The ITO-Ward-4, Gandhinagar V. The Gujarat State Civil Supplies Corporation Ltd., Gandhinagar

ITA 1173/AHD/2016

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 5962 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 9 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-02-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2012-2013
• Appeal Filed On: 05-05-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VASUNDRA UPMANYU
• Keywords: Question of law
• Section: 143(3); 12

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD D BENCH AHMEDABAD BEFORE, SHRI S. S. GODARA, JUDICIAL MEMBER AND SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER ITA NO. 1173/AHD/2016 WITH CO NO. 88/AHD/16 (ASSESSM ENT YEAR: 2012- 2013) INCOME-TAX OFFICER, WARD-4, GANDHINAGAR APPELLANT VS. THE GUJARAT STATE CIVIL SUPPLIES CORPORATION LTD., SECTOR-10A, CH ROAD, NR. NEW SACHIVALAYA, GANDHINAGAR 382010 RESPONDENT/CROSS OBJECTOR PAN: AAACT5736F /BY REVENUE : VASUNDRA UPMANYU, SR. D.R. /BY ASSESSEE : SHRI SANJAY R. SHAH, A.R. /DATE OF HEARING : 21.02.2018 /DATE OF PRONOUNCEMENT : 27.02.2018 ORDER PER S. S. GODARA, JUDICIAL MEMBER THIS REVENUES APPEAL AND ASSESSEES CROSS OBJECTIO N FOR ASSESSMENT YEAR 2012-13 ARISES AGAINST THE CIT(A), GANDHINAGARS OR DER DATED 12.02.2016, IN CASE NO. CIT(A)/GNR/76/2015-16, REVERSING ASSESSING OFFI CERS ACTION MAKING ADDITION OF RS.1,15,72,37,000/- PERTAINING TO SURPLUS OUT OF ACTIVITIES CARRIED FOR ON AND BEHALF OF GOVERNMENT OF GUJARAT, IN PROCEEDINGS U/S . 143(3) OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT. HEARD BOTH THE PARTIES. CASE FILE PERUSED. ITA NO. 1173/AHD/16 WITH CO NO. 88/AHD/16 [ITO VS. THE GUJARAT STATE CIVIL SUPPLIES CORPORATION LTD. ] A.Y. 2012-1 3 - 2 - 2. BOTH THE LEARNED REPRESENTATIVES STATE AT THE OU TSET THAT THE CIT(A)S FINDINGS UNDER CHALLENGE ELABORATELY DISCUSS THE ENTIRE ISSU E OF THE ABOVESTATED SURPLUS ADDITION AS UNDER: 5.3 I HAVE CAREFULLY CONSIDERED THE ASSESSMENT ORD ER, SUBMISSION FILED BY APPELLANT AND CONTENTIONS MADE BY THE AR OF THE APP ELLANT. THE UNDISPUTED FACTS OF THE PRESENT CASE IS THAT THE APPELLANT COMPANY WAS SET UP BY THE GOVERNMENT OF GUJARAT (GOG) UNDER THE COMPANIES ACT 1956 VIDE ITS GOVERNMENT RESOLUTION (GR) AND HAS BEEN SET UP FOR SMOOTHENING THE PUBLIC DISTRIBUTION SYSTEM(PDS) LIKE DISTRIBUTION OF GOODS GRAINS, EDIBLE OILS ETC AMONG THE POOR PEOPLE. ON CAREFUL CONSIDERATION OF DETAILS SUBMITTED BY APPELLANT AND FROM ASSESSMENT ORDER, IT IS OBSERVED THAT APPELLANT, IS, MAINLY CARRYING OUT TW O TYPES OF ACTIVITIES I.E. ONE ACTIVITY BEING APPELLANT MANAGES THE PDS AND VARIOU S PUBLIC WELFARE .SCHEMES ON BEHALF OF THE GOG AND AS PER THE