Appeal Details
Counselvise Citation
19323114 RSA 2012
Assessee PAN
Bench
Appeal Number
CRN Number
Duration Of Justice
3 year(s) 4 month(s) 17 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
17-07-2015
Appeal Filed By
Assessee
Order Result
Partly Allowed
Bench Allotted
A
Assessment Year
2005-2006
Appeal Filed On
01-03-2012
Judgement Text
VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR JH VKJ-IH-RKSYKUH] U;KF;D LNL; ,OA JH VH-VKJ-EHUK] YS[KK LNL; DS LE{K BEFORE: SHRI R.P. TOLANI, JM & SHRI T.R. MEENA, AM VK;DJ VIHY LA- @ ITA NOS. 193, 194 & 195/JP/2012 FU/KZKJ.K O'K Z @ ASSESSMENT YEARS : 2005-06, 2006-07 & 2008-09 KRISHI UPAJ MANDI SAMITI, ATRU, DISTRICT- BARAN. CUKE VS. THE I.T.O. BARAN. LFKK;H YS[KK LA-@THVKBZVKJ L A-@ PAN/GIR NO.: AAALK 0871 M VIHYKFKHZ @ APPELLANT IZR;FKHZ @ RESPONDENT FU/KZKFJRH DH VKSJ LS @ ASSESSEE BY : SHRI RAHUL LAKHWANI & SHRI NIKHIL TOTUKA (C.A.) JKTLO DH VKSJ LS @ REVENUE BY : MRS. NEENA JEPH (JCIT) LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 12/05/2015 MN?KKS'K .KK DH RKJH[ K @ DATE OF PRONOUNCEMENT : 17/07/2015 VKNS'K @ ORDER PER: T.R. MEENA, A.M. THE PRESENT THREE APPEALS FILED BY THE ASSESSEE ARE AGAINST THE ORDER DATED 29/12/2011 AND 30/12/2011 PASSED BY THE LEARNED CIT(A), KOTA FOR A.YS. 2005-06, 2006-07 AND 2008-09. THE EF FECTIVE GROUNDS OF APPEALS ARE AS UNDER:- ITA 193, 194 & 195/JP/2012_ KUMS, ATRU, BARAN VS. ITO 2 GROUNDS IN ITA NO. 193/JP/2012 1) UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LEARNED CIT(A) KOTA HAS ERRED IN/IS NOT JUSTIFIED IN UPHOLDING THE REJECTION OF BOOKS OF ACCOUNTS OF THE APPELLANT AS DONE BY THE ASSESSING OFFICER. 2) UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE AN D IN LAW, THE LEARNED CIT(A), KOTA HAS ERRED IN:- I. DENYING THE BENEFIT OF EXEMPTION U/S 11 OF THE INCOME TAX ACT, 1961 TO THE APPELLANT TO THE EXTENT OF RS. 35,36,967/- AND UPHOLDING THE COMPUTATION OF INCOME BY THE A.O. TO SUCH EXTENT. II. HOLDING THAT THE ASSESSEE HAS NOT COMPLIED WITH THE REQUIREMENTS OF SECTION 11(2) OF THE INCOME TAX ACT, 1961 AND TO SUCH EXTENT THE ORDER OF THE LEARNED CIT(A), KOTA IS BAD IN LAW. III. DENYING THE BENEFIT OF CARRY FORWARD AND SET OFF OF LOSSES AND DEPRECIATION CLAIMED BY THE APPELLANT. 3) UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE AN D IN LAW, THE LD CIT(A), KOTA HAS ERRED IN UPHOLDING THE LEVY OF INTEREST U/S 234A, 234B AND 234C. GROUNDS IN ITA NO. 194/JP/2012 1) UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LEARNED CIT(A) KOTA HAS ERRED IN/IS NOT JUSTIFIED IN UPHOLDING THE REJECTION OF BOOKS OF ACCOUNTS OF THE APPELLANT AS DONE BY THE ASSESSING OFFICER. 2) UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE AN D IN LAW, THE LEARNED CIT(A), KOTA HAS ERRED IN UPHOLDING THE ADDITION OF RS. 16,00,000/- BEING EXPENSES TOWARDS ADVANCE GIVEN TO RSAMB FOR CONSTRUCTION OF MISSING LINK ROADS. ITA 193, 194 & 195/JP/2012_ KUMS, ATRU, BARAN VS. ITO 3 3) UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE AN D IN LAW, THE LEARNED CIT(A), KOTA HAS ERRED IN :- I. DENYING THE BENEFIT OF EXEMPTION U/S 11 OF THE INCOME TAX ACT, 1961 TO THE APPELLANT TO THE EXTENT OF RS. 51,36,026/- AND UPHOLDING THE COMPUTATION OF INCOME BY THE A.O. TO SUCH EXTENT. II. HOLDING THAT THE ASSESSEE HAS NOT COMPLIED WITH THE REQUIREMENTS OF SECTION 11(2) OF THE INCOME TAX ACT, 1961 AND TO SUCH EXTENT THE ORDER OF THE LEARNED CIT(A), KOTA IS BAD IN LAW. III. DENYING THE BENEFIT OF CARRY FORWARD AND SET OFF OF LOSSES AND DEPRECIATION CLAIMED BY THE APPELLANT. 4) UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE AN D IN LAW, LEARNED CIT(A), KOTA HAS ERRED IN UPHOLDING THE LEVY OF INTEREST U/S 234A, 234B AND 234C. GROUNDS IN ITA NO. 195/JP/2012 1) UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LEARNED CIT(A) KOTA HAS ERRED IN/IS NOT JUSTIFIED IN UPHOLDING THE REJECTION OF BOOKS OF ACCOUNTS OF THE APPELLANT AS DONE BY THE ASSESSING OFFICER. 2) UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE AN D IN LAW, THE LEARNED CIT(A), KOTA HAS ERRED IN UPHOLDING THE DISALLOWANCE OF DEPRECIATION AMOUNTING TO RS. 94,968/- ON BUSINESS ASSETS. 3) UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE AN D IN LAW, THE LEARNED CIT(A), KOTA HAS ERRED IN :- I. DENYING THE BENEFIT OF EXEMPTION U/S 11 OF THE INCOME TAX ACT, 1961 TO THE APPELLANT TO THE EXTENT OF RS. 25,76,992/- AND UPHOLDING THE COMPUTATION OF INCOME BY THE A.O. TO SUCH EXTENT. ITA 193, 194 & 195/JP/2012_ KUMS, ATRU, BARAN VS. ITO 4 II. HOLDING THAT THE ASSESSEE HAS NOT COMPLIED WITH THE REQUIREMENTS OF SECTION 11(2) OF THE INCOME TAX ACT, 1961 AND TO SUCH EXTENT THE ORDER OF THE LEARNED CIT(A), KOTA IS BAD IN LAW. 4) UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE AN D IN LAW, LEARNED CIT(A), KOTA HAS ERRED IN UPHOLDING THE LEVY OF INTEREST U/S 234A, 234B AND 234C. 2. DURING THE COURSE OF HEARING, THE ASSESSEE ALSO TAKEN ADDITIONAL GROUND FOR ALL THE ASSESSMENT YEARS. THE ADDITIONAL GROUND FOR ALL THE THREE ASSESSMENT YEARS ARE COMMON AND THE SAME ARE REPRODUCED AS UNDER:- UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, LD. CIT(A), KOTA HAS ERRED IN DENYING THE EXEMPTION U/S 11 AND 12 OF THE ACT TO THE APPELLANT ON THE GROUND THAT THE APPELLANT DID NOT COMPLY WITH THE REQUIREMENTS OF SECTION 11(2) RE LATING TO SUBMISSION OF FORM 10, WITHOUT APPRECIATING THE FACT THAT THE INCOME AND EXPENDITURE ACCOUNT AND OTHER RELEVANT D OCUMENTS WERE AVAILABLE WITH THE LD. CIT(A), KOTA TO ESTABLISH THE FACT THAT PROVISIONS OF SECTION 11(2) WERE NOT APPLICABLE ON A PPELLANT. 2.1 THE LD DR OBJECTED THAT THERE IS NO REASON TO AD MIT THE ADDITIONAL GROUND AT THIS STAGE AS THE ASSESSEE ALREADY HAD CH ALLENGED THE DISALLOWANCE MADE U/S 11(2) OF THE INCOME TAX ACT, 19 61 (IN SHORT THE ACT. THEREFORE, THE ASSESSEES ADDITIONAL GROUND IS SIMPLY REPETITION OF THE SAME GROUND. HOWEVER, THE LD AR FOR THE ASSESSEE HAS ARGUED THAT ITA 193, 194 & 195/JP/2012_ KUMS, ATRU, BARAN VS. ITO 5 THIS GROUND IS QUESTION OF LAW AND LEGAL GROUND GOIN G TO THE ROOT OF THE ASSESSMENT AND FIRST APPELLANT PROCEEDINGS AND THER E WAS NO WILLFUL OMISSION OF THE ABOVE GROUND FROM FORM OF APPEAL FI LED BY THE APPELLANT. IT IS FURTHER SUBMITTED THAT THE ADDITIO NAL GROUND SPECIFICALLY COVERING THE ISSUE OR REASONS FOR EXEMPTION. THE LD AR PLACED RELIANCE ON THE DECISION OF HON'BLE SUPREME COURT IN THE CAS E OF NATIONAL THERMAL POWER CO. LTD. VS. CIT (1999) 157 CTR (SC) 249 AND JUTE CORPORATION OF INDIA LTD. VS. CIT (1990) 88 CTR (SC) 66. 2.2 AFTER CONSIDERING BOTH THE SIDES, WE ADMIT THE A DDITIONAL GROUND FOR ALL THE THREE ASSESSMENT YEARS RAISED BY THE AP PELLANT AS THE GROUND RAISED BY THE ASSESSEE IS LEGAL GROUND AND IS GOING TO THE ROOT OF THE ASSESSMENT. THEREFORE, WE ADMIT THE ADDITIONAL GROUND RAISED BY THE APPELLANT IN ALL THE ASSESSMENT YEARS. 3. GROUND NO. 1 IN ALL THE THREE YEARS IS AGAINST R EJECTING THE BOOK ACCOUNT U/S 145(3) OF THE ACT. THE ASSESSEE IS A KR ISHI UPAJ MANDI SAMITI, FILED THE RETURN FOR A.Y. 2005-06 ON 08/2/2 006, A.Y. 2006-07 ON 31/10/2006 AND A.Y. 2008-09 ON 30/09/2008 AT NIL IN COME CLAIMING THAT SURPLUS OF INCOME OVER EXPENDITURE IS EXEMPT. THE CASES WERE SCRUTINIZED U/S 143(3) OF THE ACT BY THE ASSESSING OFFICER. THE LD ASSESSING OFFICER OBSERVED THAT THE BOOKS OF ACCOUN T OF THE SAMITI HAD ITA 193, 194 & 195/JP/2012_ KUMS, ATRU, BARAN VS. ITO 6 NOT BEEN MAINTAINED AS PER ANY FORMAL ACCOUNTING ST ANDARD. NO BALANCESHEET OF THE SAMITI AS ON 31/3/2005, 31/3/20 06 AND 31/3/2008 WERE PREPARED AND NOT FILED BEFORE HIM. THE ONLY INCO ME AND EXPENDITURE ACCOUNT HAD BEEN PREPARED AND THAT TOO HAD NOT BEEN MAINTAINED AS PER FORMAL ACCOUNTING PRACTICES. THE A SSESSING OFFICER FURTHER OBSERVED THAT AUDIT REPORT U/S 44AB OF THE ACT DATED 06/2/2006 IN FORM NO. 3CA WAS FURNISHED IN A.Y. 2005-06 ALONGWI TH RETURN. IN A.Y. 2006-07, IT WAS ALLEGED THAT AUDIT REPORT FILED BY T HE ASSESSEE WAS NOT SUPPORTED BY PROPERLY AUDITED INCOME AND EXPENDITUR E ACCOUNT AS PER NORMS AND REQUIREMENTS OF RAJASTHAN STATE AGRICULTU RAL PRODUCE MARKET ACT NOR A BALANCE SHEET AS ON 31/3/2006 WAS DRAWN. T HE AUDITOR HAD MADE FOLLOWING OBSERVATIONS IN THE AUDIT REPORT IN A LL THE YEARS, WHICH ARE REPRODUCED AS UNDER:- (A) THE UN-AUDITED INCOME AND EXPENDITURE ACCOUNT FOR THE YEAR ENDED ON 31/3/2006. (B) AS PER NORMS AND REQUIREMENTS OF THE RAJASTHAN AGRICULTURAL PRODUCE MARKET ACT, 1961 ONLY INCOME A ND EXPENDITURE ACCOUNT IS PREPARED WHICH IS YET TO BE A UDITED BY THE DEPT. OF LOCAL FUND AND AS PER THEIR NORMS N O SUCH BALANCE SHEET AS ON 1/3/2006 IS DRAWN AND AUDITED. ITA 193, 194 & 195/JP/2012_ KUMS, ATRU, BARAN VS. ITO 7 (C) DOCUMENTS DECLARED BY THE SAID ACT COULD NOT BE ANNEXED TO THE INCOME AND EXPENDITURE ACCOUNT AND BALANCE S HEET BEING THE AUDIT IS YET TO BE CARRIED BY THE DEPARTM ENT. (D) ON REQUEST OF THE MANDI SAMITI THE AUDIT UNDER THE PROVISION OF SECTION 12AA OF THE I.T. ACT IS ALSO C ARRIED AND SIGNED ON THE EVEN DATE BY US. THE LD ASSESSING OFFICER AFTER CONSIDERING THE AUDIT REPORT HAD HELD THAT NO PROPER AUDITING AS PER PROVISIONS OF SECTION 44A B OF THE ACT WAS CARRIED OUT AND INCOMPLETE ACCOUNTS HAD BEEN PREPAR ED AND FURNISHED. THEREFORE, THE BOOKS OF ACCOUNT OF THE ASSESSEE SAMI TI ARE NOT RELIABLE AND THE CLAIM FOR EXEMPTION AND CORRECTNESS/GENUINE NESS OF THE RELATED EXPENSES BASED ON SUCH BOOKS ARE NOT FREE FROM DOUB TS. THEREFORE, HE REJECTED THE BOOKS OF ACCOUNT AND DECIDED THE CASE ON THE BASIS OF ABOVE OBSERVATIONS MADE BY THE ASSESSING OFFICER IN ALL THE ASSESSMENT YEARS. 