Gujarat Co.Op.Milk Marketing Federation Ltd., Anand V. The Jt.CIT.,Anand Circle, Anand

ITA 3023/AHD/2014

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 5117 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 8 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-08-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2011-2012
• Appeal Filed On: 14-11-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: APARNA AGARWAL CIT D R
• Keywords: Revenue expenditure

Judgement Text

, C IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD BEFORE SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER & SHRI MAHAVIR PRASAD, JUDICIAL MEMBER ./ I.T.A. NO. 3023/AHD/2014 ( ASSESSMENT YEAR : 2011-12) GUJARAT CO-OP. MILK MARKETING FEDERATION LTD., AMUL DAIRY ROAD, ANAND - 388001 / VS. JOINT COMMISSIONER OF INCOME TAX, ANAND CIRCLE, ANAND ( APPELLANT ) .. ( / RESPONDENT ) ./ I.T.A. NOS. 3220/AHD/2014 & 2533/AHD/2016 ( ASSESSMENT YEARS : 2011-12 & 2012-13) DEPUTY COMMISSIONER OF INCOME TAX, ANAND CIRCLE, 3 RD FLOOR, S. P. COMPLEX, NEAR OLD C. K. HALL, MAYFAIR ROAD, ANAND - 388001 / VS. THE GUJARAT CO-OP. MILK MARKETING FEDERATION LTD., AMUL DAIRY ROAD, ANAND - 388001 ./!'./ PAN/GIR NO. : AAAAG5588Q ( APPELLANT ) .. ( / RESPONDENT ) ASSESSEE BY : SHRI SUNIL TALATI, A.R. REVENUE BY : SMT. APARNA AGARWAL, CIT. D.R. # $%&'( DATE OF HEARING 23/07/2018 )*+ '( / DATE OF PRONOUNCEMENT 02/08/2018 / O R D E R ITA NO. 3023/AHD/14 & 2 ORS. [GUJARAT CO-OP. MILK MARKETING FEDERATION LTD.] A.YS. 2011-12 & 2012-13 - 2 - PER PRADIP KUMAR KEDIA - AM: THE CAPTIONED APPEALS HAVE BEEN FILED BY THE ASSESS EE (ITA N0.3023/AHD/2014) AND REVENUE (ITA NOS. 3220/AHD/20 14 & 2533/AHD/2016) AGAINST THE RESPECTIVE ORDERS OF THE CIT(A) CONCERNING AYS. 2011-12 & 2012-13. ITA NO. 3023/AHD/2014 - AY 2011-12 2. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE REA DS AS UNDER: 1. THE LEARNED C.I.T. (APPEALS) ERRED BOTH IN LAW AND ON FACTS IN CONFIRMING THE DISALLOWANCE OF RS.6,84,95,000/- BEI NG AMOUNT TRANSFERRED TO RESERVE FUND U/S.67 OF GUJARAT CO. O P. SOCIETIES ACT. ON THE FACTS OF THE CASE AND IN LAW, THE DEDUCTION OF THE AFORESAID AMOUNT OUGHT TO HAVE BEEN GIVEN. IT BE SO HELD NOW AND THE SAID AMOUNT BE ALLOWED AS CLAIMED. 3. WHEN THE MATTER WAS CALLED FOR HEARING, LEARNED AR FOR THE ASSESSEE FAIRLY SUBMITTED THAT THE ISSUE RAISED BY THE ASSESSEE AGAINST THE ORDER OF THE CIT(A) HAS BEEN ADJUDICATED AGAINS T THE ASSESSEE BY THE CO-ORDINATE BENCH IN ITA NO.3037/AHD/2010 & ORS . READ WITH M.A. NO. 07/AHD/2017 IN ASSESSEES OWN CASE. 4. LEARNED DR RELIED UPON THE ORDER OF THE CIT(A). 