Shri Sant Tukaram SSK Ltd., Pune V. Asstt. CIT Cir. 1(2) Pune, Pune

ITA 47/PUN/2010

• Counselvise Citation: [2010] 135 COUNSELVISE.COM (IT) 3132 (ITAT-PUNE)
• Duration Of Justice: 10 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-11-2010
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2006-2007
• Appeal Filed On: 07-01-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: A S SINGH
• Keywords: Depreciation; Unabsorbed depreciation

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER AND SHRI G.S. PANNU, ACCOUNTANT MEMBER I.T.A. NO. 47/PN/2010 : A.Y. 2006-07 SHRI SANT TUKARAM SSK LTD., KASARSAI DARUMBRE, TAL. MULSHI, DIST. PUNE PAN AAAJS 0091 B APPELLANT VS. ASSTT. CIT CIR. 1(2) PUNE RESPONDENT I.T.A. NO. 70/PN/2010 : A.Y. 2006-07 DY. CIT CIR. 1(2) PUNE APPELLANT VS. SHRI SANT TUKARAM SSK LTD., KASARSAI DARUMBRE, TAL. MULSHI, DIST. PUNE PAN AAAJS 0091 B RESPONDENT ASSESSEE BY: SMT. DEEPA KHARE DEPARTMENT BY: SHRI A.S. SINGH ORDER PER SHALENDRA KUMAR YADAV, JM THESE CROSS APPEALS ARISE OUT OF ORDER OF THE CIT(A)-I PUNE DATED 18-9-2009 FOR A.Y. 2006-07. ITA NO. 47/PN/2010 (ASSESSEES APPEAL) 2. IN THIS APPEAL, THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS: PAGE 2 OF 5 ITA NO. 47 AND 70/PN/2010 SHRI SANT TUKARAM SSK LTD. A.Y. 2006-07 1. HONBLE CIT(A) I PUNE HAS ERRED IN CONFIRMING THE DISALLOWANCE OF CEREMONY EXPENSES OF RS. 1,09,672/-, TELEPHONE EXPENSES OF RS. 15,616/-, VEHICLE EXPENSES OF RS. 80,645/-. 2. THE UNABSORBED DEPRECIATION AND CARRY FORWARD BUSINESS LOSSES MAY BE RECOMPUTED IN LIGHT OF GROUND NO. 1 3. THE ASSESSEE IS A CO-OPERATIVE SOCIETY ENGAGED I N MANUFACTURING AND SALE OF SUGAR AND BYE PRODUCTS. THE A.O NOTICED THAT THAT THE ASSESSEE HAS CLAIMED TELEPHONE EXPENSES AT RS. 3,72,917/- IN SUPPORT OF WHICH NO CALL REGISTER OR OTHER DETAILS HAVE BEEN MAINTAINED. ACCORDING TO THE A.O IN THE ABSENCE OF DETAILS, ASSESSEE FAILED TO SUBSTANTIATE THAT THE S AID EXPENSES HAVE BEEN INCURRED EXCLUSIVELY FOR BUSINES S PURPOSE. ACCORDINGLY, 10% OUT OF SUCH EXPENSES WAS DISALLOWED. SIMILARLY, OUT OF VEHICLE EXPENSES CLAI MED AT RS. 8,06,451/- A DISALLOWANCE WAS MADE AT 10% ON THE GROUND THAT IN THE ABSENCE OF DETAILS, ASSESSEE COULD NOT ESTABLISH THAT THE SAID EXPENSES HAVE BEE N EXCLUSIVELY INCURRED FOR BUSINESS PURPOSES. AS REGARDS DISALLOWANCE OUT OF CEREMONY EXPENSES, THE A.O NOTICED THAT THE EXPENSES WERE NOT FOUND TO BE INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSES OF BUSINESS AND THEREFORE, THE ENTIRE EXPENDITURE CLAI MED UNDER THE HEAD CEREMONY EXPENSES WAS DISALLOWED. PAGE 3 OF 5 ITA NO. 47 AND 70/PN/2010 SHRI SANT TUKARAM SSK LTD. A.Y. 2006-07 4. ON APPEAL, THE CIT(A) RESTRICTED THE DISALLOWANC E TO 50% OF THE DISALLOWANCE MADE BY THE A.O., ON ACCOUNT OF TELEPHONE EXPENSES, VEHICLE EXPENSES AND CEREMONY EXPENSES. AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 5. HAVING CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD, WE