THE ACIT, 3 (1), V. M/S KRISHI UPAJ MANDI SAMITI,

ITA 230/IND/2007

• Counselvise Citation: [2009] 115 COUNSELVISE.COM (IT) 1521 (ITAT-INDORE)
• Duration Of Justice: 2 year(s) 6 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-10-2009
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 06-10-2009
• Assessment Year: misc
• Appeal Filed On: 20-03-2007
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: V K KARAN
• Assessee Lawyers: S S MUNDRA; GIRDHAR GARG CAS
• Keywords: Depreciation; Capital expenditure; Set aside
• Section: 37

Judgement Text

PAGE 1 OF 14 IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH : INDORE BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER AND SHRI V.K. GUPTA, ACCOUNTANT MEMBER PAN NO. : AAALK0336-M I.T.A.NO. 230 & 231/IND/2007 A.Y. : 2003-04 & 2004-05 ACIT, M/S. KRISHI UPAJ MANDI SAMITI, 3(1), VS GANJBASODA, BHOPAL DIST. RAISEN (M.P.) APPELLANT RESPONDENT APPELLANT BY : SHRI V.K.KARAN, ADDL. CIT DR RESPONDENT BY : SHRI S.S.MUNDRA & SHRI GIRDHAR GARG, CAS O R D E R PER GUPTA, A.M. THESE APPEALS FILED BY THE REVENUE BELONG TO SAME ASSESSEE AND INVOLVE COMMON ISSUES, HENCE THESE WERE HEARD TOGET HER AND THESE ARE BEING DISPOSED OF THROUGH THIS CONSOLIDATED ORDER F OR THE SAKE OF CONVENIENCE. 2. WE HAVE HEARD BOTH THE PARTIES AND HAVE ALSO PERUSE D THE MATERIAL AVAILABLE ON RECORD. 3. FIRST, WE SHALL TAKE UP REVENUES APPEAL IN I.T.A.N O. 230/IND/2007 FOR THE ASSESSMENT YEAR 2003-04. PAGE 2 OF 14 4. GROUND NO. 1 READS AS UNDER :- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS. 10 ,58,823/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF PENSION FUND RESERVE. 5. THE FACTS, IN BRIEF, ARE THAT THE ASSESSEE IS ENGA GED IN FACILITATING OF SALE/MARKETING OF AGRICULTURE PRODU CTS. AS PER THE REGULATION AND POLICY OF CENTRAL/STATE GOVERNMENT, THE ASSESSEE TRANSFERRED 8 % OF LICENCE/MARKET FEE TO RESERVE FU ND CREATED FOR THE PURPOSE OF PAYMENT OF PENSION TO EMPLOYEES OF THE S TATE BOARD SERVICE AND MANDI SAMITI. THE ASSESSEE OUT OF SUCH PROVISIO N REMITTED 1/3 RD TO THE MANDI SAMITI BOARD AND KEPT 2/3 RD OF SUCH FUNDS WITH ITSELF. THE A.O. HELD THAT NO ACTUAL PAYMENT TOWARDS PENSION HAD BEE N MADE, HENCE, THE ASSESSEES SHARE OUT OF SUCH TRANSFER COULD NOT BE CONSIDERED AS AN ASCERTAINED LIABILITY OF REVENUE NATURE. ACCORDINGL Y, HE DISALLOWED A SUM OF RS. 10,58,823/-, BEING THE ASSESSEES SHARE. AGG RIEVED BY THIS, THE ASSESSEE CARRIED THE MATTER INTO APPEAL BEFORE THE LD. CIT(A), WHO