Asst. Commissioner of Income tax Cir. 2, Belgaum V. Shri. Doodhganga Krishna Sahakari Sakkare Karkhane Niyamit, Belgaum

ITA 436/PAN/2013

• Counselvise Citation: 43624114 RSA 2013
• Duration Of Justice: 11 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-12-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 18-12-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 30-12-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NISHANT K
• Assessee Lawyers: PRAVEEN P GH ALI
• Keywords: Question of law

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PANAJI BENCH, PANAJI BEFORE SHRI P.K. BANSAL, HONBLE ACCOUNTANT MEMBER AND SHRI D.T. GARASIA, HONBLE JUDICIAL MEMBER ITA NO. 436/PNJ/2013 : (ASST. YEAR : 2008 - 09) ASST. COMMISSIONER OF INCOME TAX, CIRCLE - 2, BELGAUM (APPELLANT) VS. SHRI DOODHGANGA KRISHNA SAHAKARI SAKKARE KARKHANE NIYAMIT, CHIKKODI (RESPONDENT) PAN : AAAAS1328L ASSESSEE BY : PRAVEEN P. GHALI, CA REVENUE BY : NISHANT K., DR DATE OF HEARING : 18/12/2014 DATE OF PRONOUNCEMENT : 19 /12/2014 O R D E R PER P.K. BANSAL 1. THIS APPEAL HAS BEEN FILED BY THE REVENUE AGAINST THE ORDER OF CIT(A), BELGAUM DT. 27.11.2013 BY TAKING THE FOLLOWING EFFECTIVE GROUNDS OF APPEAL: (1) THE LEARNED CIT(APPEALS) ERRED IN NOT FOLLOWING THE PROCEDURE LAID DOWN IN SECTION 250 IN PARTICULARLY SUB - SECTIONS (1) AND ERRED IN PASSING THE ORDER WITHOUT GIVING NOTICE OF HEARING TO THE ASSESSING OFFICER AND THEREFORE, THE ORDER PASSED BY THE CIT(APPEALS) IS BAD IN LAW AND REQUIRES TO BE SET ASIDE. (2 ) THE LEARNED CIT(APPEALS) ERRED IN NOT ALLOWING THE RIGHT TO BE HEARD TO THE ASSESSING OFFICER EITHER IN PERSON OR BY A REPRESENTATIVE AS PER SECTION 250(2) OF THE I. T. ACT, 1961 IN THE LIGHT OF THE OBSERVATIONS MADE BY THE HONBLE HIGH COURT OF KARNATAKA , IN ASSESSEES OWN CASE FOR ASSESSMENT YEARS 1995 - 96 TO 1999 - 2000 IN ITA NOS.5029/2010/C/W 5030/2010, 5031/2010, AND THEREFORE, THE ORDER PASSED BY THE CIT(APPEALS) IS BAD IN LAW AND REQUIRES TO BE SET ASIDE. (3) THE LEARNED CIT(APPEALS) ERRED IN DEPRIVI NG THE ASSESSING OFFICER TO AVAIL RIGHT TO BE EXAMINE THE FARMERS IN THE LIGHT OF THE OBSERVATIONS OF THE HONBLE HIGH COURT OF KARNATAKA IN THE ASSESSEES OWN CASE FOR ASSESSMENT YEARS 1995 - 96 TO 1999 - 2000 IN ITA NOS.5029/2010/C/W 5030/2010, 5031/2010 . ( 4) THE LEARNED CIT(APPEALS), ERRED IN NOT EXERCISING THE POWERS VESTED UNDER HIM UNDER THE PROVISIONS OF RULE 46A(4) OF THE I.T. RULES, 1962 TO EXAMINE THE FARMERS IN VIEW 2 ITA NO. 436/PNJ/2013 (A.Y : 2008 - 09) OF THE OBSERVATIONS OF THE HONBLE HIGH COURT OF KARNATAKA IN THE ASSESSEES OWN CAS E AND AS SUCH, THE ORDER PASSED IN BAD IN LAW AND REQUIRES TO BE SET ASIDE. 