INSTRUCTIONS OF TH E GOG WITH THE MOTIVE OF PROVIDING SOCIAL AND ECONOMIC WELFARE AND SECOND AC TIVITY BEING OPERATING PETROL PUMPS, GAS AGENCIES, DEPARTMENTAL STORES, ETC. WHIC H ARE CARRIED OUT BY THE APPELLANT ON ITS OWN BEHALF. THE GOG IS ALSO PROVID ING HANDLING COMMISSION TO THE APPELLANT AS PERCENTAGE OF TURNOVER ACHIEVED BY IT FOR FIRST TYPE OF ACTIVITY AND SUCH COMMISSION IS CONSIDERED AS PART OF INCOME BY APPEL LANT AS PART OF SECOND ACTIVITY.- AS PER DETAILS SUBMITTED BY APPELLANT AND ACCEPTED BY ASSESSING OFFICER DURING ASSESSMENT PROCEEDINGS, APPELLANT HAS SHOWN SURPLUS OF RS.67,16,76,275/- FROM FIRST TYPE OF ACTIVITY AND AS SUCH ACTIVITY WAS CAR RIED OUT ON BEHALF OF GOVERNMENT, APPELLANT HAS TRANSFERRED SUCH SURPLUS TO GOG AND C LAIMED AS EXPENDITURE IN PROFIT & LOSS ACCOUNT WHICH HAS BEEN DISALLOWED BY THE AO ON THE GROUND THAT PROFIT/SURPLUS IS EARNED BY APPELLANT AND NOT GOVER NMENT HENCE SAME IS REQUIRED TO BE TAXED IN HANDS OF APPELLANT. ON CAREFUL, PERUSAL OF THE ENTIRE FACTS, IT IS NOTICED THAT SIMILAR ISSUE HAS BEEN DECIDED IN THE CASE OF THE APPELLANT FOR AY 2010-11 IN APPEAL NO. CIT(A)GNR/152/2012-13 DATED 18/11/2013. THE FINDINGS GIVEN ARE AS UNDER: 5.4 I HAVE CAREFULLY CONSIDERED THE ASSESSMENT ORDE R, SUBMISSION FILED BY APPELLANT AND REMAND REPORT SUBMITTED BY ASSESSI NG OFFICER. THE UNDISPUTED FACTS OF THE PRESENT EASE AS OBSERVED BY ASSESSING OFFICER AT PARA 3 OF THE ASSESSMENT ORDER ARE THAT APPELLANT C OMPANY WAS SET UP BY THE GOVERNMENT OF GUJARAT (GOG) UNDER THE COMPANIES ACT 1956 VIDE ITS GOVERNMENT RESOLUTION (GR) AND HAS BEEN SET UP FOR SMOOTHENING THE PUBLIC DISTRIBUTION SYSTEM(PDS) LIKE DISTRIBUTION O F GOODS GRAINS, EDIBLE OILS ETC. AMONG THE POOR PEOPLE. ON CAREFUL CONSIDERATION OF DETAILS SUBMITTED BY AP PELLANT AND FROM ASSESSMENT ORDER, IT IS OBSERVED THAT APPELLANT IS MAINLY CARRYING OUT TWO TYPES OF ACTIVITIES I.E. ONE ACTIVITY BEING APPELLA NT MANAGES THE PDS AND VARIOUS PUBLIC WELFARE SCHEMES ON BEHALF OF THE GOG AND AS PER THE INSTRUCTIONS OF THE GOG WITH THE MOTIVE OF PROVIDIN G SOCIAL AND ECONOMIC WELFARE AND SECOND ACTIVITY BEING OPERATING PETRO L PUMPS, GAS AGENCIES, DEPARTMENTAL STORES, ETC. WHICH ARE CARRIED OUT BY THE APPELLANT ON ITS OWN BEHALF. THE GOG IS ALSO PROVIDING HANDLING COMMISSI ON TO THE APPELLANT AS PERCENTAGE OF TURNOVER ACHIEVED BY IT FOR FIRST TYP E OF ACTIVITY AND SUCH ITA NO. 1173/AHD/16 WITH CO NO. 88/AHD/16 [ITO VS. THE GUJARAT STATE CIVIL SUPPLIES CORPORATION LTD. ] A.Y. 2012-1 3 - 3 - COMMISSION IS CONSIDERED AS PART OF INCOME BY APPEL LANT AS PART OF SECOND ACTIVITY. AS PER DETAILS SUBMITTED BY APPELLANT AND ACCEPTED BY ASSESSING OFFICER DURING ASSESSMENT