DCIT CIRCLE-1, Ranchi V. M/s Jharkhand tourism Development Corpn.Ltd, Ranchi

ITA 226/RAN/2016

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 9636 (ITAT-RANCHI)
• Duration Of Justice: 2 year(s) 8 month(s) 21 day(s)
• Appeal Type: Income Tax (Transfer Pricing) Appeal
• Pronouncement Date: 05-04-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2012-2013
• Appeal Filed On: 15-07-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: CHANDAN DAS J CITLD
• Keywords: Business income
• Section: 143(3)

Judgement Text

1 ITA NO . 22 6 /RAN/1 6 A.Y 201 2 - 13 M/S. JHARKAND TOURISM DEVELO PMENT LIMITED PAGE 1 IN THE INCOME TAX APPELLATE TRIBUNAL RANCHI BENCH, RANCHI (BEFORE SHRI S. S. GODARA , J.M. & DR.A.L.SAINI, A.M.) IT A NO. 2 2 6 /RAN/1 6 : ASSTT. YEAR : 20 1 2 - 13 DCIT, CIR - 1, RANCHI VS M/S. JHARKHAND TOURISM DEVELOPMENT CORPORATION LIMITED. PAN: AABCJ40 14D (APPELLANT) (RESPONDENT) APPELLANT /DEPARTMENT BY : SHRI CHANDAN DAS, J CIT/LD.DR RESPONDENT/ ASSESSEE BY : NONE APPEARED DATE OF HEARING : 11 - 01 - 2019 DATE OF PRONOUNCEMENT: 27 - 0 2 - 2019 ORDER PER BENCH : THE CAPTIONED APPEAL FILED BY THE REVENUE , PERTAINING TO ASSESSMENT YEAR 2012 - 13, IS DIRECTED AGAINST THE ORDER DATED 12 - 04 - 2016 PASSED BY THE LD. COMMISSIONER OF INCOME - TAX (APPEALS), RANCHI , WHICH IN TURN ARISE S OUT OF AN ASSESSMENT ORDER PASSED BY THE ASSESSING OFFIC ER U/S. 143(3) OF THE INCOME - TAX ACT, 1961 (IN SHORT, THE ACT) DATED 31 - 01 - 2015 . 2. AT THE TIME OF HEARING NONE APPEARED ON BEHALF OF ASSESSEE IN SPITE OF ISSUANCE OF NOTICE FOR HEARING MORE THAN ONE OCCASIONS. THE LEARNED DEPARTMENTAL REPRESENTAT IVE ( LD.DR) WAS PRESENT FOR THE APPELLANT REVENUE. IN THE ABSENCE OF ANY APPEARANCE OF THE ASSESSE, THE APPEAL IS BEING DISPOSE OF EX PARTE QUA THE ASSESSE E 2 ITA NO . 22 6 /RAN/1 6 A.Y 201 2 - 13 M/S. JHARKAND TOURISM DEVELO PMENT LIMITED PAGE 2 AFTER HEARING THE LD. DR FOR THE REVENUE ON MERITS IN TERMS OF RULE 24 OF ITAT RULES, 1963. 3. G ROUNDS OF APPEAL RAISED BY THE REVENUE ARE AS FOLLOWS: 1. WHETHER THE LD. CIT(A) HAS ERRED ON FACT AND IN LAW IN DELETING THE DISALLOWANCE MADE ON INTEREST EARNED ON FIXED DEPOSIT. THE SAID INCOME WAS NOT THE BUSINESS RECEIPT OF THE ASSESSE COMPANY BUT WAS INCOME FROM OTHER SOURCES. 