ACIT, New Delhi V. National Cooperative Conumer Federation of India, New Delhi

ITA 2564/DEL/2010

• Counselvise Citation: 256420114 RSA 2010
• Duration Of Justice: 1 year(s) 4 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-10-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 13-10-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 28-05-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R S NEGI

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH E DELHI BEFORE SHRI RAJPAL YADAV AND SHRI K.G. BANSAL ITA NOS. 2563 & 2564(DEL)/2010 ASSESSMENT YEARS: 19996-97 & 2005-06 ASSTT. COMMISSIONER OF INCOME NATIO NAL COOPERATIVE CONSUMER TAX, CIRCLE 23(1), NEW DELHI. VS. FEDER ATION OF INDIA, DEEPALI, 5 TH FLOOR, NEHRU PLACE, NEW DELHI. PAN: AAAAN0109N (APPELLANT) (RESPON DENT) APPELLANT BY : SHRI R.S. NEGI, SR. DR RESPONDENT BY: SH RI SANJAY AGARWAL, C.A. DATE OF HEARING : 13.10.2011 DATE OF PRONOUNCEMENT: 14.10.2011. ORDER PER K.G. BANSAL : AM THESE TWO APPEALS WERE ARGUED IN A CONSOLIDATE D MANNER BY THE LD. SR. DR AND THE LD. COUNSEL FOR THE ASSESSEE. THER EFORE, A CONSOLIDATED ORDER IS PASSED. ASSESSMENT YEAR 1996-97 2. THE ONLY GROUND TAKEN IN THE APPEAL IS THAT THE LD. CIT(APPEALS) ERRED IN DELETING THE ADDITION OF RS. 13,91,081/ - IN RESPECT OF PRIOR PERIOD EXPENSES. ITA NOS. 2563&2564(DEL)/2010 2 2.1 THE LD. DR EXPLAINED THAT THE MATTER HAS TRA VELED TO THE TRIBUNAL FOR THE SECOND TIME. THE FIRST ORDER WAS PASSED ON 30.11.2005 IN WHICH THE AFORESAID MATTER WAS RESTORED TO THE FILE OF THE AO FOR EXAMINING WHETHER THE LIABILITY IN RESPECT OF PRIOR PERIOD CRYSTALLIZED IN THIS YEAR. IN PURSUANCE OF THIS DIRECTION, THE ASSESSING OFFICE R ISSUED STATUTORY NOTICE TO THE ASSESSEE FOR PRODUCING REQUISITE EVIDENCE. H OWEVER, IT WAS INFORMED THAT THE GODOWN OF THE ASSESSEE WAS FLOODED AND THE RECORDS WERE DESTROYED. CONSEQUENTLY, THE RECORDS WERE NOT PROD UCED. THUS, THE ASSESSEE HAS NOT BEEN ABLE TO ESTABLISH THAT THE CL AIM IN RESPECT OF EXPENDITURE OF PRIOR PERIOD CRYSTALLIZED IN THIS Y EAR. ACCORDINGLY, HE DID NOT GRANT THE DEDUCTION. HOWEVER, THE LD. CIT(A) ALLOWED THE RELIEF ON SATISFACTION THAT THE RECORDS OF THE ASSESSEE WE RE DESTROYED IN FLOODING OF THE GODOWN. FURTHER, IT HAS BEEN MENTIONED BY H IM THAT THE FEDERATION IS WORKING UNDER GOVERNMENT OF INDIA AND THERE WOULD BE NO GAIN TO ANY INDIVIDUAL BY MAKING UNACCOUNTED PROFIT BY BOOKI NG INFLATED EXPENDITURE. THIS FINDING IS AGAINST THE DIRECTION OF THE TRIBUNAL AS IT HAD TO BE ASCERTAINED WHETHER THE EXPENSES CRYSTALLIZ ED IN THIS YEAR. IN VIEW OF THE DIRECTIONS OF THE TRIBUNAL, THE LD. CIT(A) CO ULD NOT HAVE TAKEN RECOURSE TO THE DECISION OF THE JURISDICTIONAL HI GH COURT IN THE CASE OF CIT VS. VISHNU INDUSTRIAL GASES (P) LTD. IN ITR NO. 22 9 OF 1988, DECIDED ON ITA NOS. 2563&2564(DEL)/2010 3 06.05.2008. IN REPLY, THE LD. COUNSEL EXPRESSE D INABILITY TO PRODUCE EVIDENCE REGARDING THE DATES OF CRYSTALLIZATION OF THE LIABILITY AND MERELY REFERRED TO THE DETAILS OF THE EXPENDITURE, PLACE D ON PAGE NO. 25 OF THE PAPER BOOK, WHICH ARE IN THE NATURE OF REVENUE EXP ENSES. 