Dy.Commissioner of Income-tax Circle-4, Nagpur V. M/s Ankur Seeds Pvt Ltd, Nagpur

ITA 30/NAG/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 93392 (ITAT-NAGPUR)
• Duration Of Justice: 2 year(s) 3 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-05-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2009-2010
• Appeal Filed On: 30-01-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL, NAGPUR BENCH, NAGPUR. BEFORE SHRI MUKUL K. SHRAWAT, JUDICIAL MEMBER AND SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER. I.T.A. NO . 30/NAG/2013 ASSESSMENT YE AR : 2009-10. DY. COMMISSIONER OF INCOME-TAX, M/S ANKUR SEEDS PVT. LTD., CIRCLE-4, NAGPUR. V/S. 27, NEW COTTON MAQRKET LAYOUT, NAGPUR. PAN AABCA 0981C APPELLANT RESPONDENT. APPELLANT BY : S HRI P.R. MANE. RESPONDENT BY : SH RI K.P. DEWANI. DATE OF HEARING - 30-04-2015 DATE OF ORDER - 20 TH MAY, 2015 O R D E R PER SHRI SHAMIM YAHYA, A.M. THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST TH E ORDER OF CIT(APPEALS)- 19, MUMBAI (CAMP :NAGPUR) DATED 09-11-2012 AND PERT AINS TO ASSESSMENT YEAR 2009-10. THE GROUND OF APPEAL READS AS UNDER : IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE CIT(A) HAS ERRED IN TREATING THE INTEREST INCOME TITLED AS INCOME FROM BOOKING SCHEMES AS AGRICULTURAL INCOME. 2 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS ENGAGED IN BUSINESS OF PRODUCTION AND SALE OF SEEDS OF DIFFERENT CROPS FOR SOWING PURPOSES. THE ASSESSEE HAS LAUNCHED ADVANCE BOOKING SCHEME AND COLLECTED A DVANCE PAYMENT FROM DEALERS AND DISTRIBUTORS. OUT OF THESE ADVANCE REC EIPTS, COMPANY HAS GIVEN SPECIAL INCENTIVE TO THE DEALERS AND DISTRIBUTORS W HICH WAS DEDUCTED FROM SALE VALUE. THE AMOUNT SO COLLECTED IS USED FOR BUSINESS PURPOSES AND MAJOR FUNDS ARE INVESTED IN FIXED DEPOSIT WITH BANK. THE INTEREST G ENERATED FROM THE BANK DEPOSITS IS USED TO PAY INCENTIVE ON ADVANCES RECEI VED. ASSESSEES CLAIM WAS THAT THERE IS A DIRECT NEXUS BETWEEN AMOUNTS RECEIVED FR OM BOOKING SCHEME, INVESTMENT IN FDRS, INTEREST EARNED AND INCENTIVE ALLOWED. HENCE INCENTIVE ALLOWED AGAINST BOOKING SCHEME MAY PLEASE BE NETTED OFF AGAINST INTEREST EARNED ON FDR MADE OUT OF BOOKING SCHEME. THE ASSESSEE FOLLOWS THE SYSTEM OF CALCULATION OF AGRICULTURAL INCOME ON THE BASIS OF INCREMENTAL GP METHOD OF FARMING ACTIV ITY OVER NON-FARMING ACTIVITY CONSISTENTLY SINCE LAST SO MANY YEARS AND WAS APPRO VED BY THE VARIOUS AUTHORITIES. THERE IS NO CHANGE IN THE METHOD OF CALCULATION OF AGRICULTURAL INCOME. THE ITAT, NAGPUR BENCH IN ASSESSEES OWN CASE HAD DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE VIDE ORDER NO. ITA NO. 329/N AG/2007, AND ITA NO. 336/NAG/2007, A.Y. 2004-05, HAS HELD AS FOLLOWS: AFTER CONSIDERING THE ARGUMENTS OF BOTH THE SIDE D AND THE FACTS OF THE CASE, WE ENTIRELY AGREE WITH THE FINDING OF THE LD . CIT(A). IN OUR OPINION, THE LD. CIT(A) WAS RIGHT IN HOLDING THAT THERE IS A DI RECT NEXUS BETWEEN THE INTEREST INCOME WHICH IS EARNED BY THE ASSESSEE FR OM DEPOSITS RECEIVED FROM ADVANCE BOOKING SCHEME AND THE INCENTIVE GIV EN BY THE ASSESSEE TO 3 THE PERSONS WHO OPTED FOR ADVANCE BOOKING SCHEME. IN VIEW OF THE ABOVE, WE HOLD THAT THE LD. CIT(A) HAS RIGHTLY DIR ECTED FOR SETTING OFF OF EXPENDITURE ON INCENTIVE AGAINST THE INTEREST INCO ME. HOWEVER, THE ASSESSING OFFICER DID NOT ACCEPT THE A BOVE