M/s. Ramraj Co-operative Cane Development Union Ltd., Muzaffarnagar V. DCIT, Muzaffarnagar

ITA 1821/DEL/2015

• Counselvise Citation: 182120114 RSA 2015
• Duration Of Justice: 5 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-09-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC 1
• Next Hearing Date: 23-07-2015
• Assessment Year: 2011-2012
• Appeal Filed On: 30-03-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S K JAIN COMMISSIONER
• Assessee Lawyers: PREM PRAKASH; MASHKOOR AHMAD
• Section: 43B; 37(1)

Judgement Text

1 ITA 1821/DEL/2015 RAMRAJ COOPERATIVE CANE DEVELOPMENT VS. DCIT IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH SMC NEW DELHI BEFORE SHRI S.V. MEHROTRA : ACCOUNTANT MEMBER ITA NO. 1821/DEL/2015 ASSTT. YRS: 2011-12 RAMRAJ CO-OPERATIVE CANE VS. DCIT, CIRCLE-2, DEVELOPMENT UNION LTD., MUZAFFARNAGAR. 10, DR. SURESH MARKET, BHAGAT SINGH ROAD, MUZAFFARNAGAR. PAN: AAIFR 0542 C ( APPELLANT ) (RESPONDENT) APPELLANT BY : SHRI MASHKOOR AHMAD ADV. & SHRI PREM PRAKASH ADV. RESPONDENT BY : SHRI S.K. JAIN ADDL. COMMISSIONER DATE OF HEARING : 23/07/2015. DATE OF ORDER : 09/09/2015. O R D E R PER S.V. MEHROTRA, A.M.. : THIS APPEAL, PREFERRED BY THE ASSESSEE, IS DIRECT ED AGAINST THE ORDER OF LD. CIT(A), MUZAFFARNAGAR DATED 01-12-2014 PASSED IN AP PEAL NO. 213/13-14/MZR, RELATING TO A.Y. 2011-12.. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE, A COOPERATIVE SOCIETY, IN THE RELEVANT ASSESSMENT YEAR DERIVED INCOME FROM INTEREST, COMMISSION, RENT, DIVIDEND ETC. IT FILED ITS RETURN OF INCOME DECLARING 2 ITA 1821/DEL/2015 RAMRAJ COOPERATIVE CANE DEVELOPMENT VS. DCIT NIL INCOME. THE ASSESSEE WAS ENGAGED IN MARKETING O F SUGAR CANE GROWN BY ITS MEMBERS AND PURCHASE OF FERTILIZERS, A GRICULTURE IMPLEMENTS, PESTICIDES, SEEDS AND OTHER ARTICLES IN TENDED FOR AGRICULTURE PURPOSE FOR SUPPLY TO ITS MEMBERS AS LOAN. THE ASSE SSMENT WAS COMPLETED AT A TOTAL INCOME OF RS. 9,36,341/- BY MA KING FOLLOWING TWO ADDITIONS: (A) RENTAL INCOME EARNED BY THE SOCIETY WAS BEING TREATED AS INCOME FROM OTHER SOURCES DENYING DEDUCTION U/S 80P(2)(A)(I) RS. 1,07,726 (B) DISALLOWANCE U/S 43B RS. 8,28,615 3. LD. CIT(A), WHILE PARTLY ALLOWING THE ASSESSEES APPEAL CONFIRMED BOTH THE ABOVE ADDITIONS. BEING AGGRIEVED, THE ASSESSEE IS I N APPEAL BEFORE ME AND HAS TAKEN FOLLOWING GROUNDS OF APPEAL: 1 . THAT THE ORDER IS AGAINST LAW & FACTS ON THE RECO RD. 2. THAT LD. CIT(A) WAS WRONG IN CONFIRMING THE ADDI