DCIT,CIRCLE-4, Nagpur V. ANKUR SEEDS PVT. LTD, Nagpur

ITA 17/NAG/2014

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 1634 (ITAT-NAGPUR)
• Duration Of Justice: 1 year(s) 8 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-09-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2011-2012
• Appeal Filed On: 10-01-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NARENDRA KANE
• Assessee Lawyers: DILIP R ODI

Judgement Text

1 ITA NO. 17/NAG/2014 IN THE INCOME TAX APPELLATE TRIBUNAL, NAGPUR BENCH, NAGPUR. BEFORE SHRI MUKUL K. SHRAWAT, JUDICIAL MEMBER AND SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER. I.T.A. NO. 17/NAG/2014 ASSESSMENT YEAR : 2009 - 10. DY. COMMISSIONER OF INCOME - TAX, M/S ANKUR SEEDS PVT. LTD., CIRCLE - 4, NAGPUR. V/S. 27, NEW COTTON MARKET LAYOUT, NAGPUR. PAN AABCA 0981C APPELLANT RESPONDENT. APPELLANT BY : SHRI NARENDRA KANE. RESPONDENT BY : SHRI DILIP R ODI . DATE OF HEARING - 28 - 08 - 2015 DATE OF ORDER - 11 TH SEPT. , 2015 O R D E R PER SHRI SHAMIM YAHYA, A.M. THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF CIT(APPEALS) - I, NAGPUR DATED 05 - 11 - 2013 AND PERTAINS TO ASSESSMENT YEAR 20 11 - 12 . THE GROUND OF APPEAL READS AS UNDER : ON THE FACTS AND THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) ERRED IN ALLOWING THE EXCESS CLAIM OF EXEMPTION OF ` .2,00,88,973/ - , AN INTEREST 2 ITA NO. 17/NAG/2014 INCOME ON BOOKING SCHEME INCLUD ED FOR COMPUTATION OF AGRICULTURAL INCOME. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS ENGAGED IN BUSINESS OF PRODUCTION AND SALE OF SEEDS OF DIFFERENT CROPS FOR SOWING PURPOSES. THE ASSESSEE HAS LAUNCHED ADVANCE BOOKING SCHEME AND COLLECTED ADVAN CE PAYMENT FROM DEALERS AND DISTRIBUTORS. THESE WERE DEPOSITED IN BANK AND INTEREST HAS BEEN EARNED. FURTHER, THE COMPANY HAS GIVEN SPECIAL INCENTIVE TO THE DEALERS AND DISTRIBUTORS . THE INTEREST EARNED ON THE ABOVE DEPOSITS HAS BEEN DEDUCTED FROM THE I NCENTIVE PA ID . BALANCE AMOUNT OF INCENTIVE IS TAKEN INTO PROFIT & LOSS ACCOUNT AND TH IS IS DEDUCTED FROM AGRICULTURAL INCOME CREDITED. ASSESSEES CLAIM WAS THAT THERE IS A DIRECT NEXUS BETWEEN AMOUNTS RECEIVED FROM BOOKING SCHEME, WHICH WAS INVESTED IN FDRS, AND THE RESULTANT INTEREST EARNED AND INCENTIVE ALLOWED. HENCE INCENTIVE ALLOWED TO DEALERS MAY PLEASE BE NETTED OFF AGAINST INTEREST EARNED ON FDR MADE OUT OF BOOKING SCHEME. THE ITAT, NAGPUR BENCH IN ASSESSEES OWN CASE HAD DECID ED THE ISSUE IN FAVOUR OF THE ASSESSEE VIDE ORDER NO. ITA NO. 329/NAG/2007, AND ITA NO. 336/NAG/2007, A.Y. 2004 - 05, HAS HELD AS FOLLOWS: AFTER CONSIDERING THE ARGUMENTS OF BOTH THE SIDED AND THE FACTS OF