Krishi Utpadan Mandi Samiti, V. DCIT,

ITA 338/LKW/2010

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 7848 (ITAT-LUCKNOW)
• Duration Of Justice: 1 year(s) 11 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-04-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 17-04-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 14-05-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SEPHALI SWAROOP
• Assessee Lawyers: PRADEEP K KAPOOR
• Keywords: Charitable institution; Opportunity of being heard; Capital expenditure
• Section: 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH A , LUCKNOW BEFORE SHRI S UNIL KUMAR YADAV , JUDICIAL MEMBER AND SHRI B. R. JAIN , ACCOUNTANT MEMBER ITA NO. 338/LKW/2010 ASSESSMENT YEAR: 2006 - 07 KRISHI UTPADAN MANDI SAMITI NAWABGANJ, DIST. GONDA V . DCIT GONDA CIRCLE, GONDA PAN: AAHTK8348Q (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI. PRADEEP K KAPOOR, ADVOCATE RESPONDENT BY: SMT. SEPHALI SWAROOP, D.R. DATE OF HEARING: 17.04.2012 DATE OF PRONOUNCEMENT: 17.04.2012 O R D E R PER S UNIL KU MAR YADAV : THIS APPEAL IS PREFERRED BY THE ASSESSEE AGAINST THE ORDER OF THE LD. CIT(A) ON VARIOUS GROUNDS WHICH ARE AS UNDER: - 1 . BECAUSE THE MANDATORY NOTICE UNDER SECTION 143(2) HAVING NOT BEEN ISSUED AND SERVED IN ACCORDANCE WITH THE PROVISIONS OF LAW A S CONTAINED IN SECTION 282 OF THE ACT READ WITH THE RELEVANT PROVISION OF CIVIL PROCEDURE CODE, 1908, THE ID. 'CIT(A)' SHOULD HAVE HELD THAT THE ASSESSMENT ORDER DATED 11.11.2008 IS BAD IN LAW. WITHOUT PREJUDICE TO THE AFORESAID 2 . BECAUSE THE ID. 'CIT(A)' HA S ERRED IN LAW AND ON FACTS IN : - 2 - : UPHOLDING THE COMPUTATION MADE BY THE ASSESSING OFFICER TO THE EXTENT THAT THERE WAS A SURPLUS OF RS.67,26,208/ - AS PER INCOME AND EXPENDITURE ACCOUNT, WITHOUT APPRECIATING THE FACT THAT THERE WAS NO SURPLUS AFTER MAKING VARI OUS PAYMENTS TO MANDI PARISHAD AS REVEALED BY RECEIPT AND PAYMENT ACCOUNT FILED ALONGWITH THE RETURN. 3 . BECAUSE THE ID. 'CIT(A)' HAS GROSSLY ERRED IN LAW IN HOLDING THAT THE RECEIPT AND PAYMENT ACCOUNT FILED ALONG WITH THE RETURN CANNOT BE TAKEN INTO CONSIDE RATION AS THE 'APPELLANT' ITSELF HAS SHOWN A SURPLUS OF RS.67,26,208/ - AND CLAIMED IT EXEMPT UNDER SECTION 11, WITHOUT APPRECIATING THAT IT IS THE DUTY OF THE ASSESSING OFFICER TO ALLOW SUCH RELIEF AND EXEMPTION, TO WHICH IT IS LAWFULLY ENTITLED TO, WHILE MAKING AN ASSESSMENT, EVEN IF THE ASSESSEE HAS NOT CLAIMED SUCH RELIEF AND EXEMPTION. 