BEEN DISALLOWED. THE REFORE, HE GAVE REASONABLE OPPORTUNITY OF BEING HEARD ON THIS ISSUE . AFTER CONSIDERING THE ASSESSEES REPLY, IT HAS BEEN HELD THAT THE ASS ESSEE HAD FOLLOWED MERCANTILE SYSTEM OF ACCOUNTING. AS PER THIS SYSTEM , PRIOR PERIOD EXPENSES ARE NOT ALLOWABLE. THERE ARE FAVOURABLE DECI SIONS ON THIS ISSUE BUT SAME HAS BEEN CHALLENGED BEFORE THE HIGHE R FORUM, THEREFORE, HE MADE ADDITION. THE LD CIT(A) HAS ALLOWED THE APPEAL BY OBSERVING TH AT THIS ISSUE IS ALSO COVERED BY THE HONBLE ITAT DECISION IN ASS ESSEES OWN CASE FOR A.Y. 2003-04 TO 2010-11. ACCORDINGLY, HE ALLOWED THE APPEAL 13 ITA NO. 115 & 55/JP/2015 RAJASTHAN RAJYA SAHKARI KRAYA VIKRAYA SANGH VS ADDL .CIT THE LD DR HAS VEHEMENTLY SUPPORTED THE ORDER OF THE ASSESSING OFFICER AND THE LD AR OF THE ASSESSEE HAS REITERATE D THE ARGUMENTS MADE BEFORE THE LD CIT(A) AND PRAYED TO CONFIRM THE ORDER OF THE LD CIT(A). WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PA RTIES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. THE AS SESSEE HAS CLAIMED THIS EXPENDITURE ON CRYSTALLIZATION AND GOT SANCTIO N FROM THE COMPETENT AUTHORITY. IN PAST ALSO, THESE EXPENSES HAS BEEN CL AIMED AND ALLOWED BY THE COORDINATE BENCH IN ITA NO. 1042/JP/2010 FOR A.Y. 2007-08 VIDE ORDER DATED 04/2/2011 AND IN ITA NO. 702/JP/2009 OR DER DATED 16/07/2010 FOR A.Y. 2006-07. BY RESPECTFULLY FOLLOWI NG THE DECISION OF THE COORDINATE BENCH, WE DISMISS THE REVENUES GROUN D NO.3 OF THE APPEAL AS THE ISSUE IS IDENTICAL TO THE EARLIER YEA R. 10. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED AND REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 17/05/2016. SD/- SD/- EQDQY DS-JKOR VH-VKJ-EHUK (MUKUL K. SHRAWAT) (T.R. MEENA) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER 14 ITA NO. 115 & 55/JP/2015 RAJASTHAN RAJYA SAHKARI KRAYA VIKRAYA SANGH VS ADDL .CIT TK;IQJ@ JAIPUR FNUKAD@ DATED:- 17 TH MAY, 2016 RANJAN* VKNS'K DH IZFRFYFI VXZSFKR @ COPY OF THE ORDER FORWARDED TO: 1 VIHYKFKHZ @ THE APPELLANT- RAJASTHAN RAJYA SAHKARI KRAYA VIKRAYA SANGH LTD., JAIPUR. 2. IZR;FKHZ @ THE RESPONDENT- THE ADDL.CIT, RANGE-6/DCIT, CIRCLE-6, JAIPUR. 3. VK;DJ VK;QDR @ CIT 4. VK;DJ VK;QDRVIHY @ THE CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ @ DR, ITAT, JAIPUR 6. XKMZ QKBZY @ GUARD FILE (ITA NO. 115 &55/JP/2015) VKNS'KKUQLKJ @ BY ORDER, LGK;D IATHDKJ @ ASST. REGISTRAR