TIONS WITHOUT CONSIDERING THE SUBMISSIONS FILED AND CASE LAWS CITED BEFORE HIM. 3. THAT THE LD. CIT(A) WAS WRONG IN NOT ALLOWING TH E DEDUCTION U/S 24(B) OF THE ACT ON THE INCOME FROM H OUSE PROPERTY 3 ITA 1821/DEL/2015 RAMRAJ COOPERATIVE CANE DEVELOPMENT VS. DCIT 4. THAT LD. CIT(A) WAS WRONG IN CONFIRMING THE ADDI TION MADE U/S 43B OF THE ACT AND IN NOT CONSIDERING THE DEDUCTION CLAIMED U/S 80P(2)(A)(III) OF THE ACT. 5. THAT LD. CIT(A) WAS WRONG IN CONFIRMING THE ADDI TION MADE U/S 43B OF THE ACT WHILE THE AMOUNT REFERRED T O ADDITION PERTAINS TO THE EARLIER YEAR AND CANNOT BE ADDED IN THE YEAR IN QUESTION. 4. GROUND NOS. 1 & 2 ARE GENERAL IN NATURE AND REQU IRE NO ADJUDICATION. 5. BRIEF FACTS APROPOS GROUND NO. 3 ARE THAT ASSESS EE HAD EARNED INCOME OF RS. 1,07,726/- FROM RENT AND HAD CLAIMED DEDUCTION U/S 80P IN RESPECT OF THE SAID INCOME. THE AO DISALLOWED THE ASSESSEES CLAIM AND TAXED THE AMOUNT AS INCOME FROM OTHER SOURCES. 6. LD. CIT(A) CONFIRMED THE ASSESSEES ACTION, INTE R ALIA, OBSERVING THAT RENTAL INCOME HAD NOT BEEN EARNED BY THE SOCIETY FROM THE BUSINESS ATTRIBUTABLE TO ONE OR MORE ACTIVITIES MENTIONED IN SUB-SECTION (2) OF SEC . 80P OF THE I.T. ACT. 7. THE ONLY GRIEVANCE OF LD. COUNSEL FOR THE ASSESS EE IS THAT RENTAL INCOME SHOULD HAVE BEEN ASSESSED AS INCOME FROM HOUSE PROP ERTY AND ASSESSEE SHOULD HAVE BEEN ALLOWED STATUTORY DEDUCTION U/S 24(B) OF THE I.T. ACT. 8. AFTER CONSIDERING THE SUBMISSIONS OF BOTH THE PA RTIES, I FIND THAT THERE IS NO DISPUTE THAT THE INCOME EARNED WAS RENTAL INCOME AN D, THEREFORE, WAS ASSESSABLE AS INCOME FROM HOUSE PROPERTY AND NOT AS INCOME FROM O THER SOURCES. THEREFORE, 4 ITA 1821/DEL/2015 RAMRAJ COOPERATIVE CANE DEVELOPMENT VS. DCIT ASSESSEE WAS ENTITLED FOR DEDUCTION U/S 24(B). THE AO IS DIRECTED TO ALLOW THE SAID DEDUCTION. GROUND IS ALLOWED ACCORDINGLY. 9. BRIEF FACTS APROPOS GROUND NO. 4 ARE THAT AO NOT ICED THAT GRATUITY AMOUNTING TO RS. 17,41,623/- REMAINED PAYABLE BY THE FINANCIA L YEAR ENDING 31-3-2011. THE AO AFTER CONSIDERING THE PROVISIONS OF SECTION 43B( B), NOTED THAT GRATUITY AMOUNTING TO RS. 15 LACS HAD BEEN PAID AS EXPENSES IN THE P&L A/C IN THE YEAR ENDED ON 31-3-2011, OUT OF WHICH RS. 6,71,385/- HAD BEEN PAID WITHIN THE STIPULATED TIME. HOWEVER, AN AMOUNT OF RS. 8,28,615 /- REMAINED PAYABLE ON 30-9- 2011 I.E. DUE DATE OF FILING OF RETURN. HE, THEREFO RE, MADE THE ADDITION U/S 43B(B) DENYING THE ASSESSEES CLAIM THAT SINCE INCOME WAS