Assistant Commissioner of Income tax, V. Kolhapur Zilla Sahakari Dudh Utpadak Sangh Ltd, Kolhapur

ITA 2726/PUN/2016

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 1635 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 8 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-08-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2012-2013
• Appeal Filed On: 02-12-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: O A MAO
• Assessee Lawyers: SUS HANT PHADNIS
• Keywords: Depreciation; Question of law; Commercial expediency
• Section: 143(3); 10

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE , ! ' , $ % BEFORE MS. SUSHMA CHOWLA, JM AND SHRI ANIL CHATURV EDI, AM . / ITA NOS.2726 & 2727/PUN/2016 ' ' / ASSESSMENT YEARS : 2012-13 & 2013-14 THE ASST. COMMISSIONER OF INCOME TAX, CIRCLE 1, KOLHAPUR . / APPELLANT VS. KOLHAPUR ZILLA SAHAKARI DUDH UTPADAK SANGH LTD., B-1, MIDC, GOKUL SHIRGAON, KOLHAPUR-416 234 PAN: AAAAK0230D . / RESPONDENT / APPELLANT BY : SHRI O.A. MAO / RESPONDENT BY : SHRI SUSHANT PHADNIS / DATE OF HEARING : 30.08.2018 / DATE OF PRONOUNCEMENT: 30.08.2018 ( / ORDER PER SUSHMA CHOWLA, JM: BOTH THE APPEALS FILED BY THE REVENUE ARE AGAINST CONSOLIDATED ORDER OF CIT(A)- 1, KOLHAPUR, DATED 27.09.2016 RELATING TO ASSESSMEN T YEARS 2012-13 & 2013-14 AGAINST RESPECTIVE ORDERS PASSED UNDER SECTION 143(3) OF TH E INCOME TAX ACT 1961 (IN SHORT THE ACT). 2 ITA NOS.2726 & 2727/PUN/2016 A.YS.2012-13 & 2013-14 2. BOTH THE APPEALS FILED BY THE REVENUE RELATING T O THE SAME ASSESSEE ON SIMILAR ISSUES WERE HEARD TOGETHER AND ARE BEING DISPOSED O F BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. IN ORDER TO ADJUDICATE THE IS SUES, REFERENCE IS BEING MADE TO THE FACTS IN ITA NO.2726/PUN/2016, RELATING TO ASSESSME NT YEAR 2012-13. 3. THE REVENUE IN ITA NO.2726/PUN/2016, RELATING TO ASSESSMENT YEAR 2012-13 HAS RAISED THE FOLLOWING GROUNDS OF APPEAL:- 1) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE AND IN LAW, THE LEARNED CIT (APPEALS) WAS JUSTIFIED IN HOLDING THAT THE PAYMENT OF RATE DIFFERENCE OF RS.41,73,35,710/- AFTER THE CLOSURE OF THE ACCOU NTING YEAR DO NOT AMOUNT TO DISTRIBUTION OF PROFITS, AS THE AMOUNT TO BE PAID W AS NOT OUT OF THE PROFITS ASCERTAINED AT THE ANNUAL GENERAL MEETING? 2) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT (A) WAS JUSTIFIED IN HOLDING THAT THE PAYMENT OF RS .41,73,35,710/- ON ACCOUNT OF RATE DIFFERENCE IS OUT OF COMMERCIAL EXPEDIENCY, WH EN THERE IS NO DEMAND FROM MILK SUPPLIERS? 3) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT (A) WAS JUSTIFIED IN DELETING THE ADDITION OF RS.9, 46,087/- MADE BY THE AO TOWARDS DEPRECIATION ON FIXED ASSETS ON PROJECT WIT HOUT DEDUCTING SUBSIDY RECEIVED FROM THE NATIONAL DAIRY DEVELOPMENT BOARD, IGNORING THE PROVISIONS OF SECTION 43(1) AND EXPLANATION 10 TO SECTION 43(1) O F THE ACT? 4) THE APPELLANT PRAYS THAT THE ORDER OF THE CIT(A) BE VACATED AND THAT OF THE ASSESSING OFFICER BE RESTORED. 5) THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND OR MODIFY ANY OTHER GROUNDS OF APPEAL AT THE TIME OF PROCEEDINGS BEFORE THE HON 'BLE TRIBUNAL WHICH MAY PLEASE BE GRANTED. 4. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE AS SESSEE AT THE OUTSET POINTED OUT THAT THE ISSUE RAISED IN THE PRESENT APPEAL IS SQUARELY COVERED BY THE ORDERS OF TRIBUNAL IN ASSESSEES OWN CASE AND ALSO BY THE ORD ERS OF HONBLE BOMBAY HIGH COURT IN ASSESSEES OWN CASE. OUR ATTENTION WAS DRAWN TO THE ORDERS OF TRIBUNAL AND THE HONBLE BOMBAY HIGH COURT AS UNDER:- I) ITA NOS.401/PN/2005 TO 405/PN/2005, RELATING TO ASSESSMENT YEARS 1996-97 TO 2001-02, ORDER DATED 26.09.2005 II) CIT VS. (1) SOLAPUR DIST. CO-OP. MILK PRODUCERS AND PROCESS UNION LTD. (2) KOLHAPUR ZILLA SAHAKARI DUDH UTPADAK SANGH LTD. (2009) 315 ITR 304 (BOM) 3 ITA NOS.2726 & 2727/PUN/2016 A.YS.2012-13 & 2013-14 III) CIT VS. KOLHAPUR ZILLA SAHAKARI DUDH UTPADAK S ANGH LTD. IN INCOME TAX APPEAL NO.1156 OF 2014 WITH INCOME TAX APPEAL NO.11 57 OF 2014, JUDGMENT DATED 27.10.2016 IV) ACIT VS. KOLHAPUR ZILLA SAH. DUDH UTPADAK S ANGH LTD. IN ITA NO.578 TO 580/PUN/2016, A.YS. 2009-10 TO 2011-12, DECIDED ON 27.02.2018 5. THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE ON THE OTHER HAND, PLACED RELIANCE ON THE ORDER OF ASSESSING OFFICER. 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. BRIEFLY, IN THE FACTS OF THE CASE, THE ASSESSEE WAS CO-OPERATIVE SOCIETY ENGAGED IN THE BUSINESS OF PROCESSING OF MILK AND MILK PRODUCTS. THE ASSESSEE WAS COLLECTING MILK FROM PRIMARY MILK SOCIETIES SPREAD OVER KOLHAPUR AND ADJOINING D ISTRICTS. THE ASSESSEE CLAIMED DEDUCTION UNDER SECTION 80P OF THE ACT. THE ISSUE WHICH IS RAISED BY THE REVENUE VIDE GROUND OF APPEAL NO.1 IS ON ACCOUNT OF DISTRIBUTION OF PROFIT AFTER THE CLOSURE OF ACCOUNTING YEAR IN THE GARB OF PAYMENT OF ADDITIONA L PRICE FOR PURCHASE OF MILK. THE REVENUE IS AGGRIEVED BY DELETION OF ADDITION OF RS. 41,73,35,710/- IN ASSESSMENT YEAR 2012-13. THE SAID ISSUE HAS BEEN RAISED VIDE GROUN DS OF APPEAL NO.1 AND 2. THE NEXT ISSUE WHICH HAS BEEN RAISED IS AGAINST THE ORDER OF CIT(A) IN IGNORING THE PROVISIONS OF SECTION 43(1) OF THE ACT. 7. WE FIND THAT THE HONBLE BOMBAY HIGH COURT IN CI T VS. KOLHAPUR ZILLA SAHAKARI DUDH UTPADAK SANGH LTD. (SUPRA) HAD DECIDED SIMILAR ISSUE RAISED BY THE REVENUE. THE ISSUES WHICH WERE RAISED BEFORE THE HONBLE HIG H COURT READ AS UNDER:- (A) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE TRIBUNAL WAS JUSTIFIED IN LAW IN HOLDING THAT THE P AYMENT OF RATE DIFFERENCE AFTER THE CLOSURE OF THE ACCOUNTING YEAR DO NOT AMOUNT TO DIS TRIBUTION OF PROFIT, AS THE AMOUNT TO BE PAID WAS NOT OUT OF THE PROFIT ASCERTAINED AT THE A NNUAL GENERAL MEETING? (B) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE AND IN LAW, THE TRIBUNAL WAS JUSTIFIED IN LAW IN HOLDING THAT THE E XPLANATION 10 TO SECTION 43(1) WAS PROSPECTIVE BEING SUBSTANTIVE LAW IN NATURE AND CON TENT DE HORS THE DECISION OF HON'BLE SUPREME COURT REPORTED IN 224 ITR 557? 4 ITA NOS.2726 & 2727/PUN/2016 A.YS.2012-13 & 2013-14 8. THE DECISION ON QUESTION NO.(A) WAS AS UNDER:- 3. REG. QUESTION (A):- (A) THE IMPUGNED ORDER OF THE TRIBUNAL DISMISSED TH E REVENUES APPEAL BEFORE IT ON THE ISSUE RAISED HEREIN BY FOLLOWING THE DECISION O F THIS COURT IN CIT V/S. KOLAHPUR ZILLA SAHAKARI DUDH UTPADAK SANGH LTD. 315 ITR 304. (B) IT IS AN AGREED POSITION BETWEEN THE PARTIES TH AT THE ISSUE RAISED HEREIN STANDS CONCLUDED BY THE DECISION OF THIS COURT IN KOLHAPUR ZILLA SAHAKARI DUDH UTPADAK SANGH LTD. (SUPRA) IN FAVOUR OF THE RESPONDENT-ASSE SSEE. (C) IN THE ABOVE VIEW, THE QUESTION AS FRAMED DOES NOT GIVE RISE TO ANY SUBSTANTIAL QUESTION OF LAW AS THE IMPUGNED ORDER HAS MERELY FO LLOWED THE BINDING DECISION OF THIS COURT. THUS, NOT ENTERTAINED. 