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND THE ORDERS OF THE AUTHORITIES BELOW. THE ASSESSEE IS A CO-OPERATIVE SOCIETY REGISTERED UNDER THE GUJARAT CO-OPERATIVE SOCIETIES ACT, 1961. AS STATED, IT WAS FORMED AS A FOOD PRODUCT MARKETING ORGANIZATION WI TH 17 DISTRICT CO-OPERATIVE MILK PRODUCERS UNIONS AS ITS MEMBERS. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF MARKETING AND MANUFACTUR ING OF MILK AND MILK PRODUCTS. THE AO IN THE COURSE OF SCRUTINY AS SESSMENT INTER ALIA NOTICED THAT THE ASSESSEE HAS CLAIMED DEDUCTION OF RS.6,84,95,000/- TRANSFERRED TO RESERVE FUND AS A REVENUE EXPENDITUR E. IT WAS THE CASE ITA NO. 3023/AHD/14 & 2 ORS. [GUJARAT CO-OP. MILK MARKETING FEDERATION LTD.] A.YS. 2011-12 & 2012-13 - 3 - OF THE ASSESSEE BEFORE THE LOWER AUTHORITY THAT TRA NSFER TO SUCH FUND IS ALLOWABLE EXPENDITURE BEING STATUTORY OBLIGATION OF THE ASSESSEE AND SIMULTANEOUSLY ASSESSEE DOES NOT HAVE ANY RIGHT OVE R THE SAID FUNDS ONCE THE SAME IS TRANSFERRED. THE AO AS WELL AS TH E CIT(A) HELD THAT THE AFORESAID TRANSFER TO RESERVE FUND IS NOT IN TH E NATURE OF CHARGE TO PROFIT & LOSS ACCOUNT AND IS MERELY AN APPROPRIATIO N OF FUNDS. SIMILAR VIEW HAS BEEN TAKEN IN ASSESSEES OWN CASE BY THE CO-ORDINATE BENCH OF TRIBUNAL. THEREFORE, THE ISSUE IS NO LONG ER RES INTEGRA. IN PARITY WITH THE DECISION OF THE CO-ORDINATE BENCH I N EARLIER YEARS, THE APPEAL OF THE ASSESSEE ON THE AFORESAID SUBJECT MAT TER REQUIRES TO BE DISMISSED. 6. IN THE RESULT, APPEAL OF THE ASSESSEE IN ITA NO. 3023/AHD/2014 IS DISMISSED. 7. WE SHALL NOW TURN TO REVENUES APPEAL IN ITA NO.3220/AHD/2014. ITA NO.3220/AHD/2014 2011-12 8. THE SOLITARY GROUND OF APPEAL RAISED BY THE REVE NUE CONTESTING THE ORDER OF THE CIT(A) READS AS UNDER: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LEARNED CIT(A) ERRED IN DELETING THE ADDITION O F RS.8,24,94,000/- ON ACCOUNT OF CO-OP. DEVELOPMENT EXPENSES WHICH INC LUDES BREED IMPROVEMENT EXPENSES WITHOUT APPRECIATING THE FACT THAT SUCH EXPENDITURE IS NOT CONNECTED WITH THE ORDINARY COUR SE OF BUSINESS OF THE ASSESSEE AND THAT THE CO-OPERATIVE DEVELOPMENT EXPENSES ARE OF ENDURING NATURE AND THEREFORE THEY ARE CAPITAL IN N ATURE. 9. WHEN THE MATTER IS CALLED FOR HEARING, THE LEARN ED AR POINTED OUT THAT THE ISSUE AGITATED BY THE REVENUE IS ALSO NO LONGER RES INTEGRA AND HAS ALREADY BEEN ADJUDICATED IN FAVOUR OF THE A SSESSEE IN ITS OWN CASE IN EARLIER YEAR BY THE SAME ORDER OF THE ITAT. ITA NO. 3023/AHD/14 & 2 ORS. [GUJARAT CO-OP. MILK MARKETING FEDERATION LTD.] A.YS. 2011-12 & 2012-13 - 4 - 10. THE LEARNED DR RELIED UPON THE ORDER OF THE AO IN THIS REGARD. 11. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSI ONS. THE CONTROVERSY REVOLVES AROUND MAINTAINABILITY OF BREE D IMPROVEMENT EXPENSES AS REVENUE EXPENDITURE. IT IS BROADLY THE CASE OF THE ASSESSEE THAT IT IS AN INSTITUTION CREATED BY THE MILK PRODU CERS THEMSELVES TO SAFEGUARD THEIR INTEREST ECONOMICALLY, SOCIALLY AS WELL AS DEMOCRATICALLY. THE EXPENSES HAVE BEEN INCURRED TO OPTIMIZE THE PRODUCTIVITY AND QUALITY OF THE MILK AND MILK PRODU CTS. FOR THIS PURPOSE, THE ASSESSEE HAS INCURRED EXPENSES TOWARDS FERTILITY IMPROVEMENT PROGRAMME AND HAS INTER ALIA TAKEN EDUCATIONAL PROGRAMME WITH THE OBJECT OF IMPARTING EDUCATION, T RAINING AND INFORMATION FOR DEVELOPMENT AND STRENGTHENING THE C O-OPERATIVE STRUCTURE AND THEREBY IMPROVING MILK PRODUCTIVITY. IN THE PROCESS TO ACHIEVE SUCH OBJECTS, THE ASSESSEE HAS INCURRED EXP ENDITURE TO THE TUNE OF RS.824.94 LAKHS WHICH IS IN THE NATURE OF REVENU E EXPENDITURE TO IMPROVE THE QUALITY AND BRING EFFICIENCY IN PRODUCT ION AS WELL AS TO ACHIEVE UNFETTERED SUPPLY. IN THIS BACKGROUND, THE CIT(A) OBSERVED THAT IDENTICAL ISSUE INVOLVED IN PRECEDING ASSESSME NT YEARS HAVE BEEN DECIDED IN FAVOUR OF THE ASSESSEE BY THE PREDECESSO R CIT(A) AND THE CLAIM OF SUCH EXPENDITURE WAS ACCEPTED AS REVENUE E XPENDITURE. AS NOTICED, THE VIEW TAKEN BY THE CIT(A) HAS BEEN ENDO RSED BY THE CO- ORDINATE BENCH OF ITAT IN ITA NO.3037/AHD/2010 & OR S. READ WITH M.A. NO. 07/AHD/2017 & ORS. (SUPRA). IN CONSONANCE WITH THE ORDER OF THE CO-ORDINATE BENCH FOR EARLIER ASSESSMENT YEA RS IN OWN CASE OF ASSESSEE IN OWN CASE OF ASSESSEE, WE DO NOT SEE ANY WARRANT TO INTERFERE WITH THE ORDER OF THE CIT(A). 12. IN THE RESULT, APPEAL OF THE REVENUE IN ITA NO. 3220/AHD/2014 IS DISMISSED. ITA NO. 3023/AHD/14 & 2 ORS. [GUJARAT CO-OP. MILK MARKETING FEDERATION LTD.] A.YS. 2011-12 & 2012-13 - 5 - ITA NO. 2533/AHD/2016 - AY 2012-13 13. IN THE CAPTIONED REVENUES APPEAL, IDENTICAL IS SUE OF ALLOWABILITY OF BREED IMPROVEMENT EXPENSES AMOUNTIN G TO RS.863.40 LAKHS IS INVOLVED. IN PARITY WITH THE CONCLUSION I N ITA NO.3220/AHD/2014(SUPRA), WE DECLINE TO INTERFERE WI TH THE ORDER OF THE CIT(A) HOLDING SUCH EXPENDITURE IN A NATURE OF ALLOWABLE REVENUE EXPENDITURE. 14. IN THE RESULT, APPEAL OF THE REVENUE IN ITA NO. 2533/AHD/2016 IS ALSO DISMISSED. 15. IN THE COMBINED RESULT, APPEAL OF THE ASSESSEE IN ITA NO.3023/AHD/2014 AND BOTH APPEALS OF REVENUE IN ITA NOS. 3220/AHD/2014 & 2533/AHD/2016 ARE DISMISSED. SD/- SD/- (MAHAVIR PRASAD) (PRADIP KUMA R KEDIA) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD: DATED 02/08/2018 TRUE COPY S. K. SINHA / COPY OF ORDER FORWARDED TO:- -.!% / REVENUE 2.% / ASSESSEE /. ( # 0( / CONCERNED CIT 4. # 0(- / CIT (A) 3.4%567(7$ 8 8 / DR, ITAT, AHMEDABAD 9.6:;' / GUARD FILE. BY ORDER / 8 /! 8 THIS ORDER PRONOUNCED IN OPEN COURT ON 02/08/2 018