4 . BECAUSE ALL THE MATERIAL AND INFORMATION WITH REGARD TO 'UTILIZATION' AND 'APPLICATION OF INCOME' WAS AVAILABLE BEFORE THE ASSESSING OFFICER AS WELL AS BEFORE THE CIT(A) ', WHICH REVEALED THAT THERE WAS NO TAXABLE SURPLUS AFTER TAKING INTO CONSIDERATION RECEIPTS AND PAYMENTS AND SIMPLY BECAUSE THE 'APPELLANT' COULD NOT PUT UP PROPER CLAIM WHILE FILING THE INCOME - TAX RETURN WOULD RIOT DEBAR THE 'APPELLANT' FROM CLAIMING EXE MPTION TO WHICH IT IS LEGALLY ENTITLED TO AS PER THE PROVISIONS OF SECTION 11 OF TH E INCOME - TAX ACT READ WITH CBDT'S CIRCULAR NO.5P(LXX - 6) DATED 19.06.1968. 5 . BECAUSE THE LD. CIT(A) HAS WRONG APPLIED THE PROPOSITION OF THE HON'BLE SUPREME COURT'S ORDER IN THE CASE OF GOETZ INDIA LTD. VS. CIT REPORTED IN 284 ITR 323 (SC) WITHOUT APPRECIATING THAT THE ASSESSEE HAS NOT MADE ANY NEW CLAIM OF EXEMPTION BUT IT ONLY BROUGHT TO THE NOTICE OF THE AUTHORITIES BELOW THAT ALL THE : - 3 - : INFORMATION RELATING TO 'APPLICATION / UTILIZATION OF INCOME' WAS AVAILABLE IN THE RECORDS AND CORRECT COMPUTATION SHOULD HAVE BEEN MADE AS PER PROVISIONS OF LAW. 6 . B ECAUSE THE LD. AUTHORITIES BELOW SHOULD HAVE ALLOWED FOLLOWING OUTGOINGS AS 'APPLICATION OF INCOME' AS REFLECTED IN THE RECEIPT AND PAYMENT ACCOUNT : - ( A ) RS.35,90,789/ - { RS.45,59,789 ( - ) RS.9,69,000 } PAID TO MANDI PARISHAD UNDER THE HEAD 'ANSHDAN'. ( B ) RS.8,00,000 / - PAID TO MANDI PARISHAD ON ACCOUNT OF INTEREST ON LOAN (AS SHOWN IN RECEIPT AND PAYMENT ACCOUNT) INSTEAD OF RS.54,382.83 DEBIT ED IN INCOME AND EXPENDITURE ACCOUNT. ( C ) REPAYMENT OF LOAN OF RS.45,00,000/ - TO MANDI PARISHAD. ( D ) CAPITAL EXPENDITURE OF RS.3,57,000 / - FOR PURCHASE OF GENERATOR AND RS.9,978 / - FOR PURCHASE OF DEAD STOCK. 7. BECAUSE THE ID. 'CIT(A)' HAD NO OCCASION TO OBSERVE, IN PARA 8.4 OF THE ORDER DATED 15.03.2010, THAT: '..........THIS TREATMENT OF RECEIPTS BY MANDI PARISHAD IS NOT IN CONSISTENCY WITH ACCOUNTING PRINCIPLES. PAYMENTS TREATED AS EXPENDITURE OR APPLICATION BY MANDI SAMITIS HAVE TO BE TREATED AS BUSINESS RECEIP T BY MANDI PARISHAD. THE PARISHAD CANNOT TREAT IT AS LIABILITY, AS THESE RECEIPTS ARE FIRSTLY, NON - VOLUNTARY CONTRIBUTION BY SAMITIS, AND SECONDLY, NON - REFUNDABLE.' : - 4 - : WITHOUT EVEN GOING THROUGH THE ACCOUNTS OF MANDI PARISHAD OR WITHOUT ANY INFORMATION BEING AVAILABLE ON RECORD AND IN DIRECTING THE ASSESSING OFFICER AS - 'IN VIEW OF THIS, THE A.O. IS DIRECTED TO MAKE A REFERENCE TO THE ASSESSING OFFICER OF M ANDI PARISHAD TO TAKE REMEDIAL MEASURES, IF NECESSARY, IN THE RELEVANT ASSESSMENT YEARS TO TAX THE RELEV ANT RECEIPTS IN THE HANDS OF MANDI PARISHAD.' AND SUCH A DIRECTION TO THE ASSESSING OFFICER IS WHOLLY ERRONEOUS AND OUTSIDE THE PURVIEW OF THE PRESENT APPEAL. 8. BECAUSE THE ORDER APPEALED AGAINST IS CONTRARY TO THE FACTS, LAW AND PRINCIPLES OF NATURAL JUS TICE. 2 . DURING THE COURSE OF HEARING, THE LD. COUNSEL FOR THE ASSESSEE HAS OPTED NOT TO PRESS GROUND NO.1. THEREFORE, GROUND NO.1 IS DISMISSED BEING NOT PRESSED. 3 . THROUGH THE REMAINING GROUNDS, THE ASSESSEE HAS CHALLENGED THE ORDER OF THE LD. CIT(A) THAT TH E LD. CIT(A) HAS NOT EXAMINED THE CLAIM OF APPLICATION OF INCOME BY MAKING VARIOUS PAYMENTS TO MANDI PARISHAD UNDER UTTAR PRADESH KRISHI UPTADAN MANDI ADHINIYAM, 1964 IN ORDER TO DISCHARGE THE LEGAL OBLIGATION. 4 . THE BRIEF FACTS BORNE OUT FROM THE RECORD IN THIS REGARD ARE THAT BEFORE THE ASSESSING OFFICER THE ASSESSEE HAS SIMPLY FILED RECEIPT AND PAYMENT A CCOUNT ALONG WITH RETURN OF INCOME AND RETURNED THE INCOME FROM OTHER SOURCES AT ` 67,26,208 REPRESE NTING SURPLUS ARISING FROM THE I NCOME AND E XPENDITURE A C COUNT AND CLAIMED EXEMPTION UNDER SECTION 11 OF THE INCOME - TAX ACT, 1961 (HEREINAFTER CALLED IN SHORT THE ACT) WITH : - 5 - : REFERENCE TO THE SAME. THE ASSESSEE DID NOT MAKE ANY CLAIM REGARDING DEDUCTION OF VARIOUS PAYMENTS CLAIMED AS HAV ING BEEN MADE TO MANDI P ARISHAD DURING THE YEAR AS APPLICATION OF INCOME EITHER IN THE RETURN OF INCOME OR DURING THE ASSESSMENT PROCEEDINGS BEFORE THE ASSESSING OFFICER, NOR DID HE FILE FORM NO.10 CERTIFYING THE SETTING APART OR ACCUMULATION OF SURPLUS EXCEEDING 15% OF THE RECEI PTS FOR CHARITABLE PURPOSES ALONG WITH THE RETURN OF INCOME. IN THE ABSENCE OF SPECIFIC CLAIM REGARDING VARIOUS PAYMENTS MADE TO THE MANDI PARISHAD AS APPLICATION OF INCOME, OTHER THAN THE CLAIM FOR DEDUCTION OF EXPENDITURE MADE IN THE INCOME & EXPENDITUR E ACCOUNT, THE ASSESSING OFFICER DID NOT ENTERTAIN THE CLAIM OF APPLICATION OF INCOME AND HE ASSESSED THE SURPLUS AS PER INCOME & EXPENDITURE ACCOUNT AMOUNTING TO ` 67,26,208 AS PART OF TAXABLE INCOME OF THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION. 5 . THE AS SESSEE FILED AN APPEAL BEFORE THE LD. CIT(A) WITH THE SUBMISSION THAT THE INCOME SHOULD HAVE BEEN COMPUTED BY THE ASSESSING OFFICER ON THE BASIS OF RECEIPTS AND UTILIZATION AS REFLECTED IN RECEIPTS AND PAYMENT ACCOUNT AND ACCOR D IN G LY THE WHOLE OF THE PAYME NT MADE TO MANDI PARISHAD OUT OF COLLECTION OF MANDI SHULK AT ` 45,59,789; VIKAS CESS AT ` 28,29,390; INTEREST AT ` 8 LAKHS, REPAYMENT OF LOAN OF ` 45 LAKHS TO MANDI PARISHAD AND CAPITAL EXPENDITURE OF ` 3,66,976 AS SHOWN IN RECEIPT & PAYMENT ACCOUNT SHOULD HAV E BEEN ALLOWED AS APPLICATION OF INCOME AS PER PROVISIONS OF SECTION 11 OF THE ACT AND . THE LD. CIT(A) W AS NOT CONVINCED WITH THE ASSESSEES CONTENTION AND FOLLOWING THE JUDGMENT OF THE HON'BLE SUPREME COURT OF INDIA IN THE CASE OF GOETZE (INDIA) LTD. V. CIT, 283 ITR 323 (SC) , HE DID NOT ADMIT THE CLAIM OF THE ASSESSEE REGARDING VARIOUS PAYMENTS RECORDED IN RECEIPT & PAYMENT ACCOUNT AND DISMISSED THE APPEAL. 6 . NOW THE ASSESSEE HAS PREFERRED AN APPEAL BEFORE THE TRIBUNAL WITH THE SUBMISSION THAT THOUGH THE AS SESSEE HAS NOT RAISED SPECIFIC CLAIM : - 6 - : BEFORE THE ASSESSING OFFICER WITH RESPECT TO THE APPLICATION OF MONEY BY MAKING PAYMENT S TO MANDI PARISHAD TO MEET STATUTORY OBLIGATION , BUT THE CLAIM IS LEGALLY TENABLE AND HAS BEEN ALLOWED BY THE TRIBUNAL THROUGH ITS VARIOUS ORDERS AND ALSO BY THE JURISDICTIONAL HIGH COURT. COPIES OF THE ORDERS OF THE TRIBUNAL ARE PLACED ON RECORD AT PAGES 29 TO 37 OF THE COMPILATION OF THE ASSESSEE. IT WAS FURTHER CONTENDED ON BEHALF OF THE ASSESSEE THAT IT IS ALSO THE RESPONSIBILIT Y OF THE ASSESSING OFFICER TO MAKE PROPER ASSESSMENT IN THE HANDS OF THE ASSESSEE AND IF ANY CLAIM IS ALLOWABLE, IT SHOULD HAVE BEEN ALLOWED BY THE ASSESSING OFFICER. A SPECIFIC REQUEST WAS MADE BEFORE THE LD. CIT(A) TO ALLOW THE CLAIM OF THE ASSESSEE, BU T THE LD. CIT(A) NEITHER EXAMINED THE CLAIM OF THE ASSESSEE NOR REMITTED THE MATTER BACK TO THE FILE OF THE ASSESSING OFFICER FOR RE - ADJUDICATION OF THE CLAIM. SO FAR AS THE JUDGMENT OF THE HON'BLE SUPREME COURT IN THE CASE OF GOETZE (INDIA) LTD. V. CIT ( SUPRA) IS CONCERNED, IT WAS CONTENDED BY THE LD. COUNSEL FOR THE ASSESSEE THAT IT ONLY DEBARS THE ASSESSING OFFICER F ROM ENTERTAINING NEW CLAIM WHICH WAS NOT RAISED BEFORE HIM BY REVISING THE RETURN , BUT IT DOES NOT DEBAR THE APPELLATE AUTHORITY FROM ENTER TAINING THE CLAIM WHICH WAS INDIRECTLY RAISED BEFORE THE ASSESSING OFFICER. IN SUPPORT OF THIS CONTENTION, HE HAS PLACED RELIANCE UPON THE JUDGMENT OF THE HON'BLE DELHI HIGH COURT IN THE CASE OF CIT V. JAI PARABOLIC SPRINGS LTD [2008] 306 ITR 42 (DEL) IN WHICH IT HAS BEEN HELD THAT THERE WAS NO PROHIBITION ON THE POWERS OF THE TRIBUNAL TO ENTERTAIN AN ADDITIONAL GROUND WHICH ACCORDING TO THE TRIBUNAL AROSE IN THE MATTER AND FOR THE JUST DECISION OF THE CASE. IN THIS CASE, THEIR LORDSHIPS HAVE ALSO EXAMINE D THE JUDGMENT OF THE HON'BLE APEX COURT IN THE CASE OF GOETZE (INDIA) LTD. V. CIT (SUPRA) AND ALSO NATIO NAL THERMAL POWER CO. LTD. V. CIT [2006] 229 ITR 383 (SC). 7 . THE LD. D.R., ON THE OTHER HAND, HAS PLACED HEAVY RELIANCE UPON THE ORDERS OF THE LOWER AU THORITIES. : - 7 - : 8 . HAVING GIVEN A THOUGHTFUL CONSIDERATION TO THE RIVAL SUBMISSIONS AND ALSO FROM CAREFUL PERUSAL OF RECORD, WE FIND THAT UNDISPUTEDLY THE ASSESSEE HAS NOT RAISED A SPECIFIC CLAIM WITH RESPECT TO THE APPLICATION OF INCOME OF THE AFORESAID PAYMENTS MADE TO MANDI PARISHAD, BUT IT HAS BEEN REPEATEDLY HELD BY THE TRIBUNAL AND ALSO BY THE HIGH COURT THAT THESE PAYMENTS ARE MADE TO DISCHARGE STATUTORY OBLIGATION AND IT AMOUNTS TO AN APPLICATION OF INCOME FOR THE OBJECT . BUT WHILE FRAMING THE ASSESSMENT, THE ASSESSING OFFICER HAS NOT EXAMINED THIS ASPECT AND HAS ASSESSED THE SURPLUS AS PER INCOME & EXPENDITURE ACCOUNT AMOUNTING TO ` 67,26,208. THOUGH THE ASSESSEE HAS RAISED A SPECIFIC CLAIM BEFORE THE LD. CIT(A), BUT THE LD. CIT(A) FOLLOWING THE DECISION O F THE HON'BLE SUPREME COURT IN THE CASE OF GOETZE (INDIA) LTD. V. CIT (SUPRA) DID NOT ENTERTAIN THE CLAIM OF THE ASSESSEE. WE HAVE ALSO CAREFULLY EXAMINED THE JUDGMENTS OF THE HON'BLE DELHI HIGH COURT IN THE CASE OF CIT V. JAI PARABOLIC SPRINGS LTD (SUPR A) AND THE JUDGMENT OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF SANTRAM GULATI V. CIT (INCOME TAX APPEAL NO.54 OF 2007) IN WHICH IT WAS HELD THAT THE ASSESSEE IS ENTITLED TO RAISE LEGAL ISSUE BEFORE THE FIRST APPELLATE AUTHORITIES WHICH POSSESS CO - TERM INUS POWERS SIMILAR TO THE ASSESSING OFFICER AS PER RATIO LAID DOWN BY THE HON'BLE SUPREME COURT IN THE CASE OF JUTE CORPORATI O N OF INDIA LTD. V. CIT [1998] 229 ITR 383. 9 . IN THE LIGHT OF THE AFORESAID JUDGMENTS, WE ARE OF THE CONSIDERED VIEW THAT THOUGH THE ASSESSEE HAS NOT RAISED A SPECIFIC CLAIM WITH REGARD TO APPLICATION OF ITS INCOME BY MAKING PAYMENTS TO MANDI PARISHAD, BUT IT SHOULD HAVE BEEN EXAMINED BY THE LD. CIT(A) HAVING CO - TERMINUS POWER SIMILAR TO THE ASSESSING OFFICER , BUT HE DID NOT DO SO AND REJECTED THE CLAIM OF THE ASSESSEE FOLLOWING THE JUDGMENT OF THE HON'BLE APEX C OURT IN THE CASE OF GOETZE (INDIA) LTD. V. CIT (SUPRA) WITHOUT REALIZING THAT THE DECISION IN THE CASE OF GOETZE (INDIA) LTD. V. CIT (SUPRA) ONLY DEBARS THE ASSESSING OFFICER FO R ENTERTAINING NEW CLAIM WITHOUT REVISING THE RETURN OF INCOME , BUT : - 8 - : THE APPELLATE AUTHORITIES ARE EMPOWERED TO ENTERTAIN SUCH CLAIM DURING THE APPELLATE PROCEEDINGS. IT IS ALSO AN ADMITTED FACT THAT VARIOUS PAYMENTS MADE BY THE ASSESSEE TO MANDI PARISHAD WERE HELD TO BE PROPER APPLICATION OF FUNDS FOR CLAIMING EXEMPTION UNDER SECTION 11 OF THE ACT. UNDER THESE CIRCUMSTANCES, WE ARE OF THE VIEW THAT THE CLAIM OF THE ASSESSEE SHOULD HAVE BEEN PROPERLY EXAMINED BY THE ASSESSING OFFICER. SINCE IT HAS NOT BEE N EXAMINED BY THE LOWER AUTHORITIES , WE SET ASIDE THE ORDER OF THE LD. CIT(A) IN THIS REGARD AND REMIT THE MATTER BACK TO THE FILE OF THE ASSESSING OFFICER FOR RE - ADJUDICATION OF THE ISSUE AFTER AFFORDING AN OPPORTUNITY OF BEING HEARD TO THE ASSESSEE IN AC CORDANCE WITH LAW . ACCORDINGLY, THIS ISSUE IS DISPOSED OF. 10 . IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 17.4.2012. SD/ - SD/ - [B. R. JAIN ] [ S UNIL KUMAR Y ADAV ] ACCOUNTANT MEMB ER JUDICIAL MEMBER DATED: 17.4.2012 JJ: 1904 COPY FORWARDED TO: 1 . APPELLANT 2 . RESPONDENT 3 . CIT(A) 4 . CIT 5 . DR ASSISTANT REGISTRAR