ACIT, Jaipur V. JAIPUR ZILA DUGDH UTPADAK SANGH LTD., Jaipur

ITA 128/JPR/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 91869 (ITAT-JAIPUR)
• Duration Of Justice: 2 year(s) 5 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-07-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 01-02-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: P C PARWAL CA DHK
• Keywords: Business expenditure; Opportunity of being heard
• Section: 80G; 12AA; 37

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 VKJ-IH-RKSYKUH] U;KF;D LNL; ,OA JH VH-VKJ-EHUK] YS[KK LNL; DS LE{K BEFORE: SHRI R.P. TOLANI, JM & SHRI T.R. MEENA, AM VK;DJ VIHY LA-@ ITA NO. 128/JP/2013 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2009-10 ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE-6, JAIPUR. CUKE VS. M/S. JAIPUR ZILA DUGDH UTPADAK SANGH LTD., JAIPUR DAIRY, NEAR GANDHI NAGAR RAILWAY STATION, JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO .: AABCN 8927 B VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT ITA NO. 142/JP/2013 ASSESSMENT YEAR : 2009-10. M/S. JAIPUR ZILA DUGDH UTPADAK SANGH LTD., JAIPUR DAIRY, NEAR GANDHI NAGAR RAILWAY STATION, JAIPUR. CUKE VS. DY. COMMISSIONER OF TAX OFFICER, CIRCLE-6, JAIPUR. VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT JKTLO DH VKSJ LS@ REVENUE BY : SMT. NEENA JEPH, JCIT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI P.C. PARWAL, CA LQUOKBZ DH RKJH[K@ DATE OF HEARING : 22/06/2015 ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 17/07/2015 2 ITA NO. 128/JP/2013 & 142/JP/2013 A.Y. 2009-10 M/S. JAIPUR ZILA DUGDH UTPADAK SANGH LTD., JAIPUR. VKNS'K@ ORDER PER R.P. TOLANI, JM THESE ARE TWO CROSS APPEALS ONE BY REVENUE AND OTH ER BY ASSESSEE FILED AGAINST THE ORDER OF LD. CIT (A)-II, JAIPUR DATED 2 1.11.2012. THE SOLE GROUND RAISED IN REVENUES APPEAL IS AS UNDER :- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E THE LD. CIT (APPEALS) HAS ERRED IN DELETING THE ADDITION OF RS. 85,66,157/- MADE BY THE AO BY DISALLOWING CONTRIBUTION MADE TO SPAR SH TRUST WITHOUT APPRECIATING THE FACT THAT ASSESSEE FAILED TO PROVE DIRECT BUSINESS NEXUS AND IT IS NOT AN ALLOWABLE EXPENDITURE U/S 37 (1) 2. THE LD. CIT (A) ALLOWED THE CLAIM OF THE PAYMENT S TO SPARSH TRUST RELYING ON ITATS ORDER IN ASSESSEES OWN CASE IN ITA NO. 8 20/JP/2011 DATED 15.03.2012 HOLDING AS UNDER :- AFTER CONSIDERING THE SUBMISSIONS, ORDERS OF THE AUTHORITIES BELOW, WE FIND THAT ASSESSEE DESERVE TO SUCCEED IN ITS GROUND RAISED. IT IS NOTICED THAT BEFORE CREATING SPARSH, THE ASSESSE E WAS DOING ALL THESE EXPENDITURE ITSELF. JUST FOR BETTERMENT OF AD MINISTRATIVE SERVICES, THE ASSESSEE CREATED THE TRUST THROUGH WHOM THESE E XPENSES ARE INCURRED. THE PROFIT & LOSS ACCOUNT OF THE TRUST IS MAINTAINED, COPY OF WHICH IS PLACED IN THE COMPILATION AND IT IS SEE N THAT WHATEVER THE AMOUNT HAS BEEN GIVEN BY ASSESSEE OR REIMBURSED BY ASSESSEE THAT HAS BEEN SPENT BY THE TRUST ON THE ANIMALS TO GET BETTE R QUALITY AND QUANTITY OF MILK. THE ASSESSEE HAD CONTRIBUTED @ RS . 