AFTER PERUSING THE RULES & REGULATIONS OF M.P. KRISHI UPA J MANDI ADHINIYAM & RULES, HELD THAT SUCH SUM WAS ALLOWABLE AS DEDUCT ION. AGGRIEVED BY THIS, REVENUE IS IN APPEAL BEFORE US. PAGE 3 OF 14 6. THE LEARNED COUNSEL FOR THE ASSESSEE, AT THE VERY O UT-SET, SUBMITTED THAT INDORE BENCH OF THE TRIBUNAL IN THE CASE OF KRISHI UPAJ MANDI SAMITI, BURHANPUR VS. ITO IN I.T.A.NOS. 277 & 278/IND/2008 ORDER DATED 24.10.2008 HAD RESTORED THIS ISSUE TO T HE FILE OF A.O. AND DREW OUR ATTENTION TO RELEVANT PART OF PARA 9 AT PA GES 13 & 14 OF THE SAID ORDER. HE ALSO SUBMITTED THAT IN ANOTHER CASE OF KR ISHI UPAJ MANDI SAMITI, THE AMOUNT OF SUCH PROVISION HAD BEEN HELD AS ALLOWABLE BY THE TRIBUNAL. HOWEVER, HE COULD NOT PLACE A COPY OF SUC H ORDER ON RECORD. 7. THE LD. DEPARTMENTAL REPRESENTATIVE, ON THE OTHER H AND, PLACED RELIANCE ON THE ORDER OF THE A.O. 8. WE HAVE CONSIDERED THE SUBMISSIONS MADE BY BOTH THE SIDES, MATERIAL ON RECORD AND THE ORDERS OF THE AUTHORITIE S BELOW. 9. THOUGH THE ASSESSEE HAS CONTENDED THAT THIS ISSUE W AS COVERED IN FAVOUR OF THE ASSESSEE ON MERITS BY AN ORDER OF THE TRIBUNAL. HOWEVER, THE ASSESSEES COUNSEL HAS NOT PLACED COPY OF THE S AID ORDER ON RECORD AND THE COPY OF THE ORDER OF THE TRIBUNAL, WHICH HAS BE EN PLACED ON RECORD SHOWS THAT THIS ISSUE HAS BEEN RESTORED TO THE FILE OF THE A.O. ,FOR CONSIDERATION OF CERTAIN ASPECTS AND ADJUDICATION O F THE ISSUE AFRESH AS PER LAW. THE RELEVANT FINDINGS OF THE ORDER OF THE TRIB UNAL IN I.T.A.NO. 277 & 278/IND/2008 ARE AS UNDER :- PAGE 4 OF 14 AS REGARDS PART OF GROUND NO.9 WITH REGARD TO AARA KSHIT NIDHI, IT IS STATED TO BE CONTRIBUTION MADE FOR MEE TING THE FUTURE LIABILITY ON ACCOUNT OF PENSION, GRATUITY ET C. THE ASSESSEE IS ADMITTEDLY MAINTAINING CASH SYSTEM OF ACCOUNTING AND AS SUCH, AUTHORITIES BELOW WERE JUST IFIED IN HOLDING THAT THE PROVISION COULD NOT HAVE BEEN ALLO WED UNLESS THE LIABILITY AROSE. THE AUTHORITIES BELOW H AS HOWEVER NOT CONSIDERED THE RULE REFERRED TO BY LD. COUNSEL FOR ASSESSEE IN HIS ARGUMENTS AND HAVE ALSO NOT GIVEN A NY FINDING IF THE ASSESSEE SPENT ANY ACTUAL AMOUNT ON THIS HAND UNDER THE YEAR APPEAL BECAUSE ON PROVISION BASIS TH IS YEAR, THE ASSESSEE MIGHT HAVE MADE CLAIM IN EARLIER YEAR FOR WHICH, THE AMOUNT COULD HAVE BEEN SPENT BY THE ASSE SSEE. LD. COUNSEL FOR ASSESSEE HAS FILED COPY OF THE LETT ER DATED 9.7.8 (PB-34) THROUGH WHICH ASSESSEE WAS DIRECTED T O KEEP AARAKSHIT NIDHI IN SUCH A FIND FOR THE PURPOSE OF M AKING THE PAYMENTS. LD. COUNSEL