DCIT, Coimbatore V. The Coimbatore District Co-operative Milk Producers Union Ltd., Coimbatore

ITA 1957/CHNY/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 8441 (ITAT-CHENNAI)
• Duration Of Justice: 2 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-09-2016
• Appeal Filed By: Department
• Bench Allotted: A
• Assessment Year: 2012-2013
• Appeal Filed On: 29-06-2016
• Court: TRIBUNAL
• Department Lawyers: MRS JAYANTHI KRISHNAN
• Assessee Lawyers: N VIJAYAKUMAR SHRI K RAGHU
• Section: 143(3)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : CHENNAI , . ! , ' !# $ [ BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI G. PAVAN KUMAR, JUDICIAL MEMBER ] ./ I.T.A.NO.1957/MDS/2016 / ASSESSMENT YEAR : 2012-13 THE DY. COMMISSIONER OF INCOME TAX NON-CORPORATE CIRCLE 4 COIMBATORE VS. THE COIMBATORE DIS TRICT CO - OPERATIVE MILK PRODUCERS UNION LTD PACHAPALAYAM KALAMPALAYAM POST, PERUR VIA COIMBATORE 641 010 [PAN AAAAT 7787 L ] ( %& / APPELLANT) ( '(%& /RESPONDENT) / APPELLANT BY : MRS. JAYANTHI KRISHNAN, CIT /RESPONDENT BY : SHRI N. VIJAYAKUMAR FOR SHRI K. RAGHU, CA / DATE OF HEARING : 15 - 09 - 2016 ! / DATE OF PRONOUNCEMENT : 23 - 09 - 2016 ) / O R D E R PER G. PAVAN KUMAR, JUDICIAL MEMBER : THIS APPEAL OF THE REVENUE IS DIRECTED AGAINST T HE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-3, COIMBA TORE, DATED 29.3.2016 IN I.T.A.NO.125/15-16 TO ASSESSMENT YEAR 2012-13 PASSED U/S 143(3) AND 250 OF THE INCOME-TAX ACT, 1961(IN S HORT THE ACT). 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS: ITA NO. 1957/16 :- 2 -: 1. THE ORDER OF THE LEARNED CIT(A) IS NOT ACCEPTAB LE ON THE FACTS AND CIRCUMSTANCES OF THE CASE. 2. THE LEARNED CIT(A) HAS ERRED IN LAW, IN ALLOWING THE PR OVISION FOR LIABILITY FOR PURCHASE. 3. THE LEARNED CIT(A) OUGHT TO HAVE OBSERVED THAT IT IS NOT AN ASCERTAINED LIABILITY BUT IS CONTINGENT UPON HAPPEN ING OF AN EVENT. 4. THE LEARNED CIT(A) FAILED TO APPRECIATE THE FAC T THAT UNLESS AND UNTIL THE INCREASE IN THE PROCUREMENT PRICE IS APPR OVED BY THE COMMISSIONER OF MILK PRODUCTION & DIARY DEVELOPMENT, THE LIABILITY IS UNASCERTAINED AND IS NOT CRYSTALLIZED. 5. THE LEARNED CIT(A) HAS OUGHT TO HAVE OBSERVED TH AT IT IS REPORTED BY THE INTERNAL AUDIT OF THE SOCIETY THAT IN ORDER TO AVOID HUGE INCOME TAX LIABILITY, A PORTION OF THE PROFIT HAD TO BE AP PORTIONED TO THE MILK SUPPLIERS IN THE FORM OF PROVISION 6.FOR THESE REASONS AND OTHER GROUNDS THAT MAY BE A DDUCED AT THE TIME OF HEARING, THE ORDER OF THE LEARNED CIT(A) MA Y BE CANCELLED AND THAT OF THE ASSESSING OFFICER BE RESTORED. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A CO- OPERATIVE SOCIETY AND IN THE BUSINESS OF MILK PRODU CTION. IT HAD FILED ITS RETURN OF INCOME ELECTRONICALLY ON 27.9.2012 DE CLARING NIL INCOME. SUBSEQUENTLY, THE CASE WAS SELECTED FOR SCRUTINY U NDER CASS AND NOTICE U/S 143(2) WAS ISSUED. IN COMPLIANCE TO NO TICE, THE LD. REPRESENTATIVE FOR THE ASSESSEE APPEARED FROM TIME TO TIME AND FILED AUDITED PROFIT & LOSS ACCOUNT, BALANCE SHEET, TDS S CHEDULE AND TAX AUDIT REPORT. DURING THE COURSE OF ASSESSMENT PROC EEDINGS, THE ASSESSING OFFICER FOUND THAT THE ASSESSEE HAS DISC LOSED AN AMOUNT OF ` 10,02,50,298/- UNDER SUNDRY CREDITORS AS RELATES T O THE AMOUNT PAYABLE TO THE SOCIETIES TOWARDS ADDITIONAL PRICE. THE CLARIFICATION WAS ITA NO. 1957/16 :- 3 -: SOUGHT FOR WHICH THE LD. REPRESENTATIVE SUBMITTED T HAT THE AMOUNT REPRESENTS THE SUM PAYABLE TO SOCIETIES WHO PROCURE D MILK FROM THE FARMERS AND THE SOCIETIES IN TURN PAYS THE AMOUNTS TO THE FARMERS WHO SUPPLY MILK TO THE SOCIETY. THE ADDITIONAL PRICE I S TO BE PAID TO THE SOCIETIES AFTER OBTAINING APPROVAL FROM THE GOVERNM ENT. THE PROPOSAL WAS SENT TO THE GOVERNMENT THROUGH THE BOARD CONSTI TUTED BY THE DISTRICT COLLECTOR AS SPECIAL OFFICER. THE ASSESSIN G OFFICER WAS OF THE OPINION THAT AS PER FORM 3CD, THE ASSESSEE SOCIETY IS FOLLOWING MERCANTILE SYSTEM OF ACCOUNTING AND THE EXPENSES AC CRUED TO THE ASSESSEE HAD TO BE CLAIMED IN THE PROFIT & LOSS ACC OUNT AND THEY ARE ASCERTAINABLE. WHEREAS THE ADDITIONAL PRICE PAYABL E BY THE ASSESSEE DEBITED TO PROFIT & LOSS ACCOUNT IS IN THE NATURE O F CONTINGENT LIABILITY. HE RELIED ON THE JUDGMENT OF THE APEX COURT IN THE CASE OF M/S INDIAN MOLASSES COMPANY LTD VS CIT, 37 ITR 66. THE ASSESS ING OFFICER CONSIDERED THE SUBMISSIONS OF THE LD. AR THAT IN T HE ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2009-10 IN I.T.A.NO. 60/MD S/2013 THE TRIBUNAL VIDE ORDER DATED 11.4.2013 HAS DISMISSED T HE REVENUES APPEAL AND THE OPERATING PORTION OF THE ORDER WAS R EPRODUCED IN THE ASSESSMENT ORDER. THE ASSESSING OFFICER MADE A FIN DING THAT SINCE THE DEPARTMENT HAS NOT ACCEPTED THE ORDER OF THE TRIBUN AL AND APPEAL HAS BEEN FILED BEFORE THE JURISDICTIONAL HIGH COURT WHI CH IS PENDING. WITH ITA NO. 1957/16 :- 4 -: THESE OBSERVATIONS, THE ASSESSING OFFICER MADE ADDI TION OF ` 10,02,50,298/- AND PASSED ORDER U/S 143(3) DATED 2 6.3.2015. 4. AGGRIEVED BY THE ORDER, THE ASSESSEE FILED AN APPE AL BEFORE THE CIT(A). IN THE APPELLATE PROCEEDINGS, THE LD. AR ARGUED THE GROUNDS AND EXPLAINED THE FACTS AND SUBMITTED THAT THE ORDER OF THE ASSESSING OFFICER IS OPPOSED TO LAW AND UNSUSTAINAB LE AND THE AMOUNT OF ` 10,02,50,298/- SHOWN UNDER SUNDRY CREDITORS CANNO T BE A CONTINGENT LIABILITY. HE FURTHER SUBMITTED THAT IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2009-10, THE TRIBUNAL HAS DISMISSED THE REVENUES APPEAL. THE CIT(A) CONSIDERED THE FINDIN GS OF THE ASSESSING OFFICER AND THE SUBMISSIONS OF THE LD.AR AND FOUND THAT THE ASSESSEE HAS DEBITED THE SAID AMOUNT IN MARCH 2012 UNDER THE HEAD SUNDRY CREDITORS AS ADDITIONAL PRICE TO MILK SUPP LYING SOCIETIES AND THIS AMOUNT IS PAYABLE FOR PROCUREMENT OF MILK FROM FARM ERS AND THIS ADDITIONAL PRICE HAS TO BE PAID AFTER OBTAINING APP ROVAL FROM THE GOVERNMENT. THE LD. AR PRODUCED THE COPY OF THE A PPROVAL IN THE APPELLATE PROCEEDINGS. THE CIT(A) WAS OF THE OPINIO N THAT THE OBSERVATIONS OF THE ASSESSING OFFICER THAT THE AMOU NT WAS NOT CRYSTALLIZED AND IS NOT AN ASCERTAINED LIABILITY CA NNOT BE ACCEPTABLE. THE CIT(A) HAS RELIED ON THE DECISION OF THE TRIBUN AL IN ASSESSEES OWN CASE (SUPRA) AND DEDUCTION WAS ALLOWED TO THE ASSESSEE. ITA NO. 1957/16 :- 5 -: 5. AGGRIEVED BY THE ORDER OF