Dy.Commissioner of Income Tax-5, Kanpur V. M/s Araul Refrigeration Industries Private Lt., Kanpur Dehat

ITA 334/LKW/2014

• Counselvise Citation: 33423714 RSA 2014
• Duration Of Justice: 1 year(s) 4 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-09-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 20-08-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 02-05-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: Y P SRIVASTA VA
• Assessee Lawyers: P K KAPOOR
• Keywords: Principle of natural justice

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH A, LUCKNOW BEFORE SHRI A.K. GARODIA, ACCOUNTANT MEMBER AND SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER ITA NO. 334 /LKW/2014 ASSESSMENT YEAR:2008 - 09 DY.C.I.T. - 5, KANPUR. VS. M/S ARAUL REFRIGERATION INDUSTRIES PRIVATE LTD., VILLAGE POST ARAUL, TEHSIL - BILLAUR, KANPUR DEHAT. PAN:AABCA2226Q (APPELLANT) (RESPONDENT) C.O.NO. 17 /LKW/2014 (IN ITA NO. ITA NO.459/LKW/2014 ) ASSESSMENT YEAR:2008 - 09 DY.C.I.T. - 5, KANPUR. M/S ARAUL REFRIGERATION INDUSTRIES PRIVATE LTD., VILLAGE POST ARAUL, TEHSIL - BILLAUR, KANPUR DEHAT. PAN:AABCA2226Q (RESPONDENT) (OBJECTOR) REVENUE BY SHRI Y. P. SRIVASTAVA, D. R. ASSESSEE BY SHRI P. K. KAPOOR, C.A. DATE OF HEARING 20 /08/2015 DATE OF PRONOUNCEMENT 3 0 /09/2015 O R D E R PER A. K. GARODIA, A.M. THIS APPEAL IS FILED BY THE REVENUE AND THE C ROSS O BJECTION IS FILED BY THE ASSESSEE , WHICH ARE DIRECTED AGAINST THE ORDER OF LEARNED CIT(A) - II , KANPUR D ATED 31/01/2014 FOR ASSESSMENT YEAR 2008 - 09. 2. THE GROUNDS RAISED BY THE REVENUE ARE AS UNDER: 2 1. THE CTT(A) HAS ERRED IN LAW AND ON FACTS IN ALLOWING THE RELIEF OF RS.19,84,673/ - OUT OF TOTAL ADDITION OF RS.22,68,212/ - MADE BY THE AO WITHOUT APPRECIATING THE FACT AND CIRCUMSTANCES OF THE CASE AS WELL AS MATERIAL BROUGHT ON RECORDS BY THE AO. 2. THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN ALLOWING THE RELIEF OF RS.19,84,673/ - OUT OF TOTAL ADDITION OF RS.22,68,212/ - MADE BY THE AO WITHOUT APPRECIATING THE FACTS THAT THE 'PROPORTIONATE COMPLETION METHOD' I S APPLICABLE IN ASSESSEE'S CASE AND NOT THE 'COMPLETED SERVICE CONTRACT METHOD' AS PRESCRIBED IN AS - 9 AND THEREFORE, THE PROPORTIONATE RENT WERE RIGHTLY ADDED BY THE AO. 3. THE ORDER OF THE CIT (A), KANPUR BEING ERRONEOUS, UNJUST AND BAD IN LAW BE VACATED AND THE ORDER OF THE AO BE RESTORED. 3. LEARNED D.R. OF THE REVENUE SUPPORTED THE ASSESSMENT ORDER. HE ALSO SUBMITTED THAT THIS ISSUE IS COVERED AGAINST THE ASSESSEE BY THE TRIBUNAL ORDER RENDERED IN THE CASE OF M. B. COLD STORAGE PVT. LTD. VS. INCOME T AX OFFICER IN I.T.A. NO.680/LKW/09 DATED 19/05/2010. HE SUBMITTED COPY OF THIS TRIBUNAL DECISION AND DRAWN OUR ATTENTION TO PARA 8 OF THIS TRIBUNAL ORDER. 4. AS AGAINST THIS LEARNED A.R. OF THE ASSESSEE SUPPORTED THE ORDER OF CIT(A). 