ACIT, New Delhi V. M/s Agricultural Produce Marketing Committee, Ghazipur

ITA 2347/DEL/2009

• Counselvise Citation: [2009] 114 COUNSELVISE.COM (IT) 9932 (ITAT-DELHI)
• Duration Of Justice: 2 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-08-2009
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Assessment Year: 2003-2004
• Appeal Filed On: 29-05-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ABHA RANI SINHA
• Assessee Lawyers: PAVAN CHAUDHARY
• Keywords: Revenue expenditure

Judgement Text

ITA NO. 2347/DEL/2009 A.Y. : 2003-04 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH G NEW DELHI BEFORE SHRI C.L. SETHI, JUDICIAL MEMBER AND SHRI B.C. MEENA, ACCOUNTANT MEMBER I.T.A. NO. 2347/DEL/2009 AY 2003-04 ASSTT. COMMISSIONER OF INCOME TAX VS. M/S AGRIC ULTURAL PRODUCE CIRCLE 36(1), NEW DELHI MARKETING CO MMITTEE, AMPC OFFICE COMPLEX, FRUIT AND VEGETABLES MARKET, GHAZIPUR, DELHI-110092 [APPELLANT] (RESPONDENT) APPELLANT BY : MS. ABHA RANI SINHA, SR. DR RESPONDENT BY : MS. PAVAN CHAUDHARY, ADVOCATE ORDER PER C.L. SETHI, JM IN THIS APPEAL, FILED BY THE REVENUE AGAINST THE O RDER DATED 13.3.2009 PASSED BY THE CIT(A) FOR THE ASSTT. YEAR 2003-04, T HE ONLY ISSUE RAISED BY THE REVENUE IS WITH REGARD TO THE ADDITION OF RS. 13 ,83,848/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF PAYMENT/CONTRIBUTION TO DELHI AGRICULTURAL PRODUCE MARKETING COMMITTEE. 2. WE HAVE HEARD BOTH THE PARTIES AND HAVE CAREFULL Y GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. ITA NO. 2347/DEL/2009 A.Y. : 2003-04 2 3. IN THE ASSESSMENT MADE UNDER SECTION 143(3)/147 OF THE ACT DATED 2.12.2008, THE ASSESSING OFFICER HAS DISALLOWED THE CLAIM OF DEDUCTION ON ACCOUNT OF PAYMENT/ CONTRIBUTION TO DELHI AGRICULTURAL PRODUCE MARKETING COMMITTEE FOR THE REASON THAT THE AFORESAID CONTRIBUTION IS NOT AN EXPENDITURE TO BE ALLOWED AS DEDUCTION, BUT IS A SIMPLE DISBURSEMENT OF INCOME AND IT HAS NOT BEEN INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF EARNING PROFIT. 4. ON AN APPEAL THE CIT(A) ALLOWED THE ASSESSEES CLAIM BY RELYING UPON THE DECISION OF THE ITAT IN THE CASE OF AGRICULTURAL PR ODUCE MARKETING COMMITTEE, AZADPUR, DELHI WHICH HAS BEEN CONFIRMED BY THE HONBLE DELH I HIGH COURT AND A SPECIAL LEAVE PETITION (SLP) FILED BEFORE THE HONBLE SUPREME COU RT OF INDIA HAS ALSO BEEN DISMISSED. HE ALSO FOLLOWED THE DECISION OF THE TRIBUNAL IN TH E CASE OF IN THE CASE OF AGRICULTURAL PRODUCE MARKETING COMMITTEE, KESHOPUR VIDE ORDER DATE D 11.1.2007 IN ITA NO. 892/DEL/2007. 5. WE HAVE HEARD BOTH THE PARTIES AND CAREFULLY GON E THROUGH THE ORDERS OF THE AUTHORITIES BELOW. IN THE LIGHT OF THE DECISIONS O F THE ITAT (SUPRA) WHICH HAS BEEN CONFIRMED BY THE HONBLE DELHI HIGH COURT AND A SLP FILED BY THE REVENUE BEFORE THE HONBLE SUPREME COURT OF INDIA STANDS DISMISSED. WE ARE INCLINED TO UPHOLD THE ORDER OF THE CIT(A) IN ALLOWING THE ASSESSEES CLAIM OF D EDUCTION ON ACCOUNT OF PAYMENT/CONTRIBUTION TO THE DELHI AGRICULTURAL PROD UCE MARKETING COMMITTEE. AT THIS STAGE, WE WOULD LIKE TO REPRODUCE THE ORDER OF THE C IT(A) TO BRING THE CLARITY TO THE REASONS GIVEN BY THE CIT(A) IN ALLOWING THE ASSES SEES CLAIM. 