ACIT, Meerut V. M/s. Cane Development Council, Meerut

ITA 3869/DEL/2013

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 0140 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-06-2015
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 11-06-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 17-06-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: PARWINDER KAUR
• Section: 12AA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH B , NEW DELHI BEFORE S HRI H.S.SIDHU , JUDICIAL MEMBER AND SHRI J. SUDHAKAR REDDY, ACCOUNTANT MEMBER ITA NO. 3869 /DEL/201 3 AY: 200 6 - 07 ACIT, CIRCLE 1 VS. CANE DEVELOPMENT COUNCIL MEERUT MALIYAN, VIL. & PO MALIYANA MEERUT PAN: AAFFG 8693 L (APPELLANT) (RESPONDENT) APPELLANT BY : SMT.PARWINDER KAUR, SR. D.R. RESPONDENT BY : NONE ORDER PER J. SUDHAKAR REDDY, ACCOUNTANT MEMBER THIS APPEAL IS FILED BY THE REVENUE AND IS DIRECTED AGAINST THE ORDER OF LD.CIT(A), MEERUT DATED 28.3.2013 PERTAINING TO THE A.Y. 2006 - 07. 2. THE FACTS ARE BROUGHT OUT AT PARA 3.2 OF THE ORDER OF LD.CIT(A) WHICH IS EXTRACTED FOR READY REFERENCE. 3.2. THE FACTS OF THE CASE ARE THAT THE ASSESSEE IS A SOCIETY ENGAGED IN THE CONSTRUCTION OF ROAD, CULVERTS ETC. IN THE ASSIGNED AREA IN ORDER TO FACILITATE BATTER QUALITY PRODUCTION OF SUGARCANE AND ITS MARKETING. THE ASSESSEE HAS BEEN ESTABLISHED UNDER RULE 8 OF UP SUGARCANE (REGULATION OF SUPPLY AND PURCHASE) RULES, 1954. ASSESSEE IS REQUIRED TO CARRY OUT SUGARCANE DEVELOPMENT PROGRAMS/SCHEMES OF STATE GOVERNMENT. CONSTRUCTION OF ROADS AND CULVERTS I S DONE ON THE LAND OF THE GOVERNMENT AND THIS CONSTRUCTION BECOMES A GOVERNMENT PROPERTY. THEREFORE, THE ASSESSEE IS ENGAGED IN DEVELOPMENT AREA NOT FOR PROFIT. THE ASSESSEE RECEIVES FUNDS BY WAY OF GRANTS EITHER FROM THE CENTRAL OR STATE GOVERNMENT OR F ROM CONTRIBUTION FROM CANE GROWERS CO O P E RATIVE SOCIETY. IF THERE IS ANY SURPLUS IN A YEAR , IT ONLY IN ITA NO. 3869/DEL/13, A.Y. 2006 - 07 CANE DEVELOPMENT COUNCIL 2 THE NATURE OF CAPITAL FUND NOT LIABLE TO TAX. IN THE ASSESSMENT ORDER, THE AO HAS BROUGHT TO TAX THE SURPLUS FUNDS OF RS.23,76,777/ - AS TAXABLE INCOME FOR THE YEAR ON THE GROUND THAT THE ASSESSEE IS NOT AN APPROVED INSTITUTION U/S 12AA. 3 . NONE APPEARED ON BEHALF OF THE ASSESSEE. WRITTEN SUBMISSIONS FILED ALONG WITH CERTAIN PAPERS. 4 . THE FIRST APPELLATE AUTHORITY HAS AT PARA 3.4 HELD AS FOLLOWS. 3.4. THE FACTS OF THE CASE HAVE BEEN CONSIDERED. IT IS NOTED THAT SUBMISSIONS HAVE ALSO BEEN MADE ON SIMILAR LINES DURING THE ASSESSMENT PROCEEDINGS BUT THESE HAVE NOT BEEN DISCUSSED IN THE ASSESSMENT ORDER. NOTWITHSTANDING THE FACT THAT THE WORD INCOME, AS USED IN THE ACT, IS A WORD OF VIDE IMPORT AND THE DEFINITION GIVEN IS AN INCLUSIVE DEFINITION, ALL RECEIPTS CANNOT BE TREATED AS INCOME. IN THE CASE UNDER CONSIDERATION, THE AMOUNT RECEIVED BY THE ASSESSEE, WHO WAS UNSPENT, WAS MONEY HOLDING IN TRUST AND CANNOT BE TREATED AS INCOME. IN VIEW OF THE DECISION QUOTED ABOVE PARTICULARLY THE DECISION OF ITAT, IT IS HELD THAT THE SURPLUS OF RECEIPT OVER EXPENDITURE DID NOT CONSTITUTE THE INCOME OF THE ASSESSEE. 5 . AGGRIEVED THE REVENUE IS IN APPEAL BEFORE US ON THE FOLLOWING GROUNDS. 1. WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD.CIT(A) HAS ERRED IN LAW IN DELETING THE ADDITION OF RS.23,76,777/ - MADE BY AO HOLDING THAT SURPLUS OF RECEIPT OVER EXPENDITURE DID NOT CONSTITUTE THE INCOME OF THE ASSESSEE, IGNORING THE FACT THAT THE ADDITION WAS MADE BY THE AO BECAUSE ASSESSEE WAS NOT POSSESSING REGISTRATION U/S 12AA OF THE ACT AND HENCE, SURPLUS WAS LIABLE TO BE TAXABLE. 2. THAT THE APPELLANT CRAVES LEAVE TO ADD, MODIFY AND/OR DELETE ANY G ROUNDS OF APPEAL. 3. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ORDER OF THE CIT(A) MAY BE SET ASIDE AND THAT OF THE A.O. RESTORED. 6 . WE HAVE HEARD SMT.PARWINDER KAUR, LD.SR.D.R. ON BEHALF OF THE REVENUE AND PERUSED THE WRITTEN SUBMISSIONS FILE D BY THE ASSESSEE. THE FIRST APPELLATE AUTHORITY HAS NOT GIVEN A SPEAKING ORDER IN THIS CASE. HE HAS ALSO ITA NO. 3869/DEL/13, A.Y. 2006 - 07 CANE DEVELOPMENT COUNCIL 3 NOT DISCUSSED AS TO HOW , THE VARIOUS CASE LAWS CITED BY HIM , ARE FACTUALLY IDENTICAL TO THE CASE ON HAND. IN OUR VIEW THE ORDER IS NOT A REASONED ORD ER. HENCE WE SET ASIDE THE ISSUE TO THE FILE OF THE FIRST APPELLATE AUTHORITY FOR PASSING A SPEAKING ORDER IN ACCORDANCE WITH LAW. 7 . I N THE RESULT THE APPEAL OF THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH JUNE, 2015. SD/ - SD/ - ( H.S.SIDHU ) (J. SUDHAKAR REDDY ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: THE 30TH JUNE, 2015 MANGA COPY FORWARDED TO: - 1 . APPELLANT 2 . RESPONDENT 3 . CIT 4 . CIT(A) 5 . DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR