Deputy Commissioner of Income-tax, V. M/s. S. K. Agrotech, Jalgaon

ITA 461/PUN/2014

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 7699 (ITAT-PUNE)
• Duration Of Justice: 3 year(s) 5 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-08-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 07-07-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 07-03-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIVEK AGGARWAL
• Keywords: Business income; Depreciation; Sham transactions

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B , PUNE , , BEFORE MS. SUSHMA CHOWLA, JM AND SHRI ANIL CHATURVEDI, AM . / ITA NO. 461 /P U N/201 4 / ASSESSMENT YEAR : 20 09 - 10 THE DY. COMMISSIONER OF INCOME TAX, CIRCLE 1, JALGAON . / APPELLANT VS. M/S. S.K. AGROTECH C/O S.K. OIL INDUSTRIES COMPOUND, SHIVAJI NAGAR, JALGAON 425001 . / RESPONDENT PAN: AAKFM2762P / APPELLANT BY : SHRI VIVEK AGGARWAL / RESPONDENT BY : SHRI NIKHIL PATHAK / DATE OF HEARING : 27 .0 7 . 2017 / DATE OF PRONOUNCEMENT: 16 . 0 8 .201 7 / ORDER PER SUSHMA CHOWLA, J M : TH E APPEAL FILED BY THE REVENUE IS AGAINST THE ORDER OF CIT (A) - II , NASHIK , DATED 16.12.2013 RELATING TO ASSESSMENT YEAR 20 09 - 10 AGAINST ORDER PASSED UNDER SECTION 14 3(3) OF THE INCOME - TAX ACT , 1961 (IN SHORT THE ACT) . 2 . THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL : - ITA NO. 461 /P U N/20 1 4 M/S. S.K. AGROTECH 2 1) ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE CIT(A) HAS ERRED IN NOT ADJUDICATING THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE AGAINST VARIOUS ADDITIONS MADE BY THE A.O. AN D GIVING DECISION ON THE ISSUE NOT RAISED BY THE ASSESSEE AT ALL OR WHICH IS NOT A PART OF DISPUTE. 2) ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE CIT(A) ALSO ERRED IN GIVING ABOVE JUDGMENT WITHOUT VERIFYING IF THE ASSESSEE HAS APPEALED AGAINST THE ORD ER OF THE CIT(A) IN THE CASE OF ITS SISTER CONCERN MAHARASHTRA SOLVENT EXTRACTION PVT. LTD. 3) IN VIEW OF ABOVE, SINCE THE ISSUE AS TO WHETHER THE ADDITION OF RS.47,94,662/ - IN THE CASE OF MAHARASHTRA SOLVENT EXTRACTION PVT. LTD. OR THE ADDITIONS IN THIS CASE HAS NOT REACHED TO ITS FINALITY, IT IS THEREFORE, PRAYED THAT THE ORDER OF THE CIT(A) MAY BE VACATED AND THAT OF THE A.O. BE RESTORED. 3. THE REVENUE IS IN APPEAL AGAINST THE ORDER OF CIT(A) IN COMPUTING THE INCOME IN THE HANDS OF ASSESSEE ON ACCOUNT OF RENTAL INCOME ONLY. 4. BRIEFLY, IN THE FACTS OF THE CASE, THE ASSESSEE HAD FURNISHED THE RETURN OF INCOME DECLARING TOTAL INCOME OF RS. 44,19,860/ - . DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTED THAT THE ASSESSEE HAD MADE TH E TOTAL SALES TO MAHARASHTRA SOLVENT EXTRACTIONS PVT. LTD. WITHOUT ANY DELIVERY OF GOODS. THE ASSESSING OFFICER HELD THE SAID TRANSACTIONS WITHOUT DELIVERY OF GOODS AS SPECULATION BUSINESS AND THE INCOME OF THE ASSESSEE WAS ASSESSED AS SPECULATION PROFITS AND RS.9 LAKHS WAS ADDED TO THE INCOME OF ASSESSEE, SINCE THE ASSESSEE HAD SOLD THE GOODS TO SISTER CONCERN BELOW THE MARKET RATES. FURTHER, DISALLOWANCE ON ACCOUNT OF VARIOUS EXPENSES WAS MADE IN THE HANDS OF ASSESSEE. 