M/s The Punjab State Co-operative Supply and Marketing Federation Ltd., Chandigarh V. DCIT, Chandigarh

ITA 1280/CHANDI/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 6497 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-12-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2012-2013
• Appeal Filed On: 02-12-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANJIT SINGH; RAVI SARANGA L
• Keywords: Opportunity of being heard; Earning of tax free income; Deemed dividend
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH A, CHANDIGARH BEFORE MS. DIVA SINGH, JUDICIAL MEMBER AND SHRI B.R.R.KUMAR, ACCOUNTANT MEMBER ITA NO. 1280&1281/CHD/2016 AY. : 2012-2013 & 2013-14 THE PUNJAB STATE CO-OPERATIVE SUPPLY VS. THE DCIT , & MARKETING FEDERATION LTD., CIRCLE 4(1), PLOT NO. 4, SECTOR 35-B, CHANDIGARH. CHANDIGARH. PAN NO. AAAAT3454G (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI AMAN PARTI RESPONDENT BY : SHRI RAVI SARANGAL, CIT-DR & SHRI MANJIT SINGH, SR.DR DATE OF HEARING : 04.10.2017 DATE OF PRONOUNCEMENT : 13.12. 2017 ORDER PER DIVA SINGH,JM BY BOTH THESE APPEALS FILED BY THE ASSESSEE, THE CORRECT NESS OF THE SEPARATE ORDERS DATED 02/09/2016 OF CIT(A) TO CHANDIGA RH PERTAINING TO 201213 AND 201314 ASSESSMENT YEARS IS ASSAILED IT WA S A COMMON STAND OF THE PARTIES BEFORE THE BENCH THAT THE ISSUES R AISED IN THE PRESENT APPEALS ARE IDENTICAL, ACCORDINGLY, FOR THE SAKE OF CONVENIE NCE, THE ISSUES ARE DECIDED BY A COMMON ORDER IN THE APPEALS FILED. 2. FOR READY REFERENCE GROUNDS FROM ITA 1280 ARE REPR ODUCED HEREUNDER : 1. THAT THE WORTHY CIT(A)-2 ERRED BOTH ON FACTS AND IN LAW IN UPHOLDING THE DISALLOWANCE OF RS. 22,81,923/- U/S 14A MADE BY THE ASSESSING OFFICER AND THAT TO AGAINST A DIVIDEND OF RS 6,70,400/- RECEIVED BY THE APPELLANT. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AS WELL AS IN LAW, THE WORTHY CIT(A)-2 ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFF ICER IN MAKING AN ADDITION OF RS 1,14,22,870/- ON ACCOUNT OF/PRIOR PERIOD EXPENSES. 3. THE LD. AR INVITING ATTENTION TO THE FIRST ISSUE AGITATED IN THE PRESENT APPEAL SUBMITTED THAT ADDITION BY WAY OF A DISALLOWANCE UND ER SECTION 14A HAS BEEN MADE IGNORING THE FACT THAT THE INVESTMENT S MADE IN THE FOLLOWING 5 COMPANIES HAD BEEN MADE BY THE ASSESSEE MUCH PRIOR TO 1994. INVITING ATTENTION TO THE WRITTEN SUBMISSIONS PLACED BEFORE THE ITA 1280&1281/CHD/2016 A.Y. 2012-13 & 2013-14 PAGE 2 OF 4 CIT(A) AT PAGES 6 TO 8 OF THE PAPER BOOK FILED, IT WAS HIS SUBMISSION THAT SOME OF THE INVESTMENTS ARE AS OLD AS 1957. THE INVESTME NTS MADE BY THE ASSESSEE OVER THE YEARS IN THE FOLLOWINGS 5 SPECIFIC COMPAN IES WERE TAKEN INTO CONSIDERATION BY THE AO : S.NO. NAME OF THE COMPANY INVESTMENT 1 FOOD TECHNOLOGIES OF INDIA 51,00,000/- 2 THE PUNJAB ALKALIS AND CHEMICAL LTD. 1,12,75,000/- 3 INDIAN POTASH AND SUPPLY AGENCY 4,40,000/- 4 CENTRAL WAREHOUSING CO-OPERATION, NEW DELHI 25,000/- 5 MARK. HORT, POTATOS