5. DETERMINATION THE SUBMISSIONS MADE BY THE APPELLANT HAVE BEEN CAR EFULLY CONSIDERED IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CASE AND THE P ROVISIONS OF LAW. IT IS OBSERVED THAT THE ITA NO. 2347/DEL/2009 A.Y. : 2003-04 3 ASSESSING OFFICER HAS DISALLOWED THE CONTRIBUTION M ADE BY THE ASSESSEE TO DELHI AGRICULTURAL MARKETING BOARD FUND ON THE GROUND THA T IN THE SIMILAR CASE OF APMC, AZADPUR RELIED UPON BY THE ASSESSEE, THE HONBLE IT AT HAD SIMPLY REMANDED THE MATTER BACK TO THE LD. CIT(A) TO DECIDE THE QUANTUM OF DIS ALLOWANCE AND DID NOT EXACTLY ALLOW THE EXACTLY ALLOW THE EXPENDITURE OF THE ASSESSEE W ITH RESPECT TO CONTRIBUTION TO THE BOARD AS CLAIMED BY IT. THE ASSESSING OFFICER FURT HER OBSERVED THAT THE HONBLE HIGH COURT HAS NOT INFERRED BECAUSE NO SUBSTANTIAL QUEST ION OF LAW ARISES FOR CONSIDERATION AND NOT AS THE ASSESSEE HAS CONTENDED IN ITS REPLY DATED 30.11.2007. 5.1. IT IS, HOWEVER, OBSERVED THAT THE HONBLE ITA T IN THE CASE OF APMC, AZADPUR (SUPRA) HAS REMANDED THE MATTER BACK TO THE CIT(A) WITH THE FOLLOWING OBSERVATIONS:- WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND ALSO PERUSED THE RELEVANT MATERIAL ON RECORD. AS PER THE PROVISIONS OF SECTI ON 89(2) OF THE DELHI AGRICULTURAL PRODUCE MARKETING (REGULATION) ACT, 1998, EVERY MAR KETING COMMITTEE IS REQUIRED TO PAY CONTRIBUTION TO THE DAMB OUT OF ITS OWN FUND BEING CERTAIN PERCENTAGE OF ITS INCOME SO AS TO ENABLE THE BOARD TO DEFRAY THE EXPENSES ON OF FICE ESTABLISHMENT ETC. TO BE INCURRED BY THE BOARD IN THE INTEREST OF MARKETING COMMITTE ES. THE QUANTUM OF SUCH CONTRIBUTION IS WORKED OUT ON THE BASIS OF ANNUAL I NCOME OF MARKETING COMMITTEE. IT IS THUS CLEAR THAT THE CONTRIBUTION TO BE MADE TO DAMB IS A STATUTORY PAYMENT AND GOING BY ITS NATURE AND PURPOSE AS PROVIDED IN THE RELEVA NT STATUTE, THE SAME IS DIRECTLY CONNECTED WITH THE BUSINESS OF A MARKETING COMMITTE E. IT IS OBSERVED THAT IN THE PRESENT CASE, SUCH CONTRIBUTION MADE BY THE ASSESSEE, HOWE VER, WAS DISALLOWED BY THE ASSESSING OFFICER MAINLY FOR THE REASON THAT THE BOOKS OF ACC OUNT OF THE ASSESSEE WERE NOT AUDITED AT THE RELEVANT TIME AND IN THE ABSENCE OF THE SAME , IT WAS NOT POSSIBLE TO DETERMINE ITS ANNUAL INCOME WHICH, ACCORDING TO HIM, WAS A PRE-RE QUISITE TO ALLOW THE DEDUCTION CLAIMED BY THE ASSESSEE ON THIS COUNT. AT THE TIM E OF HEARING OF THE ASSESSEES APPEAL BEFORE THE CIT(A), THE AUDIT OF ITS BOOKS OF ACCO UNT HAD ALREADY BEEN COMPLETED AND THE AUDITED BALANCE SHEET AND PROFIT AND LOSS ACCOUNT W ERE ALSO FILED BY THE ASSESSEE IN SUPPORT OF ITS CLAIM FOR DEDUCTION ON ACCOUNT OF C ONTRIBUTION TO DAMB ALONGWITH THE AUDIT REPORT. IN THE SAID AUDIT REPORT, IT WAS OBS ERVED BY THE AUDITORS THAT THE ASSESSMENT OF THE ASSESSEES CASE UNDER DAPM ACT WA S DELAYED DUE TO ADMINISTRATIVE REASONS AND IN THE ABSENCE OF SUCH REGULAR AND FINA L ASSESSMENT, IT WAS DIFFICULT TO FIND OUT THE CORRECT AMOUNT OF FEES RECEIVABLE AS ON 31. 