DCIT, Circle, Sirsa V. M/s Namdhari Food International Pvt. Ltd., Rania

ITA 1178/CHANDI/2017

AI Insights

The case involves the Deputy Commissioner of Income Tax, Circle, Sirsa as the appellant and M/s. Namdhari Food International Pvt. Ltd. as the respondent. The appeal was directed against the order of the CIT(A) - Hissar, which had deleted certain additions made by the Assessing Officer for the Assessment Year 2011-12. The revenue contested the deletion of an addition of Rs. 1,86,00,025 treated as unexplained credit under section 68, a disallowance of depreciation on plant & machinery, and a restriction on disallowance of leased rent paid due to non-deduction of TDS. The Tribunal upheld the CIT(A)'s decision on the first two issues but reversed the decision on the leased rent issue, aligning with the Assessing Officer's view that the amendment to Section 40(a)(ia) of the Act was not retrospective and applicable from the assessment year 2015-16 onwards.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 136096 (ITAT-CHANDIGARH)
• Duration Of Justice: 5 year(s) 5 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-01-2023
• Appeal Filed By: Department
• Order Result: PartlyAllowed
• Bench Allotted: B
• Next Hearing Date: 18-10-2022
• Assessment Year: 2011-2012
• Appeal Filed On: 26-07-2017
• Other Referred Cases: Allied Motors (P) Ltd. v. CIT, Muradul Haque vs. ITO, Shree Choudhary Transport Company vs. Income Tax Officer, Commissioner of Income-tax, Kolkata v. Calcutta Export Company
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Depreciation; TDS
• Section: 143(3); 40(a)(ia); 250; 251

Judgement Text

। आयकर अपील य अ धकरण यायपीठ, चंडीगढ़। IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH, CHANDIGARGH BEFORE SHRI SANJAY GARG, HON’BLE JUDICIAL MEMBER & SHRI VIKRAM SINGH YADAV, HON’BLE ACCOUNTANT MEMBER I.T.A. No. 1178/CHANDI/2017 Assessment Year: 2011-12 Deputy Commissioner of Income Tax, Circle, Sirsa Vs M/s. Namdhari Food International Pvt. Ltd. Sri Jiwan Nagar Rania PAN : AACCN1772F अपीलाथ / (Appellant) यथ / (Respondent) Assessee by : Shri Tejmohan Singh, Advocate Revenue by : Shri Akashdeep, JCIT, Sr. D/R स ु नवाई क तार ख/Date of Hearing : 19/10/2022 घोषणा क तार ख/Date of Pronouncement : 12/01/2023 आदेश/O R D E R Per Sanjay Garg, Judicial Member: The present appeal is directed at the instance of the revenue against the order of the Learned Commissioner of Income Tax (Appeals) – Hissar (hereinafter the “ld. CIT(A)”) dated 26/05/2017, passed u/s 250 of the Income Tax Act, 1961 (“the Act’), for Assessment Year 2011-12. 2. The revenue has raised the following revised grounds of appeal:- “1. On the facts and in the circumstances of the case, the Ld. CIT (Appeals) has erred in deleting the addition of Rs. 1,86,00,025/- made on account of share application money treated as unexplained credit u/s 68, without appreciating the facts that the additions are made considering the reply/pieces of evidence furnished by the assessee company during the course of assessment proceedings. 2. On the facts and in the circumstances of the case, the Ld. CIT (Appeal) has erred in deleting the addition made at Rs.4,05,631/- on a/c of disallowance of depreciation on plant & machinery without appreciating the legal provision of law that the quantum of depreciation is calculated after reducing the amount of subsidy from the cost of assets. 3. On the facts and in the circumstances of the case, the Ld. CIT (A) has erred in restricting the disallowance @ 30% of the leased rent paid by the assessee company at Rs.3,50,000/- because the said amendment has come into force w.e.f. 01.04.2015, whereas the case of the assessee company pertains to assessment year 2011-12.” I.T.A. No. 1178/CHANDI/2017 Assessment Year: 2011-12 M/s. Namdhari Food International Pvt. Ltd. 2 3. Ground No.1:- Vide Ground No. 1, the revenue has agitated the action of the ld. CIT(A) in deleting the addition of Rs.1,86,00,025/- made by the Assessing Officer by treating the share application money received by the assessee as unexplained credits. The assessee in this case received share application money from nineteen (19) persons. The name and address of the persons were furnished before the Assessing Officer. Even their confirmations were also filed. It was also explained to the Assessing Officer that the aforesaid persons had sold their produce to the assessee and out of the sale price received by the said persons, they had invested in the assessee company as share applicants. The ld. Assessing Officer doubted the transactions only on the ground that in the normal course, persons involved in agriculture do not purchase shares of Private Limited company, rather, they would prefer to invest their funds in purchase of land, plots and house etc.. In appeal, the ld. CIT(A) deleted the additions so made by the Assessing Officer, observing as under:- “5.6 In view of the above, it is respectfully submitted that, the learned Assessing Officer was obliged in law to adduce evidence to prove the positive fact that, such income pertains to the assessee and, in absence thereof the addition made of Rs. 1,86,00,025/- be held to be untenable and, therefore be deleted. I have examined the submission made by the appellant and the fact on record, the basis of addition made by the AO and arguments of the AR, during the assessment proceedings. I find that the assessee has discharged its onus by providing all documentary evidences regarding identity, genuineness and creditworthiness. The AO has not doubted the identity of the persons who are the shareholders as mentioned above. The AO has, however, done nothing to prove that the creditworthiness of these share applicants was in doubt. Although he has stated that the appellant failed to produce these people, he could have summoned them himself considering the fact that all details in respect of addresses were on record. The surrounding circumstances in the situation referred by the AO does not lead to an incontrovertible conclusion regarding the creditworthiness and genuineness of the share applicant. Also, identical addition was made of Rs. 1,02,10,000/- in I.T.A. No. 1178/CHANDI/2017 Assessment Year: 2011-12 M/s. Namdhari Food International Pvt. Ltd. 3 Assessment Year 2012-13 by AO on dated 30.03.2015 u/s 143(3) and addition was deleted vide appeal no. 6/SRS/2015-16 on dated 22.02.2017. This ground of appeal is allowed. 4. After considering rival contentions, we do not find any infirmity in the order of the ld. CIT(A) in this respect. The ld. CIT(A) has categorically held that the Assessing Officer has not doubted the identity of the persons and there was no doubt about their creditworthiness and even their source of funds were also explained. In view of this, this ground of appeal of the revenue is hereby dismissed. 5. Ground No. 2:- Vide Ground No. 2, the revenue is aggrieved by the action of the ld. CIT(A) in deleting the addition on account of disallowance of depreciation on plant and machinery. The issue has been discussed by the ld. CIT(A) starting from para 6 of the impugned order. The ld. Assessing Officer in this case had allowed the depreciation observing that the subsidy received by the assessee was not reduced from the cost of the assets. However, the ld. CIT(A) held that the undisputed fact in this case was that the subsidy in question was not given to the assessee to meet directly or indirectly, the cost of any asset of the assessee. In view of this, we do not find any infirmity in the order of the ld. CIT(A) in respect of Ground No. 2 and accordingly Ground No. 2 of the revenue is dismissed. 6. Ground No. 3:- Vide Ground No. 3, the revenue has agitated the action of the ld. CIT(A) in restricting the disallowance @ 30% of the leased rent paid by the assessee for non-deduction of TDS. I.T.A. No. 1178/CHANDI/2017 Assessment Year: 2011-12 M/s. Namdhari Food International Pvt. Ltd. 4 The assessee during the year made a payment of Rs.3,50,000/- as lease charges for use of land for disposal of water. The Assessing Officer made the impugned addition observing that the assessee has not deducted TDS upon the said amount of Rs.3,50,000/-. The ld. CIT(A) restricted the disallowance made by the Assessing Officer to the extent of 30% holding that the amendment made by the Finance Act No. 2 to Section 40(a)(ia) of the Act w.e.f. 01/04/2015, is curative in nature and thus the said provision has to be applied retrospectively. He has further relied on the decision of the Hon’ble Supreme Court in the case of Allied Motors (P) Ltd. v. CIT (1997) 224 ITR 677 (SC). The ld. Counsel for the assessee in this aspect has also relied on the decision of the Co-ordinate Delhi Bench of the Tribunal in the case of Muradul Haque vs. ITO [2020] 117 taxmann.com 251 (Delhi), wherein similar proposition has been laid down by the Tribunal. 6.1. However, we find that the issue is covered against the assessee by the decision of the Hon’ble Supreme Court in the case of [2020] 118 taxmann.com 47 (SC) Shree Choudhary Transport Company vs. Income Tax Officer, wherein, the Hon’ble Supreme Court has held that the amendment made by the Finance (No.2) Act, 2014, could not be stretched anterior after the date of its substitution so as to reach the assessment year 2005-06. That the amendment by the Finance Act, 2014 was specifically made applicable w.e.f. 01/04/2015 and clearly represents the will of the legislature so as to what is to be deducted or what percentage of deduction is not to be allowed for a particular eventuality, for assessment year 2015-16. That the principles adopted by the Hon’ble Supreme Court in the case of Commissioner of Income-tax, Kolkata v. Calcutta Export Company [2018] 93 taxmann.com 51 (SC) dealing with curative amendment brought by the Finance Act, 2010, relating more to the procedural aspects concerning deposit by TDS, cannot be I.T.A. No. 1178/CHANDI/2017 Assessment Year: 2011-12 M/s. Namdhari Food International Pvt. Ltd. 5 applied to the amendment of the substantive provisions by Finance Act (No. 2) Act, 2014. This ground is accordingly allowed in favour of the revenue and the order of the ld. CIT(A) on this issue is set aside and that of the Assessing Officer is restored. 7. In the result, the appeal of the revenue is partly allowed. Order pronounced in the Court on 12 January, 2023 at Kolkata. Sd/- Sd/- (Vikram Singh Yadav) (Sanjay Garg) Accountant Member Judicial Member Kolkata, Dated 12 /01/2023 *SC SrPs *SC SrPs*SC SrPs *SC SrPs आदेश क त ल प अ े षत/Copy of the Order forwarded to : 1. अपीलाथ! / The Appellant 2. "यथ! / The Respondent 3. संबं&धत आयकर आय ु (त / Concerned Pr. CIT 4. आयकर आय ु (त)अपील (/ The CIT(A)- 5. वभागीय त न&ध, आयकर अपीलीय अिधकरण आयकर अपीलीय अिधकरणआयकर अपीलीय अिधकरण आयकर अपीलीय अिधकरण, चंडीगढ़ चंडीगढ़ चंडीगढ़ चंडीगढ़ /DR,ITAT, Chandigarh, 6. गाड. फाईल /Guard file. आदेशान ु सार/ BY ORDER, TRUE COPY Assistant Registrar आयकर अपील य अ&धकरण ITAT, Chandigarh