Micas Organics Ltd., Vapi V. The ACIT, Vapi Circle, Vapi

ITA 1582/AHD/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 0266 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 4 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-10-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 14-10-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 29-05-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: M K PATEL

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD B BENCH (BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER & SHRI S. S. GODARA, JUDICIAL MEMBER) ITA. NO: 1582/AHD/2013 (ASSESSMENT YEAR: 2009-10) MICAS ORGANICS LIMITED PLOT NO. 297/4-10, PHASE-II GIDC, VAPI V/S ASSISTANT COMMISSIONER OF INCOME TAX, VAPI CIRCLE, VAPI (APPELLANT) (RESPONDENT) PAN: ACBCD0226D APPELLANT BY : SHRI M. K. PATEL, AR RESPONDENT BY : SHRI JAMES KURIAN, SR. D.R. ( )/ ORDER DATE OF HEARING : 14 -10-20 16 DATE OF PRONOUNCEMENT : 20 -10-2016 PER N.K. BILLAIYA, ACCOUNTANT MEMBER: 1. THIS APPEAL BY THE ASSESSEE IS PREFERRED AGAINST TH E ORDER OF LD. CIT(A), VALSAD DATED 25.03.2013 PERTAINING TO A.Y. 2009-10. ITA NO. 1582 /AHD/2013 . A.Y. 2009-1 0 2 2. THE GRIEVANCE OF THE ASSESSEE IS THREE FOLD. (I) TH E ASSESSEE IS AGGRIEVED BY THE ADDITION OF RS. 8,56,470/- ON ACCOUNT OF NON DE DUCTION OF TAX ON EFFLUENT TREATMENT CHARGES PAID. 3. WHILE SCRUTINIZING THE RETURN OF INCOME, THE A.O. F OUND THAT THE ASSESSEE HAS DEBITED ETP CHARGES TO THE TUNE OF RS. 8,56,470 /- ON WHICH NO TAX WAS DEDUCTED AT SOURCE. ASSESSEE WAS ASKED TO JUSTIFY T HE SAME. THE ASSESSEE FILED A DETAILED REPLY CLAIMING THAT IT IS ONE OF T HE MEMBER OF M/S. VAPI WASTE AND EFFLUENT MANAGEMENT COMPANY LTD. (VWEMCL) AND ON THE DOCTRINE OF MUTUALITY. THE SAID AMOUNT PAID IS NOT COVERED UNDER THE DEFINITION OF CONTRACT FOR THE PURPOSE OF SECTION 1 94C OF THE ACT. THIS CLAIM OF THE ASSESSEE DID NOT FIND ANY FAVOUR WITH THE A. O. WHO BY INVOKING THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT MADE AN ADDITION OF RS. 8,56,470/-. 4. ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT(A) B UT WITHOUT ANY SUCCESS. 5. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE BROUGHT TO OUR NOTICE, THE DECISION OF THE CO-ORDINATE BENCH IN THE CASE OF VA PI WEST AND EFFLUENT MANAGEMENT COMPANY LTD. IN ITA NO. 1310/AHD/2010 AN D ORS. IT IS THE SAY OF THE LD. COUNSEL THAT THE INCOME OF VWEMCL HAS BE EN HELD TO BE EXEMPT FROM TAX ON THE PRINCIPLES OF MUTUALITY. THE LD. CO UNSEL CONTINUED BY STATING THAT WHEN THE INCOME OF THE PAYEE IS EXEMPT FROM TA X, THERE IS NO LIABILITY ON THE PAYER TO DEDUCT TAX AT SOURCE. PER