DCIT, Circle-1(1), Hyderabad, Hyderabad V. A.P. State Agro Development Corp Ltd., Hyderabad

ITA 241/HYD/2015

• Counselvise Citation: 24122514 RSA 2015
• Duration Of Justice: 6 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-09-2015
• Appeal Filed By: Department
• Bench Allotted: B
• Next Hearing Date: 01-09-2015
• Assessment Year: 2011-2012
• Appeal Filed On: 10-03-2015
• Court: TRIBUNAL
• Department Lawyers: Y SESHA SRINIVAS
• Assessee Lawyers: P RAVI SESHAGIRI RAO
• Keywords: Additional evidence; Revised return
• Section: 115JB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES B, HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER I.T.A. NO. 241/HYD/2015 ASSESSMENT YEAR: 2011-12 DY. COMMISSIONER OF INCOME TAX, CIRCLE-1(1), HYDERABAD VS M/S. A.P. STATE AGRO INDUSTRIES DEVELOPMENT CORP LTD., HYDERABAD [PAN: AABCA7378R] (APPELLANT) (RESPONDENT) C.O. NO. 21/HYD/2015 (IN ITA NO. 241/HYD/15) ASSESSMENT YEAR: 2011-12 M/S. A.P. STATE AGRO INDUSTRIES DEVELOPMENT CORP LTD., HYDERABAD [PAN: AABCA7378R] VS DY. COMMISSIONER OF INCOME TAX, CIRCLE-1(1), HYDERABAD ( CROSS - OBJECTOR ) (RESPONDENT) FOR REVENUE : SHRI Y. SESHA SRINIVAS, DR FOR ASSESSEE : SHRI P. RAVISESHAGIRI RAO, AR DATE OF HEARING : 07-09-2015 DATE OF PRONOUNCEMENT : 11-09-2015 O R D E R PER B. RAMAKOTAIAH, A.M. : THE REVENUE HAS PREFERRED THE APPEAL AGAINST THE O RDER OF THE LD.COMMISSIONER OF INCOME TAX (APPEALS)-I, HYDERABA D DATED 22-12-2014. ASSESSEE HAS PREFERRED CROSS OBJECTION RAISING A GROUND I.T.A. NO. 241/HYD/15 C.O. NO. 21/HYD/15 :- 2 -: ON THE ISSUE WHICH THE LD. CIT(A) DID NOT ALLOW. T HESE APPEALS ARE HEARD TOGETHER AND DECIDED BY THIS ORDER. 2. BRIEFLY STATED, ASSESSEE-COMPANY IS A STATE GOVE RNMENT UNDERTAKING AND IS IN THE BUSINESS OF DEVELOPING AG RICULTURAL LANDS, TRADING IN AGRICULTURAL IMPLEMENTS, FERTILIZERS ETC ., IT ORIGINALLY FILED RETURN OF INCOME ADMITTING INCOME OF RS. 5,12,78,49 1/- AND FILED REVISED RETURN OF INCOME OF RS. 5,44,64,931/- AFTER CLAIMIN G BROUGHT FORWARD LOSSES. ASSESSING OFFICER (AO) IGNORED THE REVISED RETURN FILED ON 31-03- 2013, AFTER THE DUE DATE. IN THE COURSE OF ASSESSM ENT PROCEEDINGS, AO NOTICED THAT ITS PROFILE REVEALED THAT ASSESSEE REC EIVED RS. 1,09,42,202/- AS CONTRACT RECEIPTS WHICH SUFFERED TDS ALSO. HE N OTICED THAT THIS AMOUNT WAS NOT OFFERED IN P&L A/C, ACCORDINGLY BROU GHT TO TAX. ANOTHER ISSUE CONSIDERED BY THE AO WAS DEBIT OF INTEREST OF RS. 1,42,08,977/- ON LOANS RECEIVED FROM GOVERNMENT. AO DISALLOWED THE ABOVE AMOUNT OF INTEREST ON THE REASON THAT INTEREST WAS PROVIDED B UT NOT PAID AND THE SAME WAS ALSO NOT CRYSTALLIZED BECAUSE OF NON-FIXAT ION OF RATE FOR THE LAND TRANSFERRED. HE DISALLOWED THE ABOVE AMOUNT. IN ADDITION, ASSESSEE MADE A PROVISION OF RS. 15,11,243/- FOR REMITTANCES IN TRANSIT MORE THAN ONE YEAR. AO DISALLOWED THE SAME AS AN UN-ASCERTAI NED PROVISION AND DISALLOWED BOTH FOR THE PURPOSE OF CALCULATION U/S. 115JB OF THE ACT AND ALSO UNDER NORMAL PROVISIONS. 3. ASSESSEE CONTENDED THE ABOVE THREE ITEMS BEFORE THE LD. CIT(A) GIVING VARIOUS DETAILS. WITH REFERENCE TO THE AMOU NT OF RS. 1,09,42,202/- STATED TO HAVE BEEN NOT ACCOUNTED, IT WAS SUBMITTED BEFORE THE CIT(A) THAT ABOVE AMOUNTS WERE ALREADY S HOWN IN THE P&L A/C UNDER VARIOUS HEADS. A CONSOLIDATED BIFURCATIO N WAS : I. SERVICE CHARGES - RS. 49,73,202 II. SALES - RS. 59,69,000 I.T.A. NO. 241/HYD/15 C.O. NO. 21/HYD/15 :- 3 -: 4. IT WAS SUBMITTED THAT THESE AMOUNTS WERE SHOWN I N THE RECEIPTS OF RS. 449.68 CRORES. LD. CIT(A) AFTER EXTRACTING THE DETAILS IN PARA 6.1 OF THE ORDER HELD THAT AMOUNTS WERE ALREADY CREDITED T O P&L A/C AND ASSESSEE ALSO TOOK CREDIT FOR THE TDS. HE WAS OF TH E OPINION THAT THE ADDITION WAS MADE BY AO WITHOUT VERIFICATION OF DET AILS AND ACCORDINGLY SAME WAS DELETED. REVENUE IS AGGRIEVED. 5. EVEN THOUGH REVENUE HAS RAISED A GROUND THAT CIT (A) ADMITTED ADDITIONAL EVIDENCE, THERE IS NOTHING ON RECORD TO INDICATE THAT CIT(A) HAS ADMITTED ANY ADDITIONAL EVIDENCE. NOTHING WAS BROUGHT ON RECORD ALSO TO SUPPORT THE CONTENTION. SINCE THIS IS ONE OF THE VERIFICATIONS OF THE EXISTING SCHEDULES OF ASSESSEES P&L A/C AND BA LANCE SHEET, WE DO NOT SEE ANY REASON TO CONSIDER THE REVENUES GROUND . AS CIT(A) HAS GIVEN FACTUAL FINDING ON THE AMOUNTS ALREADY ACCOUN TED FOR AND AS AO MADE THE ADDITION WITHOUT ANY VERIFICATION, THE ORD ER OF CIT(A) HAS TO BE APPROVED. REVENUES GROUND ON THIS IS REJECTED. 6. COMING TO THE DISALLOWANCE OF INTEREST OF RS. 1, 42,08,977/-, IT WAS THE SUBMISSION OF ASSESSEE THAT THE CORPORATION ALL OTTED THE LAND AT AC GUARDS TO INCOME TAX DEPARTMENT ON 30-10-2001 AND N O CONSIDERATION WAS PAID FOR THE SAID LAND. CORPORATION HAS SENT A PROPOSAL TO THE GOVERNMENT REQUESTING FOR ADJUSTMENT OF LAND VALUE TOWARDS THE LOANS DUE TO GOVERNMENT. THE GOVERNMENT HAS NOT FIXED TH E VALUE OF THE LAND NOR VALUE OF THE LAND REDUCED FROM THE OUTSTANDING LOANS. PENDING THIS ISSUE, THE INTEREST ON LOANS DUE TO GOVERNMENT WAS PROVIDED BY THE CORPORATION. IT WAS SUBMITTED THAT INTEREST WAS NO T PAID BUT IT WAS A CRYSTALLIZED LIABILITY. VARIOUS SUBMISSIONS MADE B Y ASSESSEE WERE SUMMARIZED IN PARA 7.2 OF THE CIT(A)S ORDER AND IN ADDITION, ASSESSEE ALSO SUBMITTED THE COMPLETE DETAILS OF REFERENCE OF GOVERNMENT ORDERS SANCTIONING THE LOAN AMOUNT, PURPOSE AND RATE OF IN TEREST AND YEAR-WISE INTEREST PAYABLE RIGHT FROM AY. 2001-02 TO 2011-12. IT WAS ALSO I.T.A. NO. 241/HYD/15 C.O. NO. 21/HYD/15 :- 4 -: SUBMITTED THAT IN THE IMMEDIATE PRECEDING YEAR, AO ALLOWED THE INTEREST PAYABLE FOR THAT YEAR WHILE DISALLOWNG THE EARLIER YEARS INTEREST. 6.1 CONSIDERING ASSESSEES SUBMISSIONS, LD. CIT(A) ALLOWED THE GROUND OF ASSESSEE AND DELETED THE DISALLOWANCE MADE BY TH E AO ON THE REASON THAT ASSESSEE BEING A CORPORATE ENTITY IS MAINTAINI NG BOOKS OF ACCOUNTS ON MERCANTILE SYSTEM AND INTEREST OF RS. 1,42,08,9 72/- HAS TO BE ALLOWED, EVEN IF THE SAME WAS NOT PAID. REVENUE IS AGGRIEVED. 6.2 AFTER CONSIDERING THE RIVAL CONTENTIONS, WE DO NOT SEE ANY REASON TO INTERFERE WITH THE ORDER OF CIT(A). THERE ARE L OANS ALREADY AVAILED BY ASSESSEE FROM THE GOVERNMENT ON WHICH, INTEREST LIA BILITY IS THERE ON YEAR TO YEAR BASIS. JUST BECAUSE A PARTICULAR LAND GIVEN TO INCOME TAX DEPARTMENT WAS NOT ADJUSTED OUT OF THE LOANS PAYABL E BY ASSESSEE- COMPANY, THE INTEREST PAYABLE ON THE BORROWINGS EAR LIER CANNOT BE DISALLOWED. LD. CIT(A)S ORDER IS BASED ON FACTS A ND SUPPORTED BY LAW. IN VIEW OF THIS, WE DO NOT FIND ANY MERIT IN REVENU ES CONTENTIONS. THIS GROUND OF REVENUE IS ALSO DISMISSED. 6.3 ACCORDINGLY, REVENUES APPEAL IS DISMISSED. 7. COMING TO ASSESSEE CROSS OBJECTION ON THIRD ISSU E, AO DISALLOWED AS UN ASCERTAINED LIABILITY OF PROVISIONS FOR REMI TTANCE IN TRANSIT OF RS. 15,11,243/-. IT WAS SUBMITTED BY ASSESSEE BEFORE T HE CIT(A) THAT THIS EXPENDITURE REPRESENTS THE NET OF AMOUNTS REMITTED FROM THE HEAD OFFICE TO BRANCH OFFICE AND VICE-VERSA. IT WAS FURTHER EX PLAINED THAT AN AMOUNT OF RS. 15,11,243/- COULD NOT BE TRACED FOR S EVERAL YEARS, THEREFORE, THE SAID AMOUNT WAS WRITTEN-OFF IN THE B OOKS OF ACCOUNTS. IT WAS FURTHER SUBMITTED THAT THIS AMOUNT CAN BE ALLOW ED AS LOSS OCCURRED DURING THE COURSE OF BUSINESS ACTIVITY AND WAS WRIT TEN-OFF IN THE BOOKS. I.T.A. NO. 241/HYD/15 C.O. NO. 21/HYD/15 :- 5 -: 7.1 LD. CIT(A) DID NOT AGREE WITH ASSESSEES CONTEN TIONS. CIT(A) FELT THAT ASSESSEE IS NOT ABLE TO GIVE CLEAR ACCOUNT OF HOW AND FOR WHAT PURPOSE THIS AMOUNT OF RS. 15,11,243/- WAS SPENT. IN THE ABSENCE OF THE DETAILS, IT WAS HELD THAT AMOUNT CANNOT BE ALLO WED. THE LD. CIT(A) ALSO FELT THAT ASSESSEES EXPLANATION THAT AMOUNTS ARE NOT TRACEABLE IS NOT SATISFACTORY AND THEREFORE, THIS GROUND OF APPE AL OF ASSESSEE WAS DISMISSED. AGGRIEVED, ASSESSEE PREFERRED THE GROUN D IN CROSS OBJECTION. 8. IN THE COURSE OF PRESENT PROCEEDINGS, ON A QUERY RAISED BY THE BENCH ASSESSEE HAS FURNISHED DETAILS OF THE CLAIM, OBJECTION RAISED BY THE CENTRAL AUDIT PARTY, THE REPLY TO THE SAID OBJE CTION, COPY OF THE JOURNAL NO. 734, LEDGER COPY OF THE DISTRICT MAIN H EAD OFFICE ACCOUNT COPY OF JOURNAL VOUCHER NO. 752 AND THE RELEVANT LE DGER ACCOUNT COPY AND SUBMITTED THAT THIS AMOUNT WAS ACTUALLY WRITTEN -OFF IN THE BOOKS OF ACCOUNTS AND THE ORIGIN OF THE AMOUNT WAS CERTAIN R EMITTANCES MADE FROM THE VARIOUS DISTRICT BRANCH OFFICES WERE NOT R ECEIVED IN HEAD OFFICE AND MAY PERTAIN TO MANY MORE YEARS EARLIER WHICH, A SSESSEE COULD NOT RECONCILE. SINCE THE AMOUNTS ARE DUE FROM THE BANK S ON THE MONEYS REMITTED BY WAY OF DDS, ASSESSEE HAS WRITTEN-OFF TH E AMOUNT AND IS ALLOWABLE EITHER AS BUSINESS LOSS OR AS A BAD DEBT. 9. AFTER CONSIDERING THE RIVAL CONTENTIONS, WE ARE OF THE OPINION THAT THIS AMOUNT IS REQUIRED TO BE RE-EXAMINED BY THE AO , ON THE BASIS OF THE DOCUMENTS PRESENTLY FILED. AO IS DIRECTED TO EXAMI NE AND CONSIDER WHETHER THE AMOUNT CAN BE ALLOWED AS BAD DEBT IF IT IS ON REVENUE ACCOUNT OR AS A BUSINESS LOSS. SINCE CIT(A) ALSO FE LT THAT NO DETAILS WERE GIVEN AND THE PRESENT DETAILS FILED, EVEN THOUGH HA VE BEEN CERTIFIED THAT THEY HAVE BEEN FILED BEFORE INCOME TAX AUTHORITIES, DOES NOT SEEM TO HAVE BEEN EXAMINED BY THE AO. IN THE INTEREST OF J USTICE, WE REMIT THE ISSUE TO THE FILE OF AO FOR FRESH VERIFICATION AND ALLOWANCE OF THE AMOUNT. I.T.A. NO. 241/HYD/15 C.O. NO. 21/HYD/15 :- 6 -: ASSESSEE SHOULD BE GIVEN DUE OPPORTUNITY IN THE PRO CEEDINGS. IN THE RESULT, C.O. IS CONSIDERED ALLOWED FOR STATISTICAL PURPOSES. 10. TO SUMMARIZE, REVENUES APPEAL IS DISMISSED AND C.O. IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN OPEN COURT ON 11 TH SEPTEMBER, 2015 SD/- SD/- (P. MADHAVI DEVI) (B.RAMAKOTAIAH) JUDICIAL MEMBER ACCOUNTANT MEMBER HYDERABAD, DATED 11 TH SEPTEMBER, 2015 TNMM COPY TO : 1. DY.COMMISSIONER OF INCOME TAX, CIRCLE-1(1), 4 TH FLOOR, AAYAKAR BHAVAN, BASHEERBAGH, HYDERABAD. 2. M/S. A.P. STATE AGRO INDUSTRIES DEVELOPMENT CORP . LTD., 504, 5 TH FLOOR, HERMITAGE COMPLEX, HILL FORT ROAD, HYDERABA D. 3. CIT(APPEALS)-I, HYDERABAD. 4. CIT-I, HYDERABAD. 5. D.R. ITAT, HYDERABAD. 6. GUARD FILE.