Andhra Pradesh Co-Operative Oil Seeds Growers Federation Limited, Vijayawada V. The Assistant Commissioner of Income Tax, Circle-2(1), , Vijayawada

ITA 226/VIZ/2019

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 8441 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 2 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-07-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2014-2015
• Appeal Filed On: 26-04-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D K SONAWAL
• Assessee Lawyers: M CHANDRAMOULESWARA RAO
• Keywords: Set aside
• Section: 43B; 143(3); 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH, VISAKHAPATNAM BEFORE SHRI V. DURGA RAO , HONBLE JUDICIAL MEMBER & SHRI D.S. SUNDER SINGH , HONBLE ACCOUNTANT MEMBER ITA NO. 226 / VIZ /201 9 (ASST. YEAR: 20 14 - 15 ) ANDHRA PRADESH CO - OPERATIVE OIL SEEDS GROWERS FEDERATION LIMITED, D.NO. 55 - 17 - 2 TO 4, C BLOCK , 4 TH FLOOR, STALIN CORPORATE, NEAR CGO COMPLEX , 2 ND ROAD , INDUSTRIAL ESTATE, JAWAHAR AUTO NAGAR, VIJAYAWADA . V S . A CIT, CIRCLE - 2 (1), VIJAYAWADA . PAN NO. AABAA 0323 L (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI M. CHANDRAMOULESWARA RAO ,C A DEPARTMENT BY : SHRI D.K. SONAWAL CIT DR DATE OF HEARING : 03 / 0 7 /201 9 . DATE OF PRONOUNCEMENT : 17 / 0 7 /201 9 . O R D E R PER D.S. SUNDER SINGH , ACCOUNTANT MEMBER TH IS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF PRINCIPAL COMMISSIONER OF INCOME TAX , VIJAYAWADA , DATED 27 /0 3 /201 9 FOR THE ASSESSMENT YEAR 20 14 - 15 . 2. THE ASSESSEE HAS RAISED THE FOL LO WING GROUNDS OF APPEAL: - 1. THE LD. PR. CIT ERRED ON FACTS AND IN LAW IN ASSUMING JURISDICTION U/S 263 OF THE ACT. 2 ITA NO. 226/VIZ/2019 ( M/S. ANDHRA PRADESH CO - OP. OIL SEEDS GROWERS FEDERATION LTD. ) 2. THE LD. PR. CIT ERRED ON FACTS AND IN LAW IN ASSUMING JURISDICTION U/S. 263 OF INCOME TAX, 1961 ON AN ISSUE WHICH WAS CONSIDERED AND DECIDED BY THE ASSESSING OFFICER ACCORDING TO THE PROVISIONS OF THE ACT. HE OUGHT TO HAVE CONSIDERED THAT THE PROVISIONS OF SECTION 43B DOES NOT REQUIRE THE FUND TO BE RECOGNIZED FOR THE ADMISS IBILITY OF THE DEDUCTION. 3. THE LD. PR. CIT ERRED IN ORDERING REVISION U/S. 263 TREATING THE ASSESSMENT ORDER AS ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF THE REVENUE HOLDING THAT THE ASSESSEE IS NOT ENTITLED TO THE DEDUCTION OF RS. 10,79,71,880/ - REP RESENTING EMPLOYERS CONTRIBUTION TOWARDS SUPERANNUATION FUND AS THE SAME WAS NOT RECOGNIZED BY THE CIT ON THE RELEVANT PERIOD OF TIME . 4. THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR WITHDRAW ANY OF THE GROUNDS OF APPEAL. 3 . ALL THE GROUNDS OF APPEAL ARE RELATED TO THE ORDER PASSED BY THE LD. PR.CIT U/SEC. 263 OF THE ACT. 4 . I N THE INSTANT CASE , ASSESSMENT ORDER WAS COMPLETED U/SEC. 143(3) ON TOTAL INCOME OF RS. 13,72,72,300/ - I.E. INCOME RETURNED WAS ACCEPTED. SUBSEQUENTLY, THE LD. PR.CIT H AS TAKEN UP THE CASE FOR REVISION U/SEC. 263 FOR NOT DISALLOWING THE DEDUCTION CLAIMED BY THE ASSESSEE U/SEC. 36(1)(IV) R.W.S. 43B OF THE A CT, RELATING TO THE CONTRIBUTION TO THE SUPERANNUATION FUND PAID TO SBI LIFE CAP SUPERANNUATION FUND TOWARDS 80% OF EMPLOYERS CONTRIBUTION FOR THE F.Y. 2013 - 14 RELEVANT TO THE A.Y. 2014 - 15 AND CLAIMED BY THE ASSESSEE AS DEDUCTION. T HE L D.PR.CIT FOUND THAT THE ASSESSEE FILED AN APPLICATION FOR RECOGNITION OF SUPERANNUATION FUND ON 11/06/2014 BEFORE THE L D. PR.CIT - IV, HYDERABAD FOR APPROVAL OF GROUP SUPERANNUATION BENEFIT SCH E ME FOR ITS EMPLOYEES AND THE 3 ITA NO. 226/VIZ/2019 ( M/S. ANDHRA PRADESH CO - OP. OIL SEEDS GROWERS FEDERATION LTD. ) APPROVAL WAS ACCORDED ON 05/01/2017 W.E.F. 29/05/2014 RELEVANT TO THE A.Y. 2015 - 16 . L D.PR.CIT OBSERVED THAT THE CONTRIBUTION MADE BY THE ASSESSEE TO THE SBI LIFE CAP ASSURED GOLD SUPERANNUATION SCHEME IS RELATED FOR THE ASSESSMENT YEAR 2014 - 15 HENCE VIEWED THAT IT IS NOT ALLOWABLE . ACCORDINGLY, ISSUED SHOW - CAUSE NOTICE AND THE ASSESSEE FILED REPLY OBJECTING FOR ASSUMING THE JURISDICTION U/S . 263 STATING THAT THE ASSESSING OFFICER HAD EXAMINED THE ISSUE BEFORE ALLOWING THE DEDUCTION DURING THE COURSE OF ASSESSMENT P ROCEEDINGS AND ALLOWED THE DEDUCTION AFTER HAVING SATISFIED WITH LEGAL POSITION . THE LD. PR.CIT DID NOT CONVINCE THE WITH THE EXPLANATI ON OFFERED BY THE ASSESSEE AND HELD THAT THE ASSESSMENT MADE U/SEC.143(3) , DATED 30/12/2016 IS ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF THE REVENUE . ACCORDINGLY, SET ASIDE THE ASSESSMENT ORDER WITH A DIRECTION TO REDO THE ASSESSMENT AFTER EXAMINING THE ISSUES MENTIONED IN THE SHOW - CAUSE NOTICE AND GIVING OPPORTUNITY OF HEARING TO THE ASSESSEE. THE LD. PR.CIT WHILE PASSING THE ORDER U/SEC. 263 HAS RELIED ON THE FOLLOWING DECISION S : - I) P. RAMGOPAL VARMA VS. ADDL. CIT [ (2014) 47 TAXMANN.COM 334 (HYD. TRIB.) ] II) CIT VS. USHA KIRAN MOVIES LTD., [ (2014) 48 TAXMANN.COM 364 (AP) ] III) ADDL. CIT VS. KARNATAKA STATE WAREHOUSING CORPORATION [( 1981 ) 