FOR ASSESSEE ALSO REFERRED TO THE PROCEDURE FOR KEEPING ACCOUNTS ON THIS ISSUE. HOWEV ER, WE FIND THAT THE SAME IS NOT CONSIDERED BY THE AUTHORI TIES BELOW. THIS ISSUE THEREFORE, REQUIRES RECONSIDERATION AT T HE LEVEL OF THE AO. WE ACCORDINGLY SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW ON THIS ISSUE AND RESTORE THE ISS UE TO THE FILE OF THE AO FOR RECONSIDERATION IN THE LIGHT OF THE SUBMISSION MADE BY THE LD. COUNSEL FOR ASSESSEE. TH E AO SHALL GIVE REASONABLE SUFFICIENT OPPORTUNITY OF BEI NG HEARD TO THE ASSESSEE. AS A RESULT, PART OF THIS GROUND OF T HE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. A SSESSEE MAY PAGE 5 OF 14 PROVIDE ADEQUATE MATERIAL BEFORE THE AO IN SUPPORT OF THE CONTENTION. 10. ACCORDINGLY, WE, RESPECTFULLY FOLLOWING THE DECISI ON OF COORDINATE BENCH, RESTORE THIS ISSUE TO THE FILE OF THE A.O. FOR ADJUDICATION AFRESH THEREOF IN IDENTICAL MANNER. TH US, THIS, GROUND OF THE REVENUE STANDS ALLOWED FOR STATISTICAL PURPOSES. 11. GROUND NO. 2 READS AS UNDER :- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS. 4, 85,540/-, RS. 1,27,235/- AND RS. 2,68,613/- ( TOTALING TO RS. 8,81,388/-) MADE BY THE ASSESSING OFFICER ON ACCOUNT OF DEDUCTI ON ACCOUNT, EMPLOYEE BANK RETURNED ACCOUNT AND BASIC S ALARY GPF ACCOUNT RESPECTIVELY. 12. THE FACTS, IN BRIEF, ARE THAT THE ASSESSEE MADE DE DUCTIONS OUT OF SALARY OF EMPLOYEES TO THE TUNE OF RS. 8,81,388/- A ND MADE THE PAYMENT OF SALARY TO THE CONCERNED EMPLOYEES NET OF THESE D EDUCTION. THE A.O. REQUIRED THE ASSESSEE TO EXPLAIN THE NATURE OF SUCH DEDUCTIONS AND FOR WANT OF PROPER EXPLANATION, HE DISALLOWED THE AMOUN T UNDER THE HEAD DEDUCTION ACCOUNT, EMPLOYEE BANK LOAN RETURNED A CCOUNT AND UNDER THE HEAD BASIC SALARY GPF ACCOUNT. IN APPEA L BEFORE THE LD. PAGE 6 OF 14 CIT(A), THE ASSESSEE SUBMITTED THAT ONLY THE GROSS SALARY HAD BEEN CLAIMED AS AN EXPENDITURE, WHICH COMPRISED OF BASIC SALARY PLUS THESE DEDUCTIONS, HENCE, THE DISALLOWANCE MADE BY THE ASS ESSING OFFICER WAS NOT PROPER. THE LD. CIT(A) HELD THAT TOTAL OF ALL T HESE HEADS REPRESENTED ACTUAL SALARY PAID TO THE EMPLOYEES, HENCE, ADDITIO N MADE BY THE ASSESSING OFFICER MERELY FOR A DIFFERENT MODE OF PR ESENTATION WAS NOT JUSTIFIED. AGGRIEVED BY THIS, THE REVENUE IS IN APP EAL BEFORE US. 13. THE LD. DEPARTMENTAL REPRESENTATIVE PLACED STRONG R ELIANCE ON THE ORDER OF THE A.O. THE LEARNED COUNSEL FOR THE A SSESSEE PLACED RELIANCE ON THE ORDER OF THE LD. CIT(A). 