PROCEEDINGS, APPELLANT HA S SHOWN SURPLUS OF RS.67,16,76,275/- FROM FIRST TYPE OF ACTIVITY AND A S SUCH ACTIVITY WAS CARRIED OUT ON 'BEHALF OF GOVERNMENT, APPELLANT HAS, TRANSF ERRED SUCH SURPLUS TO GOG AND CLAIMED AS EXPENDITURE IN PROFIT & LOSS ACC OUNT ,WHICH HAS BEEN DISALLOWED BY ASSESSING OFFICER ON THE GROUND THAT PROFIT/SURPLUS IS EARNED BY APPELLANT AND NOT GOVERNMENT HENCE SAME IS REQUI RED TO BE TAXED IN HANDS OF APPELLANT. ' 5.5 DURING THE COURSE OF APPELLATE PROCEEDINGS, APP ELLANT HAS SUBMITTED COPIES OF VARIOUS GR EXPLAINING VARIOUS PDS CARRIED OUT BY IT ON BEHALF OF GOG. G.R. NO. CSC-1083-4089-D DATED 28TH MARCH 1985 , STATES AS UNDER : 'SINCE THE OBLIGATION OF GOVERNMENT TO PROVIDE AT R EASONABLE PRICES, FOOD GRAINS AND EDIBLE OIL THROUGH FAIR PRI CE SHOPS WAS BEING DISCHARGED FOR SOME TIME PAST NOW THROUGH THE AGENC Y OF THE GUJARAT STATE CIVIL SUPPLIES CORPORATION LIMITED., GOVERNMENT WAS CONSIDERING THE BASIS ON WHICH TNIS WORK SHOULD BE ENTRUSTED TO THE CORPORATION KEEPING IN VIEW THE PROPOSAL MADE BY TH E SAID CORPORATION. IN THE CIRCUMSTANCES EXPLAINED ABOVE, GOVERNMENT IS PLEASED TO DECIDE THAT THE PUBLIC DISTRIBUTION SYSTEM OPERATIO NS IN RESPECT OF FOODGRAINS AND EDIBLE OILS, TRANSFERRED TO THE GUJA RAT STATE CIVIL SUPPLIES CORPORATION LIMITED SHOULD BE CARRIED OUT BY THE SAID CORPORATION FROM THE DATE OF ITS INCEPTION FOR. AND ON BEHALF OF THE GOVERNMENT AND THE RESULTANT PROFIT / LOSS I ARISIN G IN THE TRANSACTION OF THE SAID ITEMS WILL BE ON GOVERNMENT ACCOUNT THE GOVERNMENT IS ALSO PLEASED TO ALLOW HANDLING COMMIS SION AT 1/4% RATE ON THE TOTAL TURNOVER ON THE AFORESAID ITEMS O N GOVERNMENT ACCOUNT EFFECTED BY THE CORPORATION FOR FIRST TWO Y EARS AND AT THE RATE OF 3/4% FOR THE SUBSEQUENT 3 YEARS AGAINST CON SIDERATION OF SERVICES RENDERED BY THE SAID CORPORATION IN THIS R ESPECT: GOVERNMENT IS ALSO PLEASED TO ALLOW THE1 SAID CORPO RATION TO RETAIN THE NET SURPLUS FUNDS ON ACCOUNT OF GOVERNMENT TRAN SACTIONS COVERED UNDER PUBLIC DISTRIBUTION OPERATION, AND TH ESE SURPLUS FUND WILL BE TREATED AS ANALOGOUS TO LOAN AND THE GUJARA T STATE CIVIL SUPPLIES CORPORATION WILL PAY TO THE GOVERNMENT ON FUNDS SO RETAINED 12 Y2% INTEREST PER ANNUM. DETAILED TERM O F THIS LOAN ARRANGEMENT WOULD BE SEPARATELY ISSUED.' FURTHER, G.R. DATED 06/07/1991 STATES AS UNDER: 'GOVERNMENT VIDE G.R. OF EVEN NO, DATED. 28.03.1985 READ AT (I) ABOVE HAD DECIDED THAT THE PUBLIC DISTRIBUTI ON SYSTEM OPERATION IN RESPECT OF FOOD-GRAINS AND ELIGIBLE OI LS TRANSFERRED TO THE GUJARAT STATE: CIVIL SUPPLIES CORPORATION LIMIT ED SHOULD BE CARRIED OUT BY SAID CORPORATION FROM DATE OF ITS IN CORPORATION, FOR AND ON BEHALF OF THE STATE GOVERNMENT AND THE RESUL TANT PROFIT / LOSS ARISING IN THE TRANSACTION OF THE SAID ITEMS WILL B E ON GOVERNMENT ACCOUNT.... ITA NO. 1173/AHD/16 WITH CO NO. 88/AHD/16 [ITO VS. THE GUJARAT STATE CIVIL SUPPLIES CORPORATION LTD. ] A.Y. 2012-1 3 - 4 - ... 