The Jt.CIT.,Navsari Range, Navsari V. Valsad Dist. Co.Op.Milk Producers Union Ltd,

ITA 3356/AHD/2008

• Counselvise Citation: [2011] 135 COUNSELVISE.COM (IT) 2389 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 2 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-01-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 06-01-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 08-10-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R K DANISTA
• Section: 43B; 37(1); 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH AHMEDABAD (BEFORE S/SHRI G. D. AGARWAL, VP AND BHAVNESH SAINI , JM) ITA NO.3356/AHD/2008 A. Y.: 2005-06 THE D. C. I. T., NAVSARI RANGE, NAVSARI VS VALSAD DISTRICT CO-OP. MILK PRODUCERS UNION LTD., ALIPORE, TAL. CHIKHLI, DIS. NAVSARI PA NO. AAAAV 0542 R (APPELLANT) (RESPONDENT) APPELLANT BY SHRI R. K. DANISTA, DR RESPONDENT BY SHRI MEHUL SHAH, AR O R D E R PER BHAVNESH SAINI: THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE LEARNED CIT(A), V ALSAD DATED 19 TH JUNE, 2008 FOR ASSESSMENT YEAR 2005-06. 2. WE HAVE HEARD THE LEARNED REPRESENTATIVES OF BOT H THE PARTIES AND PERUSED THE FINDINGS OF THE AUTHORITIES BELOW. 3. ON GROUND NO.1 OF THE APPEAL, THE REVENUE HAS CH ALLENGED THE DELETION OF ADDITION OF RS.33,88,893/- MADE ON ACCO UNT OF CO- OPERATIVE DEVELOPMENT EXPENSES. THE ASSESSEE IS A C O-OPERATIVE SOCIETY FORMED IN THE YEAR 1973 WITH OBJECTIVES TO PURCHASE MILK FROM FARMERS AND SELL MILK PRODUCTS MAINLY PASTEURIZED M ILK, BUTTER MILK AND ICE-CREAM ETC. THE ASSESSEE IS RUNNING UNDER TH E GUIDANCE OF FEDERATION AND IS WITH NO PROFIT MOTIVE WITH OBJECT IVE OF UPLIFTMENT OF ITA NO.3356/AHD/2008 JCIT, NAVSARI CIRCLE VS VALSAD DISTRICT CO-OP. MILK PRODUCERS UNION LTD. 2 SMALL FARMERS OF RURAL AREAS. THE CLAIM WAS DISALLO WED BY THE AO BY MAKING OBSERVATIONS TO THE FACT THAT THE ASSESSEE C OULD NOT LINK UP THE BUSINESS CONNECTION IN RESPECT OF THE ABOVE EXP ENSES REIMBURSED TO VASUDHARA TRUST AND OTHER TWO MEMBERS OF THE TRUST HAVE NOT BORNE SUCH EXPENDITURE. THE ASSESSEE FURNI SHED DETAILS OF THE EXPENSES WHICH ARE MAINLY PERTAINING TO ANIMAL HUSBANDRY & VETERINARY AND ADMINISTRATIVE EXPENSES PERTAINING T O THESE ACTIVITIES. IT WAS SUBMITTED THAT THESE EXPENSES WERE COMPLETEL Y VOUCHED AND SUBJECT TO AUDIT AND WERE INCURRED FOR BUSINESS ACT IVITIES OF THE ASSESSEE BECAUSE THE SAME WERE ADVANTAGEOUS TO THE ASSESSEE. IT WAS ALSO SUBMITTED THAT SIMILAR DISALLOWANCE OF CO- OPERATIVE DEVELOPMENT EXPENSES BEING IN THE NATURE OF RESEARC H & DEVELOPMENT EXPENSES, WERE DISALLOWED WHICH HAVE BE EN DELETED BY THE LEARNED CIT(A) IN THE ASSESSMENT YEAR 2003-04. IN THE ASSESSMENT YEAR 2004-05, THE AO HIMSELF ALLOWED SUC H CLAIM OF CO- OPERATIVE DEVELOPMENT EXPENSES. IN ASSESSMENT YEAR 2002-03, THE AO DISALLOWED SIMILAR EXPENSES WHICH HAVE BEEN ALLO WED BY THE LEARNED CIT(A). BESIDES THIS YEAR ITSELF OFFERED TH E GRANT OF RS.20,40,000/- RECEIVED FROM NDDBDSP MATCHING