The DCITGNR Circle, Gandhinagar V. Gujarat State Seeds Corporation Ltd., Gandhinagar

ITA 2354/AHD/2015

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 8326 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 2 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-10-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2012-2013
• Appeal Filed On: 07-08-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NIDHI SRIVASTAVA
• Assessee Lawyers: K D SHAH
• Section: 143(3)

Judgement Text

, SMC/C IN THE INCOME TAX APPELLATE TRIBUNAL SMC/C BENCH, AHMEDABAD BEFORESHRI S.S. GODARA, JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER ./ ITA NO. 2354 /AHD/20 1 5 / ASSESSMENT YEAR: 2012 - 2013 DY. COMMISSIONER OF INCOME - TAX, GANDHINAGAR CIRCLE, GANDHINAGAR VS. GUJARAT STATE SEEDS CORPORATION LIMITED, BIJ NIGAM, SECTOR - 10A, GANDHINAGAR - 382010 PAN : AACCG 1850 F [ / (APPELLANT) / (RESPONDENT) REVENUE BY : NIDHI SRIVASTAVA, SR DR ASSESSEE BY : KD SHAH, CA / DA TE OF HEARING : 04 / 1 0/201 7 / DATE OF PRONOUNCEMENT: 09 / 10 /201 7 / O R D E R PER MANISH BORAD, ACCOUNTANT MEMBER: THIS APPEAL OF THE REVENUE FOR ASSESSMENT YEAR 20 12 - 13 IS DIRECTED AGAINST THE ORDER OF THE LEARNED CIT(A) , GANDHINAGAR, AHMEDABAD VIDE APPEAL NO.CIT(A) /GNR/309/2014 - 15 , DATED 11 .0 5 .201 5 , ARISING OUT OF ORDER UNDER SECTION 143(3) OF THE INCOME - TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT ), FRAMED ON 16 .0 1 .201 5 BY THE D CIT, GANDHINAGAR CIRCLE, GANDHINAGAR . 2. THE GROUNDS RAISED BY THE REVENUE READ AS UNDER: - 1. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN ALLOWING/DELETING THE ADDITION MADE ON ACCOUNT OF REVOLVING FUND OF RS.40,00,000/ - 2. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN ALLOWING/DELETING THE ADDITION MADE ON ACCOUNT OF VALUE OF SEEDS RS.1,53,26,440/ - . 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A) OUGHT TO HAVE UPHELD THE ORDER OF THE ASSESSING OFFICER. 3. AT THE TIME OF HEARING BEFORE US, LEARNED REPRESENTATIVES FAIRLY AGREE THAT THE ABOVE GRIEVANCE S ARE COVERED, IN FAVOUR OF THE ASSESSEE, BY THE DECISION ITA NO. 2354/AHD/ 2015 DCIT VS. GUJARAT STATE SEEDS CORP LTD AY : 2012 - 2013 - 2 DATED 29.06.2015 OF THE CO - ORDINATE BENCH OF THIS TRIBUNAL IN ASSESSEE S OWN CASE IN ITA NO S . 2955/AHD/2010 FOR AY 2007 - 08, 2057/AHD/2011 FOR AY 2008 - 09 AND 1666/AHD/2012 FOR AY 2009 - 10 WHEREIN THE TRIBUNAL HAS, INTER ALIA , OBSERVED A S FOLLOWS. 3.1 WITH REGARD TO DELETION OF ADDITION MADE ON ACCOUNT OF REVOLVING FUND, THE CO - ORDINATE BENCH (SUPRA) HELD AS UNDER: - 5.3 AFTER CONSIDERING THE RIVAL SUBMISSIONS AND GOING THROUGH THE MATERIAL ON RECORD WE FIND THAT THE ISSUE BEFORE US IS TREATMENT OF REVOLVING FUNDS RECEIVED FROM GOVERNMENT OF GUJARAT. THE PURPOSE OF THE FUNDS IS TO AUGMENT THE TRADING ACTIVITY OF THE AS SESSEE MEANING THEREBY IF IT WAS A CASE OF NON RETURNABLE GRANT OR SUBSIDY IT WOULD HAVE BEEN A REVENUE RECEIPT. THE ASSESSING OFFICER FAILED TO APPRECIATE THAT THE FUND IS RETURNABLE ON DEMAND. THE NATURE OF THIS FUND IS THAT OF A LOAN WITHOUT INTEREST. A LOAN CAN NEVER PARTAKE THE FORM OF INCOME. THE AMOUNT GIVEN WAS NEITHER RETURNABLE AND NOR A LIABILITY. IT IS UTILIZED FOR THE PURPOSE IT IS GIVEN. SO, THIS CANNOT BE HELD TO BE OF THE NATURE OF INCOME. IN THIS BACKGROUND, THE ADDITION MADE BY THE ASSESSI NG OFFICER WAS RIGHTLY DELETED BY THE CIT(A). SAME IS UPHELD. THIS TAKE CARE OF THIS ISSUE IN BOTH YEARS I.E. ASST. YEARS 2008 - 09 & ASST. YEAR 2009 - 10. 