ELIGIBLE FOR DEDUCTION U/S 80P(2)(A)(III), NO DISALLOWANCE COULD BE MADE. 10. LD. CIT(A) CONFIRMED THE AO/S ACTION, INTER ALI A, OBSERVING AS UNDER: THE APPELLANT'S SECOND ARGUMENT THAT EVEN IF THE A DDITION IS MADE, THE SAME WILL BE ALLOWED AS DEDUCTION U/S 80P (2)(A)(III) HAS NO FORCE. THE DISALLOWANCE U/S 43B IS FOR VIOLA TION OF STATUTORY PAYMENTS. IF THE ARGUMENTS OF THE APPELLA NT ARE ACCEPTED THEN THE ENTIRE PROVISIONS OF SECTION 438 OR 37(1) OR SECTION 36 ETC. WILL BECOME REDUNDANT. SECTION 43B STARTS WITH A NON-OBSTANTE CLAUSE I.E. IT STARTS WITH 'NOTWITHSTA NDING ANYTHING CONTAINED IN ANY OTHER PROVISIONS OF THIS ACT. .... . ' WHEREAS SECTION 80P DOES NOT ST311 WITH A NON-OBSTANTE CLAU SE. IN VIEW OF THIS THE AO WAS JUSTIFIED IN DISALLOWING THE GRA TUITY TO THE TUNE OF RS. 8,28,615/- . THE ADDITION MADE IS HEREB Y CONFIRMED. 11. AFTER CONSIDERING THE SUBMISSIONS OF BOTH THE P ARTIES, I DO NOT FIND ANY REASON TO INTERFERE IN THE FINDING OF LD. CIT(A) ON THE ISSUE IN QUESTION, BECAUSE ADMITTEDLY THE AMOUNT REMAINED PAYABLE UP TO THE DU E DATE OF FILING OF RETURN AND, 5 ITA 1821/DEL/2015 RAMRAJ COOPERATIVE CANE DEVELOPMENT VS. DCIT THEREFORE, THE DISALLOWANCE U/S 43B(B) WAS CALLED F OR, BECAUSE SECTION 43B(B) STARTS WITH A NON OBSTANTE CLAUSE AND, THEREFORE, HAS OVER -RIDING EFFECT OVER ANY OTHER PROVISIONS OF THE ACT. WHILE COMPUTING THE INCOME, A COOPERATIVE SOCIETY, TO WHICH DEDUCTION U/S 80P IS ALLOWABLE, THE ASSESSEE DOES TAKE INTO CONSIDERATION THE PROVISIONS MADE FOR GRATUITY, WHICH IS ALLOWABLE DE DUCTION, BUT FOR THE PROVISIONS OF SECTION 43B(B), WHICH REQUIRES THAT DEDUCTION CA N BE ALLOWED ONLY IF ASSESSEE HAS MADE PAYMENT BEFORE THE DUE DATE OF FILING OF R ETURN. I, ACCORDINGLY, CONFIRM THE ORDER OF LD. CIT(A) ON THIS COUNT. GROUND IS D ISMISSED. 12. IN THE RESULT, ASSESSEES APPEAL IS PARTLY ALLO WED. ORDER PRONOUNCED IN OPEN COURT ON 09/09/2015.. SD/- (S.V. MEHROTRA) ACCOUNTANT MEMBER DATED: 09/09/2015. *MP* COPY OF ORDER TO: 1. ASSESSEE 2. AO 3. CIT 4. CIT(A) 5. DR, ITAT, NEW DELHI. 6 ITA 1821/DEL/2015 RAMRAJ COOPERATIVE CANE DEVELOPMENT VS. DCIT - + DATE INITIAL 1. DRAFT DICTATED ON - 09.2015 PS 2. DRAFT PLACED BEFORE AUTHOR .09.2015 PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS PS/PS 6. KEPT FOR PRONOUNCEMENT ON PS 7. FILE SENT TO THE BENCH CLERK PS 8. DATE ON WHICH FILE GOES TO THE AR 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK. 10. DATE OF DISPATCH OF ORDER.