THE DCIT, 2(1), Bhopal V. M/s. M.P. Rajya Van Vikas Nigam Ltd., Bhopal

ITA 1348/IND/2016

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 5729 (ITAT-INDORE)
• Duration Of Justice: 3 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-03-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2013-2014
• Appeal Filed On: 16-12-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: LALCHAND
• Assessee Lawyers: ANIL KHAA; SUMIT KHAA CAS

Judgement Text

M.P. RAJYA VIKAS NIGAM LTD. / I.T.A. NO. 1348/IND/2 016/A.Y.:2013-14 PAGE 1 OF 7 , , IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE . . , . . , ' BEFORE SHRI C.M.GARG, JUDICIAL MEMBER AND SHRI O.P.MEENA, ACCOUNTANT MEMBER . . ./I.T.A NO. 1348 /IND/2016 /ASSESSMENT YEAR : 2013-14 DCIT -2(1) BHOPAL VS. M.P. RAJYA VAN VIKAS NIGAM L TD. 5 TH FLOOR PANCHNAN BUILDING MALVIYA NAGAR , BHOPAL % /APPELLANT &'% /RESPONDENT . . ./PAN: AACCM 1081 C % ( /APPELLANT BY SHRI LAL CHAND CIT (DR) &'% ( /RESPONDENT BY SHRI ANIL KHABYA AND SHRI SUMIT KHABYA, CAS ( /DATE OF HEARING 20.03.2017 , ( /DATE OF PRONOUNCEMENT 20.03.2017 /O R D E R PER O.P.MEENA, ACCOUNTANT MEMBER 1. THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINS T THE ORDER OF LEARNED COMMISSIONER OF INCOME-TAX (APPEALS)-I, BHOPAL [IN SHORT THE CIT(A )] DATED 28.09.2016 PERTAINING TO ASSESSMENT YEAR 2013-14, WHICH IN TURN HAS ARISEN F ROM THE ORDER DATED 25.02.2016 PASSED BY THE ACIT 2(1)BHOPAL (IN SHORT THE AO ) UNDER S ECTION 143 (3) OF INCOME TAX ACT,1961 ( IN SHORT THE ACT). THE ASSESSEE HAS TAKEN FOLLOWING GROUNDS OF APPEAL:- 1. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT (A) WAS JUSTIFIED IN DELETING ADDITION OF RS. 63,44,181/- MADE BY THE AO ON LEASE RENT. M.P. RAJYA VIKAS NIGAM LTD. / I.T.A. NO. 1348/IND/2 016/A.Y.:2013-14 PAGE 2 OF 7 2. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT (A) WAS JUSTIFIED IN DELETING ADDITION OF RS. 2,69,08,343/- MADE BY T HE AO ON ACCOUNT OF DISALLOWANCE OF CORPORATE EXPENSES. 2. SUCCINCTLY, FACTS AS CULLED OUT FROM THE ORDERS OF LOWER AUTHORITIES ARE THAT THE ASSESSEE IS AN MP GOVERNMENT UNDERTAKING ENGAGED IN BUSINESS OF FORESTRY. THE ASSESSEE FILED ITS RETURN OF INCOME ON 27.09,2013 DECLARING TOTAL INCOME OF RS. 17,60,08,590/- WHICH WAS ASSESSED AT RS. 83,73,38,110/- THE AO NOTICED THAT SCHEDULE J-1 OF INCOME AND EXPENDITURE INCURRED FOR FIRST FOREST DEPARTMENT SH OWED SURPLUS EXCESS OF REVENUE OVER EXPENDITURE IN GOVERNMENT ACCOUNT OF RS. 69,40,34, 393/- WHICH WAS TERMED AS LEASE RENT PAYABLE TO GOVERNMENT OF MP , FOREST DEPARTMENT. T HE AO OBSERVED THAT IN ASSESSMENT ORDER OF EARLIER YEARS ,IT HAD BEEN CONSISTENTLY HE LD THAT LEASE RENT OF RS. 63,67,826/- IS ONLY ALLOWABLE WHICH HAS BEEN BROUGHT FORWARD TO TAX SIN CE A.Y. 1997-98. EVEN THOUGH, CIT(A) AND TRIBUNAL HAD DELETED THE SAID ADDITION BUT THE DEPARTMENT HAS NOT ACCEPTED THE DECISION AND CHALLENGED IN APPEAL BEFORE THE HON`BL E HIGH COURT, WHICH IS PENDING , HENCE, TO MAINTAIN CONSISTENCY THE AO MADE THE SAID DISAL LOWANCE OF RS. 63,44,21,181/- FOR THE ASSESSMENT YEAR UNDER CONSIDERATION. 