5 TAXMAN 54 (KAR.) ] 4 ITA NO. 226/VIZ/2019 ( M/S. ANDHRA PRADESH CO - OP. OIL SEEDS GROWERS FEDERATION LTD. ) IV) CIT VS. PREMIER COTTON SPINNING MILLS LTD. [ (2003) 131 TAXMAN 79 (MAD.) ] V) VIRBHADRA SINGH (HUF) 86 TAXMANN.COM 113 (HP HC) VI) BSES RAJDHANI POWER LTD. [(2017) 88 TAXMANN.COM 25 (DELHI - HC)] 5. AGAINST THE ORDER OF THE LD. PR.CIT, THE ASSESSEE IS IN APPEAL BEFORE THIS TRIBUNAL. 6 . DURING THE APPEAL HEARING, LD.AR ARGUED THAT THE PROCEEDINGS U/ SEC . 263 ARE NOT MAINTAINABLE SINCE THE ASSESSING OFFICER HA D EXAMINED THE ISSUE IN DETAIL AT THE TIME OF FRAMING OF ASSESSMENT . LD.AR FURTHER SUBMITTED THAT THE ASSESSEE HAS CLAIMED THE DEDUCTION OF RS. 10.79 CRORES IN THE R ETURN OF INCOME REPRESENTING EMPLOYE R S CONTRIBUTION TOWARDS SUPERANNUATION FUND AND THE SAME WAS PAID TO SBI LIFE CAP ASSURED GOLD SUPERANNUATION SCHEME. DURING THE COURSE OF ASSESSMENT PROCEEDINGS , THE ASSESSING OFFICER ASKED THE ASSESSEE TO PROVIDE NOTE ON THE ALLOWABILITY OF RS. 10.79 CRORES AND THE ASSESSEE FILED A DETAILED NOTE VIDE ITS REPLY DATED 15/12/2016 . AFTER CONSIDERING THE EXPLANATION OFFERED BY THE ASSESSEE, THE ASSESSING OFFICER HAS DROPPED THE ISSUE AND DID NOT MAKE ANY ADDITION, THEREFORE ARGUED THAT THE ASSESSING OFFICER HAS CONSCIOUSLY TAKEN A DECISION THAT THE EXPENDITURE CLAIMED WAS ALLOWABLE AND NO ADDITION WAS WARRANTED . S INCE THE ASSESSING OFFICER HAS ALREADY EXAMINED THE 5 ITA NO. 226/VIZ/2019 ( M/S. ANDHRA PRADESH CO - OP. OIL SEEDS GROWERS FEDERATION LTD. ) ISSUE IN THE ASSESS MENT PROCE E DINGS , THERE IS NO ERROR IN THE ASSESSMENT ORDER AND THE LD.AR ARGUED THAT THERE IS NO CASE FOR TAKING REVISION U/SEC. 263 . THE LD.AR ON MERITS ALSO ARGUED THAT THE EMPLOYEES CONTRIBUTION TOWARDS SUPERANNUATION FUND IS ALLOWABLE U/SEC. 36(1)(IV) ON PAYMENT BASIS . THE COURTS HAVE HELD THAT SUPERANNUATION CONTRIBUTIONS MADE TO THE LIC AND THE BANKS ARE ALLOWABLE SINCE, THERE IS NO CONTROL OF THE ASSESSEE ON THE SUPERANNUATION SCHEME OF LIC AND THE BANK S . THE LD.AR RELIED ON THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF CIT VS. TEXTOOL COMPANY LTD. [(2013) 35 TAXMANN.COM 639 (SC)] . LD.A R FURTHER ARGUED THAT THE ITAT , VISAKHAPATNAM BENCH IN THE CASE OF T HE DISTRICT CO - OPERATIVE CENTRAL BANK VS. ITO IN ITA NO. 49 & 50/VIZ/2012 , DATED 25/01/2018 TAKEN A SIMILAR VIEW AND ALLOWED THE DE DU CTION CLAIMED BY THE ASSESSEE FO R UNAPPROVED GRATUITY FUND PAID TO THE LIC. T HEREFORE ARGUED THAT ON MERITS ALSO, ASSESSEE IS ENTITLED FOR DEDUCTION U/SEC. 43B R.W.S. 36(1)(IV) OF THE ACT, H ENCE, REQUESTED TO QU A SH THE ORDER PASSED U/SEC. 263 AND RESTORE THE ASSESSMENT ORDER. 