THE CIT(A), THE REVENUE I S IN APPEAL BEFORE THE TRIBUNAL. BEFORE US, THE LD. DR ARGUED THE GROUNDS THAT THE CIT(A) HAS ERRED IN ALLOWING THE APPEAL BA SED ON THE ORDER OF THE TRIBUNAL FOR EARLIER YEAR AND FAILED TO APPRECI ATE THAT THE LIABILITY IS AN UNASCERTAINED LIABILITY AND NOT CRYSTALLIZED. F URTHER, THE DEPARTMENT HAS NOT ACCEPTED THE DECISION OF THE TRIBUNAL IN A SSESSEES OWN CASE AND AN APPEAL HAS BEEN FILED BEFORE THE JURISDICTIO NAL HIGH COURT AND PRAYED FOR SETTING ASIDE THE ORDER OF THE CIT(A). 6. CONTRA, THE LD. AR RELIED ON THE ORDER OF THE CIT(A ) AND ORDERS OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR EARLIER ASSESSMENT YEARS. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MA TERIAL ON RECORD AND JUDICIAL DECISIONS. THE LD. ARS SUB MISSIONS WAS THAT THE AMOUNT PROVIDED IS NOT A CONTINGENT LIABILITY AND ASCERTAINED LIABILITY AND IS CRYSTALLIZED. THE LD. AR REITERATED BEFORE THE ASSESSING OFFICER AND THE CIT(A) THAT THIS AMOUNT IS PAYABLE TO SOCIE TIES TO PROCURE MILK FROM FARMERS WHEREAS THE SOCIETIES IN TURN PAY THE ABOVE AMOUNT TO THE FARMERS WHO SUPPLY MILK TO THE SOCIETIES AND TH IS PRICE REPRESENTS ADDITIONAL PRICE TO BE PAID TO THE SOCIETIES AFTER OBTAINING APPROVAL FROM THE GOVERNMENT. THE LD. AR ALSO REITERATED TH E OTHER SUBMISSIONS MADE BEFORE THE LOWER AUTHORITIES AND RELIED ON THE ORDER OF THIS TRIBUNAL IN ASSESSEES OWN CASE FOR ASSESS MENT YEAR 2011-12 ITA NO. 1957/16 :- 6 -: IN I.T.A.NO. 2726/MDS/2014 DATED 5.2.2015 WHEREIN T HE TRIBUNAL HAS OBSERVED THAT THE PAYMENT OF ADDITIONAL PRICE FOR P ROCUREMENT OF MILK IS ASCERTAINED LIABILITY AND ALLOWED THE APPEAL BY OBSERVING AS UNDER: 4. WE HAVE HEARD THE SUBMISSIONS MADE BY THE LD . DR AND HAVE PERUSED THE ORDERS OF THE AUTHORITIES BELO W. THE ISSUE IN APPEAL HAS BEEN RECURRING IN THE CAAES OF THE ASSESSEE. THE CO-ORDINATE BENCH OF THE TRIBUNAL IN I.T.A.NO. 60/MDS/2013 DECIDED ON 11.4.2013 FOR THE ASSESSMENT YEAR 2009-10 HAS ADJUDICATED THE ISSUE IN FAVOUR OF THE ASSESSEE BY OBSERVING THAT LIABILITY IS ASCERTAINED LIABILIT Y. THE BENCH ALSO CONSIDERED THE DECISION OF THE TRIBUNAL IN AS SESSEES OWN CASE FOR THE ASSESSMENT YEAR 2008-09 (I.T.A.NO. 2002/MDS/2011 DECIDED ON 26.11.2012) WHEREIN SIMILA R VIEW HAS BEEN TAKEN. 5. THE ISSUE IN PRESENT APPEAL IS IDENTICAL TO THE ONE ALREADY ADJUDICATED BY THE TRIBUNAL. THE TRIBUNAL HAS CONS ISTENTLY HELD THAT THE PAYMENT OF ADDITIONAL PRICE FOR MILK PROCUREMENT IS ASCERTAINED LIABILITY. THE REVENUE HAS NOT BROUGHT ON RECORD ANY NEW FACT, EVIDENCE OR ARGUMEN T TO FORCE US TO TAKE A DIFFERENT DECISION. WE FIND NO REASON TO DEVIATE FROM THE VIEW TAKEN BY THE CO-ORDINATE BENC H. 8. SINCE THE FACTS ARE SIMILAR, RESPECTFULLY FOLLOWI NG THE ABOVE ORDER OF THE TRIBUNAL, WE DISMISS THE APPEAL OF THE REVENUE. ORDER PRONOUNCED ON FRIDAY, 23 RD SEPTEMBER, 2016, AT CHENNAI. SD/- SD/- ( ) (CHANDRA POOJARI) / ACCOUNTANT MEMBER ( . ! ) (G. PAVAN KUMAR) ' / JUDICIAL MEMBER '# / CHENNAI $% / DATED: 23 RD SEPTEMBER, 2016 RD ITA NO. 1957/16 :- 7 -: %& '()( / COPY TO: 1 . / APPELLANT 4. * / CIT 2. / RESPONDENT 5. (+, - / DR 3. *./ / CIT(A) 6. ,01 / GF