FIND THAT THE CIT(A) WAS JUSTIFIED IN RESTRICTING THE DISALLOWANCE TO 50% OF THE TOTAL DISALLOWANCE ON ACCOUNT VEHICLE EXPENSES, TELEPHONE EXPENSES AND CEREMONY EXPENSES AND AS SUCH NO INTERFERENCE IS CALLED FOR AT OUR END. 6. GROUND NO.2 IS CONSEQUENTIAL IN NATURE. THE A.O IS DIRECTED TO VERIFY AND ALLOW THE CORRECT SET OFF FOR UNABSORBED DEPRECIATION AND CARRY FORWARD TO BUSINESS LOSSES AS PER LAW WHILE GIVING EFFECT TO T HIS ORDER. THIS GROUND IS DISPOSED OFF ACCORDINGLY. ITA NO . 70/PN/2010 (DEPARTMENTS APPEAL) 7. THE ONLY GROUND RAISED BY THE REVENUE IN THIS APPEAL RELATES TO DELETION OF ADDITION OF RS. 6,82, 044/- ON ACCOUNT OF SALE OF SUGAR AT CONCESSINAL RATE TO THE MEMBERS. PAGE 4 OF 5 ITA NO. 47 AND 70/PN/2010 SHRI SANT TUKARAM SSK LTD. A.Y. 2006-07 8. THE LEARNED REPRESENTATIVES OF THE PARTIES FAIRL Y AGREED THAT THIS ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE TRIBUNALS DECISION IN THE CASE OF CHHATRAPATI SSK LTD., IN ITA NO. 1924 TO 1926/PN/1990 DATED 80801996. THE ITAT IN THE SAID JUDGMENT HAS DELETED THE IDENTICAL ADDITION MADE ON ACCOUNT OF SALE OF SUGAR AT CONCESSIONAL RATE BY HOLDING AS UNDER: 39. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. THERE IS NO DISPUTE REGARDING THE FACT THAT THE ASSESSEE HAS SOLD SUGAR TO ITS MEMBERS AT CONCESSIONAL RATES. ON SUCH CONCESSIONAL SALES NO PROFIT HAS ACCRUED TO THE ASSESSEE. THERE IS NO LAW TO PROHIBIT THE CONCESSIONAL SALES BY THE ASSESSEE SOCIETY TO ITS MEMBERS. THE SUPREME COURT IN THE CASE OF CIT VS. A. RAMAN & CO. (67 ITR 11) HAS LAID DOWN THAT THE LAW DOES NOT OBLIGE A TRADER TO MAKE THE MAXIMUM PROFIT THAT HE EARN OUT OF HIS TRADING TRANSACTIONS . INCOME WHICH ACCRUES TO A TRADER IS TAXABLE IN HIS HANDS; INCOME WHICH HE COULD HAVE, BUT HAS NOT EARNED, IS NOT MADE TAXABLE AS INCOME ACCRUED TO HIM. IN THE CASE OF THE ASSESSEE BEFORE US, NO INCOME ACCRUED TO THE ASSESSEE ON CONCESSIONAL SALES AND THE ASSESSEE SOCIETY WAS, THEREFORE, NOT LIABLE TO BE ASSESSED ON THE SUMS ADDED BY THE REVENUE FOR THESE ASSESSMENT YEARS. IN OUR VIEW, THEREFORE, THE ADDITIONS WERE NOT JUSTIFIED AND HENCE DELETED. 9. IN VIEW OF THE ABOVE DISCUSSIONS, AND RESPECTFUL LY FOLLOWING THE DECISION OF THE CO-ORDINATE BENCH OF I.T.A.T. IN THE CASE OF CHHATRAPATI SSK (SUPRA) WE UPHOLD THE ORDER OF THE CIT(A) IN DELETING THE SAID PAGE 5 OF 5 ITA NO. 47 AND 70/PN/2010 SHRI SANT TUKARAM SSK LTD. A.Y. 2006-07 ADDITION ON ACCOUNT OF SALE OF SUGAR AT CONCESSIONA L RATE. THIS GROUND IS THUS DISMISSED. 10. IN THE RESULT, BOTH THE APPEALS ARE DISMISSED. ORDER PRONOUNCED ON THE 25 TH NOVEMBER 2010. SD/- SD/- (G.S. PANNU) ACCOUNTANT MEMBER ( SHAILENDRA KUMAR YADAV) JUDICIAL MEMBER PUNE DATED THE 25 TH NOVEMBER 2010 ANKAM COPY OF THE ORDER IS FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A)- I PUNE 4. THE CIT- I PUNE 5. THE D.R, A BENCH, PUNE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL PUNE