4. THE BRIEF FACTS QUA THE ISSUE ARE THAT ASSESSEE IS A STATE GOVERNMENT CORPORATION INCORPORATED WITH THE OBJECTS TO PROMOTE TOURISM IN THE STATE AND TO CREATE INFRASTRUCTURE FOR TOURISM ON BEHALF OF THE CENTRAL GOVER NMENT AND STATE. IT GETS FUNDS FROM CENTRAL GOVERNMENT/STATE GOVERNMENT FOR MAKING PAYMENT IN ACCORDANCE WITH THE GUIDELINES OF THE GOVERNMENT FOR APPROVED PROJECTS OF THE GOVERNMENT AND THE APPELLANT IS LIABLE TO REFUND THE UNUTILIZED FUND AS AND WHEN GOVERNMENT MAKES REQUISITION FOR THE SAME. IT ALSO SUBMITTED THAT THE APPELLANT KEEPS THE PORTION OF UNUTILIZED FUND IN SHORT TERM BANK DEPOSITS AND INTEREST EARNED FROM THESE DEPOSITS ARE TRANSFERRED TO THE RESPECTIVE FUND ACCOUNT OF THE GOVERNMENT. I N SUPPORT IT ALSO RELIED ON THE OFFICE MEMORANDUM, DATED 06.12.2006 ISSUED FROM THE MINISTRY OF TOURISM, GOVT. OF INDIA, WHEREIN IT HAS BEEN DIRECTED TO THE APPELLANT THAT FUNDS RELEASED AS INSTALMENTS OF CENTRAL FINANCIAL ASSISTANCE FROM MINISTRY OF TOU RISM WERE TO BE DEPOSITED IN SAVING ACCOUNTS OR FIXED DEPOSITS IN BANK. IT HAS ALSO BEEN DIRECTED TO ALL CONCERNED TO ENSURE UTILIZATION OF EARNED INTEREST ON DEPOSITS MADE OUT OF CFA ONLY FOR THE EXECUTION AND COMPLETION OF THE CONCERNED PROJECT WITHOUT . DEVIATION TO ANY OTHER HEAD OF EXPENDITURE. IN CASE THERE IS NO SCOPE TO UTILIZE THE AMOUNT OF INTEREST FOR THE EXECUTION OF THE CONCERNED PROJECT, SUCH AMOUNT OF INTEREST HAD TO BE RETURNED TO THE MINISTRY OF TOURISM, GOVT. OF INDIA. APPELLANT ALSO RE LIED ON THE AUDIT PARA OF THE C & AG OF INDIA ON THE ACCOUNTS OF THE 3 ITA NO . 22 6 /RAN/1 6 A.Y 201 2 - 13 M/S. JHARKAND TOURISM DEVELO PMENT LIMITED PAGE 3 APPELLANT FOR THE FINANCIAL YEAR - 2003 - 04 WHEREIN THE C & AG HAD ADVISED THE APPELLANT TO TREAT THIS INCOME AS INCOME OF THE GOVERNMENT. THE APPELLANT ALSO FILED AN ORDER U/S.250 OF THE I NCOME TAX ACT, 1961 IN ITS OWN CASE FOR THE ASSESSMENT YEAR - 2007 - 08 IN APPEAL NO.62/RAN/CO./12 - 13 DATED 27.10.2014 IN SUPPORT OF ITS CLAIM. 5. HOWEVER, AO REJECTED THE CONTENTION OF THE ASSESSE E AND HAS RELIED ON THE JUDGMENTS OF THE HONBLE UTTARAKHAND HIGH COURT IN THE CASE OF CIT V LAKSAR CO - OPERATIVE DEVELOPMENT UNION LTD [2013] 35 TAXMANN.COM 445 (UTTARAKHAND) AND JUDGMENTS OF THE HON'BLE SUPREME COURT IN THE CASE OF TUTICORIN ALKALI CHEMICAL AND FERTILIZER LIMITED V CIT [1997] 227 ITR 172 AND THE O RDER OF TH E ITAT MUMBAI IN THE CASE OF WHISTLING WOODS INTERNATIONAL LTD. V ITO [2011] TIOL 683 TO HOLD THAT THE INTEREST ACCRUED TO THE APPELLANT WAS ITS INCOME. 6. ON APPEAL, LD. CIT(A) DELETED THE ADDITION OBSERVING THE FOLLOWINGS: [ 5.3] I HAVE CON SIDERED THE SUBMISSIONS OF THE APPELLANT AND HAVE ALSO PERUSED THE ASSESSMENT ORDER. FIRST COMING TO THE JUDGMENT OF THE HON'BLE UTTARAKHAND HIGH COURT. THE FACTS WERE THAT THE RESPONDENT ASSESSE WAS A REGISTERED COOPERATIVE SOCIETY. THEY WERE PROVIDING C REDIT FACILITIES TO THEIR MEMBERS. THEY WERE NOT COOPERATIVE BANKS AND, ACCORDINGLY, NO