Appeal details
Counselvise Citation
[2017] 128 COUNSELVISE.COM (IT) 4446 (ITAT-CHENNAI)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
3 month(s) 22 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
31-05-2017
Appeal Filed By
Department
Order Result
Dismissed
Bench Allotted
D
Next Hearing Date
29-03-2017
Assessment Year
2012-2013
Appeal Filed On
08-02-2017
Judgement Text
, , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, CHENNAI . . . , !' .$%$&, ( ') BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER ./ ITA NO.351/MDS/2017 & +& / ASSESSMENT YEAR : 2012-13 THE ASSISTANT COMMISSIONER OF INCOME TAX, CORPORATE CIRCLE 3(1), CHENNAI - 600 034. V. M/S TAMIL NADU MEDICINAL PLANT FARMS & HERBAL MEDICINE CORPORATION LTD., ANNA HOSPITAL CAMPUS, ARUMBAKKAM, CHENNAI - 600 106. PAN : AAACT 2311 G (-./ APPELLANT) (/0-./ RESPONDENT) -. 1 2 / APPELLANT BY : SMT. SUMATHI VENKATRAMAN, JCIT /0-. 1 2 / RESPONDENT BY : SHRI G. BASKAR, ADVOCATE 3 1 4( / DATE OF HEARING : 29.03.2017 56+ 1 4( / DATE OF PRONOUNCEMENT : 31.05.2017 / O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER: THIS APPEAL OF THE REVENUE IS DIRECTED AGAINST T HE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) 13, CHEN NAI, DATED 29.11.2016 AND PERTAINS TO ASSESSMENT YEAR 2012-13. 2 I.T.A. NO.351/MDS/17 2. THE ONLY ISSUE ARISES FOR CONSIDERATION IS DISAL LOWANCE OF NOMINATION CHARGES PAID BY THE ASSESSEE TO THE EXTE NT OF ` 95,39,037/- TO GOVERNMENT OF TAMIL NADU. 3. SMT. SUMATHI VENKATRAMAN, THE LD. DEPARTMENTAL REPRESENTATIVE, SUBMITTED THAT THE ASSESSEE CLAIMED BEFORE THE ASSESSING OFFICER THAT THE GOVERNMENT OF TAMIL NADU NOMINATED THE ASSESSEE AS A SOLE PROCUREMENT AGENCY FOR THE G OVERNMENT. THE LD. D.R. FURTHER SUBMITTED THAT THE ASSESSEE WA S NOMINATED TO SUPPLY MEDICINE TO GOVERNMENT SIDDHA HOSPITALS. TH E NOMINATION CHARGES WERE PAID BY THE ASSESSEE TO THE GOVERNMENT FOR GIVING PREFERENCE IN PURCHASE OF MATERIAL. ACCORDING TO T HE LD. D.R., THE ASSESSEE BEING A STATE GOVERNMENT UNDERTAKING, CHAR GING OF NOMINATION FEE WOULD REDUCE THE PROFIT OF THE ASSES SEE. IN OTHER WORDS, THE PROFIT OF THE ASSESSEE WAS TAKEN BY PROM OTER OF THE COMPANY, NAMELY, STATE GOVERNMENT IN THE NAME OF NO MINATION FEES. THEREFORE, IT IS NOTHING BUT APPLICATION OF INCOME. THE LD. D.R. FAIRLY BROUGHT TO THE NOTICE OF THE BENCH THAT FOR THE ASSESSMENT YEAR 2011-12, AN IDENTICAL ISSUE CAME BE FORE THIS TRIBUNAL IN I.T.A. NO.1487/MDS/2015. THIS TRIBUNAL FOUND THAT THE NOMINATION FEES/CHARGES PAID TO THE GOVERNMENT CANN OT BE 3 I.T.A. NO.351/MDS/17 CONSIDERED AS APPLICATION OF INCOME. IT HAS TO BE ALLOWED AS INCOME PAID TO THE GOVERNMENT BY OVERRIDING TITLE. 4. ON THE CONTRARY, SHRI G. BASKAR, THE LD.COUNSEL FOR THE ASSESSEE, SUBMITTED THAT ON AN IDENTICAL SITUATION, THIS TRIBUNAL FOUND THAT THE PAYMENT MADE BY THE ASSESSEE WAS BY OVERRIDING TITLE, THEREFORE, THERE CANNOT BE ANY DISALLOWANCE. ACCORDING TO THE LD. COUNSEL, THE MAIN OBJECT OF THE GOVERNMENT FOR CREATING THE ASSESSEE AS A CORPORATE BODY IS TO PURCHASE SIDDHA, AYURVEDIC AND UNANI MEDICINES THROUGH THE ASSESSEE WITHOUT ANY PR OCESS OF TENDER. WITHOUT THE GRACE OF GOVERNMENT, THE ASSES SEE WOULD NOT HAVE EARNED ANY MONEY AT ALL. THE ASSESSEE WAS ALS O GIVEN A RESPONSIBILITY OF DEVELOPING MEDICINAL PLANT AND MA NUFACTURING CONVENTIONAL MEDICINES TO THE CITIZENS. ALL THE SU PPLIES MADE BY THE ASSESSEE ARE ONLY TO GOVERNMENT DEPARTMENT AND INST ITUTIONS. THEREFORE, ACCORDING TO THE LD. COUNSEL, THE CO-ORD INATE BENCH OF THIS TRIBUNAL RIGHTLY FOUND THAT THE PAYMENT OF NOM INATION FEES IS BY OVERRIDING TITLE, HENCE, IT CANNOT BE CONSIDERED AS APPLICATION OF INCOME. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. THE CONTENTION 4 I.T.A. NO.351/MDS/17 OF THE LD. DEPARTMENTAL REPRESENTATIVE WAS CONSIDER ED BY A CO- ORDINATE BENCH OF THIS TRIBUNAL IN THE ASSESSEE'S O WN CASE FOR ASSESSMENT YEAR 2011-12 AND IT WAS FOUND THAT THE N OMINATION CHARGES PAID BY THE ASSESSEE TO THE GOVERNMENT IS B Y OVERRIDING TITLE, THEREFORE, IT CANNOT BE CONSIDERED TO BE INC OME OF THE ASSESSEE. IN VIEW OF THE DECISION OF THE CO-ORDINA TE BENCH OF THIS TRIBUNAL, WE FIND NO REASON TO INTERFERE WITH THE O RDER OF THE LOWER AUTHORITY AND ACCORDINGLY THE SAME IS CONFIRMED. 6. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. ORDER PRONOUNCED ON 31 ST MAY, 2017 AT CHENNAI. SD/- SD/- ( !' .$%$& ) ( . . . ) (ABRAHAM P. GEORGE) (N.R.S. GANESAN) ( / ACCOUNTANT MEMBER /JUDICIAL MEMBER /CHENNAI, 8 /DATED, THE 31 ST MAY, 2017. KRI. 1 /49: ;:+4 /COPY TO: 1. -. /APPELLANT 2. /0-. /RESPONDENT 3. 3 <4 () /CIT(A)-13, CHENNAI 4. PRINCIPAL CIT-3, CHENNAI-34 5. := /4 /DR 6. & > /GF.