7 . PER CONTRA, LD. DR ARGUED THAT IN THE INSTANT CASE , THE ASSESSING OFFICER HAS ALLOWED THE DEDUCTION WITHOUT MAKING ANY ENQUIRY. HE FURTHER SUBMITTED THAT THE ASSESSEE DID NOT PLACE ANY EVIDENCE TO SHOW THAT THE ASSESSING OFFICER HAS CALLED FOR THE 6 ITA NO. 226/VIZ/2019 ( M/S. ANDHRA PRADESH CO - OP. OIL SEEDS GROWERS FEDERATION LTD. ) DETAILS AND MADE ENQUIRY AND TOOK A CONSCIENCE DECISION TO ALLOW THE DEDUCTION. THE ASSESSEE S ARGUMENT THAT THE CASE IS COVERED BY THE DECISION OF THIS TRIBUNAL IN THE CASE OF DISTRICT CO - OPERATIVE CENTRAL BANK (SUPRA) IS NOT ACCEPTABLE SINCE, THE ISSUE INVOLVED IN THE CASE RELIED ON BY THE ASSESSEE WAS GROUP GRATUITY FUND COVERED UNDER SECTION36(1)(V) BUT NOT SUPERANNUATION FUND WHICH IS COVERED UNDER SE CTION 36(1)(IV). THEREFORE, ARGUED THAT THE CASE LAW RELIED ON BY THE ASSESSEE IS DISTINGUISHABLE ON FACTS AND IS NOT APPLICABLE IN THIS CASE. THEREFORE, SUBMITTED THAT LD. PR.CIT RIGHTLY TAKEN THE CASE FOR REVISION U/SEC. 263 WHICH REQUIRES TO BE UPHELD. 8 . WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL PLACED ON RECORD. 9. IN THE INSTANT CASE, THE ASSESSEE HAS MADE THE PAYMENT OF RS. 10,79,71,880/ - TOWARDS SUPERANNUATION FUND AND T HE AMOUNT WAS PAID TO THE SBI LIFE CAP ASSURED GOLD SUPERANNUATION SCHEME AND THE ASSESSEE ALSO PLACED THE RECEIPT DATED 10/06/2014 IN THE PAPER BOOK. THE AMOUNT WAS INTENDED FOR THE PURPOSE OF BENEFIT OF THE EMPLOYEES SUPERANNUATION FUND . THE ASSESSEE HAS APPLIED FOR APPROVAL OF THE SUPERANNUATION FUND T O THE COMMISSI O NER OF INCOME TAX, HYDERABAD ON 10/06/2014 WHICH WAS APPROVED BY THE COMMISSIONER ON 05/01/2017 W.E.F. 7 ITA NO. 226/VIZ/2019 ( M/S. ANDHRA PRADESH CO - OP. OIL SEEDS GROWERS FEDERATION LTD. ) 29/05/2014 . HAVING ACCORDED APPROV AL FOR SUPERANNUATION FUND CREATED BY THE ASSESSEE COMPLYING WITH THE STATUTORY PROVISIONS AND WITHIN THE NORMS OF THE ACT AND THERE IS NO VIOLATION AS FAR AS SUPERANNUATION FUND SET UP BY THE BOARD OF THE ASSESSEE COMPANY. THE ASSESSEE HAS CREATED SUPERANNUATION FUND FOR THE BENEFIT OF THE EMPLOYEES AS PER THE BOARD RESOLUTION DATED 25/11/2013 A N D THE EMPLOYEES WHO ARE ON THE ROLLS ON 25 TH NOVEMBER, 2013 ARE ELIGIBLE FOR THIS SCHEME . ACCORDINGLY, THE ASSESSEE HAS MADE THE PAYMENT TOWARDS SUPERANNUATION FUND