A.C.I.T.. Cir.-4, Nagpur V. M/S ANKUR SEEDS PVT. LTD, Nagpur

ITA 350/NAG/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 1305 (ITAT-NAGPUR)
• Duration Of Justice: 11 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-11-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2013-2014
• Appeal Filed On: 21-12-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A R NINAWE
• Section: 80IB

Judgement Text

1 ITA NO. 350/NAG/2015. IN THE INCOME TAX APPELLATE TRIBUNAL, NAGPUR BENCH, NAGPUR BEFORE SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER AND SHRI RAM LAL NEGI, JUDICIAL MEMBER.. I.T.A. NO. 350/NAG/2015 ASSESSMENT YEAR : 2013 - 14. ASSTT. COMMISSIONER OF INCOME - TAX, M/S ANKUR SEEDS PVT. LTD. CIRCLE - 4, NAGPUR. VS. NAGPUR. PAN AARCA0181C. APPELLANT. RESPONDENT. APPELLANT BY : SHRI A.R. NINAWE. RESPONDENT BY : SHRI K.P. DEWANI. DATE OF H EARING : 21 - 11 - 2016 DATE OF PRONOUNCEMENT : 24 TH NOV.., 2016 O R D E R. PER SHAMI M YAHYA : THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF LEARNED CIT(APPEALS) - 4, NAGPUR DATED 22 - 09 - 2015 A ND PERTAINS TO ASSESSMENT YEAR 2013 - 14. THE GROUND OF APPEAL READS AS UNDER : ON THE FACTS AND THE CIRCUMSTANCES OF THE CASE, TH LD. CIT(A) ERRED IN ALLOWING THE EXCESS CLAIM OF EXEMPTION OF RS.4,52,09,617/ - , AN INTEREST INCOME ON BOOKING SCHEME INCLUDED FOR COMPUTATION OF AGRICULTURAL INCOM E. 2. BRIEF FACTS OF THE CASE ARE AS UNDER : ASSESSEE COMPANY IS ENGAGED IN RESEARCH CULTIVATION, P RODUCTION, P ROCESSING AND M ARKETING OF SEEDS AND HAS LAUNCHED VARIOUS ADVANCES BOOKING SCHEMES DURING THE YEARS UNDER APPEAL AND COLLECTED ADVANCE PAYMENT FROM DEALERS AND DISTRIBUTORS. ON THESE ADVANCE RECEIPTS COMPANY HAS GIVEN SPECIAL INCENTIVE TO THE DEALERS AND DISTRIBUTORS WHICH ARE DEDUCTED FROM SALES VALUE. 2 ITA NO. 350/NAG/2015. THE AMOUNT SO COLLECTED IS USED FOR BUSINESS AND MAJOR FUNDS ARE INVESTED IN FIXED DEPOSITS W ITH BANKS IN ORDER TO GENERATE RETURNS TO PAY THE INCENTIVES ON ADVANCE RECEIVED AT THE TIME OF BOOKING. IT WAS CLAIMED THAT THERE IS A DIRECT NEXUS BETWEEN AMOUNTS RECEIVED FROM BOOKING SCHEME, INVESTMENT IN FDRS, INTEREST EARNED AND INCENTIVE ALLOWED. H ENCE INCENTIVE ALLOWED AGAINST BOOKING SCHEME MAY PLEASE BE NETTED OFF AGAINST INTEREST EARNED ON FDR MADE OUT OF BOOKING SCHEME. THE ASSESSEE HAS EARNED THE INTEREST ON BANK DEPOSITS MADE OUT OF BOOKING SCHEMES. THE AO DID NOT ACCEPT THE CONTENTIONS OF TH E ASSESSEE AND ASKED THE ASSESSEE AS TO WHY INTEREST INCOME FROM BOOKING SCHEMES SHOULD NOT BE EXCLUDED FOR COMPUTATION OF AGRICULTURAL INCOME. THE ASSESSEE IN ITS REPLY HAS ALSO MENTIONED THAT THE FACTS OF A.Y. 20 10 - 11 ARE IDENTICAL TO THAT OF 2004 - 05. 3. HOWEVER, THE AO WAS NOT SATISFIED. HE HELD AS UNDER : 3.3 IN TH E AS S ES SM E NT FOR A Y 2 004 - 05 A ND AY 2005 - 06 IT WAS DI SC U SS ED TH A T INCOME FROM BOOKING SCHEM E CANNOT B E TERMED AS INCOM E DERI V ED FROM INDU S TRI A L UND E RTAKIN G EN GA G E D IN PROCE SS IN G O F SEE D . R E LI A N CE WAS PL A CED O N FOLLOWIN G C A SE L A W S TO ES T A BLISH THAT INCOME FROM IBS IS N O T INCOM E D E RI VE D F ROM INDU S TRIA L UND E RT A KIN G A ND THER E FOR E S HOULD NOT C ON S ID E RED FO R COMPUT A TION OF DEDUCTION U / S 80 LB . A S H O K LE YL A ND LTD, V. XIT [1 997 ] 22 4 I T R 1 22, CIT V. S T E RLING FOOD S [19 99 ] 2 3 7 ITR 5 7 9 HINDU S T A N LE V ER LTD, V . CIT [1999] 239 ITR 297 P A NDI A N CH E MI CA L S LTD. V . CI T [2003] 2 62 ITR 278 A SS E SSE E IN IT S REPL Y V ID E L E TT E R D A TED 2 9 . 10 . 2014 HA S A L S O MENTIONED TH A T TH E FAC T S F OR AS SESS M E NT Y EAR 20 13 - 1 4 ARE ID EN TI CA L W ITH TH AT OF 2 004 - 0 5. TH E AS SESSEE HA S FURTHER STATED TH A T THIS IS S UE I S DE C IDED IN THEIR FAV OUR BY HON'BL E I N COME T AX APP E LL A T E T R IB U N A L , NAG PUR B E NCH , N AG PUR V ID E O R D ER ' 0 . I TA NO. 32 9 I N A G / 2007 A . Y. 200 4 - 05 A ND IT A NO . 336 / NAG / 2 007 D A T ED 03 - 0 3 - 2 009 W H E R E IN T HE HON ' BL E T RIBUN A L H AS O PIN E D TH A T 'IN OUR O PINI ON TH E L D . EI T (A ) WAS RI G HT IN HOLDIN G TH A T TH E RE I S A DIR E CT NE X U S B E T WEE N T HE I NTER ES T INC O ME W H IC H I S EA RNED B Y TH E A S SESSEE F ROM TH E D E PO S IT RE C E I VE D FRO M A D VA N CE BOO K IN G S CHEME AND INCENTI V E G I VE N B Y TH E ASSESSE E TO THE P E R S ON S W HO OP TE D FOR A D VA N CE BOOKIN G SCHEM ES. I N V I EW OF TH E A B OVE WE H O LD T H A T , THE LD . CI T(A) HA S RI G HTL Y DIRECT E D FOR SE TTIN G O FF OF EXPE NDITUR E ON IN CE NTI VE AGA IN S T T H E INT E RE S T INCOM E' A ND PRA YE D FOR SE TT I N G O FF OF IN CE NTI VE AGA IN S T INT E R ES T E ARN E D . TH E D E CI S I O N OF ITAT H AS N O T BEEN A C CEPT E D B Y R E V E NU E A ND AN A PPEAL H AS 3 ITA NO. 350/NAG/2015. B E EN F IL E D B EFO R E H O N ' BL E B O M BAY HI G H CO U RT U / S 260(A) AGAI N ST OR D E R PASSE D BY ITAT FOR TH E A . Y . 2004 - 05 IN CA SE OF THE ASS E SS EE . CONSIDERIN G THE ABO V E F ACT S AND FOR THE DETAILED REASONS INDICATED IN ASSESSMENT ORDERS FOR A.Y. 2004 - 05 INTEREST INCOME FROM BOOKING SCHEME CANNOT BE CONSIDERED FOR CALCULATION OF AGRICULTURAL INCOME. 4. UPON ASSESSEES APPEAL , LEARNED CIT(APPEALS) CONCLUDED AS UNDER : 6. THE FACTS OF THE AY 2004 - 05 ARE IDENTICAL TO THAT OF AY 2013 - 14, EXCEPT FOR THE FACT THAT APPELLANT HAS NOT CLAIMED THE DEDUCTION U/S 80IB IN AY 2010 - 11, THE YEAR UNDER APPEAL, AS INITIAL ASSESSMENT YEARS ARE OVER. 6.1 THIS ISSUE IS ALSO DECIDED IN FAVOUR OF THE APPELLANT BY HONBLE INCOME TAX APPELLATE TRIBUNAL, NAGPUR BENCH, NAGPUR AND ITA NO. 292, 293 & 400/NAG/2008 FOR AY 2000 - 01, 2005 - 06 AND ITA NO. 411/NAG/2008 FOR AY 2003 - 04 DATED 06/03/2009 AND ITA NO. 205 & 206/NAG/2009 DATED 26/04/2011 FOR AY 200 1 - 02 AND 2006 - 07 AND ITA NO. 26, 27 & 28/NAG/11 DATED 07/12/2012 FOR AYS 2002 - 03, 2007 - 08 & 2008 - 09 ON THE IDENTICAL ISSUE. 6.2 RESPECTFULLY FOLLOWING THE ORDER OF THE HONBLE ITAT, NAGPUR BENCH, NAGPUR, ON THE IDENTICAL ISSUE IN THE CASE OF THE APPELLANT, THE ADDITION IS DIRECTED TO BE DELETED. 5. AGAINST THE ABOVE ORDER, REVENUE IS IN APPEAL BEFORE US. 6. WE HAVE HEARD BOTH THE COUNSEL AND PERUSED THE RECORDS. WE FIND THAT THE ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE TRIBUNALS DECISIONS IN ASSE SSEES OWN CASE IN A NUMBER OF PREVIOUS YEARS. WE MAY GAINFULLY REFER TO ITAT DECISION IN ITA NO. 17/NAG/2014 FOR ASSESSMENT YEAR 2009 - 10 VIDE ORDER DATED 11 - 09 - 2015 AS UNDER : HAVING HEARD BOTH THE COUNSEL AND PERUSING THE RECORDS, WE FIND THAT THE ITAT IN ITS ORDER FOR ASSESSMENT 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 RECEIVED FROM ADVANCE BOOKING SCHEME. THE AO HAS NOTED THIS FACT. BUT HA S OBSERVED THAT REVENUE IS IN APPEAL BEFORE HONBLE HIGH COURT. IT IS ALSO 4 ITA NO. 350/NAG/2015. NOT THE REVENUES CASE THAT HONBLE HIGH COURT HAS REVERSED THE DECISION OF THE ITAT. IT IS ALSO THE CASE OF LEARNED CIT(APPEALS) THAT HE IS FOLLOWING ITATS ORDER. IN THIS VIEW OF THE MATTER, RESPECTFULLY FOLLOWING THE PRECEDENS, WE ARE OF THE OPINION THAT THE ASSESSEE IS ENTITLED TO SETTING OFF OF EXPENDITURE ON INCENTIVE AGAINST INTEREST EARNED FROM DEPOSITS RECEIVED FROM ADVANCE BOOKING SCHEME IN ACCORDANCE WITH THE EARLIER ITAT S ORDER. ACCORDINGLY WEN UPHOLD THE ORDER OF LEARNED CIT(APPEALS). 7. SINCE THE FACTS ARE IDENTICAL, FOLLOWING THE PRECEDENT AS ABOVE, WE UPHOLD THE ORDER OF LEARNED CIT(APPEALS). 8. IN THE RESULT, THE APPEAL FILED BY THE REVENUE STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 24 TH DAY OF NOV., 2016. SD/ - SD/ - (RAM LAL NEGI) ( SHAMIM YAHYA) JUDICIAL MEMBER. ACOUNTANT MEMBER. NAGPUR, DATED: 24 TH NOV. , 2016. COPY FORWARDED TO : 1. M/S ANKUR SEEDS PVT. LTD., 27, NEW COTTON MARKET LAYOUT, OPP. BUS STATION, NAGPUR - 18. 2. A.C.I.T., CIRCLE - 4, NAGPUR. 3. C.I.T. - 3 , NAGPUR. 4. CIT(APPEALS), - 4 , NAGPUR. 5. D.R., ITAT, NAGPUR. 6. GUARD FILE TRUE COPY BY ORDER ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, NAGPUR BENCH, NAGPUR. WAKODE.