BANKING REGULATION PROVISION WAS APPLICABLE TO THEM. THE SURPLUS FUNDS AVAILABLE IN THEIR HANDS HAD BEEN INVESTED BY THEM IN THE FORM OF BANK FIXED DEPOSITS, NATIONAL SAVINGS CERTIFICATES ETC. THERE WAS NO DISPUTE THAT THESE INVESTMENTS HAVE BEEN MADE BEYOND THEIR MEMBERS, WITH THIRD PARTIES. THE THIRD PARTIES HAD PAID INTEREST ON THOSE INVESTMENTS. THE INTEREST INCOME, IN THE HANDS OF THE RESPONDENTS, WAS TREATED AS OTHER INCOME. THEREFORE THE CRUCIAL DIFFERENCE IN THE CASE WAS THAT THE FUNDS (SURPLUS) BELONGED TO THE RESPONDENTS WHICH WERE INVESTED IN BANK DEPOSITS. IN THE PRESENT CASE THE FUNDS ALWAYS REMAINED THE PROPERTY OF THE GOVERNMENT AND THE APPELLANT WA S DIRECTED TO USE THE FUNDS AS WELL AS DIRECTED ON HOW TO MANAGE THE SURPLUS. 4 ITA NO . 22 6 /RAN/1 6 A.Y 201 2 - 13 M/S. JHARKAND TOURISM DEVELO PMENT LIMITED PAGE 4 [5.4] FACTS IN THE CASE OF TUTICORIN ALKALI (SUPRA) WERE THAT THE ASSESSE TUTICORIN ALKALI CHEMICALS & FERTILISERS LTD. (FORMERLY KNOWN AS TUTICORIN ALKALI LTD.) WAS INCORPORA TED ON 03.12.1971 FOR THE PURPOSE OF, INTER ALIA, MANUFACTURING HEAVY CHEMICALS SUCH AS AMMONIUM CHLORIDE AND SODA ASH. THE TRIAL PRODUCTION OF THE FACTORIES OF THE COMPANY COMMENCED ON 30.06.1982. FOR THE PURPOSE OF SETTING UP OF THE FACTORIES, THE COMPA NY HAD TAKEN TERM LOANS FROM VARIOUS BANKS AND FINANCIAL INSTITUTIONS. THAT PART OF THE BORROWED FUN WAS NOT IMMEDIATELY REQUIRED BY THE COMPANY WAS KEPT INVESTED IN SHO RT - TERM DEPOSITS WITH BANKS. SUCH INVESTMENTS WERE SPECIFICALLY PERMITTED B Y THE MEMOR ANDUM AND ARTICLES OF ASSOCIATION OF THE COMPANY. THE ASSESSE CORN HAD ALSO DEPOSITED CERTAIN SUMS WITH THE TAMIL NADU ELECTRICITY BOARD. IT ALSO GIVEN INTEREST - BEARING LOANS TO ITS EMPLOYEES TO PURCHASE VEHICLES. UP TO ASSESSMENT YEAR 1980 - 81, INTERESTS EARNED BY THE COMPANY FROM THE VARIOUS LOANS GIVEN BY THE COMPANY AND ALSO FROM THE BANK DEPOSITS WAS SHOWN AS INCOME AND WAS TAXED ACCORDINGLY. [5.5] IN THE CASE OF WHISTLING WOODS (SUPRA) THE ASSESSEE - COMPANY WAS INCORPORATED TO ESTABLISH RESEARCH AND TRAINING INSTITUTE - CUM - INTEGRATED STUDIO FOR TRAINING PEOPLE IN FILM LINE. DURING RELEVANT ASSESSMENT YEARS THE PROJECT WAS UNDER CONSTRUCTION AND THERE WERE NO ALLIED ACTIVITIES. THE ASSESSEE, HOWEVER HAD RECEIVED INTEREST ON LOANS GIVEN TO VARIOUS OT HER COMPANIES AS WELL AS SHORT - TERM DEPOSITS WITH BANKS OUT OF SURPLUS FUND RECEIVED FROM SHARE CAPITAL. THE ASSESSE REDUCED SUCH INTEREST INCOME FROM THE COST OF PROJECT. THE ASSESSING OFFICER, HOWEVER, HELD THAT SINCE ASSESSEE WAS IN THE PROCESS OF SETT ING UP OF TRAINING INSTITUTE DURING THE YEAR, INTEREST