Kisan Sahkari Chini Mills Ltd, Pilibhit V. Dy. Commissioner of Income Tax, Bareilly

ITA 364/LKW/2014

• Counselvise Citation: 36423714 RSA 2014
• Duration Of Justice: 1 year(s) 4 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-10-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 09-09-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 09-05-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Opportunity of being heard
• Section: 43B

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH A, LUCKNOW BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER ITA NO.364/LKW/2014 ASSESSMENT YEAR 2006-07 DCIT, CIRCLE-II, BAREILLY VS KISHAN SAHKARI CHINI MILLS LTD. PURANPUR. PAN AACCK 3995 M (RESPONDENT) (APPELLANT) SHRI SHYAM LAL , CA APPELLANT BY SHRI AMIT NIGAM, DR RESPONDENT BY 09/09/2015 DATE OF HEARING 06 / 10 /2015 DATE OF PRONOUNCEMENT O R D E R PER A. K. GARODIA, A.M. THIS IS AN ASSESSEES APPEAL DIRECTED AGAINST THE O RDER OF LD. CIT (A)- BAREILLY, DATED 03.12.2013 FOR THE AY 2006-07. 2. THE GROUND NO. 1 RAISED BY THE ASSESSEE IS AS UN DER: 1) THE LEARNED COMMISSIONER OF INCOME TAX (APPE ALS) BAREILLY (HEREINAFTER CALLED CIT (APPEALS) HAS ERRED ON FACT S AND IN LAW IN CONFIRMING ADDITION OF RS 18400096.00 ON ACCOUNT OF VALUATION OF CLOSING STOCK OF LEVY SUGAR AT RATE APPLICABLE F OR FREE SUGAR IN THE PRESENT CASE. 3. IT WAS SUBMITTED BY THE LD. AR OF THE ASSESSEE T HAT THE ISSUE IN DISPUTE WAS DECIDED BY THE LD. CIT(A) AGAINST THE ASSESSEE ON T HE BASIS OF TRIBUNALS ORDER IN THE ASSESSEES OWN CASE IN ITA NO. 531 ALLD/1994 FO R AY 1990-91. HE ALSO SUBMITTED THAT THE AOS DECISION IS ALSO ON THE BASIS OF THIS TRIBUNALS ORDER BUT THIS TRIBUNALS 2 ORDER IS NOT APPLICABLE IN THE PRESENT YEAR BECAUSE THE FACTS ARE DIFFERENT. IT WAS SUBMITTED THAT IN AY 1990-91, THERE WAS NO LEVY SUG AR AND THE ASSESSEE WAS ENTITLED TO SALE ENTIRE SUGAR PRODUCTION AS FREE SA LE. IN SUPPORT OF THIS CONTENTION, HE SUBMITTED THAT ON PAGES 15 AND 16 OF THE PAPER BOOK IS ORDER OF THE MINISTRY OF CONSUMER AFFAIRS AND PUBLIC DISTRIBUTION REGARDING 10% LEVY AND 90% FREE SUGAR OUT OF TOTAL PRODUCTION. HE SUBMITTED THAT W.E.F. 0 1.03.2002, THE RATIO OF LEVY AND FREE SUGAR SALE HAS BEEN REVISED FROM 15:85 TO 10:9 0. HE ALSO SUBMITTED THAT ON PAGE 25 IS THE COPY OF CERTIFICATE REGARDING SANCTI ON OF FREE @ 100% IN THE YEAR 1985-86 TO 1991-92. THEREAFTER, HE SUBMITTED THAT S INCE THE TRIBUNALS ORDER FOLLOWED BY THE AUTHORITIES BELOW IS FOR AY 1991 DU RING WHICH PERIOD, THE ENTIRE PRODUCTION OF THE ASSESSEE WAS BEING SOLD AS FREE S ALE SUGAR, THERE WAS NO OCCASION TO VALUE LEVY SUGAR IN THAT YEAR. HE ALSO SUBMITTED THAT THE SAID TRIBUNALS ORDER IN THE ASSESSEE OWN CASE IN THE YEAR 1990 - 1991 IS AV AILABLE AT PAGES 15 TO 23 OF THE PAPER BOOK AND IN PARTICULAR, OUR ATTENTION WAS DRA WN TO PARA 6 OF THE TRIBUNALS ORDER WHERE IT WAS HELD THAT THE ENTIRE CLOSING STO CK OF SUGAR HAS TO BE VALUED AT THE RATE OF FREE SUGAR SALE. HE SUBMITTED THAT SINCE IN THAT YEAR, ASSESSEE WAS ENTITLED TO SALE ENTIRE PRODUCTION AS FREE SALE SUGAR, THE C LOSING STOCK OF SUCH SUGAR WAS TO BE VALUED AT THE RATE OF FREE SALE SUGAR. BUT IN TH E PRESENT YEAR, ONLY A PORTION CAN BE SOLD AS FREE SALE SUGAR AND THEREFORE, ENTIRE ST OCK CANNOT BE VALUED AT THE RATE OF FREE SALE SUGAR. HE ALSO SUBMITTED THAT THE ASSESSE E HAS VALUED FREE SALE SUGAR STOCK @ RS.1660 PER QTL. BEING THE SALE PRICE OF FR EE SALE SUGAR AND SIMILARLY, THE CLOSING STOCK OF LEVY SUGAR IS VALUED BY THE ASSESS EE AT THE RATE OF RS.1330 PER QUTL. BEING THE LEVY SALE PRICE AND THEREFORE, NO ADDITIO N IS CALLED FOR. LD. DR OF THE REVENUE SUPPORTED THE ORDERS OF THE AUTHORITIES BEL OW. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSION. WE FIND FORCE IN THE SUBMISSION OF LD. AR OF THE ASSESSEE. AS PER CERTIFICATE REGARDIN G SANCTION OF SALE OF SUGAR AT THE RATE OF 100% AS FREE SALE QUOTA AVAILABLE AT PAGE 2 5 OF THE PAPER BOOK, IT IS SEEN THAT FOR A PERIOD OF SEVEN YEARS FROM THE YEAR 1985 -86 TO 1991-92, THE ASSESSEE 3 WAS AUTHORIZED TO SALE 100% PRODUCTION AS FREE SALE SUGAR. HENCE, IN THE AY 1990 91, THE TRIBUNAL HAS RIGHTLY HELD THAT THE ENTIRE C LOSING STOCK HAS TO BE VALUED AT THE SELLING PRICE OF FREE SALE SUGAR. NOW, IN THE AY 20 06-07, THE ASSESSEE HAS VALUED THE CLOSING STOCK OF LEVY SUGAR FOR THREE YEARS LYING I N STOCK I.E. THE YEAR 2002-03, 2003- 04 AND 2004-05 AT SELLING PRICE OF LEVY SUGAR. UNDE R THESE FACTS, WE ARE OF THE CONSIDERED OPINION THAT NO ADDITION IS CALLED FOR B ECAUSE CLOSING STOCK OF LEVY SUGAR CANNOT BE VALUED AT SALE PRICE OF FREE SALE SUGAR. HENCE, THE ADDITION MADE BY THE AO AND CONFIRMED BY THE CIT(A) BY VALUING THE LEVY SUGAR ALSO AT THE SALE PRICE OF FREE SALE SUGAR IS DELETED. ACCORDINGLY, GROUND NO. 1 IS ALLOWED. 5. THE GROUND NO.2 RAISED BY THE ASSESSEE IS AS UND ER: 2) THE LEARNED CIT (APPEALS) HAS ERRED ON FACTS & IN LAW IN CONFIRMING DISALLOWANCE OF RS. 117228.00 REPRESENTI NG EXPENSES RELATING TO PREVIOUS YEAR, CRYSTALLIZED DURING THE YEAR, IN THE PRESENT CASE. 6. IT WAS SUBMITTED BY THE LD. AR OF THE ASSESSEE T HAT THIS ISSUE WAS VERY MUCH RAISED BY THE ASSESSEE BEFORE THE AO BUT LD. CIT(A) HAS DECIDED THE ISSUE AGAINST THE ASSESSEE ON THE BASIS THAT THE ASSESSEE DID NOT RAISE THIS ISSUE BEFORE THE AO. HE SUBMITTED THAT IN THE INTEREST OF JUSTICE, THIS MATTER MAY BE RESTORED BACK TO THE FILE OF THE AO FOR FRESH DECISION. LD. DR OF THE RE VENUE SUPPORTED THE ORDER OF THE CIT(A). 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FIN D THAT THIS ISSUE WAS RAISED BY THE ASSESSEE BEFORE LD. CIT(A) AS PER GROUND NO. 7 AND WHILE DECIDING THIS GROUND, IT IS STATED BY THE LD. CIT(A) IN HIS ORDER THAT THE ASSESSEE HAS NOT RAISED THIS ISSUE IN ASSESSMENT PROCEEDING BUT STILL, WE A RE OF THE CONSIDERED OPINION THAT IN THE INTEREST OF JUSTICE, THIS MATTER SHOULD GO B ACK TO THE FILE OF THE AO FOR FRESH DECISION AND HENCE, WE SET ASIDE THE ORDER OF THE L D. CIT ON THIS ISSUE AND RESTORE THIS MATTER BACK TO THE FILE OF THE AO FRESH DECISI ON. THE CLAIM OF THE ASSESSEE IS 4 THAT THE ARREAR SALARY OF RS.30,461/- HAS CRYSTALLI ZED DURING THE PRESENT YEAR. IF THE ASSESSEE CAN ESTABLISH THIS CONTENTION BEFORE THE A O THEN DEDUCTION SHOULD BE ALLOWED FOR THIS AMOUNT. SIMILARLY REGARDING THE CL AIM OF THE BONUS PAYMENT OF RS.86,767/-, IT IS THE CLAIM OF THE ASSESSEE THAT T HE SAME IS ALLOWABLE IN THE PRESENT YEAR U/S 43B OF THE ACT ON PAYMENT BASIS. IF THE AS SESSEE CAN ESTABLISH THAT THE BONUS WAS PAID DURING THE PRESENT YEAR THEN DEDUCTI ON SHOULD BE ALLOWED FOR THE SAME U/S 43B. THE AO SHOULD PASS NECESSARY ORDER AS PER LAW AS PER ABOVE DISCUSSION FURTHER PROVIDING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. GROUND NO.2 IS ALLOWED FOR STATISTICAL PURPOSES. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE STANDS ALLOWED IN THE TERMS INDICATED ABOVE. (ORDER WAS PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTION PAGE) SD/- SD/- (SUNIL KUMAR YADAV) (A. K. GARODIA ) JUDICIAL MEMBER ACCOUNTANT MEMBE R DATED: 06 /10/2015 AKS COPY OF THE ORDER FORWARDED TO : 1.THE APPELLANT 2.THE RESPONDENT. 3.CONCERNED CIT 4.THE CIT(A) 5.D.R., I.T.A.T., LUCKNOW ASSTT. REGI STRAR