9. REGARDING QUESTION (B), THE HONBLE HIGH COURT H ELD AS UNDER:- 4. REG. QUESTION (B):- (A) THE IMPUGNED ORDER OF THE TRIBUNAL DISMISSED TH E REVENUES APPEAL ON THE ISSUE RAISED HEREIN BY FOLLOWING ITS OWN ORDER IN T HE RESPONDENT-ASSESSEES OWN CASE IN RESPECT OF THE ASSESSMENT YEARS 1999-2000, 2001-02, 2005-06 AND 2006-07. (B) MR. SINGH, LEARNED COUNSEL APPEARING FOR THE RE VENUE IS UNABLE TO POINTS OUT WHETHER OR NOT ANY APPEAL ON THE ISSUE RAISED HEREI N, HAS BEEN FILED BY THE REVENUE. IN FACT, THE ORDER OF THIS COURT IN KOLHA PUR ZILLA SAHAKARI DUDH UTPADAK SANGH LTD. (SUPRA), APPEARS TO BE AN APPEAL BY THE REVENUE IN RESPECT OF THE VERY ORDERS WHICH ARE BEING RELIED UPON BY T HE IMPUGNED ORDER (AS EVIDENT FROM PARAGRAPH 14 OF THE ORDER OF THE CIT(A)). HOW EVER, THE ISSUE RAISED HEREIN WAS NOT EVEN AN ISSUE RAISED THEREIN. (C) IN THE ABOVE VIEW, THE QUESTION AS FRAMED DOES NOT GIVE RISE TO ANY SUBSTANTIAL QUESTION OF LAW AS THE IMPUGNED ORDER OF THE TRIBUN AL HAS MERELY FOLLOWED ITS OWN ORDERS FOR THE EARLIER ASSESSMENT YEARS, WHICH HAVE BEEN ACCEPTED BY THE REVENUE. THUS, NOT ENTERTAINED. 10. THE FIRST ISSUE WHICH ARISES IN THE PRESENT APP EAL IS SQUARELY COVERED BY THE ORDER OF HONBLE BOMBAY HIGH COURT IN CIT VS. (1) S OLAPUR DIST. CO-OP. MILK PRODUCERS AND PROCESS UNION LTD. (2) KOLHAPUR ZILLA SAHAKARI DUDH UTPADAK SANGH LTD. (SUPRA), WHICH HAS BEEN APPLIED IN ASSESSMENT YEARS 2007-08 AND 2008-09. THE YEAR UNDER APPEAL BEFORE US IS ASSESSMENT YEAR 2012-13 AND FOL LOWING THE SAME PARITY OF REASONING, WE UPHOLD THE ORDER OF CIT(A) IN THIS RE GARD AND DISMISS THE GROUNDS OF APPEAL NO.1 AND 2 RAISED BY THE REVENUE. 11. SIMILARLY, THE ISSUE RAISED VIDE GROUND OF APPE AL NO.3 IS SQUARELY COVERED BY THE ORDER OF HONBLE HIGH COURT IN ASSESSEES OWN CASE RELATING TO ASSESSMENT YEARS 2007- 5 ITA NOS.2726 & 2727/PUN/2016 A.YS.2012-13 & 2013-14 08 AND 2008-09, WHEREIN THE HONBLE HIGH COURT HAS OBSERVED THAT THE RELIEF WAS GIVEN TO ASSESSEE IN EARLIER YEARS, AGAINST WHICH THE REV ENUE HAD NOT FILED ANY GROUND, THOUGH IT HAD FILED THE APPEAL IN RESPECT OF SAID O RDERS OF TRIBUNAL. THE HONBLE HIGH COURT THUS, DISMISSED THE GROUNDS OF APPEAL RAISED BY THE REVENUE IN THIS REGARD. APPLYING THE SAID RATIO, WE DISMISS THE GROUND OF A PPEAL NO.3 RAISED BY THE REVENUE. 12. THE FACTS AND ISSUES IN ITA NO.2727/PUN/2016 AR E IDENTICAL TO THE FACTS AND ISSUES IN ITA NO.2726/PUN/2016 AND OUR DECISION IN ITA NO.2726/PUN/2016 SHALL APPLY MUTATIS MUTANDIS TO ITA NO.2727/PUN/2016. 13. IN THE RESULT, BOTH THE APPEALS OF REVENUE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 30 TH DAY OF AUGUST, 2018. SD/- SD/- (ANIL CHATURVEDI) (SUSHMA CHOWLA) $ / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE ; DATED : 30 TH AUGUST , 2018 . S S B B ( ) *!+, -,! / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT; 2. / THE RESPONDENT; 3. ! ! ' () / THE CIT(A)-1, KOLHAPUR; 4. THE PR. C IT - 1 , KOLHAPUR ; 5. %&' (()*, ! )* , / DR B, ITAT, PUNE; 6. ',- . / GUARD FILE. // TRUE COPY // ( / BY ORDER , (/ )0 / PRIVATE SECRETARY ! )* , / ITAT, PUNE.