EARNED BY DEPLOYING SURPLUS FUNDS WAS INCOME TO BE ASSESSED UNDER THE HEAD 'INCOME FROM OTHER SOURCES'. [5.6] THE ANALYSIS OF THE ABOVE CASE LAWS CITED BY THE LD. ASSESSING OFFICER CLEARLY SHOW TH AT THE FACTS WERE DIFFERENT AND THEREFORE, THE QUESTIONS BEFORE THE HON'BLE COURTS WERE DIFFERENT. THE RULE OF JUDICIAL PRECEDENCE WAS ELABORATED BY THE HON'BLE SUPREME COURT IN THE CASE OF CIT V SUN ENGINEERING WORKS (P) LTD. 197 ITR 297(SC) STATING 'TH E JUDGMENT MUST BE READ AS A WHOLE AND THE OBSERVATIONS FROM THE JUDGMENT HAVE TO BE CONSIDERED IN THE LIGHT OF THE QUESTIONS WHICH WERE BEFORE THE COURT. A DECISION OF THE COURT TAKES ITS COLOUR FROM THE QUESTIONS INVOLVED IN THE CASE IN WHICH IT IS REN DERED AND WHILE APPLYING 5 ITA NO . 22 6 /RAN/1 6 A.Y 201 2 - 13 M/S. JHARKAND TOURISM DEVELO PMENT LIMITED PAGE 5 THE DECISION TO A LATTER CASE, THE COURTS MUST CAREFULLY TRY TO ASCERTAIN THE TRUE PRINCIPLE LAID DOWN BY THE DECISION OF THE COURT AND NOT TO PICK OUT WORDS OR SENTENCES FROM THE JUDGMENT, DIVORCED FROM THE CONTEXT OF THE QUESTI ONS UNDER CONSIDERATION BY THE COURT, TO SUPPORT THEIR PROCEEDINGS. [5.7] I HAVE ALSO GONE THROUGH THE ORDER OF MY LD. PREDECESSOR. AFTER HAVING REGARD TO THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. COMMISSIONER OF INCOME TAX(APPEALS) HELD AS UN DER: - '4.3 I HAVE CONSIDERED THE SUBMISSION OF THE COUNSEL OF THE APPELLANT AND PERUSED THE ASSESSMENT ORDER. IT IS NOTED THAT THE APPELLANT IS A STATE GOVERNMENT CORPORATION INCORPORATED WITH THE OBJECTS TO PROMOTE TOURISM IN THE STATE AND TO CREATE INFRASTRUCTURE FOR TOURISM ON BEHALF OF THE CENTRAL GOVERNMENT AND STATE. IT IS ALSO NOTED THAT THE FUNDS FROM CENTRAL GOVERNMENT/STATE GOVERNMENT WERE DISBURSED TO THE APPELLANT FOR MAKING PAYMENT IN ACCORDANCE WITH THE GUIDELINES OF THE GOVERNMENT F OR APPROVED PROJECTS OF THE GOVERNMENT AND THE APPELLANT IS LIABLE TO REFUND THE UNUTILIZED FUND AS AND WHEN GOVERNMENT MADE REQUISITION FOR THE SAME. IT IS ALSO NOTED THAT THE APPELLANT KEEPS THE PORTION OF UNUTILIZED FUND IN SHORT TERM BANK DEPOSITS A ND INTEREST EARNED FROM THESE DEPOSITS ARE TRANSFERRED TO THE RESPECTIVE FUND ACCOUNT OF THE GOVERNMENT. IT IS EVIDENT FROM THE OFFICE MEMORANDUM, DATED 06.12.2006 ISSUED FROM THE MINISTRY OF TOURISM, GOVT. OF INDIA, WHEREIN IT HAS BEEN DIRECTED TO THE APPELLANT THAT FUNDS RELEASED AS INSTALMENTS OF CENTRAL FINANCIAL ASSISTANCE FROM MINISTRY OF TOURISM WERE TO BE DEPOSITED IN SAVING ACCOUNTS OR FIXED DEPOSITS IN BANK AND AS A RESULT A SUBSTANTIAL AMOUNT ACCRUES AS INTEREST ON THE DEPOSITS MADE OUT OF CENTRAL FINANCIAL ASSISTANCE. IT