PROPOSITION. HE HELD THAT THE DECISION OF ITAT HAS BEEN APPEALED BEFORE THE H ONBLE BOMBAY HIGH COURT. THE ASSESSING OFFICER CONCLUDED AS UNDER : THE DECISION OF THE HONBLE ITAT HAS NOT BEEN ACC EPTED BY THE REVENUE AND AN APPEAL HAS BEEN FILEDM BEFORE HONBLE BOMBA Y HIGH COURT U/S 260(A) FOR THE A.Y. 2004-05 IN CASE OF THE ASSESSE E. CONSIDERING THE ABOVE FACTS AND FOR THE DETAILED REASONS INDICATED IN TH E ASSESSMENT ORDERS FOR A.Y. 2004-05 INCOME FROM BOOKING SCHEME CANNOT BE CONSIDERED FOR CALCULATION OF AGRICULTURAL INCOME. 3. UPON ASSESSEES APPEAL, LEARNED CIT(APPEALS) FOL LOWED ITATS ORDER AND HELD AS UNDER : RESPECTFULLY FOLLOWING THE ORDERS OF THE ITAT, I DIRECT THE AO TO DELETE THE ADDITION OF ` .75,37,619/- AS INCOME FROM BOOKING SCHEME FOR COMP UTATION OF AGRICULTURAL INCOME, IN ACCORDANCE WITH THE DIR ECTION OF THE ITAT FOR THE YEARS 2002-03, 2007-08 AND 2008-09. 4. NOW REVENUE IS IN APPEAL BEFORE US AGAINST THE A BOVE ORDER. THE GROUND RAISED BY THE REVENUE IS THAT THE CIT(APPEALS) HAS ERRED IN TREATING THE INTEREST INCOME TITLED AS INCOME FROM BOOKING SCHEME AS AGRI CULTURAL INCOME. 4 5. WE HAVE HEARD BOTH THE PARTIES. WE FIND THAT THE ASSESSING OFFICER IN ASSESSMENT ORDER HAS HELD THAT INCOME FROM BOOKING SCHEME CANNOT BE CLAIMED TO HAVE DIRECT NEXUS WITH THE SEED PROCESSING ACTIV ITY OF THE ASSESSEE. HE HELD THAT INCOME FROM BOOKING SCHEME IS NOT INCOME DERIV ED FROM INDUSTRIAL UNDERTAKING AND, THEREFORE, SHOULD NOT BE CONSIDERE D FOR COMPUTATION OF DEDUCTION UNDER SECTION 80IB. IN THIS REGARD, LD.CI T(A) HAS REFERRED TO TRIBUNALS DECISION IN ASSESSEES OWN CASE. IN THIS DECISION IT WAS HELD THAT CIT(APPEALS) WAS CORRECT IN DIRECTING FOR SETTING OF EXPENDITUR E ON INCENTIVE AGAINST INTEREST INCOME. NOW QUOTING THE ABOVE ITAT ORDER, LEARNED C IT(APPEALS) HAS HELD THAT HE WAS DIRECTING THE ASSESSING OFFICER TO DELETE THE A DDITION OF ` .75,37, 619/- AS INCOME FROM BOOKING SCHEME FOR COMPUTATION OF AGRIC ULTURAL INCOME IN ACCORDANCE WITH THE DIRECTION OF THE ITAT. 6. WE FIND THAT THE ITAT IN ITS ORDER FOR ASSESSMEN T YEAR 2004-05 HAD HELD THAT LEARNED CIT(APPEALS) WAS JUSTIFIED IN DIRECTING FOR SETTING OFF OF EXPENDITURE ON INCENTIVE AGAINST INTEREST EARNED ON DEPOSITS RE CEIVED FROM ADVANCE BOOKING SCHEME. FROM THE ORDER OF THE LEARNED CIT(APPEALS) IT IS NOT CLEAR AS TO WHAT IS THE EFFECT OF THE LEARNED CIT(APPEALS) DIRECTION I N THE PRESENT CASE. IF THE DIRECTION IS TO SET OFF OF THE EXPENDITURE ON INCEN TIVE FROM INTEREST INCOME THEN IT WILL BE AS PER ITATS ORDER IN ASSESSEES OWN CASE. IT IS ALSO THE CASE OF LEARNED CIT(APPEALS) THAT HE IS FOLLOWING ITATS ORDER. IN THIS VIEW OF THE MATTER, WE ARE OF THE OPINION THAT THE ASSESSEE IS ENTITLED TO SETTIN G OFF OF EXPENDITURE ON INCENTIVE AGAINST INTEREST EARNED FROM DEPOSITS RECEIVED FROM ADVANCE BOOKING SCHEME IN ACCORDANCE WITH THE EARLIER ITATS ORDER. 5 7. THIS APPEAL OF THE REVENUE IS DISPOSED OF IN ACC ORDANCE WITH THE ABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON 20 TH MAY, 2015. SD/- S D/- (MUKUL K. SHRAWAT) (SHAMIM YAHYA) JUDICIAL MEMBER. ACCOUNTANT MEMBER NAGPUR, DATED: 20 TH MAY, 2015. COPY OF ORDER FORWARDED TO : 1. THE ASSESSEE. 2. REVENUE. 3. THE CIT(A) 4. THE CIT, NAGPUR. 5. THE D.R., ITAT, NAGPUR. 6. GUARD FILE. T RUE COPY. BY ORDER ASSISTANT REGISTRAR, I TAT, NAGPUR WAKODE