Krishi Utpadan Mandi Samiti, V. DCIT,

ITA 352/LKW/2010

• Counselvise Citation: [2010] 119 COUNSELVISE.COM (IT) 6089 (ITAT-LUCKNOW)
• Duration Of Justice: 3 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-09-2010
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 14-09-2010
• Assessment Year: 2006-2007
• Appeal Filed On: 19-05-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ANADI VERMA
• Keywords: Business income; Depreciation; Principle of natural justice

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, LUCKNOW BENCH 'A, LUCKNOW. BEFORE SHRI H. L. KARWA, HON'BLE VICE PRESIDENT AND SHRI B. R. KAUSHIK, ACCOUNTANT MEMBER I.T.A. NO.352/LUC/10 ASSESSMENT YEAR: 06-07 KRISHI UTPADAN MANDI SAMITI, VS. DY. C. I. T., BANSHI, GONDA CIRCLE, DIST. SIDDHARTH NAGAR. GONDA. PAN:AAALK0622N (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI AMIT SHUKLA, ADVOCATE REVENUE BY : SHRI ANADI VERMA, D. R. O R D E R PER H. L. KARWA, V.P.: THIS APPEAL, FILED BY THE ASSESSEE, IS DIRECTED AG AINST THE ORDER OF CIT(A)-II, LUCKNOW DATED 16/03/2010 RELATING TO ASS ESSMENT YEAR 2006- 2007. 2. IN THIS APPEAL, THE ASSESSEE HAS RAISED THE FOLL OWING GROUNDS: 1. BECAUSE THE MANDATORY NOTICE UNDER SECTION 143( 2) HAVING NOT BEEN ISSUED AND SERVED IN ACCORDANCE WIT H THE PROVISIONS OF LAW AS CONTAINED IN SECTION 282 OF TH E ACT READ WITH THE RELEVANT PROVISION OF CIVIL PROCEDURE CODE , 1908, THE ID. 'CIT(A)' SHOULD HAVE HELD THAT THE ASSESSMENT O RDER DATED 11.11.2008 IS BAD IN LAW. 2 WITHOUT PREJUDICE TO THE AFORESAID 2.1 BECAUSE THE AUTHORITIES BELOW WERE NOT JUSTIFIE D EITHER IN LAW OR ON FACTS IN DISALLOWING THE CLAIM OF DEPR ECIATION AMOUNTING TO RS.13,912/- ON THE GROUND THAT THE ENT IRE COST OF ASSETS HAD BEEN ALLOWED AS APPLICATION/UTILIZATION OF INCOME. 2.2 BECAUSE THE RATIO OF DECISION OF HON'BLE SUPREM E COURT IN THE CASE OF ESCORTS LTD. VS. UNION OF INDI A REPORTED IN 199 ITR AT PAGE 43 RELIED BY THE ASSESSING OFFICER IS CLEARLY DISTINGUISHABLE ON FACTS AND CONSEQUENTLY NOT APPLI CABLE IN THE PRESENT CASE, AND, THEREFORE, THE ID. '''CIT(A)'' S HOULD HAVE UPHELD THE 'APPELLANT'S' CLAIM OF DEPRECIATION. 2.3 BECAUSE DEPRECIATION OF ASSETS THAT HAVE BEEN UTILIZED FOR ATTAINMENT OF THE OBJECTS OF THE 'APPE LLANT' REPRESENTED COST OF USER OF THE SERVICES AND AS PER JUDICIAL OPINION SUCH AN OUTGOING ALSO REPRESENTED 'UTILIZAT ION' AND ACCORDINGLY THE SAME DESERVED TO BE A1L0WED AS 'APP LICATION OF INCOME'. 3. BECAUSE THE ID. 'CIT(A)' HAD NO OCCASION TO OBSE RVE, IN PARA 8.4 OF THE ORDER DATED 16.03.2010, THAT: ..THIS TREATMENT OF RECEIPTS BY MANDI PARISHAD IS NOT IN CONSISTENCY WITH THE 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 LIA BILITY, AS THESE RECEIPTS ARE FIRSTLY, NON-VOLUNTARY CONTRI BUTION BY SAMITIS, AND SECONDLY, NON-REFUNDABLE. WITHOUT EVEN GOING THROUGH THE ACCOUNTS OF MANDI PA RISHAD OR WITHOUT ANY INFORMATION BEING AVAILABLE ON RECORD A ND IN DIRECTING THE ASSESSING OFFICER AS 'IN VIEW OF THIS, THE AO IS DIRECTED TO MAKE A REFE RENCE TO THE ASSESSING OFFICER OF MANDI PARISHAD TO TAKE REMEDIAL MEASURES, IF NECESSARY, IN THE RELEVANT 3 ASSESSMENT YEARS TO TAX THE RELEVANT RECEIPTS IN TH E HANDS OF MANDI PARISHAD. AND SUCH A DIRECTION TO THE ASSESSING OFFICER IS WH OLLY ERRONEOUS AND OUTSIDE THE PURVIEW OF THE PRESENT AP PEAL. 4. BECAUSE THE ORDER APPEALED AGAINST IS CONTRARY T O THE FACTS, LAW AND PRINCIPLES OF NATURAL JUSTICE. 3. FIRSTLY WE WILL TAKE UP GROUND NO. 3 OF THE APPE AL. DURING THE COURSE OF HEARING, THE LEARNED COUNSEL FOR THE ASSESSEE, A T THE VERY OUTSET, STATED THAT THIS ISSUE HAD ALREADY BEEN ADJUDICATED BY THE ITAT 'B' BENCH, LUCKNOW IN C.O. NO.9/LUC/04 IN THE CASE OF KRISHI UTPADAN MANDI SAMITI, BANTHRA VS. INCOME TAX OFFICER VIDE ORDER DATED 21/ 04/2010. 4. THE AFORESAID CONTENTION OF LEARNED COUNSEL FOR THE ASSESSEE WAS NOT CONTROVERTED BY LEARNED D. R. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND CAR EFULLY GONE THROUGH THE MATERIAL AVAILABLE ON RECORD. IN THE P RESENT CASE, THE ASSESSEE HAD OBJECTED TO THE OBSERVATION OF LEARNED CIT(A) WHICH HAD BEEN REPRODUCED IN THE GROUND NO. 3. THE SIMILAR O BSERVATIONS WERE MADE BY THE LEARNED CIT(A), VIDE ORDER DATED 24/12/ 2009 VIDE PARA 10.4 IN THE CASE OF KRISHI UTPADAN MANDI SAMITI, BANTHRA AG AINST THE SAID ORDER THE ASSESSEE FILED CROSS OBJECTION AND WHILE ADJUDI CATING THE SAID CROSS OBJECTION FILED BY THE SAID ASSESSEE VIDE C.O. NO. 9/LUC/10 ARISING OUT OF 4 I.T.A. NO.144/LUC/10 FOR THE ASSESSMENT YEAR 2006-2 007, THE RELEVANT FINDINGS HAVE BEEN GIVEN IN PARA 9 TO 12 OF THE ORD ER DATED 21/04/2010 WHICH READ AS UNDER: '9. A BARE PERUSAL OF THE COMMON GROUND NO.3 OF THE CROSS OBJECTION, ALREADY REPRODUCED ABOVE, WOULD CLARIFY THAT THE GRIEVANCE OF THE ASSESSEE RELATES TO THE FOLLOWING COMMON OBSERVATIONS OF THE ID. CIT(A) IN PARA 12.4 OF THE ORDER DATED 24. 12.2009, PARA 10.4 OF THE ORDER DATED 24.12.200 9 AND PARA 12.5 OF THE ORDER DATED 23.12.2009: '12.4 HAVING ACCEPTED THAT THE MONEY TRANSFERRED BY MANDI SAMITI TO MANDI PARISHAD IS APPLICATION OF INCOME, WHAT IS IMPORTANT AS WELL AS ESSENTIAL IS THAT THE AMOUNT T RANSFERRED BY THE MANDI SAMITI IN TERMS OF PAYMENT TO MANDI PA RISHAD MUST BE ACCOUNTED FOR BY MANDI PARISHAD AS ITS BUSI NESS RECEIPTS. IF THIS AMOUNT TRANSFERRED TO MANDI PARIS HAD IS NOT TREATED AS ADVANCE BUT APPLICATION OF INCOME BY THE MANDI SAMITI, IT CAN NOT BE TREATED AS LIABILITY IN THE H ANDS OF MANDI PARISHAD. IT HAS BEEN INFORMED THAT VIKAS CESS COLL ECTED BY THE SAMITIS AND TRANSFERRED TO MANDI PARISHAD IS NO T CREDITED BY THE MANDI PARISHAD TO ITS INCOME AND EXPENDITURE ACCOUNT BUT DIRECTLY CREDITED TO CESS FUND (CENTRAL MANDI F UND). THE REST OF THE RECEIPTS FROM THE MANDI SAMITIS ARE ALS O TREATED BY THE PARISHAD AS LIABILITIES AND DIRECTLY CREDITED I N THE BALANCE SHEET UNDER MANDI VIKAS NIDHI. THIS TREATMENT OF RE CEIPTS BY MANDI PARISHAD IS NOT IN CONSISTENCY WITH ACCOUNTIN G PRINCIPLES AND TREATMENT BY MANDI SAMITI. PAYMENT TREATED AS EXPENDITURE OR APPLICATION BY MANDI SAMITIS HAS TO BE TREATED AS BUSINESS RECEIPT BY MANDI PARISHAD. THE PARISHAD CANNOT TREAT IT AS LIABILITY AS THESE RECEIPTS ARE FIRSTLY NON-VOLUNTARY CONTRIBUTION BY SAMITIS, SECONDLY NON-REFUNDABLE AN D ARE NOT CONSIDERED BY SAMITIS AS ADVANCES IN BOOKS OF ACCOU NTS. IN VIEW OF THIS, THE AO IS DIRECTED TO MAKE A REFERENC E TO THE ASSESSING OFFICER OF MANDI PARISHAD TO TAKE, REMEDI AL MEASURES, IF NECESSARY, IN ALL THE RELEVANT ASSESSM ENT YEARS TO TAX THE RELEVANT RECEIPTS IN THE HANDS OF MANDI PARISHAD. 