2. GOVERNMENT IS FURTHER PLEASED TO CLARIFY THA T ALL DIRECT EXPENSES SUCH AS FREIGHT, GUNNY BAGS, LABOUR CHARGES, TRANSP ORT CHARGES, PACKING EXPENSES, GUARANTEE 'CHARGES, COMMISSION ON , SALES RELATING TO PROCUREMENT OF FOOD GRAINS AND EDIBLE OILS CARRI ED OUT ON GOVERNMENT ACCOUNT SHALL BE DEBITED TO GOVERNMENT A CCOUNT SUBJECT TO GENERAL SUPERVISION AND INSTRUCTIONS OF THE GOVERNMENT ISSUED FROM TIME TO TIME. AS REGARDS INTEREST CHARG ES ON BORROWED FUNDS INCLUDING THE SURPLUS IN GOVERNMENT ACCOUNT A ND OTHER FINANCING CHARGES INCURRED BY THE GUJARAT STATE CIV IL SUPPLIES CORPORATION LIMITED FOR CARRYING OUT BUSINESS ON GO VERNMENT ACCOUNT AND ITS OWN ACCOUNT MAY BE APPORTIONED BETW EEN TWO OPERATIONS ON THE BASIS OF ANNUAL AVERAGE INVENTORY HELD DURING THE YEAR.' 3. GOVERNMENT IS ALSO PLEASED TO ALLOW THE SAID COR PORATION TO RETAIN TO THE CREDIT OF GUJARAT GOVERNMENT ACCOUNT THE NET SURPLUS FUNDS I.E. AFTER DEDUCTING THE AFORESAID COMMISSION PAYABLE TO GUJARAT STATE CIVIL SUPPLIES CORPORATION LIMITED ON ACCOUNT OF GOVERNMENT TRANSACTIONS COVERED UNDER THE PUBLIC DI STRIBUTION SYSTEM OPERATIONS AND DIRECT THAT THESE SURPLUS FUN DS WILL BE TREATED AS ANALOGUES TO LOAN AND THE SAID CORPORATION SHALL PAY TO THE GOVERNMENT ON FUNDS SO RETAINED INTEREST AT THE RAT E OF 14% PER ANNUM, ON SURPLUS GENERATED FROM 1 ST APRIL 1990 TILL FURTHER ORDERS.' IT IS CRYSTAL CLEAR FROM AFORESAID GR ALONG WITH TH E FACTS DISCUSSED HEREIN ABOVE: (I) PUBLIC DISTRIBUTION SYSTEM OPERATIONS IN RESPEC T OF FOODGRAINS AND EDIBLE OILS, TRANSFERRED TO THE GUJA RAT STATE CIVIL SUPPLIES CORPORATION LIMITED SHOULD 'BE CARRI ED OUT BY THE SAID CORPORATION FROM THE DATE OF ITS INCEPTION FOR AND ON BEHALF OF THE GOVERNMENT (II) THE GOVERNMENT WILL ALLOW HANDLING COMMISSION ON THE TURNOVER CARRIED OUT BY APPELLANT ON BEHALF OF GOG. (III) THE APPELLANT IS CARRYING OUT AND FUNCTION PDS AS AGENT OF GOG. (IV) THE RESULTANT PROFIT OR LOSS ARISING OUT OF SUCH ACTIVITY WILL BE ON GOVERNMENT ACCOUNT. (V) THE APPELLANT WOULD RETAIN NET SURPLUS FUND I .E. AFTER DEDUCTING THE AFORESAID COMMISSION PAYABLE TO GUJARAT STATE, CIVIL SUPPLIES CORPORATION LIMITED ON ACCO UNT OF GOVERNMENT TRANSACTIONS COVERED UNDER PDS AND SURPL US FUND WILL BE TREATED AS ANALOGUES TO LOAN AND APPEL LANT WOULD PAY INTEREST TO GOG ON FUNDS RETAINED BY IT. IT IS FURTHER OBSERVED FROM AFORESAID GRS THAT APPE LLANT IS CARRYING OUT AND FUNCTION PDS ON BEHALF- OF