3.2 WITH REGARD TO DELETION OF ADDITION MADE ON ACCOUNT OF VALUE OF SEEDS, THE CO - ORDINATE BENCH (SUPR A) HELD AS UNDER: - 3.3. AFTER GOING THROUGH THE MATERIAL ON RECORD, WE FIND THAT ASSESSING OFFICER HAS ADDED RS.1,61,88,935/ - I.E. 50% OF 'JANGAD' STOCK OF RS.3,23,77,870/ - . HE OBSERVED THAT THE ASSESSEE HAS NEITHER SHOWN SEEDS OF RS.3,23,77,870/ - AS PURCHASES NOR HAS INCLUDED IN ITS CLOSING STOCK. THE STAND OF THE ASSESSEE HAS BEEN THAT GOODS ARE RECEIVED ON APPROVAL BASIS. TILL THE GOODS ARE CERTIFIED TO BE OF RELIABLE QUAL ITY, THE SAME REMAINS PROPERTY OF FARMERS AND ARE KEPT IN THE GODOWN OF ASSESSEE. ONLY AFTER CERTIFICATION OF THE SEEDS BY THE CONCERNED CERTIFYING AGENCIES, THE ABOVE SEEDS ARE TAKEN INTO PURCHASE ACCOUNT OF ASSESSEE. ONLY THEN THAT WOULD FORM CLOSING ST OCK AT THE END OF THE YEAR. THE ASSESSING OFFICER HAS FURTHER OBSERVED THAT ASSESSEE WAS MAKING ADHOC PAYMENT OF 50% OF THE STOCK TO THE FARMERS AS ADVANCES ON RECEIPT OF GOODS ON APPROVAL WHILE AS PER THE BALANCE SHEET, THE ASSESSEE HAS NOT SHOWN SUCH ADV ANCES ON THE ASSET SIDE OF THE BALANCE SHEET. THE ASSESSEE GAVE DETAILED BIFURCATION IN THIS REGARD AND HAD STATED THAT IT IS EVIDENT FROM THE ANNUAL ACCOUNTS OF THE ASSESSEE. AS PER SCHEDULE ''J'' OF LOANS AND ADVANCES, ADVANCES RECOVERABLE IN CASH OR KIN D ARE SHOWN AT RS.3,18,56,035/ - IN BALANCE SHEET. THE GROUPING OF SCH. ''J'' SHOWS ADVANCES TO PRODUCERS (FARMERS AGAINST JANGAD PURCHASES) AT RS.56,64,882/ - WHICH IS ITA NO. 2354/AHD/ 2015 DCIT VS. GUJARAT STATE SEEDS CORP LTD AY : 2012 - 2013 - 3 SUPPORTED BY THE DETAILED STATEMENT OF PART PAYMENT MADE OF 'JANGAD STOCK'FARMER - WISE. TH E ASSESSEE FULLY EXPLAINED ITS STAND AS TAKEN IN ITS ACCOUNT. THE ASSESSEE HAS BEEN FOLLOWING THIS SYSTEM OF ACCOUNTING IN A CONSISTENT MANNER. SAME HAS BEEN ACCEPTED BY THE DEPARTMENT AS EVIDENT FROM THE ORDERS PASSED U/S 143(3) OF THE ACT IN THE EARLIER YEARS. THE BOOKS OF THE ASSESSEE ARE AUDITED BY TAX AUDITORS, GOVERNMENT AUDITORS AND STATUTORY AUDITORS. THE ASSESSEE'S RELIANCE ON PROVISIONS OF SECTION 24 OF THE SALE OF GOODS ACT AND ACCOUNTING STAN DARDS IN THIS REGARD WAS FOUND APPROPRIATE. KEEPING IN VIEW OF OUR DISCUSSION, WE FIND THAT CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION OF RS.1,61,88,935/ - . NO INTERFERENCE IS CALLED FOR IN THE WELL REASONED ORDER OF CIT(A). ACCORDINGLY SAME IS UPHELD. 4. WE SEE NO REASON TO TAKE ANY OTHER VIEW OF THE MATTER THAN THE VIEW SO TAKEN BY THE C O - ORDINATE B ENCH. RESPECTFULLY FOLLOWING THE SAME, WE SEE NO REASONS TO INTERFERE IN THE CONCLUSIONS ARRIVED AT BY THE LD. CIT(A) IN THIS MATTER . ACCORDINGLY, WE CONFIRM THE ORDER OF THE LEARNED CIT(A) AND DISMISS THE APPEAL OF THE REVENUE. 5 . IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE COURT ON 9 TH OCTOBER 2017 AT AHMEDABAD. SD/ - SD/ - ( S.S. GODARA ) JUDICIAL MEMBER (MANISH BORAD) ACCOUNTANT MEMBER AHMEDABAD ; DATED , 09 / 10 / 20 1 7 8T / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / CONCERNED CIT 4. ) ( / THE CIT(A) - 5. , , /DR,ITAT, AHMEDABAD, 6. / GUARD FILE. / BY ORDER, TRUE COPY (ASSTT.REGISTRAR) ITAT, AHMEDABAD