5. THE CIT(A) NOTED THAT WHILE DE CIDING THE APPEAL OF MAHARASHTRA SOLVENT EXTRACTIONS PVT. LTD., (MSEPL) THE TRANSACTION S OF SALE AND PURCHASE SHOWN AT RS.41.04 CRORES AND RS.41.52 CRORES RESULTING INTO EXPENDITURE OF RS.47,85,927/ - , WERE HELD AS SHAM TRANSACTIONS AND WERE TO BE IGNORED I N VIEW OF THE FACTS OF THE CASE. ACCORDINGLY, ADDITION MADE IN THE HANDS OF ITA NO. 461 /P U N/20 1 4 M/S. S.K. AGROTECH 3 MSEPL AT RS.44,85,927/ - WAS CONFIRMED SUBJECT TO DELETION TO THE EXTENT OF RS.3 LAKHS. THE CIT(A) HELD THAT WHEN THE ADDITION ON ACCOUNT OF REDUCTION IN THE PROFIT DUE TO TRANSAC TIONS OF PROFIT AND SALE WITH THE ASSESSEE FIRM HAD BEEN CONFIRMED IN THE CASE OF MSEPL TO THE EXTENT OF RS.44,85,927/ - , THE NECESSARY COROLLARY OF THE SAID DECISION WAS THAT THE ASSESSEE HAD NOT CARRIED OUT ANY BUSINESS AND HAD ONLY EARNED INCOME FROM LET TING OF WAREHOUSE WHICH HAS TO BE TAXED UNDER THE HEAD INCOME FROM HOUSE PROPERTY. FURTHER, THE EXPENDITURE DEBITED TO THE PROFIT AND LOSS ACCOUNT TOWARDS ADMINISTRATIVE EXPENSES, INTEREST AND FINANCE CHARGES, DEPRECIATION WAS DISALLOWED. HOWEVER, INCO ME FROM HOUSE PROPERTY AT RS.3 LAKHS WAS ADDED IN THE HANDS OF ASSESSEE AND STATUTORY DEDUCTION @ 30% WAS ALLOWED. 6. THE REVENUE IS IN APPEAL AGAINST THE ORDER OF CIT(A). 7. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ISSUE ARISING IN THE PRESENT APPEAL IS LINKED TO THE APPEAL FILED BY MSEPL BEING ITA NO.73 /PUN/2013, RELATING TO ASSESSMENT YEAR 2009 - 10, WHEREIN THE GROUND OF APPEAL NO.4 RAISED AGAINST THE ADDITION O F RS.44,85,927/ - IS NOT PRESSED. THE NECESSARY COROLLARY TO THE SAME IS THAT THE ADDITION OF RS.44,85,927/ - ON ACCOUNT OF TRANSACTIONS OF SALE AND PURCHASE HAS BEEN ADDED IN THE HANDS OF MSEPL. THE ASSESSEE BEFORE US HAD ONLY FURNISHED THE SAID TRANSACTION IN ITS PROFIT AND LOSS ACCOUNT AND ONCE THE SAID TRANSACTION IS AS SESSED IN THE HANDS OF MSEPL, PROFIT SHOWN BY THE ASSESSEE IS NOT TO BE INCLUDED IN THE HANDS OF ASSESSEE AS ADDITION IS TO BE MADE IN ONE HAND AND NOT IN BOTH THE HANDS. ACCORDINGLY, WE UPHOLD THE ORDER OF CIT(A) IN THIS REGARD. FURTHER, THE CIT(A) HAS COMPUTED THE INCOME FROM HOUSE PROPERTY ON ACCOUNT OF RENT DUE FROM MSEPL TO THE ASSESSEE FIRM. ITA NO. 461 /P U N/20 1 4 M/S. S.K. AGROTECH 4 ACCORDINGLY, THE SAME MERITS TO BE INCLUDED IN THE HANDS OF ASSESSEE. WE HOLD SO. THE GROUNDS OF APPEAL RAISED BY THE REVENUE BECOME INFRUCTUOUS AND THE SAME ARE DISMISSED. 8 . IN THE RESULT, THE APPEAL OF REVENUE IS DISMISSE D. ORDER PRONOUNCED ON THIS 16 TH DAY OF AUGUST , 201 7 . SD/ - SD/ - (ANIL CHATURVEDI ) (SUSHMA CHOWLA ) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE ; DATED : 16 TH AUGUST , 201 7 . GCVSR / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPE LLANT ; 2. / THE RESPONDENT; 3. ( ) / THE CIT (A) - II , NASHIK ; 4. / THE CIT - II, NASHIK ; 5. , , / DR B , ITAT, PUNE; 6. / GUARD FILE . / BY ORDER , // TRUE COPY // / SR. PRIVATE SECRETARY , / ITAT, PUNE