2. THE ONLY ISSUE INVOLVED IN THE GROUNDS TAKEN BY THE REVENUE RELATE TO DELETION OF ADDITION OF RS. 1,51,91,667/ - DISALLOWED AS INTEREST INCURRED BY THE ASSESSEE ON REFUNDABLE, NON - REFUNDABLE EXPANSION AND DEVELOPMENT DEPOSITS AS WELL AS THE FACT THAT THE AO HAS NOT BEEN HEARD BY THE CIT(A) AS PER THE PROVISIONS OF SEC. 250(2). 3. WE HEARD THE RIVAL SUBMISSIONS AND CAREFULLY CONSIDERED THE ISSUE BEFORE US. THE L D. DR COULD NOT PRODUCE ANY EVIDENCE WHICH MAY PROVE THAT THE CIT(A) HAS NOT ISSUED NOTICE FOR HEARING TO THE AO, THEREFORE, WE DISMISS THE GROUND THAT THE CIT(A) ERRED IN NOT ALLOWING HEARING TO THE AO. 4. SO FAR AS THE CLAIM OF DEDUCTION IN RESPECT OF INTEREST IS CONCERNED, WE NOTED THAT THIS ISSUE IS DULY COVERED BY THE DECISION OF THIS TRIBUNAL IN ASSESSEES OWN CASE FOR A.YS 2003 - 04 TO 2006 - 07 IN WHICH THIS TRIBUNAL UNDER PARA 3.2 OF ITS ORDER DT. 23.3.2011 HAS HELD AS UNDER : THE APPELLATE TRIBUN AL, IN THE ASSESSEES OWN CASE BY ITS ORDER DATED 3.12.2009 IN ITA NOS. 7 TO 11/PNJ/2009 HAS HELD THAT SUCH DEPOSITS CANNOT BE TREATED AS TRADING RECEIPTS LIABLE TO TAX AND ALSO UPHELD THE DELETION OF DISALLOWANCE OF INTEREST MADE ON THE SAID DEPOSITS. FO R THE SAKE OF CONSISTENCY, WE FIND NO REASON TO INTERFERE WITH THE DECISION REACHED BY THE LD. CIT(A). IN THAT VIEW OF THE MATTER, THE GROUNDS IN APPEAL RAISED BY REVENUE ON THESE COUNTS STAND REJECTED. NO CONTRARY DECISION WAS BROUGHT TO OUR KNOWLEDGE BY THE LD. DR. RESPECTFULLY FOLLOWING THE DECISION OF THIS TRIBUNAL, WE CONFIRM THE ORDER OF CIT(A) DELETING THE DISALLOWANCE MADE IN RESPECT OF INTEREST PAID ON REFUNDABLE, NON - REFUNDABLE EXPANSION AND DEVELOPMENT DEPOSITS. WE NOTED THAT THE HON'BLE KAR NATAKA HIGH COURT IN THE ASSESSEES OWN CASE BEING ITA NOS. 5030 TO 5033/2010 VIDE ITS ORDER DT. 7.3.2011 IN RESPECT OF INTEREST ON REFUNDABLE DEPOSIT HAS HELD AS UNDER : 3 ITA NO. 436/PNJ/2013 (A.Y : 2008 - 09) 3. WE HAVE HEARD THE LEARNED COUNSEL FOR BOTH THE PARTIES. 4 . THE MAIN GRIEVANCE O F THE L EARNED COUNSEL FOR THE APPELLANTS IS THAT THE COMMISSIONER OF INCOME TAX (APPEALS), AS WELL AS THE TRIBUNAL DID NOT CONSIDER THAT THE ASSESSEE DID NOT PROVE THAT IT HAD A RIGHT T O COLLECT THE DEPOSIT FROM ITS FARMERS OR SUGARCANE GROWERS AND THAT AC TUALLY IT IS A REFUNDABLE DEPOSIT WITH INTEREST. THEREFORE, HE REQUESTS THE COURT TO SET ASIDE THE FINDINGS OF THE AUTHORIT IES BELOW . 