4. BEING AGGRIEVED BY THE ORDER OF THE ASSESSING OF FICER, THE ASSESSEE CARRIED THE MATTER BEFORE THE LEARNED CIT( A). THE LD CIT(A) HAS HELD THAT EVEN BEFORE HIM, IT WAS NOT CLEAR THAT AUDIT U/S 44AB WAS CARRIED OUT AND P&L ACCOUNT AND BALANCE SHEET WERE P REPARED. IT WAS ALSO NOT CLAIMED THAT AUDIT AS PER RAJASTHAN STATE AGRICULTURAL PRODUCT ITA 193, 194 & 195/JP/2012_ KUMS, ATRU, BARAN VS. ITO 8 MARKET ACT WERE CARRIED OUT, THEREFORE, HE UPHELD TH E FINDING GIVEN BY THE LD ASSESSING OFFICER ON CORRECTNESS AND GENUINE NESS OF THE BOOKS OF ACCOUNT MAINTAINED BY THE ASSESSEE IN ALL THE ASSES SMENT YEARS. 5. NOW THE ASSESSEE IS IN APPEAL BEFORE US. THE LEARN ED A.R. FOR THE ASSESSEE SUBMITTED THAT THE SAMITI MAINTAINS REGULA R AND PROPER BOOKS OF ACCOUNT ON CASH SYSTEM OF ACCOUNTING. ALL SUPPO RTING RECORDS ARE KEPT. THE ACCOUNTS/VOUCHERS AND SUPPORTING ARE MAINT AINED AS REQUIRED UNDER THE ACT. THE ASSESSEE IS NOT CARRYING ON THE ACTIVITY FOR PROFIT. IT WAS UNDER BONAFIDE BELIEF THAT NO RETURN NEED TO BE FILED U/S 139(1) OF THE ACT. NO NOTICE U/S 142(1) OF THE ACT WAS RECEIVE D UP TO THE ASSESSMENT YEAR 2002-03. THE ASSESSEE BEING UNDER BO NAFIDE BELIEF THAT IT IS STATE FUNCTIONARY PERFORMING THE JUDICIA L, LEGISLATIVE AND EXECUTIVE FUNCTIONS, WITHOUT ANY MOTIVE OF EARNING A NY INCOME/PROFIT AND EXISTING FOR PUBLIC PURPOSES, IS NOT AMENABLE T O THE PROVISIONS OF THE INCOME TAX ACT. HOWEVER, THE RETURN OF THE INCOME FOR THE YEAR UNDER APPEAL FILED ON DIFFERENT DATES ALONGWITH AUDI TED INCOME AND EXPENDITURE ACCOUNTS. HOWEVER, THE LD ASSESSING OFFI CER IN AN ARBITRARY MANNER HAD COMPUTED THE TOTAL INCOME IN ALL THE YEA RS. HE FURTHER DRAWN OUR ATTENTION ON AUDIT REPORT PLACED IN THE PA PER BOOK AND ARGUED THAT IN A.Y. 2005-06 THE AUDIT WAS COMPLETED ON 06/2/2006, IN ITA 193, 194 & 195/JP/2012_ KUMS, ATRU, BARAN VS. ITO 9 A.Y. 2006-07 ON 29/10/2006 AND IN A.Y. 2008-09 ON 2 5/09/2008. THE AUDIT FOR A.Y. 2005-06 WAS DELAYED DUE TO BONAFIDE B ELIEF THAT THE ASSESSEE SAMITI WAS NOT TO FURNISH THE RETURN UNDER THE ACT. HOWEVER, THE ASSESSEE HAD MADE FULL COMPLIANCE OF RAJASTHAN STATE AGRICULTURAL PRODUCE MARKET ACT AND INCOME AND EXPENDITURE HAD B EEN PREPARED WITHIN THE TIME FOR THE PURPOSES OF THAT ACT. THEREFO RE, THE OBSERVATIONS MADE BY THE LOWER AUTHORITIES MAY PLEASE BE DELETED. 6. THE LEARNED DR VEHEMENTLY SUPPORTED THE ORDER OF THE LEARNED CIT(A). 7. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE AUDIT REPORT FOR A.Y. 2005-06 IS DELAYED BUT MADE AS PER LAW BY THE C.A.. IN OTHER TWO YEARS, THE AUDITS WERE MADE WITHIN TIME. AS SUCH, AS PER AUDIT REPORT, NO ADVERSE COMMENT HAS BEEN GIVEN BY THE AUDITOR IN THE AUDIT REPORT. THEREFORE, THERE IS NO JUSTIFICATION IN DOUBTING THE CORRECTNESS AND GENUINENESS OF THE INCOME/EXPENSES OF THE SAMITI ON THE BASIS OF RETURN FURNISHED BY IT IN ALL THE YEARS. ACCORDINGLY, WE RE VERSE THE ORDER OF THE LD CIT(A) IN ALL THE THREE YEARS. 8. GROUND NO. 2 IN APPEAL FOR A.Y. 2005-06 AND GROU ND NO. 3 IN THE APPEALS FOR A.Y. 2006-07 AND 2008-09 ARE AGAINST DE NYING THE BENEFIT ITA 193, 194 & 195/JP/2012_ KUMS, ATRU, BARAN VS. ITO 10 U/S 11 AND NOT FOLLOWING THE REQUIREMENT U/S 11(2) OF THE ACT AS WELL AS DENYING THE BENEFIT OF CARRY FORWARD AND SET OFF OF LOSSES AND DEPRECIATION CLAIMED BY THE APPELLANT. THE LD ASSESS ING OFFICER HAD NOT ALLOWED THE APPLICATION OF FUND U/S 11(2) OF THE ACT AND MADE ADDITION UNDER VARIOUS HEADS AFTER CONSIDERING THE AMENDMENT MADE IN SECTION 2(15) OF THE ACT IN ALL THE YEARS. THE ASSESSEE CHAL LENGED THESE ADDITIONS BEFORE THE LD CIT(A) BUT WHO DELETED THE A DDITIONS. HOWEVER, IT HAS BEEN HELD THAT AS PER INCOME AND EXPENDITURE ACCOUNT, A SUM OF RS. 45,36,967/- APPEARED AS SURPLUS IN A.Y. 2005-06 , RS. 51,36,026/- IN A.Y. 2006-07 AND RS. 25, 76,992 IN A.Y. 2008-09. IN THE AUDIT REPORT, THE AUDITOR HAS NOT MENTIONED ANY ACCUMULATION OR S ETTING APART OF ANY SUM FOR SPECIFIED PURPOSES U/S 11(2) OF THE ACT. THE ASSESSEE HAD ALSO NOT GIVEN ANY NOTICE TO THE ASSESSING OFFICER IN PR ESCRIBED FORM (FORM NO. 10) AND MANNER (AS PER RULE 17) AS PRESCRIBED U /S 11(2)(A) OF THE ACT. 9. NOW THE ASSESSEE IS IN APPEAL BEFORE US. THE LEARN ED A.R. FOR THE ASSESSEE SUBMITTED AS UNDER:- THE FINDING OF THE LD. CIT(A) THAT THE APPELLANT SAM ITI HAS NOT COMPLIED WITH THE CONDITIONS OF SECTION 11(2) OF THE ACT AND HENCE, NOT ELIGIBLE FOR EXEMPTION U/S 11(1) IS PERV ERSE AND BAD IN LAW. ITA 193, 194 & 195/JP/2012_ KUMS, ATRU, BARAN VS. ITO 11 HE DRAWN OUR ATTENTION TOWARDS SECTION 11(2) OF THE ACT. HE ALSO SUBMITTED THAT FROM READING OF SECTION 11(2) O F THE ACT, IT IS CLEAR THAT THE PRE-CONDITION FOR THE APPLICABILI TY OF THE PROVISIONS OF SECTION 11(2) IS THAT: A) THE ASSESSEE HAS APPLIED LESS THAN 85% OF INCOME FOR THE RELEVANT FINANCIAL YEAR TOWARDS CHARITABLE OR RELIGI OUS PURPOSES: AND B) SUCH ASSESSEE WISHES TO ACCUMULATE OR SET APART T HE SURPLUS IN EXCESS OF 15% OF THE INCOME TO BE APPLIE D TOWARDS CHARITABLE OR RELIGIOUS PURPOSES IN THE FOLLOWING AS SESSMENT YEARS. HE FURTHER SUBMITTED THAT IN THE RELEVANT ASSESSMEN T YEAR UNDER CONSIDERATION, THE APPELLANT SAMITI HAS APPLI ED MORE THAN 85% OF THE RELEVANT ASSESSMENT YEARS INCOME. THE DETAIL OF THE OVERALL APPLICATION OF INCOME IS AS UNDER:- PARTICULARS A.Y. 2005 - 06 A.Y. 2006 - 07 A.Y. 2007 - 08 AMOUNT (IN RS.) TOTAL INCOME AS PER INCOME & EXPENDITURE ACCOUNT 73,50,061 1,13,77,024 99,53,764 EXPENSES AND APPLICATION AS PER RECASTED INCOME AND EXPENDITURE ACCOUNT SUBMITTED BEFORE LD. CIT(A). LESS: CAPITAL EXPENDITURE ACCOUNT 9,411 - 50,83,023 LESS: OTHER EXPENSES AND APPLICATION 38,13,094 62,40,998 73,76,773 ITA 193, 194 & 195/JP/2012_ KUMS, ATRU, BARAN VS. ITO 12 SURPLUS AS PER RECASTED I&E A/C (B) 35,27,556 51,36,026 ( - )25,06,031 EXCESS APPLICATION OF EARLIER YEARS LESS: BROUGHT FORWARD LOSSES SET OFF AS PER RETURN OF INCOME 35,36,967 13,86,036 - LESS: BROUGHT FORWARD DEPRECATION SET OFF AS PER RETURN OF INCOME - 24,42,357 - SURPLUS AFTER TOTAL APPLICATION (D) ( - ) 9,411 13,07,633 ( - )25,06,031 PERMISSIBLE ACCUMU LATION (@ 15%) 11,02,509 17,06,554 14,93,065 HE FURTHER SUBMITTED THAT IN THE LIGHT OF THE DISCU SSION ABOVE, IT IS CLEAR THAT THE APPELLANT SAMITI HAS APPLIED MORE THAN 100% OF TOTAL INCOME OF THE RELEVANT ASSESSMENT YEAR IN THE SAID ASSESSMENT YEAR. HENCE, THE PROVISIONS OF SECTION 1 1(2) ARE NOT APPLICABLE ON THE APPELLANT. HE FURTHER SUBMITTED THAT THE RETURN OF INCOME OF T HE ASSESSMENT YEARS 2003-04 AND 2004-05, I.E. THE ASSE SSMENT YEARS FROM WHICH SUCH LOSSES WERE CARRIED FORWARD. IT IS HUMBLY SUBMITTED THAT THE CONTENTION OF THE LD CIT(A ) THAT SUCH RETURNS WERE NOT SUBMITTED IS INCORRECT. THE APP ELLANT THROUGH ITS AUTHORIZED C.A. VAG & CO. HAD SUBMITTED A REPLY DATED 21/10/2010 ADDRESSED TO THE LD ITO, BARAN IN R EPLY TO THE LETTER DATED 11/10/2010 ISSUED BY THE DEPARTME NT U/S 148/143(3). IN THE SAID REPLY DATED 21/10/2010, THE AUTHORIZED REPRESENTATIVE HAD PROVIDED WRITTEN SUBMISSIONS ON T HE VARIOUS ITA 193, 194 & 195/JP/2012_ KUMS, ATRU, BARAN VS. ITO 13 QUERIES RAISED BY THE DEPARTMENT AND HAD ALSO PROVI DED COPIES OF THE ITR SUBMITTED BY THE APPELLANT SAMITI FOR ASS ESSMENT YEAR 2003-04 AND 2004-05 FOR READY REFERENCE. THE CO PY OF THE SAID REPLY DATED 21/10/2010 IS AVAILABLE IN THE PAP ER BOOK AT PAGE NO. 1 TO 22 AND THE COPIES OF THE ITR OF ASSESS MENT YEAR 2003-04 AND 2004-05 ARE AVAILABLE IN THE PAPER BOOK ON PAGE NO. 23 TO 30. HE ALSO RELIED ON THE VARIOUS CASE LA WS, WHICH IS REPRODUCED HEREUNDER: 1. CIT VS. MAHARANA OF MEWAR CHARITABLE FOUNDATION (1 987) 164 ITR 439 (RAJ). 2. CIT VS. SHRI GUJRATI SAMAJ (REGD) (2010) 349 ITR 5 59 (MP). 3. CIT VS. MATRISEVA TRUST (2000) 242 ITR 20 (MAD). 4. GONVINDU NAICKER ESTATE VS. ASST. DIRECTOR OF IN COME TAX (2001) 248 ITR 368 (MAD). 5. CIT VS. SHRI PLOT SWETAMBER MURTI PUJAK JAIN MANDA L (1995) 211 ITR 293 (GUJ). HE FURTHER SUBMITTED THAT IT IS CLEAR THAT ONCE IT HAS BEEN CONCLUDED THAT THE APPELLANT SAMITI WILL BE ELIGIBLE FOR EXEMPTION U/S 11 AS AGAINST U/S 10 OF THE ACT, IT S HALL BE ELIGIBLE TO SET OFF THE EXCESS APPLICATION OF PREVI OUS YEARS AGAINST CURRENT YEAR INCOME. IT IS A SETTLED PRINCI PLE OF LAW THAT AN ASSESSEE SHALL NOT BE DEPRIVED OF A BENEFIT AVAI LABLE TO HIM ITA 193, 194 & 195/JP/2012_ KUMS, ATRU, BARAN VS. ITO 14 UNDER THE ACT DUE TO A BONA FIDE MISTAKE. FOR THIS HE RELIED ON THE DECISION OF HON'BLE SUPREME COURT IN THE CASE O F BAJAJ TEMPO LTD. VS. CIT 196 ITR 188 (SC). IN VIEW OF THE ABOVE SUBMISSIONS, IT IS HUMBLY SUBMI TTED THAT THE ADDITIONS MADE BY THE LD CIT(A) ON ACCOUNT OF TR EATING THE APPELLANT TO BE IN DEFAULT OF SECTION 11(2) AND FU RTHER BY NOT ALLOWING THE SET OFF OF THE AMOUNT OF EXCESS APPLICA TION OF INCOME OF EARLIER YEAR AGAINST DEFICIENCY OF CURREN T YEAR DESERVES TO BE DELETED. 10. AT THE OUTSET, THE LEARNED DR VEHEMENTLY SUPPOR TED THE ORDER OF THE LOWER AUTHORITIES. 11. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE SAMITI HAD APPLIED MORE THAN 85% OF TOTAL INCOME OF THE RELEVANT ASSESSMENT YEAR. AS PER SECTION 11(2) OF THE ACT, THE PROCEDURE IN FORM NO. 10 AND AS PER RULE 17 OF SECTION 11(2)(A) IS TO BE FOLLOWED WHERE THE AP PLICATION OF TOTAL INCOME IS LESS THAN 85%. THE LD DR HAD NOT DISPUTED THE APPLICATION OF FUND STATEMENT SUBMITTED IN WRITTEN REPLY, THEREFORE , WE ARE OF THE CONSIDERED VIEW THAT THE LD CIT(A) WAS NOT RIGHT IN DE NYING THE EXEMPTION U/S 11(2) OF THE ACT. 12. IN A.Y. 2005-06 AND 2006-07, THE ASSESSING OFFI CER AS WELL AS LD CIT(A) DENYING THE CARRY FORWARD LOSS AS WELL AS DEPRE CIATION. THE LD ITA 193, 194 & 195/JP/2012_ KUMS, ATRU, BARAN VS. ITO 15 CIT(A) HAS OBSERVED THAT IN A.Y. 2005-06 AND 2006-0 7, THE ASSESSEE HAS CLAIMED CARRY FORWARD LOSSES WHICH HAS BEEN DISAL LOWED BY THE ASSESSING OFFICER IN ABSENCE OF ANY PROOF OF FURNIS HING OF INVALID RETURN. THE LD CIT(A) VERIFIED THE RECORD FROM A.Y. 2003-04 O NWARDS AND CAME TO CONCLUSION THAT THE ASSESSEE DID NOT HAVE UN-ABS OLVED LOSS AND DEPRECIATION TO BE SET OFF AGAINST THE INCOME OF CU RRENT YEAR. EVEN ON LAW, THE ASSESSEE WAS NOT ENTITLED FOR CARRY FORWARD O F LOSSES AND DEPRECIATION. SIMILAR FINDINGS WERE GIVEN IN A.Y. 2 006-07. 13. NOW THE ASSESSEE IS IN APPEALS BEFORE US. THE ASS ESSEE HAS DRAWN OUR ATTENTION ON THE PAPER BOOK AND RETURN FIL ED BY THE ASSESSEE AND HAS DRAWN OUR ATTENTION ON PAGE NO. 71 OF PAPER BOOK WHEREIN THE ASSESSEE HAS CLAIMED BROUGHT FORWARDED LOSSES TO BE CARRY FORWARDED AT RS. 13,86,036/- AND DEPRECIATION AT RS. 24,42,357/- . SIMILARLY ON PAGE 141 OF THE PAPER BOOK, THE ASSESSEE HAD ADJUSTED TH E BROUGHT FORWARDED LOSSES AGAINST THE INCOME FOR THE A.Y. 20 06-07 AND DEPRECIATION ALSO CAN FINALLY BROUGHT FORWARDED LOSS ES AS WELL AS DEPRECIATION SHOWN NIL. THEREFORE, ASSESSING OFFICER IS DIRECTED TO VERIFY THE FIGURES FROM THE RETURN AND TAKE DECISIO N AS PER LAW AS THIS MATTER IS REQUIRED VERIFICATION FROM THE RECORD. ITA 193, 194 & 195/JP/2012_ KUMS, ATRU, BARAN VS. ITO 16 13.1 IN A.Y. 2006-07, THE ASSESSEE IN GROUND NO. 2 HAS CHALLENGED THE UPHOLDING THE ADDITION OF RS. 16 LAC S BEING EXPENSES TOWARDS ADVANCE GIVEN TO RAJASTHAN STATE AGRICULTURA L MARKETING BOARD (RSAMB) FOR CONSTRUCTION OF MISSING LINK ROAD. THE L D ASSESSING OFFICER AS WELL AS LD CIT(A) DISALLOWED THESE EXPENSES BY OBSE RVING THAT THIS GROUND IS DIRECTLY COVERED BY ITEM NO. 6 OF THE DEC ISION MENTIONED IN ITA NO. 560/JP/2010 IN ASSESSEES OWN CASE WHEREIN TH E HONBLE ITAT HAS HELD THAT THESE EXPENSES ARE FOR THE OBJECT OF THE SAMITI AND ARE ALLOWABLE. HOWEVER, IN THE CASE OF ASSESSEE OUT OF RS . 21,16,393/- A SUM OF RS. 16 LACS HAS BEEN GIVEN TO RSAMB AS ADVAN CE. IN THEIR OPINION, NO ADVANCE CAN BE TREATED AS SPENT/APPLIED FOR THE PURPOSE OF SAMITI TILL IT IS NOT ACTUALLY SPENT. THEREFORE, LD CIT(A) CONFIRMED THE ADDITION OF RS. 16 LACS. NOW THE ASSESSEE IS BEFORE US AND HAS DRAWN OUR ATTENTION ON THE DECISION OF THIS BENCH IN THE CASE OF KUMS, CHHABRA, DISTRICT BARAN VS. ITO IN ITA NO. 190 & 191 /JP/2012 DATED 04/03/2015 WHEREIN IDENTICAL ISSUE HAS BEEN DECIDED BY THIS BENCH IN GROUND NO. 3 AT PAGE 8 AND ARGUED THAT THESE PAYMEN TS WERE FOR CHARITABLE PURPOSES OF THE SAMITI UNDER THE RAJASTH AN STATE AGRICULTURAL PRODUCE MARKETING ACT WHEREIN THE HONBLE ITAT HAS DE CIDED THIS ISSUE BY FOLLOWING THE ORDER HONBLE JURISDICTIONAL HIGH C OURT IN THE CASE OF ITA 193, 194 & 195/JP/2012_ KUMS, ATRU, BARAN VS. ITO 17 CIT VS. KRISHI UPAJ MANDI SAMITI, GAJSINGHPUR 227 CT R 79, THEREFORE, IT IS A COVERED ISSUE. 14. AT THE OUTSET, THE LD DR HAS VEHEMENTLY SUPPORT ED THE ORDER OF THE ASSESSING OFFICER. 15. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. THIS I SSUE HAS BEEN CAME BEFORE THIS BENCH IN VARIOUS MANDI SAMITIS CASES WH EREIN THESE ADVANCES WERE HELD AS ALLOWABLE AND PAID FOR ACHIEVIN G THE OBJECT OF THE SAMITI. IN THE HANDS OF SAMITI EVEN GIVING THE AMOUNT TO THE RSAMB AS ADVANCE IS TREATED AS SPENT WHICH HAS TO BE PAID AS PER THIS ACT TO THE MOTHER BOARD BY THE SAMITI. THEREFORE, WE REVERS E THE ORDER OF THE LD CIT(A). ACCORDINGLY, ASSESSEES APPEALS ARE ALLOWE D ON THIS GROUND. 16. GROUND NO. 2 IN A.Y. 2008-09 IS AGAINST NOT ALL OWING THE DEPRECATION AT RS. 94,968/-. THE ASSESSING OFFICER H AD NOT ALLOWED DEPRECIATION AND CLAIMED IN THE INCOME AND EXPENDIT URE ACCOUNT AT RS. 94,968/- ON THE BASIS OF FACT THAT THE ASSESSEE IS A CHARITABLE INSTITUTION. THEREFORE, DEPRECIATION IS NOT ALLOWABLE, WHICH WAS CON FIRMED BY THE LD CIT(A) BY OBSERVING THAT DEPRECIATION ON AUCTION PLA TFORM IS ALLOWED @ 10% INSTEAD OF 15% CLAIMED BY THE ASSESSEE. THE ASS ESSEE ARGUED THAT SIMILAR DEPRECIATION ON AUCTION PLATFORM @ 15% HAS BEEN ALLOWED ITA 193, 194 & 195/JP/2012_ KUMS, ATRU, BARAN VS. ITO 18 IN THE CASE OF KUMS, BARAN IN A.Y. 2007-08. THEREFOR E, IT IS PRAYED THAT SAME MAY BE ALLOWED IN A.Y. 2008-09 IN ASSESSEES CA SE. 17. THE LD DR SUPPORTED THE ORDER OF THE LD CIT(A). 18. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. THIS I DENTICAL ISSUE HAS BEEN ALLOWED BY THIS BENCH IN THE CASE OF KUMS, CHHA BRA, BARAN IN ITA NO. 190&191/JP/2012 ORDER DATED 04/3/2015, THEREFOR E, IT IS A COVERED ISSUE AND DEPRECIATION @ 15% IS ALLOWABLE. ACCORDINGL Y, WE ALLOW THE APPEAL OF THE ASSESSEE ON THIS GROUND. 19. THE OTHER GROUNDS OF APPEALS ARE CONSEQUENTIAL T O THE ABOVE FINDING, THEREFORE, SAME ARE NOT REQUIRED TO BE ADJ UDICATED. 20. IN THE RESULT, ALL THE ASSESSEES APPEALS ARE A LLOWED PARTLY. ORDER PRONOUNCED IN THE OPEN COURT ON 17/07/2015. SD/- SD/- VKJ-IH-RKSYKUH VH-VKJ-EHUK (R.P.TOLANI) (T.R. MEENA) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ @ JAIPUR FNUKAD @ DATED:- 17 TH JULY, 2015 *RANJAN VKNS'K DH IZFRFYFI VXZSFKR @ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ @ THE APPELLANT- KRISHI UPAJ MANDI SAMITI, CHHABRA, DISTRICT- BARAN. ITA 193, 194 & 195/JP/2012_ KUMS, ATRU, BARAN VS. ITO 19 2. IZR;FKHZ @ THE RESPONDENT- THE I.T.O., BARAN. 3. VK;DJ VK;QDR @ CIT 4. VK;DJ VK;QDRVIHY @ THE CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ @ DR, ITAT, JAIPUR 6. XKMZ QKBZY @ GUARD FILE (ITA NO. 193, 194 & 195/JP/2012) VKNS'KKUQLKJ @ BY ORDER, LGK;D IATHDKJ @ ASST. REGISTRAR
Other Referred Cases
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