14. ON DUE CONSIDERATION OF FACTS AND CIRCUMSTANCES, IN OUR OPINION, MERELY BECAUSE THE SALARY PAID TO EMPLOYEES HAS BEE N SHOWN IN THE PROFIT AND LOSS ACCOUNT UNDER FOUR DIFFERENT HEADS, INSTEA D OF GROSS SALARY COMPRISING OF BASIC SALARY PLUS THESE DEDUCTIONS, W HICH IS OTHERWISE ALLOWABLE AS EXPENDITURE, THE DISALLOWANCE CANNOT B E MADE. HENCE, WE UPHOLD THE ORDER OF THE LD. CIT(A). THUS, THIS GROU ND OF THE REVENUE IS DISMISSED. 15. GROUND NO. 3 READS AS UNDER :- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS. 13 ,03,167/- PAGE 7 OF 14 MADE BY THE ASSESSING OFFICER ON ACCOUNT OF DISALLO WANCE OF DEPRECIATION. 16. THE FACTS, IN BRIEF, ARE THAT THE ASSESSEE CLAIMED DEPRECIATION AT RS. 16,47,263/-. THE A.O. FOUND THAT W. D. V. AS ON 1.4.2002, BEING THE OPENING DATE OF THE FINANCIAL YEAR WAS HISTORICAL C OST, HENCE ACTUAL W.D.V. HAD TO BE WORKED OUT FROM THE DATE OF ACQUIS ITION OF ASSETS AND NOTIONAL DEPRECIATION TILL 1.4.2002, AS THE ASSESSE E HAD FILED RETURN FOR THE YEAR UNDER CONSIDERATION FOR THE FIRST TIME. ACCORD INGLY, HE WORKED OUT THE W.D.V. AS ON 1.4.2002, AND COMPUTED DEPRECIATIO N THEREON AT RS. 3,44,096/-. THE A.O., ACCORDINGLY, DISALLOWED THE E XCESS DEPRECIATION OF RS. 13,03,167/-. AGGRIEVED BY THIS, THE ASSESSEE CA RRIED THE MATTER INTO APPEAL BEFORE THE LD. CIT(A), WHEREIN THE ASSESSEE SUBMITTED AUDITED ACCOUNTS ALONGWITH SCHEDULE OF FIXED ASSETS, WHEREI N THE VALUE AS ON 1.4.2002, HAD BEEN CATEGORIZED AS W.D.V. AND NOT HI STORICAL COST. THE LD. CIT(A) AFTER CONSIDERING THIS FACT HELD THAT THE AS SESSEE HAD RIGHTLY CLAIMED DEPRECIATION. HENCE, HE REVERSED THE DECISI ON OF A.O. AGGRIEVED BY THIS, THE REVENUE IS IN APPEAL BEFORE US. 17. THE LD. DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THE ASSESSEE HAD FILED RETURN FOR THE FIRST YEAR AND BALANCE SHE ET OF EARLIER YEARS HAD NOT BEEN FILED, WHEREAS IN SOME CASES, IT WAS FOUND THA T THE VALUE SHOWN AS ON 1.4.2002 WAS ACTUALLY HISTORICAL COST THOUGH TER MED AS W.D.V. HE PAGE 8 OF 14 FURTHER CONTENDED THAT THE A.O. HAD VERIFIED THIS F ACT AND ON THE BASIS OF DETAILS FURNISHED BY THE ASSESSEE HE WORKED OUT THE ACTUAL QUANTUM OF DEPRECIATION ALLOWABLE TO THE ASSESSEE. HENCE, THE DECISION OF THE LD. CIT(A) WAS NOT CORRECT IN LAW. 18. THE LEARNED COUNSEL FOR THE ASSESSEE, ON THE OTHER HAND, ARGUED THE MATTER AT LENGTH AND BESIDES PLACING STRONG REL IANCE ON THE ORDER OF THE LD. CIT(A). 