Andhra Pradesh Beverages Corporation Ltd., Hyderabad V. ITO, Ward 1(1), Hyderabad

ITA 207/HYD/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 66314 (ITAT-HYDERABAD)
• Duration Of Justice: 7 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-10-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 08-02-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V SRINIVAS
• Assessee Lawyers: K VASANT KUMAR
• Keywords: Principle of natural justice; Retrospective amendment; Revenue expenditure

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A, HYDERABAD BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER ITA NO. 207/HYD/2012 ASSESSMENT YEAR: 2008-09 ANDHRA PRADESH BEVERAGES CORPN. LTD., ... APPEL LANT HYDERABAD. (PAN AABCA7385A) VS. INCOME TAX OFFICER, RESPONDENT WARD 1(1), HYDERABAD. APPELLANT BY : SHRI K. VASANT KUMAR RESPONDENT BY : SHRI V. SRINIVAS DATE OF HEARING : 07/09/2012 DATE OF PRONOUNCEMENT : 05/10/ 2012 ORDER PER ASHA VIJAYARAGHAVAN, J.M.: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF CIT(A)-II, HYDERABAD DATED 16/01/2012 FOR THE AS SESSMENT YEAR 2008-09. 2. THE ONLY ISSUE IN THE ASSESSEES APPEAL IS THE DISALLOWANCE OF THE CLAIM FOR DEDUCTION OF RS.1,415 .28 CRORES PAID BY THE ASSESSEE TO THE STATE GOVERNMENT AS SPE CIAL PRIVILEGE FEE ETC AS PER SEC.23A OF THE EXCISE ACT READ WITH VARIOUS GOVERNMENT ORDERS. 2 ITA NO. 207/HYD/2012 ANDHRA PRADESH BEVERAGES CORPN. LTD. 3. THE ASSESSEE HAS BEEN GRANTED EXCLUSIVE LICENSE TO DISTRIBUTE INDIAN MADE FOREIGN LIQUOR THROUGHOUT TH E STATE OF ANDHRA PRADESH. UNDER SEC 23A OF THE EXCISE ACT THE ASSESSEE IS TO PAY TO THE GOVERNMENT OF AP, BY WAY OF PRIVIL EGE FEE, SPECIAL PRIVILEGE FEE ETC, AS MAY BE NOTIFIED, AN A MOUNT DETERMINED AS A MARGIN PERCENTAGE. THE ASSESSING OF FICER AND CIT(A) HAD DISALLOWED THIS CLAIM OF RS.1,415.28 CRO RES ON THE GROUND THAT IT IS AN APPLICATION OF PROFITS AS THE ASSESSEE HAS PASSED ON ITS MARGIN OF PROFIT AND HENCE THE AMOUNT CANNOT BE ALLOWED AS A DEDUCTION FROM THE INCOME. 4. THE LEARNED COUNSEL THE LEARNED COUNSEL FOR THE ASSESSEE SHRI SHRI VASANTKUMAR HAS STATED IN THE WRITTEN SUB MISSION AS FOLLOWS: ONCE IT IS ACCEPTED THAT THE BUSINESS IS NOT DONE ON ITS OWN BUT ACTING AS AN AGENT WHETHER THE INCOME IS TA XABLE IN VIEW OF ARTICLE 289 OF CONSTITUTION ALSO REMAIN S UNANSWERED. THESE ISSUES WERE NOT ANSWERED AND IT I S NOT UNDERSTOOD WHETHER THE HONBLE ITAT IS OF THE VIEW THAT THE AMENDMENTS ANSWER ALL THESE ISSUES AND IF IT IS CONSIDERED THESE ISSUES GET ANSWERED 5. THE LEARNED COUNSEL FOR THE ASSESSEE HAS SUBMITT ED THAT THE RATIO OF THE DECISION OF THE HONBLE DELHI HIGH COURT IN THE CASE OF D.T.T.D.C. LTD., REPORTED IN 71 DTR 115 MAY BE CONSIDERED. IN THE CASE OF