Gaekwad Plantations Ltd., Baroda V. The Income tax Officer, Ward-1(2), Baroda

ITA 2717/AHD/2006

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 6646 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 3 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-04-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 06-04-2010
• Assessment Year: 2002-2003
• Appeal Filed On: 08-12-2006
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: C K MISHRA
• Assessee Lawyers: M J SHAH
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD AHMEDABAD D BENCH (BEFORE S/SHRI G.D. AGARWAL, VICE-PRESIDENT AND BHAVESH SAINI, JUDICIAL MEMBER) ITA.NO.2717/AHD/2006 ASSTT.YEAR : 2002-2003 GAEKWAD PLANTATIONS LTD. 404, PARADISE COMPLEX SAYAJIGUNJ, VADODARA 390 005. VS. ITO, WARD-1(2) VADODARA. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI M.J.SHAH REVENUE BY : SHRI C.K. MISHRA O R D E R PER G.D. AGARWAL, VICE-PRESIDENT: THIS IS ASSESSEEES APPEAL AGAINST THE ORDER OF THE CIT(A) DATED 11-09-2006 AR ISING OUT OF ORDER OF THE ASSESSING OFFICER UNDER SECTION 143(3) OF THE INCO ME TAX ACT, 1961. THE ASSESSEE IN THE APPEAL RAISED THE FOLLOWING GROUNDS : 1. THE LD.CIT HAS ERRED BOTH ON LAW AND ON FACTS W HILE PASSING THE ORDER DTD. 11.09.2006 UNDER SECTION 143(3) OF THE I T ACT. THE ORDER IS BAD IN LAW AND DESERVES TO BE CANCELLED NOW. 2. RESP. CIT HAS ERRED IN COMPUTING THE INCOME OF P LANTATION DIVISION ON THE BASIS OF GUIDELINES ISSUED BY SEBI IN CASE OF PLANTATION SCHEME. AS PER GUIDELINES OF SEBI THE INCOME OF TH E PLANTATION DIVISION WILL BE MUCH DIFFERENT. IT MAY BE BROUGHT TO KIND ATTENTION OF TRIBUNAL TH AT THE APPELLANT IS ALREADY PREFERRED AN APPEAL BEFORE THE TRIBUNAL AGAINST THE ORDERS DTD.09.02.2001 AND DTD.21.01.2003 FOR AY 1996-97 OF RESP.CIT(A), VADODARA IN CASE OF APPELLANT COMPANY TO COMPUTE TH E INCOME OF THE PLANTATION DIVISION ON THE BASIS OF GUIDELINES PRES CRIBED BY SEBI FOR PREPARING ACCOUNTS OF THE PLANTATION COMPANIES. TH E SAID APPEAL IS PENDING. IT IS SUBMITTED THAT THE PROVISIONS OF TH E SAID GUIDELINES CANNOT BE APPLIED TO THE APPELLANT AS ACTIVITIES OF THE AP PELLANT IS DIFFERENT FROM THE ACTIVITIES OF THE COMPANY FOR WHOM THE GUIDELIN ES IS PREPARED. 2. AT THE TIME OF HEARING BEFORE US, IT WAS POINTED BY THE LEARNED COUNSEL THAT THE ISSUE IS SQUARELY COVERED BY THE DECISION OF THE ITAT IN ASSESSEES OWN ITA.NO.2717/AHD/2006 -2- CASE FOR A.Y.1996-97 IN ITA NO.916/AHD/2001 AND 179 1/AHD/2003 DATED 8-8- 2008. THE LEARNED DR ON THE OTHER HAND RELIED UPON THE ORDERS OF THE LOWER AUTHORITIES: 3. WE FIND THAT THE ITAT, AHMEDABAD BENCHES HAS CON SIDERED THE IDENTICAL ISSUE IN ASSESSEES OWN CASE FOR A.Y.1996 -97 WHEREIN THE ITAT HELD AS UNDER: 7. WE HAVE HEARD RIVAL SUBMISSIONS, PERUSED RECORD AND CASE LAWS CITED BY BOTH PARTIES. IN SO FAR AS ACCOUNTING O F INCOME FOLLOWED BY THE ASSESSEE IN PLANTATION ACTIVITY, AS PER THE ASS ESSEE, IT HAS SOLD TEAK TREES FOR RS.1000/- PER UNIT AND AS PER THE AGREEME NT IT IS SUPPOSED TO MAINTAIN TREE FOR 17 YEARS. THE INCOME, THEREFORE, IS BIFURCATED AND SPREAD OVER BY THE ASSESSEE THROUGH 17 YEARS BY DIV IDING TOTAL RECEIPTS BY 17 YEARS. SIMILARLY, EXPENDITURE INCURRED BY TH E ASSESSEE IS CLAMED, ACCORDINGLY, ON YEAR TO YEAR BASIS. THERE IS NOTHI NG WRONG IN THE SAID METHOD, AND IN OUR OPINION, THE DIRECTION OF THE CI T(A) THAT THE GUIDELINES OF SEBI SHOULD BE FOLLOWED IN ACCOUNTING SUCH INCOME IS NOT TENABLE IN THE CASE UNDER CONSIDERATION, AS THE SAI D SEBI GUIDELINES ARE NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE. U NDER THE OLD SCHEME, THE ASSESSEE HAD OPTION TO FOLLOW SEBI GUIDELINES, IF MORE THAN 50% OF SHARE HOLDERS AGREED TO THAT. THERE IS NO SUCH AGR EEMENT IN THIS CASE. MONEY RECEIVED BY THE ASSESSEE IS FOR SELLING AND T HEREAFTER FOSTERING AND NURTURING OF THE TEAK TREES ON BEHALF OF THE TE AK-HOLDERS FOR THE PERIOD SPREAD OVER 17 YEARS. THE COMPANY HAS NOT M ADE APPLICATION FOR GRANT OF CERTIFICATE AND HAVE NOT OBTAINED CERT IFICATE OF REGISTRATION AS REQUIRED BY PROVISIONS OF SEBI (COLLECTIVE INVES TMENT SCHEMES) REGULATIONS, 1999, THEREFORE, SEBI REGULATIONS IN T HIS BEHALF IS NOT APPLICABLE. 8. ASSESSEE HAS BEEN FOLLOWING THIS SYSTEM CONTINUO USLY EXCEPT FOR 1996-97 AND 2002-2003 AND IN ALL OTHER CASES RIGHT FROM ASSTT.YEAR 1993-94, WHICH HAS BEEN ACCEPTED BY THE REVENUE. I N THESE CIRCUMSTANCES, THE CIT(A) WAS NOT JUSTIFIED IN REJE CTING THE SYSTEM FOLLOWED BY THE ASSESSSEE, WHICH IN OUR OPINION IS JUST AND PROPER METHOD. ACCORDINGLY, WE REVERSE THE ORDER OF THE C IT(A), AND DIRECT THE AO TO COMPUTE THE INCOME ON THE BASIS OF ACCOUNTING FOLLOWED BY THE ASSESSEE. SINCE THE FACTS OF THE CASE FOR THE YEAR UNDER CONS IDERATION ARE IDENTICAL, WE RESPECTFULLY FOLLOWING THE ABOVE DECISION OF THE TR IBUNAL IN ASSESSEES OWN ITA.NO.2717/AHD/2006 -3- CASE, DIRECT THE AO TO COMPUTE THE INCOME OF THE AS SESSEE ON THE BASIS OF ACCOUNTING SYSTEM FOLLOWED BY THE ASSESSEE. 4. IN THE RESULT, THE ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 6 TH APRIL, 2010. SD/- SD/- (BHAVESH SAINI) JUDICIAL MEMBER (G.D. AGARWAL) VICE-PRESIDENT PLACE : AHMEDABAD DATE : 06-04-2010 VK* COPY OF THE ORDER FORWARDED TO: 1) : APPELLANT 2) : RESPONDENT 3) : CIT(A) 4) : CIT CONCERNED 5) : DR, ITAT. BY ORDER AR, ITAT, AHMEDABAD