19. WE HAVE CONSIDERED THE SUBMISSIONS MADE BY BOTH THE SIDES, MATERIAL ON RECORD AND ORDERS OF THE AUTHORITIES BE LOW. IT IS NOTED THAT THE DISPUTE IS REGARDING THE ACTUAL NATURE OF VALUE OF ASSETS SHOWN AS ON 1.4.2002 I.E. WHETHER ITS W.D.V. OR HISTORICAL COST , SO AS TO WORK OUT THE CORRECT QUANTUM OF DEPRECIATION ALLOWABLE TO THE AS SESSEE. IT IS ALSO NOT IN DISPUTE THAT RETURN OF INCOME HAS BEEN FILED FOR TH E FIRST TIME DUE TO CHANGE IN THE PROVISIONS OF LAW. IT IS ALSO NOTED T HAT BALANCE SHEETS OF EARLIER YEARS HAVE NEITHER BEEN PRODUCED BEFORE US NOR BEFORE THE LD. CIT(A), SO THAT THE CLAIMS OF THE ASSESSEE IN THIS REGARD, COULD BE VERIFIED. HENCE, IN THE INTEREST OF JUSTICE, WE RESTORE THIS ISSUE TO THE FILE OF A.O. TO VERIFY THE CORRECT FACTS AND DECIDE THE ISSUE AFRES H AS PER LAW, AFTER GIVING DUE OPPORTUNITY OF HEARING TO THE ASSESSEE. BEFORE PARTING, WE MAY ADD THAT IF VALUE OF ASSETS SHOWN AS ON 1.4.2002 IS W.D .V., THEN, THE ASSESSEES CLAIMS ARE LIABLE TO BE ACCEPTED. THUS, THIS GROUND OF THE PAGE 9 OF 14 REVENUE STANDS ALLOWED FOR STATISTICAL PURPOSES, SU BJECT TO OUR OBSERVATIONS MADE HEREINABOVE. 20. IN THE RESULT, THE APPEAL FILED BY THE REVENUE STA NDS PARTLY ALLOWED FOR STATISTICAL PURPOSES. 21. NOW, WE SHALL TAKE UP THE REVENUES APPEAL IN I.T.A .NO. 231/IND/2007. 22. GROUND NO. 1 READS AS UNDER :- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS. 3, 87,370/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF EXCESS OF ROAD DEVELOPMENT FUND. 23. THE FACTS, IN BRIEF, ARE THAT THE ASSESSEE CLAIMED A SUM OF RS. 1,71,67,659/- AS AN EXPENDITURE, WHICH WAS CONTRIBU TED TOWARDS ROAD DEVELOPMENT FUND. THE A.O. FOUND THAT IT COMPRISED OF SUM IN EXCESS OF LIMITS OF 85% PRESCRIBED IN THE MANDI SAMITI ACT, 1 972. HENCE, HE DISALLOWED THE EXCESS AMOUNT OF RS. 3,87,370/-. ON APPEAL BY THE ASSESSEE, THE LD. CIT(A) FOUND THAT THE IMPUGNED SU M HAD BEEN PAID IN THE PREVIOUS YEAR ON CRYSTALLIZATION OF THE LIABILI TY ON THIS ACCOUNT, THOUGH IT PERTAINED TO EARLIER YEARS AND IT WAS SO IN VIEW OF THE NOTIFICATION/DIRECTIONS OF THE STATE GOVERNMENT, HE NCE, THE SAME WAS ALLOWABLE, PARTICULARLY WHEN ULTIMATELY THE CONTRI BUTION IN THOSE YEARS PAGE 10 OF 14 TAKING INTO CONSIDERATION THE IMPUGNED AMOUNT WITHI N THE PRESCRIBED LIMITS. AGGRIEVED BY THIS, THE REVENUE IS IN APPEAL . 24. LD. DEPARTMENTAL REPRESENTATIVE NARRATED THE FACTS AND PLACED STRONG RELIANCE ON THE ORDER OF THE ASSESSING OFFIC ER. 25. THE LEARNED COUNSEL FOR THE ASSESSEE, ON THE OTHER HAND, CONTENDED THAT THIS ISSUE WAS COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE TRIBUNAL IN I.T.A.NO. 236/IND/2006 ORDER DATED 12.10.2007. HE FURTHER PLACED STRONG RELIANCE ON TH E ORDER OF THE CIT(A). 