3.2003. IT WAS ALSO OBSERVED BY THE AUDITORS THAT THE FIGURES OF MARKET FEES AS RECEIVE D FROM INDIVIDUAL TRADERS SHOWN BY THE ADC DEPARTMENT DID NOT MATCH WITH THE RECEIPTS SHOW N BY THE DETAILS PREPARED BY THE STAFF AT THE ENTRY GATE. KEEPING IN VIEW THESE AD VERSE OBSERVATIONS OF THE AUDITORS, THE LD. CIT(A) INFERRED THAT THE MARKET FUND AS DEFIN ED IN SECTION 88 OF THE DAPM ACT WAS NOT CORRECTLY DETERMINED AND PROCEEDED TO CONFIRM T HE DISALLOWANCE ON ACCOUNT CONTRIBUTION TO DAMP FUND WHICH WAS CLAIMED BY TH E ASSESSEE AT A HIGHER FIGURE OF RS. 6,35,81,772/- ON THE BASIS OF AUDITED ACCOUNTS. A FTER TAKING INTO CONSIDERATION THE SUBMISSIONS MADE ON BEHALF OF BOTH THE SIDES BEFORE US IN THE LIGHT OF MATERIAL AVAILABLE ON RECORD, WE FIND NO JUSTIFICATION IN THE IMPUGNED ORDER OF THE LD. CIT(A) ON THIS ISSUE. IF AT ALL THERE WAS SOME DIFFICULTY IN DETERMINING THE ANNUAL INCOME OF THE ASSESSEE BECAUSE OF THE DIFFERENCE IN THE FIGURES OF MARKET FEES AS NOTED BY THE AUDITORS, THE LD. CIT(A) OUGHT TO HAVE GIVEN AN OPPORTUNITY TO THE A SSESSEE TO RECONCILE THE SAID DIFFERENCE ESPECIALLY WHEN IT WAS POINTED OUT ON B EHALF OF THE ASSESSEE BEFORE HIM THAN ITA NO. 2347/DEL/2009 A.Y. : 2003-04 4 SUCH DIFFERENCE COULD BE BECAUSE OF THE CASH SYSTEM OF ACCOUNTING FOLLOWED BY IT. MOREOVER, ANY DELAY IN THE AUDIT UNDER THE DELHI AG RICULTURAL PRODUCE MARKETING ACT, WAS BEYOND THE CONTROL OF THE ASSESSEE AND IN ANY C ASE, IF AT ALL THERE WAS ANY DISPUTE IN THE MATTER OF DETERMINING THE MARKET FUND, DISALLOW ANCE ON THIS COUNT SHOULD HAVE BEEN RESTRICTED ONLY TO THE EXTENT OF SUCH DISPUTED AMOU NT. AS SUCH, CONSIDERING ALL THE FACTS OF THE CASE, WE FIND IT JUST AND PROPER TO REMAND T HIS MATER TO THE LEARNED CIT(A) FOR GIVING AN OPPORTUNITY TO THE ASSESSEE TO RECONCIL E THE AFORESAID DIFFERENCE AND, ACCORDINGLY, TO DECIDE THE QUANTUM OF DISALLOWANCE ON THIS ISSUE. 5.2 IT IS, THUS, OBSERVED THAT CONTRIBUTION TO DEL HI AGRICULTURAL MARKETING BOARD FUND WAS ALLOWED BY THE HONBLE ITAT AS A STATUTORY PAY MENT DIRECTLY CONNECTED WITH THE BUSINESS OF A MARKETING COMMITTEE AND THE MATTER WAS REMANDED TO THE LD. CIT(A) ONLY FOR GIVING AN OPPORTUNITY TO THE ASSESSEE TO REC ONCILE THE DIFFERENCE IN THE FIGURES OF THE MARKET FEES AND ACCORDINGLY, TO DECIDE THE QUANTUM OF DISALLOWANCE ON THIS ISSUE WHICH SHOULD HAVE BEEN RESTRICTED ONLY TO THE EXTENT OF D ISPUTED AMOUNT, IF AT ALL THERE WAS ANY DISPUTE IN THE MATER OF DETERMINING THE MARKET FUND . 5.3 SIMILARLY, IN THE DEPARTMENTAL APPEAL BEFORE TH E HONBLE DELHI HIGH COURT AGAINST THE ABOVE ORDER, THE HONBLE HIGH COURT HA S OBSERVED THAT : WE ARE OF THE OPINION THAT THE VIEW EXPRESSED BY THE HONBLE TRIBUNAL DOES NOT CALL FOR ANY INTERFERENCE. ALL THAT HAS BEEN DONE IS TO REMAND THE MATER BACK TO THE CIT(A) FOR LOOKING INTO THE ISSUE AFRESH AND ALSO TO LOOK INTO THE AUDITED ACCOUNTS WHICH HAVE SINCE BEEN FILED BY THE ASSESSEE AND TAKE INTO CONS IDERATION THE FACT THAT FOR ALMOST 20 YEARS, THE CONTRIBUTIONS MADE BY THE ASSESSEE HAVE BEEN EXEMPTED BY THE REVENUE. 