0.05 PAISE PER LITER OF MILK PROCURED TO ITS TRUST FOR THE PURPOSE OF INCURRING 3 ITA NO. 128/JP/2013 & 142/JP/2013 A.Y. 2009-10 M/S. JAIPUR ZILA DUGDH UTPADAK SANGH LTD., JAIPUR. EXPENDITURE FOR BETTER QUALITY OF MILK. AN AGENDA NOTE WAS PREPARED WHICH CLEARLY STATES THAT THE PURPOSE OF THE CONTRI BUTION IS FOR MEDICALS AND HEALTH FACILITY OF THE ANIMALS OF THE MILK PRODUCERS AT THE DISTRICT LEVEL. THE CONTRIBUTION MADE BY THE ASSESS EE TO TRUST IS THUS DIRECTLY LINKED WITH THE PROCUREMENT OF BETTER QUAL ITY, HYGIENIC AND MORE QUANTITY OF THE MILK. IT IS IN THE INTEREST OF THE ASSESSEE THAT THE MILK ANIMALS AT THE VILLAGE LEVEL FROM WHERE IT PRO CURES THE MILK ARE HEALTHY & FOR THIS PURPOSE, SPARSH TRUST INCURRED E XPENDITURE IN PROVIDING VATERNITY CARE, REGULAR TREATMENT, EMERGE NCY CARE, PREVENTIVE CARE, BREED IMPROVEMENT THROUGH A.I. UNI NTERRUPTED SUPPLY OF NUTRITIONAL SUPPLEMENT ETC. THEREFORE, IN OUR CO NSIDERED VIEW, CONTRIBUTION MADE BY ASSESSEE TO THIS TRUST IS AN E XPENDITURE INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS WHICH IS ALLOWABLE UNDER SECTION 37(1). FROM THE INCOME AND EXPENDITUR E ACCOUNT OF THE TRUST, IT CAN BE NOTED THAT IT HAS INCURRED AN EXPE NDITURE OF RS. 80,35,447/- IN PURSUANCE OF ITS OBJECTIVE AND AFTER CONSIDERING THE RECEIPTS, THERE IS A DEFICIT OF RS. 23,48,303/- TO THE TRUST SIN THE YEAR UNDER CONSIDERATION. SUCH DEFICIT IS MET OUT OF THE CONTRIBUTION MADE BY THE ASSESSEE TO THE TRUST. IT IS FURTHER SEEN TH AT BEFORE CREATING THIS TRUST, THE ASSESSEE WAS INCURRING ALL THESE EXPENSE S ITSELF AND ALL THESE EXPENSES WERE ALLOTTED BY THE DEPARTMENT WHILE COMP LETING ASSESSMENT UNDER SECTION 143(3). THEREFORE, THIS IS NOT A CASE THAT ASSESSEE HAS MADE ANY DONATION TO ANY TRUST AND, TH EREFORE, THE SAME CANNOT BE ALLOWED AS BUSINESS EXPENDITURE. THE LD. CIT (A) HAS DISALLOWED THE CLAIM OF THE ASSESSEE BY OBSERVING T HAT SINCE ASSESSEE HAS MADE DONATION UNDER SECTION 80G AND, THEREFORE, DEDUCTION UNDER 4 ITA NO. 128/JP/2013 & 142/JP/2013 A.Y. 2009-10 M/S. JAIPUR ZILA DUGDH UTPADAK SANGH LTD., JAIPUR. SECTION 80G IS ALLOWABLE WHEREAS THE FACTS ARE OTHE RWISE. THE ASSESSEE HAS NOT MADE ANY DONATION BUT HAS CONTRIBUTED TO TH E TRUST FOR A SPECIFIC PURPOSE I.E. TO INCUR THE EXPENDITURE TO G ET BETTER MILK FROM MILK ANIMAL. VARIOUS CASE LAW RELIED UPON BY ASSESS EE ARE IN SUPPORT OF THE CASE OF THE ASSESSEE. WE ARE NOT GETTING INT O DETAILS IN RESPECT TO THOSE CASES AS THEY HAVE ALREADY HAVE MENTIONED IN THE WRITTEN SUBMISSIONS WHICH ARE REPRODUCED HEREIN ABOVE. IN V IEW OF THESE FACTS AND CIRCUMSTANCES, WE HOLD THAT THE EXPENDITURE/CON TRIBUTION MADE BY ASSESSEE IS ALLOWABLE AS BUSINESS EXPENDITURE. ACCO RDINGLY, THE ADDITION MADE AND CONFIRMED BY THE LOWER AUTHORITIE S IS DELETED. 3. WE HAVE HEARD BOTH THE PARTIES ON THE ISSUE. SIN CE THE ISSUE IN QUESTION IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE I TAT JUDGMENT IN ITS OWN CASE, ESPECIALLY FOLLOWING THE SAME, WE UPHOLD THE ORDER OF LD. CIT (A). THUS REVENUES APPEAL IS DISMISSED. 4. IN THE ASSESSEES APPEAL THE ONLY GROUND RAISED IS AS UNDER :- THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED ON FACTS AND IN LAW IN CONFIRMING THE DISALLOWANCE OF RS. 20 ,18,213/- BEING CONTRIBUTION MADE TO REHABILITATION FUND. 5. THE LD. COUNSEL FOR THE ASSESSEE CONTENDED THAT IN THE CASE OF ASSESSEES APEX BODY M/S. RAJASTHAN COOPERATIVE DAIRY FEDERATI ON LTD. SIMILAR DISALLOWANCE WAS MADE IN EARLIER YEAR. THE LD. CIT (A) FOLLOWING THAT ORDER REJECTED THE CLAIM OF THE ASSESSEE. HOWEVER, IN THE CASE OF RAJASTHAN C OOPERATIVE DAIRY FEDERATION, THE FACTS ARE DISTINGUISHABLE IN AS MUCH AS A SEPARATE REHABILITATION FUND HAS BEEN 5 ITA NO. 128/JP/2013 & 142/JP/2013 A.Y. 2009-10 M/S. JAIPUR ZILA DUGDH UTPADAK SANGH LTD., JAIPUR. CREATED BY RCDF WHICH IS REGISTERED UNDER SECTION 1 2AA. IN RCDFS CASE ALSO IN A.Y. 2010-11 THE LD. CIT (A) HOLDING THAT THE CONTR IBUTION WAS MADE TO SEPARATE REHABILITATION FUND CREATED BY IT WHICH WAS REGISTE RED UNDER SECTION 12AA ALLOWED THE CLAIM OF THE ASSESSEE. IN VIEW THEREOF THE CLAIM MAY BE ALLOWED OR ALTERNATIVELY SUBMITTED THAT THE CASE MAY BE SET AS IDE TO THE FILE OF A.O. TO DECIDE AFRESH AFTER CONSIDERING THE RELEVANT ASPECTS. 6. THE LD. D/R IS HEARD. 7. WE HAVE HEARD RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. WE FUND MERIT IN THE ALTERNATIVE CONTENTION OF LD. COU NSEL FOR THE ASSESSEE. IN VIEW OF THE FACT THAT ASSESSEE CREATED A SEPARATE REHABILIT ATION TRUST WHICH IS REGISTERED UNDER SECTION 12AA OF THE IT ACT AND IN THE CASE OF RCDF ON THESE FACTS THE CLAIM HAS BEEN ALLOWED IN A.Y. 2010-11, WE SET ASIDE THE MATTER TO DECIDE THE SAME AFRESH IN ACCORDANCE WITH LAW AFTER GIVING ASSESSEE AN OPPORTUNITY OF BEING HEARD. 8. IN THE RESULT, REVENUES APPEAL IS DISMISSED AND ASSESSEES APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. ORDER IS PRONOUNCED IN THE OPEN COURT ON 17/7/15. SD/- SD/- VH-VKJ-EHUK VKJ-IH-RKSYKUH (T.R. MEENA) (R.P. TOLANI) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER T;IQJ@ JAIPUR FNUKAAD@ DATED:- 17/7/2015. DAS/ 6 ITA NO. 128/JP/2013 & 142/JP/2013 A.Y. 2009-10 M/S. JAIPUR ZILA DUGDH UTPADAK SANGH LTD., JAIPUR. VKNS'K DH IZFRFYFI VXZSFKR @ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT-ACIT/DCIT, CIRCLE-6, JAIPUR. 2. IZR;FKHZ@ THE RESPONDENT- JAIPUR ZILA DUGDH UTPADAK SANGH LTD. , JAIPUR. 3. VK;DJ VK;QDR@ CIT 4. VK;DJ VK;QDR VIHY@ 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.128 & 142/JP/2013) VKNS'KKUQLKJ@ BY ORDER, LKGK;D IATHDKJ@ ASST. REGISTRAR