GRANT IN THIS BEHALF. THE LEARNED CIT(A) ON PERUSAL OF THE FACTS NOTED THAT DR. MANIBHAI DESAI TECHNOLOGY TRANSFER CENTRE AND VASUD HARA RESEARCH & DEVELOPMENT MANDAL SUPPORT THE MILK BEA RING ANIMALS IMPROVEMENT PROGRAMME. THE ASSESSEE FILED THE DETAI LS TO SHOW THAT THE ABOVE TRUST HAVE HELPED THE ASSESSEE IN THE ARE AS OF SEMINARS, CONCEPTION OF CROSS-BREEDING COWS AND BUFFALOS, COM MUNITY BENEFITS FOR BETTER QUALITY OF LIFE IN RURAL AREAS, UPLIFTME NT OF MILK BEARING ANIMALS AND PROVIDING INPUTS ETC. HAVE BEEN PROVIDE D. THE AO DID ITA NO.3356/AHD/2008 JCIT, NAVSARI CIRCLE VS VALSAD DISTRICT CO-OP. MILK PRODUCERS UNION LTD. 3 NOT BRING ANY MATERIAL TO DISALLOW SUCH EXPENSES. M ORE SO, THE AO ALLOWED SIMILAR CLAIM IN THE PRECEDING ASSESSMENT Y EAR 2004-05. THE LEARNED CIT(A) ALSO ALLOWED SIMILAR CLAIM IN ASSESS MENT YEARS 2002- 03 AND 2003-04. ADDITION WAS ACCORDINGLY DELETED BY THE LEARNED CIT(A). 3. ON CONSIDERATION OF THE ABOVE FACTS, WE DO NOT F IND ANY MERIT IN THE DEPARTMENTAL APPEAL. THE LEARNED COUNSEL FOR TH E ASSESSEE AT THE OUTSET SUBMITTED THAT DEPARTMENTAL APPEAL ON SI MILAR GROUND HAS BEEN DISMISSED BY ITAT AHMEDABAD BENCH IN THE CASE OF THE SAME ASSESSEE FOR ASSESSMENT YEAR 2002-03 IN ITA NO.1349 /AHD/2006 DATED 11-09-2009 IN WHICH IN PARA 26 IT WAS HELD AS UNDER: 26. AFTER HEARING BOTH THE PARTIES AND ON PERUSAL OF THE RECORD, WE FIND THAT CLAUSE 18 OF SECTION 3 OF THE BYE-LAWS OF THE ASSESSEE SOCIETY DOES EMPOWER THE ASSESSEE SOCIETY TO CARRY OUT ITS OBJECTIVE IN COLLABORATION WITH ANY OTHER ENTITY, INSTITUTION OR PERSONS. THE ASSESSEE HAS PLACED ON RECORD A COPY OF THE RELEVANT RESOLUTIONS PASSED AT THE MEETINGS OF THE MANAGING COMMITTEE OF THE ASSESSEE SOCIETY RESOLVING COLLABORATION WITH VASUD HARA RESEARCH AND DEVELOPMENT MANDAL AND DR. MANIBHAI DESAI TECHNOLOGY TRANSFER CENTRE. FROM THE ABOVE SA ID RESOLUTION AND COPIES OF MEMORANDUM IT CAN BE SEEN THAT THESE ARE MERELY EXTENSION OF THE ACTIVITY OF THE A SSESSEE SOCIETY AND THE COLLABORATION MADE BY THE ASSESSEE IS NOT ULTRA VIRES , CAN CO-ORDINATE AND UNDERTAKE ANY OF THE ACTIVITIES WHICH ARE CONNECTED WITHY CARRYING OUT T HE OBJECTS OF THE ASSESSEE SOCIETY. THE ASSESSEE HAS SUPPLIED A COPY OF RESOLUTION PASSED IN THE MEETING OF MANAGING COMMITTEE OF THE SOCIETY. THEREFORE, THE CIT(A) HAS ALLOWED THE CLAIM OF THE ASSESSEE. SINCE THE CIT(A) HAS PASSED DETAILED AND ELABORATE ORDER, THEREFORE, WE ARE NOT INCLINED TO INTERFERE WITH TH E SAME. ITA NO.3356/AHD/2008 JCIT, NAVSARI CIRCLE VS VALSAD DISTRICT CO-OP. MILK PRODUCERS UNION LTD. 4 ACCORDINGLY, WE DISMISS THE GROUND NO.1 TAKEN BY TH E REVENUE. THE ISSUE IS, THEREFORE, COVERED IN FAVOUR OF THE A SSESSEE BY THE ORDER OF THE TRIBUNAL. MORE SO, IN THE PRECEDING AS SESSMENT YEAR THE CLAIM OF THE ASSESSEE HAS BEEN ALLOWED BY THE AO HI MSELF. THEREFORE, THERE IS NO NEED TO INTERFERE WITH THE O RDER OF THE LEARNED CIT(A) IN DELETING THE ADDITION. GROUND NO.1 OF THE APPEAL OF THE REVENUE IS DISMISSED. 