3. BEING, AGGRIEVED THE ASSESSEE FILED AN APPEAL BEFOR E THE LD. CIT (A). DURING THE COURSE OF APPELLATE PROCEEDINGS, THE LD. COUNSEL FO R THE ASSESSEE SUBMITTED THAT THE ASSESSEE IS A GOVERNMENT COMPANY ENGAGED IN ENRICH ING THE FOREST OF THE STATE OF MP THROUGH PLANTATION AND SILVICULTURAL WORKING IN DEG RADED FOREST AREAS TRANSFERRED TO IT BY THE GOVERNMENT OF MADHYA PRADESH, FOREST DEPARTMENT. IN THE INITIAL YEARS OF THE NIGAM (APPELLANT) THOUGH THE LAND WITH EXISTING FOREST GR OWTH WERE TRANSFERRED BY THE GOVT. OF MADHYA PRADESH, THE TERMS AND CONDITIONS OF SUCH TR ANSFER / LEASE WERE DECIDED ON 14.11.1979 BY GOVERNMENT OF MADHYA PRADESH. IN THE ABSENCE OF SUCH AN AGREEMENT, THE M.P. RAJYA VIKAS NIGAM LTD. / I.T.A. NO. 1348/IND/2 016/A.Y.:2013-14 PAGE 3 OF 7 AO CALCULATED A REASONABLE LEASE RENT ON THE BASIS OF RECOMMENDATION OF NATIONAL COMMISSION ON AGRICULTURE (NCA). THE GOVT. OF MADHY A PRADESH VIDE ORDER DATED 14.11.1979 DECIDED THAT THE ASSESSEE SHALL GET 2 % COMMISSION ON GROSS SALE AND THAT THE ENTIRE SALE PROCEEDS OF SUCH PROJECT WOULD BELONG T O GOVT. OF MADHYA PRADESH AND SIMILARLY, ALL EXPENSES OF SUCH PROJECT WAS ALSO TO BE BORNE B Y THE GOVT. OF MADHYA PRADESH. THE NET SURPLUS WAS TERMED AS LEASE RENT AND THE SAME BELON GED TO GOVT. OF MADHYA PRADESH. THE APPELLANT WAS ENTITLED TO ONLY 2% OF THE COMMISSION ON SUCH SALES. IT WAS CONTENDED THAT THE AO WAS NOT JUSTIFIED IN MAKING ADDITION OF RS.6 9,40,34,393/- OUT OF SURPLUS LEASE RENT. IT WAS ALSO POINTED OUT THAT THIS ISSUE HAS BEEN CONSI STENTLY DECIDED IN FAVOUR OF THE APPELLANT BY THE LD. CSIT (A) AS WELL AS HON'BLE ITAT. THE HO N'BLE ITAT INDORE BENCH IN APPEAL ITA NO.21/IND/2011 FOR THE A.Y. 2007-08 HAS RECENTLY AL LOWED THE CLAIM OF THE APPELLANT VIDE ORDER DATED 31.10.2011. THUS, IT WAS PRAYED THAT TH E ADDITION OF RS.63,44,21,181/- MADE BY THE AO ON ACCOUNT OF LEASE RENT MAY PLEASE BE DELET ED. THE LD. CIT (A) OBSERVED AS UNDER: 4.2 I HAVE CAREFULLY CONSIDERED THE SUBMISSION OF THE APPELLANT AND FACTS OF THE CASE. IT MAY BE NOTED THAT THE AO MADE THIS ADDITIO N MAINLY TO MAINTAIN CONSISTENCY IN THE ASSESSMENT OF THE APPELLANT. IT IS NOTICED THAT THE FIRST APPELLATE AUTHORITY [CIT (A)] AS WELL AS THE HON'BL E ITAT HAVE DELETED SUCH ADDITION IN EARLIER YEARS. THE HON'BLE ITAT, INDORE BENCH VIDE ITS ORDER DATED 31.10.2011 IN ITA NO.21/IND/2011 FOR THE A.Y. 2007- 08 ALLOWED THE CLAIM OF THE APPELLANT AND DISMISSED THE DEPARTMENTAL APPEAL. TH E CONCLUDING PARA OF THIS ORDER OF HON'BLE ITAT READS AS UNDER :- 5. IF THE CONCLUSION DRAWN IN THE IMPUGNED ORDER , THE ORDERS OF THE TRIBUNAL FOR EARLIER ASSESSMENT YEARS AND UN-CONTROVERTED FACTS AS ABOVE ARE KEPT IN JUXTAPOSITION AND ANALYZED, WE FIND THAT BOTH THE I SSUES I.E. LEASE RENT AND M.P. RAJYA VIKAS NIGAM LTD. / I.T.A. NO. 1348/IND/2 016/A.Y.:2013-14 PAGE 4 OF 7 CORPORATE EXPENSES ARE COVERED BY THE AFORESAID DEC ISIONS OF THE TRIBUNAL, WHICH HAVE BEEN FOLLOWED BY THE LD. CIT (A) IN THE IMPUGNED ORDER, THEREFORE, IN THE ABSENCE OF ANY CONTRARY FACTS, WE FIND NO INFIR MITY IN THE STAND OF THE LD. CIT(A). IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED. 4.4. RESPECTFULLY FOLLOWING THE DECISIONS OF MY PRE DECESSOR CSIT (A) AS ALSO THE JURISDICTIONAL HON'BLE ITAT ON THIS ISSUE, THE ADDI TION ON ACCOUNT OF DISALLOWANCE IN RESPECT OF PROFIT OF GOVERNMENT ACC OUNT TERMED AS LEASE RENT AMOUNTING TO RS.63,44,21,181/- IS HEREBY DELETED. T HIS GROUND OF APPEAL IS ALLOWED. THE LD. CIT (A) DELETED THE DISALLOWANCE MADE BY TH E AO BY FOLLOWING THE ORDERS OF ITAT IN I.T.A. NO. 21/IND/2011 FOR THE ASSESSMENT YEAR 2007 -08 DTD. 31.10.2011 AND I.T.A. NO. 558 & 559/ IND/2013 FOR THE ASSESSMENT YEAR 2010-11 AND 2011-12 DTD. 04.08.2015 DELETED THE ADDITION SO MADE. 4. BEING, AGGRIEVED THE REVENUE FILED THIS APPEAL BEF ORE THE TRIBUNAL. THE LD. CIT (DR) SUBMITTED THAT THE ISSUE IS RECURRING ONE AND DEPAR TMENT HAS NOT ACCEPTED THE SAME AND APPEAL AGAINST THE ORDERS OF TRIBUNAL IS PENDING BE FORE THE HON`BLE MP HIGH COURT. 5. ON THE OTHER HAND, THE LD. A.R. RELIED ON THE ORDER OF LD. CIT (A) AND TRIBUNAL IN EARLIER YEARS. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS OF BOTH THE PAR TIES AND HAVE PERUSED THE MATERIAL AVAILABLE ON RECORD. LOOKING TO THE FACT S AND CIRCUMSTANCES OF THE CASE, WE FIND THAT THE LD. CIT(A) HAS FOLLOWED THE ORDER OF I.T.A .T. IN ASSESSEES OWN CASE IN I.T.A.NO. 21/IND/2011 FOR ASSESSMENT YEAR 2007-08. DURING THE COURSE OF HEARING, THE LD. SENIOR D.R. COULD NOT PRODUCE ANYTHING CONTRARY TO THE FINDING AGAINST THE DECISION OF THE TRIBUNAL. M.P. RAJYA VIKAS NIGAM LTD. / I.T.A. NO. 1348/IND/2 016/A.Y.:2013-14 PAGE 5 OF 7 THEREFORE, RESPECTFULLY FOLLOWING THE SAME, WE DISM ISS THE DEPARTMENTAL APPEAL ON THIS GROUND. 7. GROUND NO. 2 RELATES TO DELETION OF ADDITION OF RS. 2,69,08,343/- MADE BY THE AO ON ACCOUNT OF DISALLOWANCE OF CORPORATE EXPENSES. 8. THE BRIEF FACTS ARE THAT DURING THE ASSESSMENT PROC EEDINGS, THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAS CLAIMED CORPORATE EXP ENSES OF RS. 2,69,08,343/- DURING THE YEAR. THE AO OBSERVED THAT THE CLAIM OF THE ASSESSE E NIGAM HAS BEEN DISALLOWED IN THE ORDERS OF EARLIER ASSESSMENT YEARS. EVEN THOUGH THE ADDITION MADE WAS DELETED BY THE LD. CIT (A) AS WELL AS HON'BLE ITAT FOR EARLIER YEARS I N ASSESSEES OWN CASE BUT THE DEPARTMENT DID NOT ACCEPT THE DECISIONS OF HON'BLE ITAT AND CH ALLENGED THE SAME BEFORE THE HON'BLE HIGH COURT OF MADHYA PRADESH WHICH IS YET PENDING F OR DECISION. ACCORDINGLY, TO MAINTAIN CONSISTENCY IN THE ASSESSMENT FOR THIS YEAR ALSO AN D FOR THE REASONS MENTIONED IN ORDERS FOR EARLIER ASSESSMENT YEARS, THE AO DISALLOWED A SUM O F RS. RS. 2,69,08,343/-ON ACCOUNT OF CORPORATE EXPENSES. 9. THE MATTER CARRIED TO LD. CIT(A). THE LD. CIT(A) DE LETED THE ADDITION OBSERVING AS UNDER :- 5.2. I HAVE CONSIDERED THE SUBMISSION OF THE LD. AR AS A LSO THE FINDINGS OF THE ASSESSING OFFICER REGARDING THIS ADDITION. IT IS NO TICED THAT THE AO MADE THIS ADDITION FOR SAKE OF CONSISTENCY IN THE ASSESSMENT. THE FIRS T APPELLATE AUTHORITY AND THE HONBLE ITAT HAS CONSISTENTLY DELETED SUCH ADDITION IN EARLIER ASSESSMENT YEARS. THE HONBLE ITAT. INDORE BENCH VIDE ITS ORDER DATED 13. 03.2009 IN ITA NO. 537 FOR A.Y.2004-05 ALLOWED THE CLAIM OF THE APPELLANT AND DISMISSED THE DEPARTMENTAL APPEAL. THE OPERATING PARA OF THE ABOVE ORDER OF HO NBLE ITAT IS REPRODUCED AS UNDER :- M.P. RAJYA VIKAS NIGAM LTD. / I.T.A. NO. 1348/IND/2 016/A.Y.:2013-14 PAGE 6 OF 7 THE LEARNED COUNSEL FOR THE ASSESSEE AT THE OUTSET SUBMITTED THAT BOTH THE ISSUES ARE COVERED BY EARLIER ORDER OF THIS BENCH I N THE CASE OF THE SAME ASSESSEE VIDE ORDER DATED 28 LH DECEMBER 2007FOR THE ASSESSMENT YEAR 1997- 98 AND 1998-99 IN ITA NOS. 87 & 88 /1ND/2004. THE A BOVE ORDER HAS ALSO BEEN FOLLOWED BY THIS BENCH FOR THE ASSESSMENT YEAR 2001-02 & 2003-04 IN ITA NOS. 723 & 724 DATED 20' H MARCH 2008. HENCE, FOLLOWING OUR EARLIER ORDER, THIS APPEAL OF THE REVENUE IS DISMISSED. 5.3. SIMILARLY, AS MENTIONED HEREIN ABOVE, THE HON'BLE I TAT INDORE BENCH HAD DELETED THE SIMILAR ADDITION IN A.Y. 2007-08 IN APPEAL ITA NO.2 1/IND/2011 ORDER DATED 31.10.2011 IN APPELLANTS OWN CASE AND DISMISSED TH E APPEAL OF THE REVENUE. 5.4. THE FACTS OF THE APPELLANT IN THE ASSESSMENT YEAR U NDER CONSIDERATION ARE EXACTLY THE SAME AS WERE IN EARLIER YEARS. THEREFORE, RESPECTFU LLY FOLLOWING THE DECISIONS OF MY PREDECESSOR CSLT(A) AND ALSO OF THE JURISDICTIONAL HONBLE ITAT IN APPELLANTS OWN CASE ON THIS ISSUE, THE ADDITION ON ACCOUNT OF CORP ORATE EXPENSES AMOUNTING TO RS. 2,69,08,343/- IS DELETED. THIS GROUND IS ALLOWED. 10. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PAR TIES. LOOKING TO THE FACTS AND CIRCUMSTANCES OF THE CASE, WE FIND THAT THE LD. CIT (A) HAS FOLLOWED THE ORDER OF I.T.A.T. IN ASSESSEES OWN CASE IN I.T.A. NO. 21/IND/2011 FOR A SSESSMENT YEAR 2007-08. 11. DURING THE COURSE OF HEARING, THE LD. SENIOR D.R. C OULD NOT PRODUCE ANYTHING CONTRARY TO THE FINDING OF THE TRIBUNAL. THEREFORE, RESPECTFULLY FOLLOWING THE SAME, WE DISMISS THE DEPARTMENTAL APPEAL ON THIS GROUND. 12. IN THE RESULT, APPEAL OF THE REVENUE FOR THE ASSESS MENT YEAR 2013-14 IS DISMISSED. 13. THE ORDER PRONOUNCED IN THE OPEN COURT ON 20.03.201 7. M.P. RAJYA VIKAS NIGAM LTD. / I.T.A. NO. 1348/IND/2 016/A.Y.:2013-14 PAGE 7 OF 7 SD/- ( . . ) (C.M. GARG) JUDICIAL MEMBER SD/- ( . . ) (O.P.MEENA) ACCOUNTANT MEMBER DATED: 20 TH MARCH, 2017