DTTDC, THE GOVERNMENT HA S ALLOTTED THE RIGHT TO RETAIL VENDING IN COUNTRY LIQUORS AND 50 DEGREE UP RUM IN DELHI. IN LIEU OF THE SAME THE DTTDC IS REQU IRED TO 3 ITA NO. 207/HYD/2012 ANDHRA PRADESH BEVERAGES CORPN. LTD. CONSTRUCT THE FLYOVERS AND PEDESTRIAN FACILITIES OU T OF 95 PAISE FROM RS. 1 WHICH THE ASSESSEE DTTDC WAS ENTITLED TO RETAIN AND KEEP. THE BALANCE 5 PAISE PER BOTTLE WAS TO MEE T THE ADMINISTRATIVE EXPENSES INCLUDING CORPORATE EXPENSE S. THE INCOME-TAX DEPARTMENT TOOK THE STAND THAT IT IS CAP ITAL EXPENDITURE. THE COMMISSIONER HELD IT TO BE REVENUE EXPENDITURE. THE ITAT HELD IT TO BE REVENUE EXPENDI TURE. THE HIGH COURT CONFIRMED THE ORDER OF THE ITAT. THE LE ARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE SAID DE CISION MEET THE TWO ARGUMENTS OF THE DEPARTMENT IN ITS CASE. ON E IS THAT THE PAYMENT SHOULD BE QUANTIFIED. IN THE ABOVE CASE IT IS NOT QUANTIFIED. ONLY 5 PAISE PER RUPEE IS ALLOWED AS AD MINISTRATIVE AND CORPORATE EXPENSES. SECOND THING AS EMANATE FRO M THE CIT(A) ORDER IS THAT IT COULD BE CAPITAL EXPENDITUR E. THIS ISSUE ALSO IS SETTLED BY THE ITAT WHICH IS CONFIRMED BY T HE HIGH COURT. ALSO THIS SETTLED THE POSITION THAT THE QUES TION OF INVOKING AS 22 DOES NOT ARISE SINCE THERE IS NO PRO FITS ONCE THE EXPENDITURE IS HELD TO BE ALLOWABLE. 6. WE FIND THAT THE SAID CASE DTTDC LTD. IS INAPPLI CABLE TO THE PRESENT CASE BEFORE US AS THERE IS NO AMENDMENT WHICH HAS NOT BEEN CONSIDERED BY THE CIT(A) IN THAT CASE. 7. WE FIND THAT AN IDENTICAL ISSUE HAS COME UP FOR OUR CONSIDERATION FOR THE ASSESSMENT YEAR 2006-07. AFTE R A DETAILED CONSIDERATION OF VARIOUS ISSUES AND CASE L AWS RAISED BY THE ASSESSEE AND THE REVENUE, THE ITAT IN ITS OR DER IN ITA 693/H/11 DATED 30 TH JULY, 2012 TO WHICH BOTH THE MEMBERS WERE PARTY, IT WAS FOUND THAT THE ANDHRA PRADESH LE GISLATURE 4 ITA NO. 207/HYD/2012 ANDHRA PRADESH BEVERAGES CORPN. LTD. PASSED AN AMENDMENT ON 16.04.2012 VIDE G.O. MS.NO.3 26, REVENUE (EXCISE-II), 21 ST MAY, 2012 TO THE ANDHRA PRADESH EXCISE AND ANDHRA PRADESH (REGULATION OF TRADE IN I NDIAN MADE FOREIGN LIQUOR, FOREIGN LIQUOR) ACTS, (AMENDMENT) A CT, 2012 (ANDHRA PRADESH ACT NO.5 OF 2012). IT WAS THEREFORE FELT THAT AS THE AMENDMENTS CARRIED BY THE GOVERNMENT TO THE EXCISE ACT WITH RETROSPECTIVE EFFECT WERE NOT BEFORE THE L OWER AUTHORITIES, IN THE INTEREST OF JUSTICE THE MATTER SHOULD GO BACK TO THE FILES OF CIT TO RECONSIDER THE WHOLE ISSUE A FRESH, TAKING INTO ACCOUNT THE AMENDMENT CARRIED OUT BY THE STATE ON 16.4.12. IN OUR EARLIER ORDER FOR THE AY 2006-07, W E HAVE HELD AS FOLLOWS: 24. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE RE CORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELO W. WE FIND THAT THE AMENDMENTS PASSED BY THE ANDHRA PRADE SH LEGISLATURE ON 16-04-2012, VIDE G.O. MS. NO. 326, REVENUE (EXCISE-II), 21 ST MAY, 2012 TO THE ANDHRA PRADESH EXCISE AND ANDHRA PRADESH (REGULATION OF TR ADE IN INDIAN MADE FOREIGN LIQUOR, FOREIGN LIQUOR) ACTS , (AMENDMENT) ACT, 2012(ANDHRA PRADESH ACT NO. 5 OF 2012), HAS TO BE EXAMINED AND ANALYSED TAKING INTO ACCOUNT THE SUBMISSIONS MADE BY THE LEARNED DR SHR I V. SRINVIAS. THE LEARNED DR HAS POINTED OUT THAT THE FOLLOWING: I) WITH RESPECT TO NEWLY INSERTED SECTION 4C, IT ON LY REAFFIRMS THE FACT THAT IT IS THE PROFIT THAT IS SO UGHT TO BE APPROPRIATED. ACCORDING TO THE DR, THE NEW AMENDMENT TO EXCISE ACT, CLEARLY ESTABLISHES THE FACT THAT THE ENTIRE INCOME OF THE ASSESSEE IS NOT THAT OF THE STATE AND ONLY THE AMOUNTS SPECIFIED AS PRIVILEGE FEES IS INCOME OF THE STATE. II) WITH RESPECT TO NEWLY INSERTED SECTION 4A, THE INVOICES RAISED BY THE ASSESSEE DO NOT INDICATE SEPARATE AMOUNTS AS PRIVILEGE FEE OR SPECIAL PRIVILEGE FEE OR SPORTS PRIVILEGE FEE. 5 ITA NO. 207/HYD/2012 ANDHRA PRADESH BEVERAGES CORPN. LTD. III) WITH RESPECT TO THE NEWLY INSERTED SECTION 4B, THE MANNER OF COMPUTATION IS NOT SPECIFIED UNDER 4B AND THE COMPUTATION NEEDS TO BE MADE U/S 23A AND THE IMPLICATION OF AS-22 IS TO BE EXAMINED. 8. SINCE THE CIT(A) HAD NO OCCASION TO CONSIDER THE AMENDMENTS PASSED BY THE ANDHRA PRADESH LEGISLATUR E ON 16/04/2012, WE RESTORE THE ISSUE IN DISPUTE BACK TO THE FILE OF THE CIT(A) WITH A DIRECTION TO DECIDE THE ISSUE DE- NOVO AFTER EXAMINING THE SAID AMENDMENTS. IT IS NEEDLESS TO SA Y THAT AMENDMENT OF STATUTORY PROVISION, UNDER WHICH THE A SSESSEE IS CLAIMING DEDUCTION HAS A BEARING ON THE INTERPRETAT ION OF THAT STATUTE VIS A VIS THE CLAIM FOR DEDUCTION BY THE AS SESSEE. THE ISSUE WHETHER THE PAYMENT MADE BY THE CORPORATION I S AN EXPENDITURE ALLOWABLE UNDER THE PROVISIONS OF THE A CT OR WHETHER IT IS MERELY AN APPROPRIATION OR APPLICATIO N OF INCOME AFTER IT HAS ACCRUED TO THE APPELLANT HAS TO BE EXA MINED. THE PURPOSE AND NECESSITY OF THE AMENDMENT TO THE ACT B ROUGHT ABOUT IN APRIL 2012, ITS RAMIFICATION AFFECTING THE NATURE AND ALLOWABILITY OF THE AMOUNTS PAID BY THE ASSESSEE TO THE GOVERNMENT HAS TO BE EXAMINED. THE AMENDMENT WAS MA DE WITH RETROSPECTIVE EFFECT COVERING THE YEARS UNDER APPEAL ALSO. WHEN THE LOWER AUTHORITIES DID NOT HAVE THE OPPORTU NITY TO EXAMINE THE AMENDED PROVISIONS, IT IS IN THE INTERE ST OF NATURAL JUSTICE THAT AN OPPORTUNITY SHOULD BE GRANTED TO TH E CIT(A) TO CONSIDER THE AMENDMENT. IT HAS TO BE BORNE IN MIND THAT THE AMENDMENT HAS BEEN MADE EFFECTIVE RETROSPECTIVELY, COVERING THE YEARS UNDER APPEAL. THE ALLOWABILITY OF THE AMO UNTS PAID CANNOT BE DECIDED DEHORS THE AMENDMENT. WHILE IT IS THE CONTENTION OF THE