4. ON GROUND NO.2 OF THE APPEAL, THE REVENUE CHALLE NGED THE DELETION OF ADDITION OF RS.40,772/- U/S 37(1) OF T HE IT ACT. THE ABOVE AMOUNT WAS PAID TO SHRI R. M. NAYAK FOR ATTENDING S WAWLAMBI GRAMIN NARI GROUPS WHICH WAS PAID IN CASH WITHOUT D EDUCTING TDS. IT WAS SUBMITTED THAT CORRECT FIGURE OF THE AMOUNT IS RS.40,272/- PAID IN RESPECT OF 9 VILLAGES CONSISTING OF 84 CASES RAN GING FROM 6 CASES TO 13 CASES PER VILLAGE. THE ABOVE AMOUNT WAS DEPOSITE D THROUGH 84 DIFFERENT CHALLANS IN THE STATE BANK OF INDIA, VALS AD BEING RECOVERY CHARGES I.E. DARKHAST MONEY PAID TO THE COURT IN FA VOUR OF THE CIVIL COURT, DISTRICT VALSAD IN 84 CASES THROUGH CHALLANS COPIES OF WHICH ARE AVAILABLE ON RECORD. THE PAYMENT WAS MADE WHICH WAS IN THE NATURE OF COURT EXPENSES AND THE CHALLANS DID NOT E XCEED RS.1,000/- IN EACH CASE WHICH WAS PAID TO THE STATE GOVERNMENT AND THE COURT AUTHORITIES. THEREFORE, THERE WAS NO NEED OF DEDUCT ING TDS. THE ASSESSEE PRODUCED COPIES OF THE CHALLANS. IT WAS AL SO EXPLAINED THAT IN CASE OF DEFAULT AND NON-RECOVERY OF THE AMOUNT T HE SUITS WERE FILED AGAINST THE DEFAULTERS AND GUARANTORS AND EXPENSES WERE TO BE INCURRED FOR FILING SUIT IN CIVIL COURT. THE LEARNE D CIT(A) ACCEPTED THE CLAIM OF THE ASSESSEE AND DELETED THE ADDITION. ITA NO.3356/AHD/2008 JCIT, NAVSARI CIRCLE VS VALSAD DISTRICT CO-OP. MILK PRODUCERS UNION LTD. 5 5. ON CONSIDERATION OF THE ABOVE FACTS, WE ARE OF T HE VIEW THAT SINCE RECOVERY OF THE OUTSTANDING AMOUNT IS TO BE M ADE BY FILING PETITION IN THE CIVIL COURT, THE ASSESSEE SHALL HAV E TO INCUR EXPENSES WHICH ARE CONNECTED WITH THE BUSINESS ACTIVITIES OF THE ASSESSEE. THE ASSESSEE HAS SUPPORTED THE CLAIM BY CHALLANS PRODUC ED ON RECORD. THEREFORE, THE LEARNED CIT(A) ON PROPER APPRECIATIO N OF THE FACTS RIGHTLY DELETED THE ADDITION. THIS GROUND OF APPEAL OF THE REVENUE IS ACCORDINGLY DISMISSED. 6. ON GROUND NO.3, THE REVENUE CHALLENGED THE DELET ION OF ADDITION OF RS.2,640/- DISALLOWED U/S 40A (3) OF T HE IT ACT. THE AO DISALLOWED THE AMOUNT OF RS.10,276/- BEING 20% OF E XPENSES OF RS.51,380/- PAID IN CASH AND IN EXCESS OF RS.20,000 /- U/S 40A (3)OF THE IT ACT. THE ASSESSEE FURNISHED COMPLETE DETAIL S OF 4 VOUCHERS FOR THE EXPENSES INCURRED FOR 1344 PASSENGERS OF 24 TRAVEL BUSES. THE EXPENSES OF 3 VOUCHERS OF RS.1,075/- + RS.11,04 0/- + RS.2,083/- DID NOT EXCEED THE LIMIT OF RS.20,000/-. MOREOVER, EXPENSES OF RS.37,182/- WAS IN RESPECT OF 1344 PASSENGERS OF 24 BUSES. ACCORDING TO THE ASSESSEE THE LEADER OF EACH BUS WA S GIVEN SEPARATE AMOUNT AFTER COMPLETION OF THE TOUR AND THE SAME DI D NOT EXCEED PRESCRIBED LIMIT OF RS.20,000/-. THE LEARNED CIT(A) VERIFIED THE CLAIM OF THE ASSESSEE AND FOUND THAT ONLY ONE VOUCHER OF RS.37,182/- WAS PREPARED WHICH WAS IN EXCESS OF RS.20,000/- AND ACC ORDINGLY DELETED THE ADDITION OF RS.2,640/- BY SUSTAINING DISALLOWAN CE IN A SUM OF RS.7,436/-. ITA NO.3356/AHD/2008 JCIT, NAVSARI CIRCLE VS VALSAD DISTRICT CO-OP. MILK PRODUCERS UNION LTD. 6 7. ON CONSIDERATION OF THE ABOVE FACTS, WE ARE OF T HE VIEW THAT THE LEARNED CIT(A) ON PROPER APPRECIATION OF THE FACTS RIGHTLY DELETED THE ADDITION OF RS.2,640/-. THIS GROUND OF APPEAL OF TH E REVENUE IS ACCORDINGLY DISMISSED. 