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FIND THAT THE ISSUE IN DISPUTE IN THE PRESENT CASE IS THIS THAT WHEN THE POTATOES ARE STORED IN THE COLD STORAGE IN ONE FINANCIAL YEAR AND THE SAME ARE DELIVERED BACK TO THE PARTY IN THE SECOND FINANCIAL YEAR THEN WHETHER THE RE NT OF POTATOES STORAGE IS TAXABLE IN THE FIRST YEAR OR IN THE NEXT YEAR WHEN THE SAME IS DELIVERED TO THE PARTY. AS PER THE ASSESSING OFFICER , PROPORTIONATE RENTAL INCOME FOR TWO MONTHS I.E. FEBRUARY TO MARCH 2008 FOR STORAGE OF 12,485 QUINTAL IN THIS YEAR IS LIABLE TO BE TAXED IN THE PRESENT YEAR WHEREAS THE 3 SAME WAS OFFERED TO TAX BY THE ASSESSEE IN NEXT YEAR AND CIT(A) HAS DECIDED THE ISSUE ON THE BASIS AS PER THE FINDING ON THE LAST PAGE OF HIS ORDER, WHICH IS REPRODUCED BELOW FOR THE SAKE OF READY REFERENCE: - FROM THE GROUNDS OF APPEAL, IT IS NOTICED THAT THE ASSESSEE, ALTHOUGH, HAS RAISED FIVE GROUNDS, HOWEVER, THE GRIEVANCE RELATES ONLY TO THE ADDITION OF RS.22,68,212.00 RELATING TO THE RENTAL INCOME. I HAVE (SUBMITTED FOR A.Y. 2006 - 07, AS BOTH ARE DECIDED TOGETHER) CONSIDERED THE WRITTEN / VERBAL SUBMISSIONS OF A.R. OF THE APPELLANT, THE REMAND REPORT DATED 07 - 01 - 2014, DECISION OF THE HON'BLE ITAT AND THE CASE RECORDS AND I FIND THAT THERE IS LOT OF FORCE IN THE CONTENTIONS / SUBMISSIONS OF THE APPELLANT BUT THE ORDER OF THE HON'BLE I.T.A.T. IS VERY CLEAR ON THE ISSUE INVOLVED AND IT HAS TO BE FOLLOWED. ACCORDING TO THE ORDER OF THE ITAT, THE INCOME OF THE APPELLANT HAS TO BE RECOMPUTED AND HENCE THE AO IS DIRECTED TO RECOMPUTE THE INCOME OF THE YEAR UNDER APPEAL OF THE APPELLANT AS UNDER: - ( A ) FIRSTLY EXCLUDE THE INCOME OF THE 1/6 CYCLE AT RS.1984673.00 RELATING TO THE PERIOD FEBRUARY 07 TO MARCH 07 INCLUDED IN THE INCOME OF THE YEAR UNDER APPEAL AS IT RELATES TO AY 2007 - 08. ( B ) SET OFF THE INCOME OF R S. 2268212.00 OF 1/6 CYCLE TAXED IN THE YEAR UNDER APPEAL FROM THE INCOME ASSESSED IN AY 2009 - 10 ON RECEIPT BASIS AS THE SAME INCOME CANNOT BE TAXED TWICE. IN THE RESULT APPEAL IS PARTLY ALLOWED AND THE ADDITION OF RS.22,68,212.00 IS SUSTAINED TO THE EXTE NT OF RS.2,83,539.00 (2268252 - 1984673). 5.1 FROM THE ABOVE FINDING OF CIT(A), WE FIND THAT HE HAS GIVEN HIS FINDING BY FOLLOWING THE TRIBUNAL ORDER RENDERED IN THE CASE OF M. B. COLD STORAGE PVT. LTD. (SUPRA). IN VIEW OF THIS FACT THAT THE DECISION OF CIT(A) IS IN LINE WITH THE TRIBUNAL ORDER AND NO DIFFERENCE IN FACTS COULD BE POINTED 4 OUT BY LEARNED D.R. OF THE REVENUE, WE FIND NO REASON TO INTERFERE IN THE ORDER OF CIT(A) . 6. IN THE RESULT, THE APPEAL OF THE REVENUE STANDS DISMISSED. 