GOG AND RESULTANT PROFIT/LOSS FROM SUCH TRANSACTION IS ON GOVERNMENT ACCOUNT HENCE OBSERVATION OF AO AT PAGE NO 5 OF THE ORDER THAT IT IS NOWHERE STATED IN GR THAT PROFIT/SURPLUS FROM THE ACTIVITY IS THE INCOME OF GOVERNMENT IS FALLACIOUS. THE AO HAS REFERRED ONLY PART PARAGRAPH OF GR (PARA 3 OF GR DATED 1991) AND TAME TO CONCLUS ION THAT PROFIT/SURPLUS IS LOAN BY GOG TO ASSESSES. THESE PR OVE BEYOND ITA NO. 1173/AHD/16 WITH CO NO. 88/AHD/16 [ITO VS. THE GUJARAT STATE CIVIL SUPPLIES CORPORATION LTD. ] A.Y. 2012-1 3 - 5 - DOUBT THAT AO HAS PASSED THE PRESENT ORDER VERY, HU RRIEDLY AND WITHOUT APPRECIATING PROPER PERSPECTIVE OF TRANSACT IONS AND ACTIVITIES CARRIED BY APPELLANT. ON CAREFUL CONSIDERATION OF VARIOUS ACTIVITIES CARR IED OUT BY APPELLANT ALONG WITH MODUS OPERANDI AS DISCUSSED HE REIN ABOVE, IT IS OBSERVED THAT APPELLANT ESTIMATES THE PROCUREMEN T AND DISTRIBUTION COST (INCLUDING TRANSPORTATION AND LOG ISTICS COSTS) AND PROVIDES SUCH ESTIMATES TO THE GOG AND DIFFERENCE B ETWEEN THE DISTRIBUTION PRICE UNDER THE SCHEMES MENTIONED ABOV E AND THE AGGREGATE OF PURCHASE PRICE AND ESTIMATED PROCUREME NT & DISTRIBUTION COST (PROVIDED BY THE APPELLANT) IS RE IMBURSED TO THE APPELLANT AS SUBSIDY BY THE GOG. THE SUBSIDY REIMBU RSED BY THE GOG IS CREDITED TO SEGMENT RELATED TO GOG ACTIVITIE S OF THE PROFIT & LOSS ACCOUNT MAINTAINED BY APPELLANT. IN CASE THE P AYMENT OF SUBSIDY FAY(THE GOG IS HIGHER THAN THE DIFFERENCE B ETWEEN SALES REALIZATION AND, PURCHASE PRICE AND PROCUREMENT OF DISTRIBUTION COST THERE IS SURPLUS' AND SURPLUS IS NOT PROFIT OF THE GOG AS OBSERVED BY THE AO BUT IT IS EXCESS, SUBSIDY RECEIVED BY THE AP PELLANT |'ON THE DISTRIBUTION OF VARIOUS ITEMS UNDER THE PDS. EVEN F OR CARRYING OUT SUCH ACTIVITY, APPELLANT HAS EARNED COMMISSION INCO ME OF RS.51.17 CRORE FROM GOG AND OFFERED TO TAX IN PROFIT & LOSS ACCOUNT. THUS, WHATEVER SURPLUS/LOSS IS EARNED BY APPELLANT FOR AC TIVITY CARRIED OUT ON BEHALF OF GOG IS BELONGING TO GOI AND APPELLANT IS RETAINING SUCH PROFIT ON BEHALF OF GOG AND SUCH PROFIT/LOSS C ANNOT BE TAXED AS INCOME OF APPELLANT AS IT IS CARRYING OUT SUCH ACTI VITY AS AGENT OF GOG AND FOR RETAINING SUCH INCOME, APPELLANT IS PAY ING INTEREST TO GOG WHICH IS ALSO NOT DISPUTED BY AO. HAD IT BEEN T HE INCOME OF THE APPELLANT, IT WOULD NEVER TRANSFER SUCH AMOUNT TO GOVERNMENT ACCOUNT AS LOAN PAYABLE AND WOULD PAY HUGE INTEREST . NO PERSON WOULD PAY INTEREST ON INCOME EARNED BY IT AND BELON GING TO IT BUT ASSESSEE IS PAYING INTEREST TO GOG AS IT IS SURPLUS EARNED FROM ACTIVITY CARRIED OUT ON BEHALF OF GOG AND AS SUCH F UNDS ARE NOT PAID IMMEDIATELY TO GOG, IT IS PAYING INTEREST. IT IS OBSERVED FROM THE RECORDS THAT WHENEVER THERE IS DEFICIT IN SUCH ACTIVITY, IT IS NOT BORN BY APPELLANT BUT HAS BEEN RECOVERED FROM GOG. THUS, SURPLUS GENERATED DURING THE YEAR UNDER CONSIDERATION FROM PDS ACTIVITY FOR RS.67.16 CRORE CANNOT BE HELD OR TAXABLE AS INCOME IN HANDS OF APPELLANT. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, APPELL ANT HAS ALSO SUBMITTED A COLUMNAR PROFIT AND LOSS ACCOUNT P RESENTING ACTIVITIES CARRIED OUT ON BEHALF OF GOG AND THOSE C ARRIED OUT ON ITS OWN BEHALF SEPARATELY WHICH IS ALSO REPRODUCED BY A O AT PAGE 7 OF THE ORDER. THE SALES IN RESPECT OF ACTIVITIES CARRI ED OUT ON BEHALF OF THE GOG AND THE SUBSIDY RECEIVED IN RESPECT OF THE SAID SALES IS CREDITED TO THE GOG SECTION OFF THE COLUMNAR PROFIT & LOSS ACCOUNT WHEREAS PURCHASES AND OTHER DIRECT EXPENSES IN RESP ECT OF GOG ACTIVITIES ARE DEBITED TO THE GOG SECTION OF THE CO LUMNAR PROFIT & LOSS ACCOUNT AND WHATEVER SURPLUS IS COMPUTED FROM SUCH ACTIVITY IS ITA NO. 1173/AHD/16 WITH CO NO. 88/AHD/16 [ITO VS. THE GUJARAT STATE CIVIL SUPPLIES CORPORATION LTD. ] A.Y. 2012-1 3 - 6 - TRANSFERRED TO GOG AND CLAIMED AS EXPENDITURE AND T HUS 'APPELLANT HAS CORRECTLY SHOWN NIL INCOME FROM ITS FIRST ACUIT Y AS DISCUSSED HEREIN ABOVE. THE COMMISSION INCOME EARNED FOR ACTI VITY CARRIED OUT ON BEHALF OF GOG AND INCOME EARNED FROM APPELLA NT'S OWN ACTIVITY HAS BEEN CORRECTLY SHOWN AS INCOME OF APPE LLANT AND OFFERED SUCH INCOME FOR TAX IN RETURN OF INCOME. 5.6 APART FROM ABOVE, IT IS OBSERVED THAT APPELLANT IS CONSISTENTLY FOLLOWING AFORESAID PRACTICE OF ACCOUNTING ITS INCO ME SINCE LONG AND SUCH METHOD OF ACCOUNTING HAS BEEN ACCEPTED BY ASSE SSING OFFICER WHILE PASSING THE ASSESSMENT ORDERS U/S 143(3) OF T HE ACT FOR A.Y. 2005-06 TO 2009-2010 HENCE AO WAS NOT JUSTIFIED IN' REJECTING AND MAKING ADDITION IN CURRENT YEAR WHEN FACTS OF PRESE NT ASSESSMENT YEARS ARE IDENTICAL WITH THE FACTS OF EARLIER ASSES SMENT YEAR. 5.7 FURTHER, IN A.Y. 2002-2003, APPELLANT HAD DISTR IBUTED CEMENT AT THE BEHEST OF THE STATE GOVERNMENT AT THE PRICES DETERMINED BY THE STATE GOVERNMENT AND SIMILAR ADDITION MADE IN CASE OF APPELLANT. WHILE DECIDING THE ISSUE, THE HON'BLE AHMEDABAD I.T .A.T. VIDE ITS ORDER DATED 3/3/2009 IN I.T.A. NO.1219/AHD/2006 HAS HELD AS UNDER: 'WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. UNDER THE SCHEME OF THE ACT WHAT IS 'TAXABLE IS THE INCOME AC CRUING TO THE ASSESSES AND NOT ALL RECEIPTS. THEREFORE, UNLESS TH E NATURE OF RECEIPT DEMONSTRATED THAT IT WAS IN THE NATURE OF INCOME AC CRUING TO THE ASSESSEE, THE SAME IS NOT LIABLE TO TAX. IN THE PRE SENT CASE, THE ASSESSEE WAS FUNCTIONING AT THE BEHEST OF THE STATE GOVERNMENT. DUE TO THE EARTHQUAKE IN GUJARAT, THE CEMENT