2.2 WE HAVE CONSIDERED THE FACTS OF THE CASE AND SUBMISSIONS MADE BEFORE US. IT IS NOT IN DISPUTE THAT THE EXPENSES ARE REVENUE IN NATURE. THE DISPUTE IS-WHETHER, THE LIABILITY CRYSTALLIZED IN THIS YEAR. IN THE FIRST ORDER, THE TRIBUNAL HAD DIRECTED THE AO TO FIND OUT W HETHER ANY LIABILITY OF EARLIER YEAR HAS CRYSTALLIZED IN THIS YEAR AND TH E MATTER WAS REMANDED TO AO FOR VERIFICATION. THE ASSESSEE HAS NOT BEEN ABLE TO PRODUCE EVIDENCE IN THIS REGARD. THEREFORE, WE ARE OF THE VIEW TH AT THE LD. CIT(APPEALS) COULD NOT HAVE ALLOWED RELIEF BY MAKING ONLY GE NERAL OBSERVATION. ACCORDINGLY, HIS ORDER IS SET ASIDE AND THAT OF T HE AO IS RESTORED. ASSESSMENT YEAR : 2005-06 3. GROUND NO. 1 IS SIMILAR TO THE GROUND IN THE A PPEAL FOR ASSESSMENT YEAR 1996-97. THE AMOUNT INVOLVED IS RS. 12,61,448 /-. THE AO HAD ADDED THIS AMOUNT TO THE TOTAL INCOME BY MENTIONING THAT THE EXPENDITURE PERTAINS TO THE EARLIER YEAR. HOWEVER, THE LD. C IT(A) ALLOWED THE APPEAL OF ITA NOS. 2563&2564(DEL)/2010 4 THE ASSESSEE ON THIS GROUND BY HOLDING THAT THE LIABILITY CRYSTALLIZED IN THIS YEAR. 3.1 BEFORE US, THE LD. DR RELIED ON THE ORDER OF T HE AO. ON THE OTHER HAND, THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE AMOUNT REPRESENTS RECOVERY MADE FROM FOOD CORPORATION OF INDIA (FCI FOR SHORT) ON ACCOUNT OF FAILURE ON THE PART OF M/S CITY SH OES TO EXPORT RICE AS PER TERMS OF AGREEMENT MADE DURING FINANCIAL YEAR 200 2-03. THE DETAILS OF THIS CLAIM WERE FORWARDED BY THE FCI ALONG WITH I TS LETTER DATED 14.10.2004. THE AMOUNT WAS ALSO ADJUSTED BY IT FR OM THE ACCOUNT OF THE ASSESSEE IN THIS YEAR. THE LETTER OF THE FCI D ATED 14.10.2004 HAS BEEN PLACED IN THE PAPER BOOK ON PAGE NO. 17 AND THE ACC OUNT HAS BEEN PLACED ON PAGE NO. 16. 3.2 WE HAVE CONSIDERED THE FACTS OF THE CASE AND SUBMISSIONS MADE BEFORE US. FROM THE FACTS NARRATED ABOVE, IT IS CL EAR THAT ALTHOUGH THE TRANSACTION PERTAINS TO FINANCIAL YEAR 2002-03, T HE CLAIM WAS RAISED BY THE FCI ON 14.10.2004. THE CLAIM WAS MADE ON ACCOU NT OF FAILURE OF THE ASSESSEES ASSOCIATE CONCERN TO MEET THE TERMS OF AGREEMENT FOR EXPORT OF RICE BECAUSE OF WHICH THE LIABILITY FOR DAMAGES D EVOLVED UPON THE ITA NOS. 2563&2564(DEL)/2010 5 ASSESSEE. THE EXPENDITURE IS REVENUE IN NATURE AN D IT HAS CRYSTALLIZED IN THIS YEAR. THEREFORE, IT IS HELD THAT THE ASSESS EE IS ENTITLED TO DEDUCT THIS AMOUNT WHILE COMPUTING THE TOTAL INCOME OF THIS Y EAR. ACCORDINGLY, GROUND NO. 1 IS ALLOWED. 4. GROUND NO. 2 IS ALSO IN RESPECT OF PRIOR PERIOD LIABILITY OF RS. 11,06,893/-. THE LD. COUNSEL REFERRED TO PAGE NO . 20, WHICH FURNISHES THE DETAIL OF THE LIABILITY. PAGE NOS. 21 TO 25 CONT AIN THE DETAILS WHICH SHOW THAT THE LIABILITIES WERE ASCERTAINED ON 28.09. 2004 AND 31.03.2005. THE LIABILITIES ARE IN RESPECT OF FAILURE TO EXPORT ONION, SALES RETURN AND ADJUSTMENT OF TDS. SINCE THE LIABILITY AROSE I N THIS YEAR, IT IS HELD THAT THE ASSESSEE IS ENTITLED TO DEDUCT THESE AMOUNTS IN CO MPUTING THE TOTAL INCOME OF THIS YEAR. 5. IN THE RESULT, THE APPEAL FOR ASSESSMENT YEAR 1996-97 IS ALLOWED, AND THE APPEAL FOR ASSESSMENT YEAR 2005-06 IS DISMISS ED. SD/- SD/- (RAJPAL YADAV) (K.G.BANSAL) JUDICIAL MEMBER ACCOUNTANT MEMBER SP SATIA ITA NOS. 2563&2564(DEL)/2010 6 COPY OF THE ORDER FORWARDED TO:- NATIONAL, COOPERATIVE CONSUMER FEDERATION OF INDIA, NEW DELHI. ACIT, CIRCLE 23(1), NEW DELHI. CIT(A) CIT THE DR, ITAT, NEW DELHI. ASSISTANT REGISTRAR.