INDIA LTD. 7,50,000/- TOTAL AMOUNT 1,75,90,000/- 3.1 INVITING ATTENTION TO THE CONCLUSION DRAWN BY THE CIT(A), IT WAS SUBMITTED THAT THE FACTS HAVE BEEN COMPLETELY IGNORED B Y THE ASSESSING OFFICER. INVITING FURTHER ATTENTION TO THE ORDER OF THE CIT( A) IT WAS SUBMITTED THAT IT IS EVIDENT FROM THE WRITTEN SUBMISSIONS FILE D THAT THIS FACT WAS BROUGHT TO THE NOTICE OF THE CIT(A) WHO THOUGH CONSIDERING THE ORDER OF THE ITAT DATED 30 TH OF SEPTEMBER 2011 IN ITA-548/CHD/2011 PERTAINING TO 20072008 ASSESSMENT YEAR, IGNORED THE FIND ING AND INSTEAD RELIED UPON THE ORDER FOLLOWED BY THE CIT(A) DATED 03/11/2014 IN 201112 ASSESSMENT YEAR. ACCORDINGLY, IT WAS HIS PRAYER THAT ON FACTS, NO ADDITION COULD HAVE BEEN MADE BY WAY OF DISALLOWANCE. APART FROM THAT, IT WAS HIS SUBMISSION IN THE ALTERNATIVE THAT ON THE FACTUAL A SPECT THERE HAS BEEN NO DISCUSSION IN THE ORDER. WITHOUT PREJUDICE TO THE MAIN ARGUMENTS, IT WAS SUBMITTED THAT EVEN IF ADDITION WAS STILL TO BE MADE, IT COULD HAVE BEEN MADE AND SUSTAINED ONLY TO THE EXTENT OF DEEMED DIVIDEND RECEIVED. 4 THE LD. CIT-DR RELIED UPON THE ORDERS OF THE AUTHOR ITIES BELOW. HOWEVER, THE ARGUMENTS THAT THE FACTS HAD NOT BEEN TA KEN INTO CONSIDERATION BY THE AUTHORITIES BELOW WAS NOT REBUTTED. 5. WE HAVE HEARD THE SUBMISSIONS AND PERUSED THE MATER IAL AVAILABLE ON RECORD. ON A CONSIDERATION OF THE SUBMISSIONS OF THE P ARTIES BEFORE THE BENCH WE FIND THAT IN THE PECULIAR FACTS AND CIRCUMSTANCES , IT WOULD BE APPROPRIATE TO SET ASIDE THE IMPUGNED ORDER AND RESTOR E THE ISSUE BACK TO THE FILE OF THE ASSESSING OFFICER WITH THE DIRECTION TO EXAMINE THE CLAIM OF THE ASSESSEE THAT THE INVESTMENTS ARE OLD INVESTMENTS. FURTHER, THE LD. AR HAS ALSO PLACED RELIANCE UPON JOINT INVESTMENTS PRIVAT E LTD. VS ACIT ITA 1280&1281/CHD/2016 A.Y. 2012-13 & 2013-14 PAGE 3 OF 4 (2015) 372 ITR 694 (DEL) FOR THE PROPOSITION THAT 14A DISA LLOWANCE CAN BE LIMITED ONLY TO THE EXTENT OF DISALLOWING EXPENDITURE INCURRE D BY THE ASSESSEE IN RELATION TO THE TAX EXEMPT INCOME. WE ALSO DEE M IT APPROPRIATE TO TAKE NOTE OF THE DECISION OF THE HONBLE APEX COURT IN THE CASE OF GODREJ AND BOYCE MANUFACTURING LTD. VS DCIT DATED 8 TH MAY,2017 FOR THE PROPOSITION THAT WHERE THE ASSESSING OFFICER ACCEPTED THE FACT IN THE EARLIER YEARS THAT NO SUCH EXPENDITURE HAS BEEN INCURRE D BY THE ASSESSEE . THE COURT IN VERY CATEGORIC TERMS HAS HELD THAT THE A O THEN CANNOT TAKE A CONTRARY STAND FOR LATER YEARS IF THE FACTS AND CIRCUMS TANCES HAVE NOT CHANGED. ACCORDINGLY, CONSIDERING THE PRAYER OF THE PART IES, THE IMPUGNED ORDER IS SET ASIDE BACK TO THE FILE OF THE ASSESSING OFFICER TO CONSIDER THE PAST HISTORY ON THE ISSUE IN THE LIGHT OF THE DECISION OF T HE APEX COURT AND PASS A SPEAKING ORDER IN ACCORDANCE WITH LAW AFTER GIVING THE ASSESSEE A REASONABLE OPPORTUNITY OF BEING HEARD. 