26. WE HAVE CONSIDERED THE SUBMISSIONS MADE BY BOTH THE SIDES, MATERIAL ON RECORD AND THE ORDERS OF THE AUTHORITIE S BELOW. IT IS NOTED THAT THE LEARNED COUNSEL HAD RELIED ON ONE DECISION OF T HE TRIBUNAL. HOWEVER, COPY OF THE SAME HAS NOT BEEN PLACED ON RECORD. HEN CE, SUCH CONTENTION OF THE ASSESSEE REMAINS UN-SUBSTANTIATED. HAVING ST ATED SO, HOWEVER, ON MERITS, WE FIND THAT LIABILITY TO PAY THIS AMOUNT H AS CRYSTALLIZED DURING THE YEAR UNDER CONSIDERATION AND THE AMOUNT ACTUALLY PA ID IN EARLIER YEARS AND THIS SUM, TAKEN TOGETHER DO NOT EXCEED THE SPECIFIE D LIMITS. HENCE, WE HOLD THAT THE ORDER OF THE LD. CIT(A) IS CORRECT IN LAW. HENCE, WE DISMISS THIS GROUND OF THE REVENUE. 27. GROUND NO. 2 READS AS UNDER :- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS. 47 ,29,990/- PAGE 11 OF 14 MADE BY THE ASSESSING OFFICER ON ACCOUNT OF BOARD F EE CLAIMED BY THE ASSESSEE. 28. THE LEARNED COUNSEL FOR THE ASSESSEE, AT THE VER Y OUT-SET, SUBMITTED THAT THIS ISSUE IS COVERED IN FAVOUR OF T HE ASSESSEE BY THE ORDER OF THE TRIBUNAL IN I.T.A.NO. 277 & 278/IND/2008 ORD ER DATED 24.10.2008 CITED HEREINBEFORE AND REFERRED TO PAGE NOS. 16 & 1 8 OF THE SAID ORDER FOR OUR PERUSAL. THE LD. DEPARTMENTAL REPRESENTATIVE AL SO AGREED. 29. WE FIND THAT IDENTICAL ISSUE AROSE BEFORE THE TRIBU NAL IN I.T.A.NOS. 277 & 278/IND/08, AND THE TRIBUNAL AFTER CONSIDERING THE SUBMISSIONS OF BOTH THE PARTIES, HELD AS UNDER :- 15. ON CONSIDERATION OF RIVAL SUBMISSIONS, WE ARE OF THE VIEW THAT THE ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE ORDER OF ITAT, JABALPUR BENCH IN THE CASE OF KRISHI UPAJ MANDI SAMITI & OTHERS (SUPRA) IN WHICH, IN PARA 12 THE TRIBUNAL HELD WE HAVE CAREFULLY CONSIDERED THE ISSUE. THE VIEW OF THE AO THAT THE PAYMENT MADE TO THE BOARD FOR ROAD DEVELOPMENT AND AGRICULTURAL RESEARCH WAS FOR CAPITAL EXPENDITURE AND HENCE NOT ALLOWABLE U/S 37 OF THE ACT, CANNOT BE CONSIDERED CORRECT BECAUSE THE PAYMENT WAS MADE AS STATUTORY LIABILITY AS PER SEC. 43 OF THE RELEVANT ACT. PAGE 12 OF 14 SIMILARLY, BOARD FEES WERE ALSO MADE AS PER PROVISIONS OF THE RELEVANT STATUTE AND WAS ALLOWABLE EXPENDITURE. THE AO IS THEREFORE, NOT CORRECT TO DISALLOW THE SAME ON THE GROUND THAT THE PAYMENT IN QUESTION WAS IN THE NATURE OF APPLICATION OF INCOME. IN OUR CONSIDERED OPINION, THE ORDER OF THE LD. CIT(A) DESERVES NO