5.4. THUS, IT IS VERY CLEAR THAT THE ISSUE HAS BEEN DECIDED IN FAVOUR OF THE APPELLANT BY THE HIGHER APPELLATE AUTHORITIES AS ABOVE. IT HAS FURTHER BEEN SUBMITTED BY THE LD. AR THAT THE ISSUE NOW STANDS SETTLED IN FAVOUR OF T HE APPELLANT, AS THE HONBLE SUPREME COURT HAS BEEN PLEASED TO DISMISS THE SPECIAL LEAVE PETITION FILED BY THE DEPARTMENT AGAINST THE AFORESAID ORDER OF THE HONBLE HIGH COU RT. A COPY OF THE ORDER OF THE HONBLE SUPREME COURT REJECTING THE SPECIAL LEAVE PETITION AS ABOVE HAS BEEN PLACED ON RECORD. 5.5. IT IS FURTHER OBSERVED THAT ON EXACTLY THE FAC TS AND CIRCUMSTANCES IN THE CASE OF APMC, KESHOPUR, THE HONBLE ITAT IN ITA NO. 892/DEL /2007 DATED 11.1.2007 HAS CATEGORICALLY ALLOWED THE CONTRIBUTION TO DAMB AS A STATUTORY PAYMENT WITH THE FOLLOWING OBSERVATIONS:- ON CAREFUL CONSIDERATION AND ON PERUSAL OF THE ORD ER OF THE TRIBUNAL IN CASE OF APMC AZADPUR, WE FIND THAT THIS ISSUE HAD BEEN CONS IDERED BY THE TRIBUNAL IN THE SAID CASE AND SIMILAR ARGUMENTS HAD BEEN ADVANC ED THAT THE CONTRIBUTION HAD BEEN MADE AS PER REQUIREMENT OF SECTION 89 OF D ELHI AGRICULTURAL PRODUCE MARKETING (REGULATION) ACT, 1998. THE TRIBUNAL A FTER NECESSARY EXAMINATION HELD THAT THE CONTRIBUTION MADE TO DAMB WAS A STATU TORY PAYMENT AND GOING BY ITS NATURE AND PURPOSE AS PROVIDED IN THE RELEVANT STATUTE THE SAME WAS DIRECTLY CONNECTED WITH THE BUSINESS OF MARKETING COMMITTEE. THE TRIBUNAL HOWEVER, RESTORED THIS ISSUE TO THE ASSESSING OFFICER FOR DE TERMINING THE QUANTUM OF ALLOWANCE. IN THE PRESENT CASE, THERE IS NO DISPU TE ABOUT THE QUANTUM OF ITA NO. 2347/DEL/2009 A.Y. : 2003-04 5 CONTRIBUTION MADE TO DAMB. AS REGARDS THE JUDGEM ENT OF HONBLE HIGH COURT OF RAJASTHAN IN THE CASE OF JODHPUR MARKETING COO PERATIVE SOCIETY (SUPRA), RELIED UPON BY THE REVENUE AUTHORITIES, WE FIND THA T THE SAME IS DISTINGUISHABLE. IN THAT CASE, THE DISALLOWANCE WAS IN RESPECT OF RE SERVE CREATED FOR THE USE OF THE ASSESSEE ITSELF AND IT WAS NOT ANY STATUTORY BODY A ND THE CASE IS, THEREFORE, DISTINGUISHABLE. IN OUR VIEW, THE STATUTORY PAY MENTS TO DAMB ARE ALLOWANCE AS DEDUCTION AND WE ORDER ACCORDINGLY RESPECTFULLY FOLLOWING THE DECISION OF THE TRIBUNAL IN THE CASE OF APMC AZADPUR (SUPRA). 5.6 IN VIEW OF THE ABOVE DISCUSSION AND RESPECTFULL Y FOLLOWING THE DECISIONS CITED SUPRA, IT IS HEREBY HELD THAT THE ASSESSING OFFICER WAS NOT JUSTIFIED IN DISALLOWING THE CONTRIBUTION TO THE DELHI AGRICULTURAL MARKETIN G BOARD CLAIMED BY THE ASSESSEE AS REVENUE EXPENDITURE. THE ADDITION OF R S. 13,83,848/- MADE ON THIS COUNT IS, ACCORDINGLY, HEREBY DELETED. 6. IN THE RESULT, THE INSTANT APPEAL FILED BY THE R EVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 13 TH AUGUST, 2009 IMMEDIATELY AFTER CONCLUSION OF THE HEARING. SD/- SD/- [B.C. MEENA] [C.L. SETHI] ACCOUNTANT MEMBER JUDICIAL MEMBER SRB COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, DEPUTY REGISTRAR, ITAT, DELHI BENCHES