WAS REQUIR ED TO BE DISTRIBUTED AT A PRE-DETERMINED PRICE. EARLIER THE PRICE WAS DETERMINED AT RS.101 WHICH WAS LATER REVISED TO RS. 100 PER BAG. HOWEVER, WHAT WAS RECEIVABLE BY THE ASSESSEE AS ITS INCOME IS ONLY HANDLING CHARGES OF RS. 2 PER BAG WHICH HAVE, ALREA DY BEEN ACCOUNTED FOR AS INCOME. THE EXCESS REALIZATION IS NOT BELONGING TO THE ASSESSEE. THE SAME IS REFUNDABLE EITHER TO THE STATE GOVERNMENT OR TO VARIOUS NGOS TO WHOM CEMENT WAS SUPPLIED. SIN CE THE ASSESSEE DOES NOT HAVE ANY RIGHT OVER SUCH AMOUNT C OLLECTED THE SAME IS NOT LIABLE TO BE INCLUDED AS INCOME OF THE ASSESSEE. ACCORDINGLY, THE LEARNED CIT(A) WAS JUSTIFIED IN DE LETING THE ADDITION. GROUND NO.2 FAILS.' FURTHER AFORESAID DECISION WAS ALSO CONFIRMED BY HO N'BLE GUJARAT HIGH COURT VIDE ITS ORDER DATED 15/3/2011 WHEREIN IT WAS HELD AS UNDER: 'WE ARE BROADLY IN AGREEMENT WITH THE LOGIC ADOPTED BY THE TRIBUNAL, IT CANNOT BE STATED THAT THE MARGIN OF EX CESS PRICE OF CEMENT BAGS WAS INCOME OF THE ASSESSEE AND IT IS NO T IN DISPUTE THAT THE ASSESSEE WAS NOT IN THE BUSINESS OF BUYING AND SELLING CEMENT. WE FIND NO FAULT WITH THE LOGIC ADOPTED BY THE TRIB UNAL. WE FIND THAT NO SUBSTANTIAL QUESTION OF LAW IS ARISING.' ITA NO. 1173/AHD/16 WITH CO NO. 88/AHD/16 [ITO VS. THE GUJARAT STATE CIVIL SUPPLIES CORPORATION LTD. ] A.Y. 2012-1 3 - 7 - THE HON'BLE GUJARAT HIGH COURT IN THE CASE OF GUJAR AT POWER CORPORATION LIMITED (1996) 25 TAXMANN.COM 14 (GUJ.) HAS FURTHER HELD AS UNDER 'SECT/ON 4, READ WITH SECTION 2(24), OF THE INCOME- TAX ACT, 1961 - INCOME - CHARGEABLE AS - ASSESSMENT YEAR 1992-93 - STATE GOVERNMENT HAD SANCTIONED CERTAIN AMOUNT TOWARDS IT S EQUITY SHARE CAPITAL CONTRIBUTION IN ASSESSEE-COMPANY - SHARES C OULD NOT BE ALLOTTED IN FAVOUR OF STATE GOVERNMENT IMMEDIATELY - ASSESSEE DEPOSITED SAME IN BANKS IN SHORT-TERM DEPOSITS WHIC H EARNED SOME INTEREST - SUCH AMOUNT OF INTEREST WAS AGREED OVER TO BE PAID TO STATE GOVERNMENT -WHETHER AMOUNT WHICH REMAINED WIT H ASSESSEE WAS HELD IN TRUST FOR AND ON BEHALF OF STATE GOVERN MENT AND, THEREFORE, INTEREST ACCRUED MUST ALSO BELONG TO STA TE GOVERNMENT AND WOULD NOT BE TREATED AS INCOME IN HANDS OF ASSE SSEE - HELD, YES [IN FAVOUR OF ASSESSEE]' IN VIEW OF AFORESAID DISCUSSION AND ON HOLISTIC CON SIDERATION ENTIRE FACTS AND RESPECT FULLY FOLLOWING THE DECISION OF H ON'BLE JURISDICTIONAL I.T.A.T., AND HIGH COURT IN APPELLANT'S OWN CASE, I T IS OBSERVED THAT SURPLUS OF RS.67,16,76,274/- EARNED FROM FUNCTIONING OF PDS ON BEHALF OF GOG CANNOT BE TAXED AS INCOME IN THE HANDS OF APPELLANT AS SUCH SURPLUS IS EXCESS SUBSIDY .RECEIVED BY THE APPELLANT ON THE DI STRIBUTION OF VARIOUS ITEMS UNDER THE PDS WHICH IS BELONGING TO