8. ON GROUND NO.4, THE REVENUE CHALLENGED THE DELET ION OF ADDITION OF RS.75,938/- BEING MADE ON ACCOUNT OF BE LATED PAYMENT OF PROVIDENT FUND. THE AO DISALLOWED THE PROVIDENT FUN D PAYMENT OF RS.32,554/- + RS.43,834/- = RS.75,938/- PAID BY TH E ASSESSEE ON 20- 10-2004 AS AGAINST DUE DATE OF 15-10-2004 BEING PAI D DURING THE GRACE PERIOD. THE ASSESSEE SUBMITTED THAT ADDITION BE DELETED BECAUSE OF AMENDMENT IN THE PROVISIONS OF SECTION 4 3B OF THE IT ACT. THE LEARNED CIT(A) NOTED THAT THE PAYMENTS HAVE BEE N MADE WITHIN THE GRACE PERIOD, ACCORDINGLY ADDITION WAS DELETED. 9. ON CONSIDERATION OF THE ABOVE FACTS, WE ARE OF T HE VIEW THAT SINCE THE PAYMENTS HAVE BEEN MADE BEFORE DUE DATE O F FILING OF FILING OF THE RETURN U/S 139 (1) OF THE IT ACT AS PER AMEN DED PROVISIONS OF SECTION 43B OF THE IT ACT, THEREFORE, THE LEARNED C IT(A) RIGHTLY DELETED THE ADDITION. THE VIEW IS SUPPORTED BY THE DECISION OF THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS P. M. ELECTR ONICS 313 ITR 161 IN WHICH IS WAS HELD AS UNDER: THE ASSESSING OFFICER DISALLOWED THE CONTRIBUTIONS MADE BY THE ASSESSEE TOWARDS PROVIDENT FUND UNDER SECTION 43B OF THE INCOME-TAX ACT, 1961, FOR THE ASSESSMENT YEAR 1998-99, ON THE GROUND THAT THE PAYMENTS WERE MADE BY THE ASSESSEE AFTER THE DUE DATE UNDER SECTION 36(1) (VA) OF THE ACT AND ACCORDINGLY MADE ADDITIONS. THE COMMISSIONER (APPEALS) CONFIRMED THE ADDITION OF RS.13,10,791, ITA NO.3356/AHD/2008 JCIT, NAVSARI CIRCLE VS VALSAD DISTRICT CO-OP. MILK PRODUCERS UNION LTD. 7 AGAINST RS.17,94,042 MADE BY THE ASSESSING OFFICER ON THE GROUND THAT CERTAIN PAYMENTS WERE MADE WITHIN THE PRESCRIBED TIME. THE TRIBUNAL ALLOWED TH E ASSESSEES APPEAL. ON APPEAL: HELD, DISMISSING THE APPEAL, THAT THE VIEW TAKEN BY THE TRIBUNAL DESERVED TO BE SUSTAINED AS IT WAS NO LONGER RES INTEGRA IN VIEW OF THE DECISION OF THE SUPREME COURT. THE ASSESSEE WAS ENTITLED TO CLAIM THE BENEFIT UNDER SECTION 43B FOR THE PERIOD PARTICULARLY IN VIEW OF THE FACT THAT IT HAD CONTRI BUTED TO PROVIDENT FUND BEFORE FILING THE RETURN. THE DECISION OF THE HONBLE SUPREME COURT IN THE CA SE OF VINAY CEMENT LTD. 213 CTR 268, ALSO SUPPORT THE ABOVE VIE W. THIS GROUND IS DISMISSED. 10. NO OTHER POINT IS INVOLVED IN THE DEPARTMENTAL APPEAL. 11. IN THE RESULT, THE DEPARTMENTAL APPEAL IS DISM ISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 07-01-2011 SD/- SD/- (G. D. AGARWAL) VICE PRESIDENT (BHAVNESH SAINI) JUDICIAL MEMBER DATE : 07-01-2011 LAKSHMIKANT/- ITA NO.3356/AHD/2008 JCIT, NAVSARI CIRCLE VS VALSAD DISTRICT CO-OP. MILK PRODUCERS UNION LTD. 8 COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER D Y. REGISTRAR, ITAT, AHMEDABAD