HAS ALSO BEEN DIRECTED TO ALL CONCERNED TO ENSURE UTILIZATION OF EARNED INTEREST ON DEPOSITS MADE OUT OF CF A ONLY FOR THE EXECUTION AND COMPLETION OF THE CONCERNED PROJECT WITHOUT DEVIATION TO ANY OTHER HEAD OF EXPEND ITURE. IN CASE THERE IS NO SCOPE TO UTILIZE THE AMOUNT OF INTEREST FOR THE EXECUTION OF THE CONCERNED PROJECT, SUCH AMOUNT OF INTEREST MAY BE RETURNED TO THE MINISTRY OF TOURISM, GOVT. OF INDIA. IT IS EVIDENT FROM THE AUDIT PARA OF THE C & AG OF INDIA O N THE ACCOUNTS OF THE APPELLANT FOR THE FINANCIAL YEAR - 2003 - 04 THAT THE C & AG HAD ADVISED ASSESSEE TO TREAT THIS INCOME AS INCOME OF THE GOVERNMENT. IN VIEW OF THESE DISCUSSIONS, IT IS SEEN THAT THE APPELLANT HAS CORRECTLY ACCOUNTED FOR 6 ITA NO . 22 6 /RAN/1 6 A.Y 201 2 - 13 M/S. JHARKAND TOURISM DEVELO PMENT LIMITED PAGE 6 THE INTEREST RE CEIVED ON BANK DEPOSIT OUT OF GOVERNMENT FUND ' IN TERMS OF GUIDELINES OF THE GOVT. OF INDIA AS A LIABILITY TO BE REPAID TO THE GOVERNMENT OR TO BE UTILIZED IN THE PROJECT OF GOVERNMENT AND ACCORDINGLY CREDITED TO THE ACCOUNT OF RESPECTIVE FUND ACCOUNT . THE LD. ASSESSING OFFICER HAD FAILED TO UNDERSTAND THESE FACTS AND ERRED IN HOLDING A DIFFERENT VIEW AND TREATING THE INTEREST EARNED RS. 2,06,79,291/ - AS INCOME OF THE APPELLANT AND ADDING IT TO THE TOTAL INCOME. IN VIEW OF THE ABOVE DISCUSSIONS, THE ADDITION MADE BY THE LD. ASSESSING OFFICER ON THIS ACCOUNT CANNOT BE SUSTAINED IN APPEAL AND IS DIRECTED TO BE DELETED. ACCORDINGLY, THIS GROUND OF APPEAL OF THE APPELLANT IS ALLOWED. [5.8] I HAVE ALSO GONE THROUGH THE LETTER OF THE JOINT SECRETARY, MINISTRY OF TOURISM , GOVERNMENT OF INDIA NO.5 - P/ \ C(44)/06 DATED 06.12.2006, THE RELEVANT PORTION OF THE LETTER IS EXTRACTED BELOW: - 'IT HAS BEEN OBSERVED THAT IN SEVERAL CASES FUNDS RELEASED AS INSTALMENTS OF CENTRAL FINANCIAL ASSISTANCE (CF A) FRO M THE MINISTRY OF TOURISM, ARE DEPOSITED IN SAVING ACCOUNTS OR FIXED DEPOSITS IN BANKS. ON ACCOUNT OF THIS, A SUBSTANTIAL AMOUNT ACCRUES AS INTEREST ON THE DEPOSITS MADE OUT OF CENTRAL FINANCIAL ASSISTANCE (CFA). ALL CONCERNED ARE, THEREFORE, DIRECTED T O ENSURE UTILIZATION OF EARNED INTEREST ON DEPOSITS MADE OUT OF CFA ONLY FOR THE EXECUTION AND COMPLETION OF THE CONCERNED PROJECT WITHOUT DEVIATION TO ANY OTHER HEAD OF EXPENDITURE. IN CASE THERE IS NO SCOPE TO UTILIZE THE AMOUNT OF INTEREST FOR THE EX ECUTION OF THE CONCERNED PROJECT, SUCH AMOUNT OF INTEREST MAY BE RETURNED TO THE MINISTRY OF TOURISM, GOVT. OF INDIA . [5.9] FACTS OF THE CASE SHOW THAT THE INCOME NEVER REACHED THE APPELLANT AND WAS DIVERTED AT SOURCE BY AN OVERRIDING TITLE. THE CONCE PT WAS