GOVERNMEN T AND PAYABLE TO GOG ALONG WITH INTEREST AFTER I REDUCING COMMISSION EARNED BY APPELLANT. CONSIDERING THE SAME, ADDITION MADE BY ASSESSING OF FICER FOR RS.67,16,76,274/- IS DELETED. AS THE ISSUE IN HAND IS SIMILAR TO THE ISSUE DECIDE D IN AY 2010-11 AND ALSO SINCE THE CONTENTIONS MADE BY THE AO ARE ON SIMILAR LINES SO ALSO THE CONTENTIONS MADE BY THE APPELLANT, I FIND NO REASON TO DEVIATE FROM THE DECISION TAKEN FOR AY 2010-11 IN THE CASE OF THE APPELLANT AND THE ADDITI ON MADE OF RS.115,72,37,000/- IS HEREBY DIRECTED TO BE DELETED AND THE RELEVANT GROU ND OF APPEAL IS ALLOWED. AS REGARDS ALTERNATE GROUND RAISED BY THE APPELLANT (GROUND NO.3), IT HAS BECOME INFRUCTUOUS, SINCE THE MAIN ISSUE HAS BEEN D ECIDED IN FAVOUR OF APPELLANT AND THUS DOES NOT REQUIRE ANY FURTHER ADJUDICATION. 3. IT IS THEREFORE CLEAR THAT THE CIT(A) HAS ADOPTE D JUDICIAL CONSISTENCY IN DECIDING THE ABOVE SURPLUS ISSUE IN ASSESSEES FAVO UR. WE SOUGHT TO KNOW ABOUT THE FINAL OUTCOME OF REVENUES APPEAL IN PRECEDING ASSE SSMENT YEAR 2010-11; IF ANY. LEARNED COUNSEL REPRESENTING ASSESSEE INFORMS US TH AT A CO-ORDINATE BENCH HAS ALREADY DECLINED THE SAME IN ITA NO. 334/AHD/2014 V IDE ORDER DATED01.06.2017. THE REVENUE FAILS TO PINPOINT ANY DISTINCTION ON FA CTS OR LAW INVOLVED IN THE TWO ASSESSMENT YEARS IN QUESTION. WE THEREFORE SEE NO REASON TO ADOPT A DIFFERENT ITA NO. 1173/AHD/16 WITH CO NO. 88/AHD/16 [ITO VS. THE GUJARAT STATE CIVIL SUPPLIES CORPORATION LTD. ] A.Y. 2012-1 3 - 8 - APPROACH IN THE IMPUGNED ASSESSMENT YEAR IN GIVEN F ACTS AND CIRCUMSTANCES OF THE INSTANT APPEAL. THE REVENUE THEREFORE FAILS IN ITS APPEAL ITA NO.1173/AHD/2016. 4. LEARNED COUNSEL REPRESENTING ASSESSEE SUBMITS RE GARDING ITS CROSS OBJECTION NO.88/AHD/2016 THAT THE SAME RAISES AN ALTERNATIVE PLEA IN SEEKING TO ADOPT NETTING FORMULA QUA ITS COMMISSION INCOME OF RS.66,01,04,00 0/- INSTEAD OF THE ENTIRE SURPLUS AMOUNT ADDITION FOR THE PURPOSE OF EXCLUSIO N THEREOF IN COMPUTATION. HE INFORMS US THAT THE ASSESSEE NO MORE WISH TO PRESS FOR ITS ABOVE TWO PLEAS SINCE WE HAVE REJECTED REVENUES APPEAL IN PRECEDING PARAGRA PHS. WE THEREFORE DISMISS ASSESSEES INSTANT CROSS OBJECTION AS NOT PRESSED. 5. THE REVENUES APPEAL ITA NO.1173/AHD/16 IS DISMI SSED AND ASSESSEES CO NO. 88/AHD/16 IS DISMISSED AS NOT PRESSED. [PRONOUNCED IN THE OPEN COURT ON THIS T HE 27 TH DAY OF FEBRUARY, 2018.] SD/- SD/- ( PRADIP KUMAR KEDIA ) (S. S. G ODARA) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD: DATED 27/02/2018 TRUE COPY S.K.SINHA / COPY OF ORDER FORWARDED TO:- / REVENUE 2 / ASSESSEE ! / CONCERNED CIT 4 !- / CIT (A) ( )*+ ,--. . /0 / DR, ITAT, AHMEDABAD 1 +23 4 / GUARD FILE. BY ORDER / . // . /0