LEARNED AR OF THE ASSESSEE THAT T HE 6 ITA NO. 207/HYD/2012 ANDHRA PRADESH BEVERAGES CORPN. LTD. AMENDMENT IS IN THEIR FAVOUR, LEARNED DR SUBMITS TH AT THE NEW AMENDMENT TO EXCISE ACT, CLEARLY ESTABLISHES TH E FACT THAT THE ENTIRE INCOME OF THE ASSESSEE IS NOT THAT OF TH E STATE AND ONLY THE AMOUNTS SPECIFIED AS PRIVILEGE FEES IS INC OME OF THE STATE HAS TO BE CONSIDERED BY THE LOWER AUTHORITIES , WHO HAD NO OCCASION TO CONSIDER THE AMENDMENTS AND HENCE, T HE MATTER HAS TO BE SET ASIDE TO THE FIRST APPELLATE AUTHORITY. 9. THE LEARNED COUNSEL FOR THE ASSESSEE OF THE ASSE SSEE CITED THE CASE OF DISTRIBUTORS BARODA, 155 ITR 120, TO CONTEND THAT EARLIER MISTAKE NEED NOT BE CONTINUED. IN OUR OPINION THE RATIO OF THE DECISION OF THE APEX COURT IS NOT APPL ICABLE TO THIS CASE. HOWEVER STRONGLY THE LEARNED AR MAY FEEL THAT THE ISSUE SHOULD BE DECIDED BY THE TRIBUNAL, WE FEEL THAT THE CIT(A) SHOULD BE GIVEN AN OPPORTUNITY TO CONSIDER THE MATT ER AFRESH. WHEN IN THE COURSE OF APPELLATE PROCEEDING NEW EVID ENCE IS PRODUCED BY THE ASSESSEE, IT IS THE DUTY OF THE APP ELLATE AUTHORITIES, IF THEY THINK THAT THE NEW EVIDENCE SH OULD BE ADMITTED, TO GIVE AN OPPORTUNITY TO THE LOWER AUTHO RITES TO CONSIDER THE FRESH EVIDENCE. RULE 46A MAKES IT MAND ATORY FOR CIT(A) TO PROVIDE AN OPPORTUNITY TO CONSIDER FRESH EVIDENCE FILED BEFORE THE CIT(A). THE LEARNED COUNSEL FOR TH E ASSESSEE IS NOT CORRECT IN QUESTIONING THE CONCLUSION ARRIVE D AT BY THE TRIBUNAL IN ITS DECISION IN THE ASSESSEES CASE FOR THE EARLIER YEAR ITA 693/H/11 DATED 30 TH JULY, 2012. IT IS A MATTER OF OPINION OF THE TRIBUNAL, IF THE LEARNED COUNSEL FOR THE ASSESSEE IS NOT AGREEING WITH IT, THE REMEDY LIES ELSEWHERE. 7 ITA NO. 207/HYD/2012 ANDHRA PRADESH BEVERAGES CORPN. LTD. 10. SINCE THE ISSUE UNDER CONSIDERATION IS IDENTICA L TO THE CASE DECIDED BY THE ITAT IN THE ASSESSEES OWN CASE FOR THE AY 2006-07 IN ITA 693/H/11 DATED 30 TH JULY, 2012, RESPECTFULLY FOLLOWING THE SAME, WE SET ASIDE THE MATTER TO THE FILE OF CIT(A) TO CONSIDER THE ISSUE AFRESH IN ACCORDANCE W ITH LAW, AFTER GIVING REASONABLE OPPORTUNITY TO THE ASSESSEE TO PUT FORWARD ITS CASE. 11. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALL OWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON 5 TH OCTOBER, 2012. SD/- SD/- ( CHANDRA POOJARI) (ASHA VIJAYARAGHAVAN) ACCOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD, DATED: 5 TH OCTOBER, 2012. KV COPY TO:- 1) ANDHRA PRADESH BEVERAGES CORPN. LTD., C/O K. VASANTKUMAR, A.V. RAGHURAM, ADVOCATES, 610, BABUKHAN ESTATE, BASHEERBAGH, HYDERABAD- 500 001. 2) ITO, WARD 1(1), AAYAKAR BHAVAN, HYDERABAD. 3) THE CIT (A)-II, HYDERABAD 4) CIT-1, HYDERABAD 5) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYDERABAD.