The ACIT, 1 (2), V. M/s Krshi Upaj Mandi Samiti, Itarsi

ITA 249/IND/2008

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 8041 (ITAT-INDORE)
• Duration Of Justice: 1 year(s) 8 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-02-2010
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 26-02-2010
• Assessment Year: misc
• Appeal Filed On: 02-06-2008
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: V K KARAN
• Keywords: Depreciation; Principle of natural justice
• Section: 32

Judgement Text

PAGE 1 OF 7 - I.T.A.NOS. 249 & 250/IND/2008 KUMS, ITARSI IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH : INDORE BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER AND SHRI V.K. GUPTA, ACCOUNTANT MEMBER PAN NO. : AAALK0572B I.T.A.NO.249 & 250/IND/2008 A.Y. : 2003-04 & 2004-05 ACIT M/S. KRISHI UPAJ MANDI SAMITI, 1(2), VS ITARSI BHOPAL APPELLANT RESPONDENT APPELLANT BY : SHRI V.K.KARAN, SR. DR RESPONDENT BY : NONE DATE OF HEARING : 26.02.2010 O R D E R PER V.K. GUPTA, A.M. BOTH THESE APPEALS OF THE REVENUE BELONG TO THE SAM E ASSESSEE, HENCE, THESE WERE HEARD TOGETHER AND THESE ARE BEIN G DISPOSED OF THROUGH THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE . 2. NONE APPEARED ON BEHALF OF THE ASSESSEE. HENCE, WE PROCEEDED TO DECIDE THESE APPEALS ON MERITS AFTER HEARING THE LD. DEPARTMENTAL REPRESENTATIVE. 3. FIRST, WE SHALL TAKE UP THE REVENUES APPEAL IN I.T .A.NO. 249/IND/2008. PAGE 2 OF 7 - I.T.A.NOS. 249 & 250/IND/2008 KUMS, ITARSI 4. GROUND NO.1 READS AS UNDER :- IN THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITIONS ON ACCOU NT OF PENSION FUND AMOUNTING TO RS. 1204587/- BY HOLDING THAT THE SAME ARE DEDUCTION IN VIEW OF SECTION 36(1)(XII) OF INCOME- TAX ACT, 1961, EVEN WHEN THE SAME CANNOT BE ALLOWED TO ASSESS AS IT HAS NOT UTILIZED THE SAME FOR PURPOSE MEANT FOR AND THE INTEREST ACCRUED ON SUCH AMOUNT IS ALSO TAX ABLE. 5. THE LD. DEPARTMENTAL REPRESENTATIVE FAIRLY CONTENDE D THAT THIS ISSUE WAS COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE TRIBUNAL IN THE CASE OF KUMS, BURHANPUR, AS REPORTE D IN 12 ITJ 12, RELEVANT PAGES 21, 23 & 24. HE FURTHER CONTENDED TH AT THIS ISSUE HAD NOT RESTORED TO THE FILE OF A.O. FOR THE REASON THAT IF THE ASSESSEE HAD CLAIMED EXPENDITURE ON PROVISION BASIS, HENCE, IN THE YEAR OF ACTUAL EXPENDITURE, NO FURTHER DEDUCTION SHOULD HAVE BEEN CLAIMED. ACCO RDINGLY, WE ALSO RESTORE THE ISSUE TO THE FILE OF A.O. FOR RE-ADJUDI CATION OF THIS ISSUE IN ACCORDANCE WITH THE RATIO OF THE DECISION OF THE TR IBUNAL IN THE CASE OF KUMS (SUPRA). 6. GROUND NOS. 2 & 3 READ AS UNDER :- 2. IN THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) ERRED IN DELETING THE ADDITIONS ON ACCOU NT PAGE 3 OF 7 - I.T.A.NOS. 249 & 250/IND/2008 KUMS, ITARSI OF DISALLOWANCE OF DEPRECIATION CLAIM AMOUNTING TO RS. 14,16,576/- BY HOLDING THAT IT IS CLAIMED AS PE R LAW AS CONTAINED IN SECTION 32 OF INCOME-TAX ACT, 1961, EVEN WHEN THE ASSESSEE FAILED TO SUBMIT THE SPECIFI C DOCUMENTS REQUIRED UNDER THE ACT FOR ALLOWANCE OF CLAIM OF DEPRECIATION U/S 32. 3. IN THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) ERRED IN DELETING THE ADDITION ON ACCOUN T OF DISALLOWANCE OF DEPRECIATION CLAIM AMOUNTING TO RS. 14,16,576/-WITHOUT APPRECIATING THE REASONS GIV EN BY THE ASSESSING OFFICER FOR MAKING SUCH DISALLOWANCES AND FINDING OF CIT(A) ARE CONTRARY TO THE MATERIAL PLACED ON RECORD. 7. THE LD. DEPARTMENTAL REPRESENTATIVE SUBMITTED THA T THE DISPUTE INVOLVED IN THESE GROUNDS WAS REGARDING THE ALLOWAB ILITY OF DEPRECIATION ON THE W.D.V. AS ON 1.4.2002 BY COMPUTING THE SAME ON THE BASIS OF DEEMED DEPRECIATION OUT OF ACTUAL COST OF SUCH FIXE D ASSETS. HE REFERRED TO PARA 76 AT PAGE 16 OF THE ASSESSMENT ORDER, WHEREIN THE A.O. HAD POINTED OUT THAT THE VALUE OF FIXED ASSETS HAD BEEN SHOWN O N 1.4.2002 WAS NOT W.D.V. , BUT THE HISTORICAL COST. AT THIS STAGE, TH E ATTENTION OF THE LD. DEPARTMENTAL REPRESENTATIVE WAS DRAWN TO THE FINDIN GS OF THE LD. CIT(A) PAGE 4 OF 7 - I.T.A.NOS. 249 & 250/IND/2008 KUMS, ITARSI AT PAGE 3 OF THE APPELLATE ORDER, WHEREIN THE LD. C IT(A) HAD STATED THAT THE VALUE AS ON 1.4.2002 WAS W.D.V. WORKED OUT BY T HE ASSESSEE BY DEDUCTING NOTIONAL DEPRECIATION. 8. THE LD. DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THIS WAS A DISPUTE IN NUMBER OF CASES OF KUMS AND THE MATTER H AD BEEN RESTORED TO VERIFY THESE FACTS. SINCE WE ARE PARTY TO SUCH DECI SIONS, HENCE, WE RESTORE THIS ISSUE TO THE FILE OF A.O. TO VERIFY THESE FACT S AND IF THE CLAIMS OF THE ASSESSEE ARE FOUND TO BE CORRECT, THEN THERE WOULD NOT BE ANY REQUIREMENT FOR MAKING ADJUSTMENT FOR REDUCING THE QUANTUM OF D EPRECIATION AS CLAIMED BY THE ASSESSEE. IF THE FACTS EMERGE OTHERW ISE, THEN THE A.O. WILL COMPUTE THE QUANTUM OF DEPRECIATION AS PER LAW. IT IS NEEDLESS TO MENTION THAT AN ADEQUATE OPPORTUNITY OF HEARING SHALL BE PR OVIDED TO THE ASSESSEE IN DOING SO. 9. GROUND NO. 4 READS AS UNDER :- IN THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION ON ACCOUN T OF EXPENSES OF CAPITAL NATURE OF RS. 2,21,714/- HOLDIN G THAT THE A.O. HAD DISALLOWED THE CLAIM AGAINST THE PRINCIPLE S OF NATURAL JUSTICE WITHOUT REBUTTING TO ASSESSEE EVEN WHEN THE SAME WERE DISALLOWED BEING OF CAPITAL NATURE. PAGE 5 OF 7 - I.T.A.NOS. 249 & 250/IND/2008 KUMS, ITARSI 10. THE FACTS, IN BRIEF, ARE THAT THE IMPUGNED EXPEND ITURE WAS DISALLOWED BY THE ASSESSING OFFICER TREATING THE SA ME AS CAPITAL NATURE. HOWEVER, ON APPEAL, THE LD. CIT(A) DELETED SUCH DIS ALLOWANCE FOR THE REASON THAT THE IMPUGNED EXPENDITURE HAD BEEN INCUR RED ON REPAIRS AND MAINTENANCE OF THE ROADS INSPITE OF THE MANDI YARDS , HENCE, WAS OF REVENUE. AGGRIEVED BY THIS, THE REVENUE IS IN APPEA L BEFORE US. 11. THE LD. DEPARTMENTAL REPRESENTATIVE PLACED STRONG R ELIANCE ON THE ORDER OF A.O. 12. ON DUE CONSIDERATION OF FACTS AND CIRCUMSTANCES, WE ARE OF THE VIEW THAT THE REVENUE NATURE OF EXPENDITURE CANNOT BE DISPUTED. HENCE, WE CONFIRM THE FINDINGS OF THE LD. CIT(A). THUS, TH IS GROUND OF THE REVENUE IS DISMISSED. 13. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS P ARTLY ALLOWED FOR STATISTICAL PURPOSES. 14. NOW, WE SHALL TAKE UP REVENUES APPEAL IN I.T.A.NO. 250/IND/2008, WHEREIN THE REVENUE HAS RAISED FOLLOW ING GROUNDS :- 1. IN THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITIONS ON ACCOU NT OF FIXED FUND AND RESERVE FUND AMOUNTING TO RS. 23,34, 451/- AND RS. 58,36,127/- RESPECTIVELY BY HOLDING THAT TH E SAME ARE DEDUCTIBLE IN VIEW OF SECTION 36(1)(XII) OF INCOME- TAX ACT, PAGE 6 OF 7 - I.T.A.NOS. 249 & 250/IND/2008 KUMS, ITARSI 1961, EVEN WHEN THE SAME CANNOT BE ALLOWED TO ASSES SEE AS IT HAS NOT UTILIZED THE SAME FOR PURPOSE MEANT FOR AND THE INTEREST ACCRUED ON SUCH AMOUNT IS ALSO TAXABLE. 2. IN THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION ON ACCOUN T OF FIXED FUND AND RESERVE FUND AMOUNTING TO RS. 23,34, 451/- AND RS. 58,36,127/- RESPECTIVELY WITHOUT APPRECIATI NG THE REASONS GIVEN BY THE ASSESSING OFFICER FOR MAKING S UCH DISALLOWANCES AND FINDINGS OF CIT(A) ARE CONTRARY T O THE MATERIAL PLACED ON RECORD. 15. THE LEARNED COUNSEL SUBMITTED THAT THIS ISSUE WAS ALSO COVERED BY THE DECISION OF THE TRIBUNAL IN THE CAS E OF KUMS, BURHANPUR (SUPRA), WHEREIN THESE EXPENSES WERE ALLOWABLE AND REFERRED TO THE RELEVANT OBSERVATIONS AT PAGES 14 & 15 OF THE REPOR T. 16. ON DUE CONSIDERATION OF FACTS AND MATERIAL ON RECOR D, WE FIND THAT THE IMPUGNED PAYMENTS HAVE BEEN MADE AS PER TH E PROVISIONS OF MANDI SAMITI ACT, HENCE, ARE DEDUCTIBLE IN VIEW OF THE SECTION 36(1)(XII) OF THE INCOME-TAX ACT, 1961. RELEVANT FINDINGS OF T HE LD. CIT(A) HAVE ALSO REMAINED UNCONTROVERTED BEFORE US. ACCORDINGLY , BOTH THE GROUNDS OF THE REVENUE ARE DISMISSED. PAGE 7 OF 7 - I.T.A.NOS. 249 & 250/IND/2008 KUMS, ITARSI 17. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED 18. TO SUM UP REVENUES APPEAL IN I.T.A.NO. 249/IND/200 8 IS PARTLY ALLOWED FOR STATISTICAL PURPOSES AND I.T.A.N O. 250/IND/2008 STANDS DISMISSED. THIS ORDER HAS BEEN PRONOUNCED IN THE OPEN COURT ON 26 TH FEBRUARY,2010. SD/- SD/- (JOGINDER SINGH) (V. K. GUPTA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 26 TH FEBRUARY, 2010. CPU* 262