5 . PER CONTRA, THE LEARNED COUNSEL FOR THE RESPONDENT - ASSESSEE SUBMITS THAT BEFORE THE ASSESSING OFFICER THE ASSESSED HAS PRODUCED THE DOCU M ENT TO SHOW THE INSTANCE WHERE THE FARMERS HAVE WI T HDRAWN THE DEPOSIT AND ALSO THE INTEREST . THEREFORE, HE CONTENDS THAT THERE ARE NO MERITS IN THIS APPEAL AND REQUIRES TO BE DI SMISS ED. 6 . HAVING HEARD THE LEARNED COUNSEL FOR THE PARTIES, WE DO NOT SEE ANY SUBSTANTIAL QUESTIONS O F LAW ARISES IN THIS APPEAL FOR THE FOLLOWING REASONS : ADMITTEDLY, WHETHER THE AMOUNT DEDUCTED OUT OF THE PAYMENT PAYABLE TO THE FARMERS OUT O F THE SUGARCANE PRICE UNDE R THE NAME OF REFUNDABLE DEPOSIT WITH INTEREST AND WHETHER SUCH AMOUNT IS REA LL Y REFUNDABLE TO THE SUGARCANE SUPPLIERS WITH INTEREST OR NOT IS A QUESTION OF FACT. 7. THE COMMISSIONER OF INCOME TAX (APPEALS) AS WELL AS THE TRIBUNAL HAVE CONCURRENTLY HELD THAT THE ACCOUNTS PRODUCED BY THE ASSESSEE ESTABLISH THAT THEY ARE THE REFUNDABLE DEPOSITS WITH INTEREST TO THE FARMERS. IF IT IS SO, THE CASE OF THE REVENUE CANNOT BE ACCEPTED BY THIS COURT AND WE DO NOT SEE ANY SUBSTANTIAL QUESTIONS O F LAW ARISES IN THIS APPEAL. 8. ACCORDINGLY WE DO NOT SEE ANY MERITS IN THIS AP P EA L. WHILE CONSIDER I NG THE CASE OF THE PARTIES, WE ARE OF THE OPINION AS TO WHETHER THE AMOUNT IN DEPOSIT I S REFUNDABLE OR NOT, THE ASSESSING O F FICER WAS REQUIRED TO I S SUE NOTICE TO THE FARMERS AND FIND OUT WHETHER REALLY DEPOSITS ARE MADE BY THEM AND ARE ENTIT L ED TO CLAIM INTEREST FROM THE SUGARC A N E FACTORY. UNFO RT U N ATELY SUCH EXERCISE HAS NOT BEEN DONE BY THE ASSESSING OFFICER . IN THE ABSENCE OF SUCH FINDING, I T IS DIFFICU LT FOR US TO ACCEPT THE ARGUMENTS ADVANCED BY THE LEARNED COUNSEL FOR THE APPELLANTS. 9. ACCORD INGLY, THESE APPEALS ARE DISMISSED HOLDING THAT NO QUESTION OF LAW ARISES. 5. IN THIS CASE, WE NOTED THAT THE ASSESSEE HAS SUBMITTED BEFORE THE AO DETAILS OF THE DEPOSITS AS REFUNDABLE, NON - REFUNDABLE EXPANSION AND DEVELOPMENT DEPOSITS. THE AO HAS NOT DISPUTED THE NATURE OF THE DEPOSITS BUT 4 ITA NO. 436/PNJ/2013 (A.Y : 2008 - 09) ONLY DISALLOWED THE INTEREST ON THE BASIS THAT THE DECISION OF ITAT, PANAJI BENCH FOR A.YS 1995 - 96 TO 1999 - 2000 IS PENDIN G BEFORE THE HON'BLE KARNATAKA HIGH COURT. WE, THEREFORE, AT THIS STAGE CANNOT ACCEPT THE PLEA OF THE LD. DR THAT THE MATTER BE RESTORED TO THE FILE OF AO FOR ISSUING NOTICE TO THE FARMERS TO FIND OUT WHETHER REALLY DEPOSITS ARE MADE BY THEM AND WHETHER T HEY ARE ENTITLED TO CLAIM THE INTEREST FROM SUGARCANE FACTORIES. WE, THEREFORE, IN VIEW OF THE DECISION OF THE EARLIER YEAR IN THE CASE OF THE ASSESSEE, CONFIRM THE ORDER OF CIT(A) DELETING THE INTEREST LIABILITY INCURRED BY THE ASSESSEE ON THE VARIOUS DE POSITS. 6. IN THE RESULT, THE APPEAL FILED BY THE REVENUE STANDS DISMISSED. 7. ORDER PRONOUNCED IN THE OPEN COURT ON 1 9 /12/ 201 4 . S D / - (D.T.GARASIA) JUDICIAL MEMBER S D / - (P.K. BANSAL) ACCOUNTANT MEMBER PLACE : PANAJI / GOA DATED : 1 9 /12/ 201 4 *SSL* COPY TO : (1) APPELLANT (2) RESPONDENT (3) CIT CONCERNED (4) CIT (5) D.R (6) GUARD FILE TRUE COPY, BY ORDER ,