6. THE NEXT ISSUE AGITATED BY THE ASSESSEE IN THE PRES ENT APPEAL PERTAINS TO THE ADDITION MADE BY THE AO BY WAY OF DISALLO WING THE PRIOR PERIOD EXPENSES CLAIMED. THE LD. AR SUBMITTED THAT CONSIDE RING THE COURT SETTLEMENT ETC., CERTAIN DIRECTIONS HAVE BEEN GIVEN BY THE CIT(A) ON THE BASIS OF WHICH PART RELIEF HAS BEEN GRANTED. HOWEVER, THE SAME HAS NOT BEEN CONSIDERED IN THE PROPER PERSPECTIVE. INVITING ATTENTION TO PAPER BOOK PAGE NO. 76 WHICH IS THE DETAIL OF PRIOR PERIOD EXPEND ITURE AND INVITING ATTENTION TO THE WRITTEN SUBMISSIONS PLACED AT PA GES 12 TO 18 WHICH ELABORATELY ADDRESS THE FACTUAL POSITION QUA THE AR BITRATION AWARD AND THE PAYMENT DIRECTED ON ACCOUNT OF THE COURT SETT LEMENT QUA THE PAYMENTS DUE TO COOPERATIVE MARKETING-CUM-PROCESSING S OCIETY, SIRHIND ON ACCOUNT OF RENT FOR WHEAT AND PADDY STORED IN THE GODOWNS. FURTHER THE PAYMENTS DUE ON ACCOUNT OF CLAIM OF EXCISE DUTY RAISE D BY NATIONAL FERTILIZERS LTD. SIMILARLY, THE PAYMENTS WHICH BECAME DUE AS A RESULT OF RAISING OF HOUSE TAX BY THE MUNICIPAL CORPORATION AND MUNIC IPAL COMMITTEE GIDARBAHA AND CANNERIES JALANDHAR, AGRO CHEMICLE S, MOHALI ETC. AND REVERSAL OF INPUT TAX CREDIT (VAT INPUT) ON ACCO UNT OF SHORTAGE OF BASMATI PADDY ETC. ALL THESE FACTS WHICH WERE BROUGHT TO THE NOTICE OF THE CIT(A), WERE SUPPORTED BY DOCUMENTS. ALL THESE FACTUAL AS PECTS, IT WAS SUBMITTED, HAVE BEEN COMPLETELY IGNORED BY THE CIT(A) W HO HAS INSTEAD GIVEN A NON-SPEAKING ORDER CURSORILY CONSIDERING THE FACT S. ACCORDINGLY, IT WAS HIS SUBMISSION THAT THE MATTER MAY ALSO BE REMANDED BACK THE FILE OF ITA 1280&1281/CHD/2016 A.Y. 2012-13 & 2013-14 PAGE 4 OF 4 THE ASSESSING OFFICER TO DECIDE THE SAID CLAIM ON THE BASIS OF FACTS AND SUBMISSIONS ON RECORD. 7. THE SAID PRAYER WAS NOT OPPOSED IN THE PECULIAR FAC TS AND CIRCUMSTANCES BY THE LD. CIT-DR. 8. WE HAVE HEARD THE SUBMISSIONS AND PERUSED THE M ATERIAL ON RECORD. IT IS SEEN THAT WHILE DECIDING THE ISSUE, THE NECESSARY D OCUMENTS IN SUPPORT OF THE CLAIM WERE NOT CONSIDERED. ACCORDINGLY IN THE INTERESTS OF JUSTICE, THE ISSUE IS ALSO SET ASIDE BACK TO THE FILE OF THE A O WITH THE DIRECTION TO PASS A SPEAKING ORDER IN ACCORDANCE WITH LAW AFTER AFFORDING THE ASSESSEE A REASONABLE OPPORTUNITY OF BEING HEARD. 9. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 10. THE ISSUES RAISED IN ITA 1281/CHD/ 2016, IT IS NOTICED ARE IDENTIC AL TO THE FACTS AND CIRCUMSTANCES AS AVAILABLE IN ITA 1280/ CHD/2016. ACCORDINGLY, SAME ARE ALSO SET ASIDE BACK THE FILE OF THE A SSESSING OFFICER IN LINE WITH THE VIEW TAKEN IN 2012-13 ASSESSMENT YEAR WIT H THE DIRECTION TO PASS A SPEAKING ORDER IN ACCORDANCE WITH LAW AFTER GIV ING THE ASSESSEE REASONABLE OPPORTUNITY OF BEING HEARD. 11. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE AR E ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 13 TH DECEMBER,2017. SD/- SD/- ( B.R.R.KUMAR) (DI VA SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER POONAM COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR ASSTT. REGISTRAR ITAT,CHANDIGARH.