FOR THE F.Y. 2013 - 14 AND PAID THE SAME ON 30/05/2014 TO THE SBI LIFE CAP ASSURED GOLD SUPERANNUATION SCHEME. A S RIGHTLY SUBMITTED BY THE LD.AR , THE PURPOSE OF APPROVAL OF SUPERANNUATION FUND IS TO ENSURE THAT THE COMPANY SHOULD NOT HAVE CONTROL ON THE EMPLOYEES SUPERANNUATION FUND AND TO PREVENT THE MISUSE. IN THE INSTANT CASE , THE ASSESSE E MADE THE PAYMENT TO SBI LIFE CAP ASSURED GOLD SUPERANNUATION SCHEME WHICH IS ALSO NOT CONTROLLED BY THE ASSESSEE . THE SBI LIFE CAP ASSURED GOLD SUPERANNUATION SCHEME WAS STATED TO BE ON PAR WITH THE LIC GROUP GRATUITY SCHEME AS ARGUED BY THE LD.AR. THE ASSESSEE RELIED ON THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF TEXTOOL COMPANY LTD. (SUPRA) WHEREIN IT HAS BEEN HELD AS UNDER: - 8 ITA NO. 226/VIZ/2019 ( M/S. ANDHRA PRADESH CO - OP. OIL SEEDS GROWERS FEDERATION LTD. ) 8. HAVING CONSIDERED THE MATTER IN THE LIGHT OF THE BACKGROUND FACTS, WE ARE OF THE OPINION THAT THERE IS NO M ERIT IN THE APPEAL. TRUE THAT A FISCAL STATUTE IS TO BE CONSTRUED STRICTLY AND NOTHING SHOULD BE ADDED OR SUBTRACTED TO THE LANGUAGE EMPLOYED IN THE SECTION, YET A STRICT CONSTRUCTION OF A PROVISION DOES NOT RULE OUT THE APPLICATION OF THE PRINCIPLES OF RE ASONABLE CONSTRUCTION TO GIVE EFFECT TO THE PURPOSE AND INTENTION OF ANY PARTICULAR PROVISION OF THE ACT. (SEE : SHREE SAJJAN MILLS LTD. V. CIT [19851 156 ITR 585/23 TAXMAN 37 (SC). FROM A BARE READING OF SECTI O N 36(1)(V) OF THE ACT, IT IS MANIFEST THAT THE REAL INTENTION BEHIND THE PROVISION IS THAT THE EMPLOYER SHOULD NOT HAVE ANY CONTROL OVER THE FUNDS OF THE IRREVOCABLE TRUST CREATED EXCLUSIVELY FOR THE BENEFIT OF THE EMPLOYEES. IN THE INSTANT CASE, IT IS EVIDENT FROM THE FINDINGS RECORDED BY THE COMMISS IONER AND AFFIRMED BY THE TRIBUNAL THAT THE ASSESSEE HAD ABSOLUTELY NO CONTROL OVER THE FUND CREATED BY THE LIC FOR THE BENEFIT OF THE EMPLOYEES OF THE ASSESSEE AND FURTHER ALL THE CONTRIBUTION MADE BY THE ASSESSEE IN THE SAID FUND ULTIMATELY CAME BACK TO THE TEXTOOL EMPLOYEES GRATUITY FUND, APPROVED BY THE COMMISSIONER WITH EFFECT FROM THE FOLLOWING PREVIOUS YEAR. THUS, THE CONDITIONS STIPULATED IN SECTION 36(1)(V) OF THE ACT WERE SATISFIED. HAVING REGARD TO THE FACTS FOUND BY THE COMMISSIONER AND AFFIRMED BY THE TRIBUNAL, NO FAULT CAN BE FOUND WITH THE OPINION EXPRESSED BY THE HIGH COURT, WARRANTING OUR INTERFERENCE. 