EXPLAINED IN THE CASE OF CIT V SITALDAS TIRATHDAS 41 ITR 367 (SC) IT HAS BEEN HELD THAT 'OBLIGATIONS, NO DOUBT, THERE ARE IN EVERY CASE, BUT IT IS THE NATURE OF THE OBLIGATION WHICH IS THE DECISIVE FACT. THERE IS A DIFFERENCE BETWEEN AN AMOUNT WH ICH A PERSON IS OBLIGED TO APPLY OUT OF HIS INCOME AND AN AMOUNT WHICH BY THE NATURE OF THE OBLIGATION CANNOT BE SAID TO BE A PART OF THE INCOME OF THE ASSESSEE. WHERE BY THE OBLIGATION INCOME IS DIVERTED BEFORE IT REACHES THE ASSESSEE, IT IS DEDUCTIBLE, BUT WHERE THE INCOME IS REQUIRED TO BE APPLIED TO DISCHARGE AN OBLIGATION AFTER SUCH INCOME REACHES THE 7 ITA NO . 22 6 /RAN/1 6 A.Y 201 2 - 13 M/S. JHARKAND TOURISM DEVELO PMENT LIMITED PAGE 7 ASSESSEE, THE SAME CONSEQUENCE, IN LAW, DOES NOT FOLLOW. IT IS THE FIRST KIND OF PAYMENT WHICH CAN TRULY BE EXCUSED AND NOT THE SECOND. THE SECOND PA YMENT - IS MERELY AN OBLIGATION TO PAY ANOTHER A PORTION OF ONE'S OWN INCOME, WHICH HAS BEEN RECEIVED AND IS SINCE APPLIED. THE FIRST IS A CASE IN WHICH THE INCOME NEVER REACHES THE ASSESSEE, WHO EVEN IF HE WERE TO COLLECT IT, DOES SO, NOT AS PART OF HIS I NCOME, BUT FOR AND ON BEHALF OF THE PERSON TO WHOM IT IS PAYABLE. ' [5.10] IN THE CASE OF POONA ELECTRIC SUPPLY CO. LTD V CIT 57 ITR 521 (SC) THE FACTS WERE THAT THE ASSESSEE WAS COMMERCIAL UNDERTAKING. IT DID BUSINESS OF THE SUPPLY OF ELECTRICITY SU BJECT TO THE PROVISIONS OF THE ACT. AS A BUSINESS CONCERN ITS REAL PROFITS HAD TO BE ASCERTAINED ON THE PRINCIPLES OF COMMERCIAL ACCOUNTANCY. AS A LICENSEE GOVERNED BY THE STATUTE ITS CLEAR PROFITS WAS ASCERTAINED IN TERMS OF THE STATUTE AND THE SCHEDULE ANNEXED THERETO. THE TWO PROFITS WERE FOR DIFFERENT PURPOSES - ONE IS FOR COMMERCIAL AND TAX PURPOSES AND THE OTHER IS FOR STATUTORY PURPOSES IN ORDER TO MAINTAIN A REASONABLE LEVEL OF RATES. FOR THE PURPOSES OF THE ACT, DURING THE ACCOUNTING YEARS THE A SSESSEE CREDITED THE SAID AMOUNTS TO THE 'CONSUMERS' BENEFIT RESERVE ACCOUNT'. THEY WERE A PART OF THE EXCESS AMOUNT PAID TO IT AND RESERVED TO BE RETURNED TO THE CONSUMERS. THEY DID NOT FORM PART OF THE ASSESSEE'S REAL PROFITS. SO, TO ARRIVE AT THE TAX ABLE INCOME OF THE ASSESSEE FROM THE BUSINESS UNDER SECTION 1 0(1) OF 1922 ACT, THE SAID AMOUNTS HAVE TO BE DEDUCTED FROM ITS TOTAL INCOME. THE RATIO DECIDENDI OF THE CASE IS 'THE PROFITS AND GAINS OF BUSINESS ARE NOT PROFITS REGULATED BY ANY STATUS BUT P ROFITS IN A BUSINESS COMPUTED ON BUSINESS PRINCIPLES. THEY ARE BUSINESS PROFITS AND NOT STATUTORY PROFITS. THEY ARE REAL PROFITS AND NOT NOTIONAL PROFITS. THE REAL PROFITS OF A BUSINESSMAN UNDER SECTION 10(1) OF 1922 ACT CANNOT OBVIOUSLY INCLUDE THE AM OUNTS RETURNED BY HIM BY WAY OF REBATE TO THE CONSUMERS UNDER STATUTORY COMPULSION. IT IS AS IF HE RECEIVED ONLY FROM THE CONSUMERS THE ORIGINAL AMOUNT MINUS THE AMOUNT HE RETURNED TO THEM. IN SUBSTANCE THERE CANNOT BE ANY DIFFERENCE BETWEEN A BUSINESSM AN COLLECTING FROM HIS CONSTITUENTS A SUM OF RS. Y IN ADDITION TO RS. X BY MISTAKE AND RETURNING RS. Y TO THEM AND ANOTHER BUSINESSMAN COLLECTING RS. X ALONE. THE AMOUNT RETURNED IS NOT A PART OF THE PROFITS AT ALL. 8 ITA NO . 22 6 /RAN/1 6 A.Y 201 2 - 13 M/S. JHARKAND TOURISM DEVELO PMENT LIMITED PAGE 8 INCOME - TAX IS A TAX ON THE REAL INCOM E, I.E., THE PROFITS ARRIVED AT ON COMMERCIAL PRINCIPLES SUBJECT TO THE PROVISIONS OF THE INCOME - TAX ACT. THE REAL PROFIT CAN BE ASCERTAINED ONLY BY MAKING THE PERMISSIBLE DEDUCTIONS. THERE IS A CLEAR - CUT DISTINCTION BETWEEN DEDUCTIONS MADE FOR ASCERTAINI NG THE PROFITS AND DISTRIBUTIONS MADE OUT OF PROFITS. IN A GIVEN CASE WHETHER THE OUTGOINGS FALL IN ONE OR THE OTHER OF THE HEADS IS A QUESTION OF FACT TO BE FOUND ON THE RELEVANT CIRCUMSTANCES, HAVING REGARD TO BUSINESS PRINCIPLES. ANOTHER DISTINCTION THAT SHALL BE BORNE IN MIND IS THAT BETWEEN THE REAL AND THE STATUTORY PROFITS, I.E., BETWEEN THE COMMERCIAL PROFITS AND STATUTORY PROFITS. THE LATTER ARE STATUTORILY FIXED FOR A SPECIFIED PURPOSE. ' [5.11] FACTS OF THE CASE CLEARLY SHOW THAT THE APPE LLANT NEVER BECAME THE 'OWNER' OF THE MONEY. IT HAD TO RETURN THE EXCESS FUNDS TO THE GOVERNMENT. UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN VIEW OF THE LEGAL POSITION, IT IS HELD THAT THE ADDITION MADE BY THE LD. ASSESSING OFFICER CANNOT BE SUST AINED IN APPEAL. GROUND OF APPEAL IS ALLOWED . 7. WE HAVE GONE THROUGH THE ABOVE FINDINGS OF LD. CIT(A) AND WE NOTE THAT THERE IS NO INFIRMITY IN THE ORDER PASSED BY LD. CIT(A), HIS ORDER ON THIS ISSUE IS HEREBY UPHELD AND GROUNDS OF APPEAL RAISED BY TH E REVENUE IS DISMISSED. 8. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED ORDER PRONOUNCED IN THE OPEN COURT ON 27 - 0 2 - 2019 SD/ - SD/ - ( S. S. GODARA ) (DR. A.L.SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 27 - 0 2 - 2019 9 ITA NO . 22 6 /RAN/1 6 A.Y 201 2 - 13 M/S. JHARKAND TOURISM DEVELO PMENT LIMITED PAGE 9 *PRADIP (SR.PS) COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT/ REVENUE: DCIT, CIR - 1, RANCHI 2 THE RESPONDENT/ ASSESSEE: M/S. JHARKHAND TOURISM DEVELOPMEN T CORPORATION LTD. HOTEL BIRSA VIHAR, COMPLEX, 5 MAIN ROAD, RANCHI - 834001. 3. THE CIT - , 4. THE CIT(A) - , 5. DR, RANCHI BENCHES, RANCHI TRUE COPY, BY ORDER, ASSISTANT REGISTRAR / SENIOR P.S ITAT, RANCHI BENCHES