CONTRA, T HE LD. D.R. STRONGLY SUPPORTED THE FINDINGS OF THE REVENUE AUTHORITIES. ITA NO. 1582 /AHD/2013 . A.Y. 2009-1 0 3 6. AFTER CONSIDERING THE FACTS AND IN THE LIGHT OF THE DECISION OF THE CO- ORDINATE BENCH (SUPRA). WE FIND FORCE IN THE CONTEN TION OF THE LD. COUNSEL. WE FIND THAT BY THE ORDER OF THE HONBLE GUJARAT HI GH COURT, VAPI INDUSTRIES ASSOCIATION SHOWED COMMITMENT TO TAKE EFFECTIVE STE PS FOR CONTAINING POLLUTION. FOR THIS PURPOSE, M/S. VAPI WASTE AND EF FLUENT MANAGEMENT COMPANY LTD. WAS INCORPORATED AND VARIOUS MEMBERS O F THIS COMPANY TOOK OVER COMMON EFFLUENT TREATMENT PLANT (CETP) FROM GI DC. ASSESSEE BEING A FOUNDER MEMBER OF THIS COMPANY MADE ITS CONTRIBUTIO N TOWARDS THE COMMON CAUSE. WE ALSO FIND THAT THE CO-ORDINATE BEN CH IN THE CASE OF VWEMCL HAS TREATED SUCH CONTRIBUTION OF MEMBERS AS EXEMPT FROM TAX ON THE PRINCIPLE OF MUTUALITY. SINCE THE INCOME OF THE PAYEE IS EXEMPT FROM TAX AS PER THE DECISION OF THE CO-ORDINATE BENCH, I N OUR CONSIDERED OPINION, THE CONTRIBUTION MADE BY THE PAYER COMPANY ASSESSE E IS NOT SUBJECTED TO DEDUCTION OF TAX AT SOURCE. WE, THEREFORE, SET ASID E THE FINDINGS OF THE LD. CIT(A) AND DIRECT THE A.O. TO DELETE THE ADDITION O F RS. 8,56,470/-. GROUND NO. 1 IS ALLOWED. 7. THE SECOND AND THIRD GRIEVANCE OF THE ASSESSEE RELA TED TO THE ADDITION OF RS. 34,305/- OUT OF INTEREST ON FIXED DEPOSITS AND RS. 86,048/- BEING INTEREST ON DEPOSIT HELD WITH DGVCL. 8. HAVING HEARD THE RIVAL CONTENTIONS, WE HAVE CAREFUL LY PERUSED THE ORDERS OF THE AUTHORITIES BELOW. THE LD. COUNSEL POINTED OUT THAT THE IMPUGNED INTEREST INCOME HAVE BEEN OFFERED FOR TAXATION IN T HE SUBSEQUENT YEAR I.E. A.Y. 2010-11. THEREFORE, IF THE ADDITION IS ALSO SU STAINED HERE, IT WOULD ITA NO. 1582 /AHD/2013 . A.Y. 2009-1 0 4 AMOUNT TO DOUBLE TAXATION OF THE SAME INCOME. WE FI ND THAT THE ASSESSEE HAS TAKEN THE CREDIT OF THE TDS DURING THE YEAR UND ER CONSIDERATION, THEREFORE, THESE TWO INTEREST INCOME SHOULD BE TAXE D IN THE YEAR UNDER CONSIDERATION. WE, ACCORDINGLY, CONFIRM THE ADDITIO N OF RS. 34,305/- AND 86,048/-. HOWEVER, WE DIRECT THE A.O. TO VERIFY IF THESE TWO INTEREST INCOME ARE OFFERED IN A.Y. 2010-11 THEN THE SAME SHOULD NO T BE CONSIDERED IN A.Y. 2010-11 AS IT WOULD AMOUNT TO DOUBLE TAXATION OF TH E SAME INCOME. WITH THIS DIRECTION, THE IMPUGNED ADDITIONS ARE CONFIRME D. GROUND NO. 2 & 3 ARE ACCORDINGLY DISMISSED. 9. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 20 - 10- 2 016. SD/- SD/- (S. S. GODARA) (N. K. BILLAIYA) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD: TRUE COPY RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,AHME DABAD