THE CASE, WE ENTIRELY AGREE WITH THE FINDING OF THE LD. CIT(A). IN OUR OPINION, THE LD. CIT(A) WAS RIGHT IN HOLDING THAT THERE IS A DIRECT NEXUS BETWEEN THE INTEREST INCOME WHICH IS EARNED BY THE ASSESSEE FROM DEPOSITS RECEIVED FROM ADVANCE BOOKING SCHEME AND THE INCENTIVE GIVEN BY THE ASSESSEE TO THE PERSONS WHO OPTED FOR ADVANCE BOOKING SCHEME. IN VIEW OF THE ABOVE, WE HOLD THAT THE LD. CIT(A) HAS RIGHTLY DIRECTED FOR SETTING OFF OF EXPENDITURE ON INCENTIVE AGAINST THE INTEREST INCOME. 3 ITA NO. 17/NAG/2014 HOWEVER, THE ASSESSING OFFICER DID NOT ACCEPT THE ABOVE P ROPOSITION. HE HELD THAT THE DECISION OF ITAT HAS BEEN APPEALED BEFORE THE HONBLE BOMBAY HIGH COURT. THE ASSESSING OFFICER CONCLUDED AS UNDER : THE DECISION OF THE HONBLE ITAT HAS NOT BEEN ACCEPTED BY THE REVENUE AND AN APPEAL HAS BEEN FILEDM BEFORE H ONBLE BOMBAY HIGH COURT U/S 260(A) FOR THE A.Y. 2004 - 05 IN CASE OF THE ASSESSEE. CONSIDERING THE ABOVE FACTS AND FOR THE DETAILED REASONS INDICATED IN THE ASSESSMENT ORDERS FOR A.Y. 2004 - 05 INCOME FROM BOOKING SCHEME CANNOT BE CONSIDERED FOR CALCULAT ION OF AGRICULTURAL INCOME. 3. UPON ASSESSEES APPEAL, LEARNED CIT(APPEALS) FOLLOWED ITATS ORDER AND DELETED THE ADDITION. 4. NOW REVENUE IS IN APPEAL BEFORE US AGAINST THE ABOVE ORDER. 5 . HAVING HEARD BOTH THE COUNSEL AND PERUSING THE RECORDS, W E FIND THAT THE ITAT IN ITS ORDER FOR ASSESSMENT YEAR 2004 - 05 HAD HELD THAT LEARNED CIT(APPEALS) WAS JUSTIFIED IN DIRECTING FOR SETTING OFF OF EXPENDITURE ON INCENTIVE AGAINST INTEREST EARNED ON DEPOSITS RECEIVED FROM ADVANCE BOOKING SCHEME. THE AO HAS NOTED TH IS FACT. BUT HAS OBSERVED THAT REVENUE IS IN APPEAL BEFORE HONBLE HIGH COURT. IT IS ALSO NOT THE REVENUES CASE THAT HONBLE HIGH COURT HAS REVERSED THE DECISION OF THE ITAT . IT IS ALSO THE CASE OF LEARNED CIT(APPEALS) THAT HE IS FOLLOWING ITATS ORDE R. IN THIS VIEW OF THE MATTER, RESPECTFULLY FOLLOWING THE PRECEDENTS, WE ARE OF THE OPINION THAT THE ASSESSEE IS ENTITLED TO SETTING OFF OF EXPENDITURE ON INCENTIVE AGAINST INTEREST EARNED FROM DEPOSITS RECEIVED FROM ADVANCE BOOKING SCHEME IN ACCORDANCE W ITH THE EARLIER ITATS ORDER. ACCORDINGLY WE UPHOLD THE ORDER OF LEARNED CIT(APPEALS). 4 ITA NO. 17/NAG/2014 6 . THIS APPEAL OF THE REVENUE IS ACCORDINGLY DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 11 TH SEPT., 2015. SD/ SD/ (MUKUL K. SHRAWAT) (SHAMIM YAHYA) JUDICIAL MEMBER. ACCOUNTANT MEMBER NAGPUR, DATED: 11 TH SEPT. , 2015. COPY OF ORDER FORWAR DED TO : 1. THE ASSESSEE. 2. REVENUE. 3. THE CIT(A) 4. THE CIT, NAGPUR. 5. THE D.R., ITAT, NAGPUR. 6. GUARD FILE. TRUE COPY. BY ORDER ASSISTANT REGISTRAR, ITAT, NAGPUR WAKODE