INTERFERENCE. THE APPEAL OF THE DEPARTMENT IS THEREFORE, DISMISSED. WE FIND THAT THE CASE OF THE ASSESSEE IS ON IDENTICAL FACTS BECAUSE THE BOARD FEES IS PAID AS PER SEC. 43 OF MP KRISHI UPAJ MANDI ADHINIYAM WHICH IS STATUTORY LIABILITY OF THE ASSESSEE TO PAY IN ORDER TO ACHIEVE ITS OBJECTIVES. IT IS THEREFORE, ALLOWABLE DEDUCTION AS WAS SPENT WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS OF THE ASSESSEE. AS PER SEC. 36(1)(XII), ANY EXPENDITURE INCURRED BY THE CORPORATION OR BODY CORPORATE BY WHATEVER NAME CALLED CONSTITUTED OR ESTABLISHED BY CENTRAL, STATE OR PROVINCIAL ACT FOR THE OBJECTS AND PURPOSES AUTHORIZED BY THE ACT FOR WHICH, IT WAS ESTABLISHED SHALL BE ALLOWED AS DEDUCTION. THE LD. CIT(A) MISUNDERSTOOD THIS ISSUE BY TREATING THE BOARD FEES TO BE THE PAGE 13 OF 14 TRANSFER OF FUNDS. IN THE AFORESAID SEC. 36(1)(XII), IT IS SPECIFICALLY MENTIONED THAT THE EXPENDITURE INCURRED COULD HAVE ANY NAME WHATSOEVER THEREFORE, THE LD. CIT(A) SHOULD HAVE CONSIDERED THE ISSUE IN THE BROAD PERSPECTIVE CONSIDERING THE NATURE AND FUNCTIONING OF THE ASSESSEE INSTITUTION UNDER THE SPECIAL ACT. IN VIEW OF THE ABOVE, THE ORDERS OF THE AUTHORITIES BELOW ARE SET ASIDE AND ENTIRE ADDITION IS DELETED. THIS GROUND OF APPEAL OF THE ASSESSEE IS ALLOWED. 30. RESPECTFULLY FOLLOWING THE RATIO OF THIS DECISION, WE HOLD THAT THE ORDER OF THE CIT(A) IS CORRECT IN LAW. HENCE, W E DISMISS THIS GROUND OF THE REVENUES APPEAL. 31. GROUND NO. 3 READS AS UNDER :- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS. 8, 83,895/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF 8 % PEN SION FUND RESERVED CLAIMED BY THE ASSESSEE. 32. THE ISSUE RAISED IN THIS GROUND IS IDENTICAL TO TH E ISSUE RAISED IN GROUND NO.1 OF I.T.A.NO. 230/IND/2007. HENCE, THIS ISSUE IS ALSO RESTORED PAGE 14 OF 14 TO THE FILE OF THE A.O. ON SIMILAR LINES. THUS, THI S GROUND OF THE REVENUE STANDS ALLOWED FOR STATISTICAL PURPOSES. 33. THE ISSUE RAISED IN GROUND NOS. 4 & 5 IS IDENTICAL TO THE ISSUE RAISED IN GROUND NO.3 OF I.T.A.NO. 230/IND/2007, HE NCE, RESTORED TO THE FILE OF A.O. ON SIMILAR LINES. 34. IN THE RESULT, THE APPEAL FILED BY THE REVENUE STAN DS PARTLY ALLOWED FOR STATISTICAL PURPOSES. 35. TO SUM UP, BOTH THE APPEALS OF THE REVENUE STAND PA RTLY ALLOWED FOR STATISTICAL PURPOSES. THIS ORDER HAS BEEN PRONOUNCED IN THE OPEN COURT ON 9 TH OCTOBER, 2009. SD/- SD/- (JOGINDER SINGH) (V. K. GUPTA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 9 TH OCTOBER, 2009. CPU* 7D810