7. NOW WE TAKE UP THE CROSS OBJECTION FILED BY THE ASSESSEE. IN THIS CROSS OBJECTION, THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS: 1. BECAUSE THE COMMISSIONER OF INCOME - TAX(APPEALS) HA S ERRED IN LAW AND ON FACTS IN SUSTAINING ADDITION TO THE EXTENT OF RS.2,83,539/ - BY DIRECTING THE ASSESSING OFFICER TO RE - COMPUTE THE INCOME OF THE APPELLANT IN THE FOLLOWING MANNER: - ( A ) FIRSTLY EXCLUDE THE INCOME OF THE 1/6 CYCLE AT RS.1984673.00 RELATING TO THE PERIOD FEBRUARY 07 TO MARCH 07 INCLUDED IN THE INCOME OF THE YEAR UNDER APPEAL AS IT RELATES TO A.Y. 2007 - 08. ( B ) SET OFF THE INCOME OF RS. 2268212.00 OF 1/6 CYCLE TAXED IN THE YEAR UNDER APPEAL FROM THE INCOME ASSESSED IN A.Y. 2009 - 10 ON RECEIPT BASIS AS THE SAME INCOME CANNOT BE TAXED TWICE. IN THE RESULT APPEAL IS PARTLY ALLOWED AND THE ADDITION OF RS. 22,68,212.00 IS SUSTAINED TO THE EXTENT OF RS. 2,83,539.00 (2268252 - 1984673). 2. BECAUSE HAVING ACCEPTED THAT THE APPELLANT HAD BEEN CONSISTENTLY AND CORRECTLY FOLLOWING THE METHOD OF ACCOUNTING ON THE BASIS OF COMPLETED SERVICE CONTRACT METHOD WHICH IS IN CONSONANCE WITH THE ACCOUNTING STANDARD NO - AS - 9, THE ID. CIT(A) SHOULD HAVE UPHELD THE COMPUTATION OF INCOME MADE BY THE APPELLANT AND CONSEQUENTLY THE DIRECTION GIVEN TO THE A.O. TO RE - COMPUTE THE INCOME IS LIABLE TO BE SET ASIDE. 3. BECAUSE THE ORDER APPEALED AGAINST IS CONTRARY TO THE FACTS, LAW AND PRINCIPLES OF NATURAL JUSTICE TO THE EXTENT MENTIONED IN THE FOREGOING GROUNDS. 8. LEARNED A.R. OF THE ASSESSEE REITERATED THE SAME CONTENTIONS WHICH WERE RAISED BY THE ASSESSEE BEFORE THE CIT(A) WHEREAS LEARNED D.R. OF THE REVENUE SUBMITTED THAT SINCE THE ORDER OF CIT(A) IS IN LINE WITH THE 5 TRIBUNAL DECISION IN THE CASE OF M. B. COLD ST ORAGE PVT. LTD. (SUPRA), T HERE IS NO MERIT IN THE CROSS OBJECTION OF THE ASSESSEE. 9. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND SINCE THE ORDER OF CIT(A) IS IN LINE WITH THE TRIBUNAL DECISION RENDERED IN THE CASE OF M. B. COLD STORAGE PVT. LTD. (SUPRA) , WE FIND NO REASON TO INTERFERE WITH THE ORDER OF LEARNED CIT(A) AS PER WHICH HE HAS SUSTAINED ADDITION OF RS.2,83,539/ - BY DIRECTING THE ASSESSING OFFICER TO EXCLUDE THE INCOME OF FEBRUARY 07 TO MARCH 07 BEING 1/6 TH INCOME OF THAT YEAR AMOUNTING TO RS.19 ,84,673/ - AGAINST THE ADDITION OF RS.22,68,212/ - MADE BY THE ASSESSING OFFICER IN THE PRESENT YEAR IN RESPECT OF INCOME FOR TWO MONTHS BEING FEBRUARY 2008 AND MARCH 2008 AND HAS GIVEN A DIRECTION TO THE ASSESSING OFFICER TO EXCLUDE THIS INCOME OF RS.22,68, 212/ - OF FEBRUARY AND MARCH 2008 IN THE NEXT ASSESSMENT YEAR I.E. 2009 - 10. CONSIDERING THE FACTS OF THE PRESENT CASE AND THIS POSITION THAT THE DECISION OF CIT(A) IS IN LINE WITH THE TRIBUNAL DECISION IN M. B. COLD STORAGE PVT. LTD. (SUPRA), WE HOLD THAT THERE IS NO INFIRMITY IN THE ORDER OF CIT(A). 10. IN THE RESULT, THE C.O. OF THE ASSESSEE STANDS DISMISSED. 11. IN THE COMBINED RESULT, THE APPEAL OF THE REVENUE AND C.O. OF THE ASSESSEE ARE DISMISSED. (ORDER WAS PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTION PAGE) SD/. SD/. ( SUDHANSHU SRIVASTAVA ) ( A. K. GARODIA ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 3 0 /09/2015 *SINGH COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. CONCERNED CIT 4. THE CIT(A) 5. D.R., I.T.A.T., LUCKNOW ASSTT. REGISTRAR