5 10. DURING THE COURSE OF HEARING, THE ID. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ID. CIT(A) WAS NOT DEALING WITH THE APPEALS RELATING TO THE MANDI PARISDHAD AND NO MATERIAL WAS AVAILABLE BEFORE HIM RELATING TO THE IMPUGNED ISSUE, SO THESE FINDIN GS HAD BEEN MADE UNNECESSARILY. AND WITHOUT AFFORDING OPPORTUNI TY TO THE ASSESSEE AS WELL AS MANDI PARISHAD WHOSE CASES HAVE BEEN REFERRED TO BY THE ID. CIT(A). 11. IN HIS RIVAL SUBMISSIONS, THE ID. D.R. STRONGL Y SUPPORTED THE ORDER OF THE ID. CIT(A) AND SUBMITTED THAT AS PER T HE PROVISIONS CONTAINED IN SECTION 251 OF THE INCOME-TAX ACT, THE ID. CIT(A) CAN MAKE SUCH OBSERVATIONS. 12. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AND GONE THROUGH THE MATERIAL AVAILABLE ON RECORD. IN T HE INSTANT CASE, IT IS NOTICED THAT THE ID. CIT(A) WHILE REFERRING TO T HE CASES OF MANDI PARISHADS HAD NOT AFFORDED ANY OPPORTUNITY TO THE S AID ASSESSEES AND IT IS ALSO NOTICED THAT THE ID. CIT(A) MADE THE SE OBSERVATIONS IN SPITE OF THE FACT THAT NO SUCH MATERIAL RELATING TO MANDI PARISHADS WAS AVAILABLE TO HIM. IN OUR OPINION, THESE OBSERVA TIONS OF THE ID. CIT(A) ARE UNNECESSARY BECAUSE THE FACTS OF THE CAS E WHICH IS PENDING FOR ADJUDICATION ARE ONLY TO BE CONSIDERED HOWEVER, IN THE INSTANT CASE, NEITHER THE MATERIAL II FATING TO OTH ER ISSUES WAS AVAILABLE TO THE ID. CIT(A) NOR OPPORTUNITY OF BEIN G HEARD WAS GIVEN TO THE SAID ASSESSEES WHOSE CASES HAVE BEEN REFERRE D BY THE ID. CIT(A). WE, THEREFORE, MODIFY THE ORDER OF THE ID. CIT(A) TO THIS EXTENT THAT THE IMPUGNED OBSERVATIONS MADE BY HIM A RE UNWARRANTED IN THE CASE OF PRESENT ASSESSEES. ACCOR DINGLY, THE CROSS OBJECTIONS BY THE ASSESSEES ARE PARTLY ALLOWE D.' 6. SINCE THE FACTS OF THE PRESENT CASE ARE IDENTICA L TO THE FACTS INVOLVED IN THE AFORESAID REFERRED TO CASE OF KRISHIL UTPADA N MANDI SAMITI, BANTHRA (SUPRA) WHEREIN SIMILAR OBSERVATIONS WERE MADE BY THE LEARNED CIT(A) VIDE ORDER DATED 24/12/2009, SO RESPECTFULLY FOLLOW ING THE AFORESAID REFERRED TO ORDER OF THE TRIBUNAL DATED 21/04/2010, THE GROUND RAISED BY THE ASSESSEE IS ALLOWED. 6 7. GROUND NO. 1 OF THE APPEAL WAS NOT PRESSED BEFOR E US AND ACCORDINGLY WE DISMISS THE SAME AS NOT PRESSED. 8. GROUND NO. 2.1 TO 2.3, RAISED BY THE ASSESSEE IN THE APPEAL, IS STATED TO BE OF ACADEMIC INTEREST ONLY AND, THEREFO RE, NO FINDINGS ARE BEING GIVEN. 9. IN THE RESULT, THE APPEAL IS ALLOWED PARTLY AS I NDICATED ABOVE. (ORDER PRONOUNCED IN THE OPEN COURT ON 14/09/2010 ) SD/. SD/. (B. R. KAUSHIK) (H. L. KARWA) ACCOUNTANT MEMBER VICE PRESIDENT DATED: 14/09/2010 *SINGH COPY FORWARDED TO THE: - 1. APPELLANT. 2. RESPONDENT. 3. CIT (A) 4. CIT 5. DR. ASSISTANT REGISTRAR