10 . T HE DEDUCTION U/SEC. 36(1)(V) AND THE DEDUCTION U/SEC. 36(1)(IV) BOTH ARE FOR THE BENEFIT OF THE EMPLOYEES AND PERTAINED TO THE SUPERANNUATION FUNDS. THEREFORE THE JUDGMENT OF THE HONBLE APEX COURT SQUARELY APPLIES TO SECTION 36(1)( I V) ALSO, SINCE THE SUPERANNUATION FUND IS ALSO FOR THE BENEFIT OF THE EMPLOYEES. H AVING MADE THE PAYMENTS TO THE SBI LIFE CAP ASSURED GOLD SUPERANNUA TION SCHEME AND THE SUPERANNUATION FUND OF THE COMPANY WAS APPROVED BY THE LD. COMMISSIONER OF INCOME TAX SUBSEQUENTLY , WE HOLD THAT THE DECISION OF THIS TRIBUNAL IN THE CASE OF THE DISTRICT CO - OPERATIVE CENTRAL BANK (SUPRA) AND THE DECISION OF HO N BLE APEX COURT IS EQU A LLY APPLIES TO THE ASSESSEES CASE ALSO 9 ITA NO. 226/VIZ/2019 ( M/S. ANDHRA PRADESH CO - OP. OIL SEEDS GROWERS FEDERATION LTD. ) AND ACCORDINGLY WE HOLD THAT THE ASSESSEE IS ENTITLED FOR DEDUCTION U/SEC. 36(1)(IV) R.W.S. 43B OF THE ACT. 11 . ANOTHER ASPECT OF TH E CASE IS THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS , THE ASSESSING OFFICER HAD EXAMINED THE ISSUE AND TAKEN A CONSCIENCE DECISION FOR ALLOWING DEDUCTION. THE ASSESSEE PLACED A COPY OF NOTE FILE D BEFORE TH E ASSESSING OFFICER AT PAGE NO. 48 OF THE PAPER BOOK. THE LD.DR DID NOT P LACE ANY EVIDENCE TO SUPPORT THAT NOTE WAS NOT PLACED BEFORE TH E ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS. THE ASSESSEE DULY CERTIFIED IN THE PAPER BOOK THAT THE NOT E WAS FILED BEFORE THE ASSESSING OFFICER . SINCE THE ISSUE HAS BEEN EXAMINED AND THE DEDUCTION WAS ALLOWED BY THE ASSESSING OFFICER, THE ASSESSMENT FRAMED U/SEC. 143(3) CANNOT BE HELD TO BE ERRONEOUS, HENCE, ORDER PASSED BY THE LD. PR.CIT IS UNSUSTAINABLE . ACCORDINGLY, WE SET ASIDE THE ORDER PASSED U/SEC. 263 AND RESTORE THE ASSESSMENT ORDER . THUS, THIS APPEAL FILED BY THE ASSESSEE IS ALLOWED. 12 . IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON TH IS 1 7 T H DAY OF JU LY , 201 9 . S D / - S D / - (V. DURGA RAO) ( D.S. SUNDER SINGH ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 1 7 T H JU LY , 201 9 . 10 ITA NO. 226/VIZ/2019 ( M/S. ANDHRA PRADESH CO - OP. OIL SEEDS GROWERS FEDERATION LTD. ) VR/ - COPY TO: 1. THE ASSESSEE ANDHRA PRADESH CO - OPERATIVE OIL SEEDS GROWERS FEDERATION LIMITED, D.NO. 55 - 17 - 2 TO 4, C BLOCK, 4 TH FLOOR, STALIN CORPORATE, NEAR CGO COMPLEX, 2 ND ROAD, INDUSTRIAL ESTATE, JAWAHAR AUTO NAGAR, VIJAYAWADA. 2. THE REVENUE ACIT, CIRCLE - 2(1), VIJAYAWADA . 3. THE PR. CIT , VIJAYAWADA. 4. THE D.R . , VISAKHAPATNAM. 5. GUARD FILE. BY ORDER (VUKKEM RAMBABU) SR. PRIVATE SECRETARY, ITAT, VISAKHAPATNAM.