ACIT, Bhubaneswar V. Indopol (Jagannth) Agro Pvt. Ltd, Khurda

ITA 486/CTK/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 77509 (ITAT-CUTTACK)
• Duration Of Justice: 5 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-04-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2010-2011
• Appeal Filed On: 11-11-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K AJAY KUMAR
• Assessee Lawyers: D K SHETH; M SHETH
• Keywords: Gift

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL CUTTACK BENCH, CUTTACK . . , . . , BEFORE SHRI P.K.BANSAL , AM & SHRI D.T.GARASIA , JM ./ ITA NO. 486 /C TK/201 3 ( / ASSESSMENT YEAR :20 10 - 11 ) ACIT, CIRCLE - 2(1), BHUBANESWAR VS. M/S INDOPOL (J AGANNATH) AGRO PVT. LTD., RAMACHANDRAPUR BAZAR, JATNI - 752 050, KHURDA ./ ./ PAN/GIR NO. : A ABCI 0779 G ( / APPELLANT ) .. ( / RESPONDENT ) /REVENUE BY : SHRI K.AJAY KUMAR /ASSES SEE BY : SHRI D.K.SHETH & MR. M.SHETH / DATE OF HEARING : 23 RD APRIL, 2014 / DATE OF PRONOUNCEMENT : 23 RD A PRIL, 2014 / O R D E R PER BENCH : THIS APPEAL HAS BEEN FILED AGAINST THE ORDER OF THE CIT(A) DATED 14 - 8 - 2013 BY TAKING FOLLOWING EFFECTIVE GROUNDS OF APPEAL: - 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) WAS NOT JUSTI FIED IN DELETING THE ADDITION OF RS.1,01,69,317/ - MADE BY THE AO DISALLOWING THE CLAIM MADE BY THE ASSESSEE U/S.80IB. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) WAS NOT JUSTIFIED IN DELETING THE ADDITION OF RS.4,53,43,702/ - MAD E BY THE AO ON ACCOUNT OF SALES SUPPRESSION. 2 ITA NO. 486 /201 3 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) WAS NOT JUSTIFIED IN DELETING THE ADDITION OF RS.9,000/ - MADE BY THE AO U/S.35D. 2 . GROUND NO.1 RELATES TO THE DELETION OF THE ADDITION OF RS.1,01,69,317/ - MADE BY THE AO BY DISALLOWING THE CLAIM MADE BY THE ASSESSEE U/S.80IB. 2.1 . SIMILAR ISSUE HAS COME UP BEFORE THIS TRIBUNAL IN ASSESSEES OWN CASE IN THE PRECEDING YEAR 2009 - 10. BOTH THE PARTIES AGREED THAT THIS ISSUE HAS BEEN DECIDED BY THIS TRIBUNAL IN ITA NO. 242 & 243/CTK/2013, VIDE ITS ORDER DATED 10 - 6 - 2013 IN FAVOUR OF THE ASSESSEE. RESPECTFULLY FOLLOWING THE DECISION OF THE TRIBUNAL, WHICH WE HAVE PERUSED, COPY OF WHICH WAS FILED BEFORE US, IN OUR OPINION, NO INTERFERENCE IS CALLED FOR IN THE ORDER OF CIT(A). HENCE, WE CONFIRM THE ORDER OF THE CIT(A). THIS GROUND STANDS DISMISSED. 3. GROUND NO.2 RELATES TO SUPPRESSION OF SALES AMOUNTING TO RS. 4,53,43,702/ - . 3.1 THE FACTS RELATING TO THIS GROUND ARE THAT THE AO NOTED THAT ON ACCOUNT OF BARTER PROGRAMME, THE ASSESSEE USED TO GET PAID IN TERMS OF EXTRA SUPPLY OF WHEAT FOR MANUFACTURING CERTAIN READYMADE FOOD UNDER THE WORLD FOOD PROGRAMME . OUT OF THE QUANTITY OF WHEAT IT GETS UNDER THE PROGRAMME, ONLY A PART IS CONSUMED IN THE CONCERNE D FOOD MANUFACTURING AND THE BALANCE IS TO BE SOLD T O MEET THE ENTIRE MANUFACTURING AND ESTABLISH EXPENSES AND TO GET THE RELEVANT PROFIT 3 ITA NO. 486 /201 3 UNDER THE PROGRAMME. THE ENTIRE WHEAT WAS FOUND TO BE SOLD TO A SISTERS COMPAN Y OF THE ASSESSEE NAMELY M/S , MAA UTTARA YANI ROLLER FLO U R MILLS (P) LTD. ALSO PURCHASED OTHER WHEAT OF LIMITED QUANTITY FROM THE OPEN MARKET AT RATE THAN THE RATE AT WHICH IT PAID TO THE ASSESSEE COMPANY. THE AO COMPUTED MARKET RATES OF WHEAT AVAILABLE FROM OPEN MARKET ON THE BASIS OF THE OPEN M ARKET PURCHASES OF THE SAID SISTER CONCERN AND APPLIED THE SAME RATE TO THE WHEAT SOLD BY HE ASSESSEE TO ITS SISTER CONCERN M/S MAA UTTARA YANI ROLLER FLOUR MILSS (P) LTD AND WORKED OUT TO RS.4,53,43,702/ - . THE AO TREATED IT AS SUPPRESSION OF THE SALE PRICE AND ADDED THE SAME IN THE INCOME OF THE ASSESSEE. THE ASSESSEE WENT IN APPEAL BEFORE THE CIT(A) AND THE CIT(A) DELETED THE ADDITION BY HOLDING AS UNDER : - BE THAT AS IT MAY, IT IS COMPLETELY LEFT TO A BUSINESS CONCERN TO DECIDE AS TO HOW IT MAY CONDUCT I TS BUSINESS AND AT WHAT PRICE T HE GOODS SHOULD BE SOLD TO WHOM. THE AO CANNOT IMPOSE THE SALE PRICE ON THE APPELLANT COMPANY AND THAT TOO ON THE BA SIS OF THE RATES AT WHICH M/S MAA UTTARAYANI ROLLER FLOUR MILLS PVT. LTD. PURCHASED VERY LIMITED QUANTITY OF WHEAT FROM OTHERS, (THE TOTAL QUANTITY OF PURCHASE FROM M/S MAHAVIR S TORE, M/S MANISH FOOD PRODUCTS (P) LTD AND M/S. UNI FOOD IN DIA PER ACCOUNTED FOR ONLY 1.68% , 1.41% AND 1.09% OF THE TOTAL QUANTITY OF WHEAT PROCUREMENT BY THAT COMPANY). THEREFORE, EVE N FOR ARGUMENTS SAKE, IF THE PURCHASE PRICE PAID TO THOSE 3 COMPANIES ARE CONSIDERED, THEY CANNOT BE PROPER INDICATORS OF BULK PURCHASE PRICE AT ALL. IN ANY CASE, IT WAS THE RESPONSIBILITY OF THE APPELLANT TO REALISE CASH ON BULK SALE OF THE SURPLUS WHICH IT HAD GOT IN BARTER. UNLESS SOLD IN BULK, STOCK OF WHEAT WOULD HAVE B EEN DAMAGED AND WOULD HAVE BECOME UNFIT FOR HUMAN CONSUMPTION. CONTROVERTING THE AO, FOR ARGUMENTS SAKE, THE A/R OF THE APPELLANT STATED THAT THE APPELLANT WAS COMPLETELY FREE TO GIF T AWAY THE ENTIRE WHEAT TO THE SISTER CONCERN OR EVEN TO AN OUTSIDER COMPLETE FREE OF COST. IN THAT EVENT, IT WAS NOT OPEN TO THE AO TO FORCE HIS CALCULATION OF A PRICE AND 4 ITA NO. 486 /201 3 CONSIDER THE GIFT AS A SALE. MOREOVER WITHOUT KNOWING ABOUT THE QUALITY OF BARTER WHEAT AND THE WHE AT PURCHASED FROM OPEN MARKET, IT WAS UNFAIR TO COMPARE THEIR PRICES . ON FACTS OF THE CASE, I AGREE WITH THE LOGIC AND ARGUMENTS PLACED BEFO RE ME BY THE A/R OF THE APPELLANT. HYPOTHETICAL SALE VALUE CANNOT BE PUSHED INTO ANY T AXPAYERS P/L ACCOUNT, PARTICULARLY, WHEN THE AO DID NOT HAVE ANY MATERIAL TO SHOW THAT THE APPELLANT HAD INDEED SOLD AT A HIGHER PRICE AND HAD UNDERSTATED THE SALES IN ITS ACCOUNT. A CCORDINGLY, I DIRECT THE AO TO DELETE THE HYPOTHETICAL SALES FIGURE OF RS. 4,53,43, 702/ - . 3 .2 LEARNED DR, BEFORE US, RELIED ON THE ORDER OF AO WHILE LEARNED AR RELIED ON THE ORDER OF THE CIT(A). 3. 3 . WE HEARD THE RIVAL SUBMISSIONS AND CAREFULLY CONSIDERED THE SAME. IN OUR OPINION, THE AO CANNOT DIRECT AN ASSESSEE TO SALE GOODS AT A P ARTICULAR PRICE. THE AO CANNOT ENTER INTO THE SHOES OF THE ASSESSEE . THERE IS NO PROVISION UNDER THE INCOME TAX ACT, WHICH MAY IMPOSE ON THE ASSESSEE THAT THE ASSESSEE HAS TO CONDUCT THE BUSINESS BY SELLING THE PRODUCT AT A PARTICULAR PRICE. IT IS NOT A CA SE WHERE ANY COGENT MATERIAL OR EVIDENCE HAS BEEN BROUGHT ON RECORD, WHICH MAY PROVE THAT THE ASSESSEE HAS SOLD THE GOODS AT A PARTICULAR PRICE BUT HAS RECORDED IT AT A PRICE LESS THAN THE PRICE AT WHICH IT WAS SOLD. THERE IS NO SUCH ALLEGATION BEING LEVEL ED. U NDER THE FACTS AND CIRCUMSTANCES , I N OUR OPINION, NO INTERFERENCE IS CALLED FOR IN THE ORDER AND THE CIT(A) DELETING THE ADDITION MADE ON THE BASIS OF HYPOTHETICAL SALE. THUS, THIS GROUND STANDS DISMISSED. 4 . GROUND NO. 3 RELATES TO DELETION OF ADDITIO N OF RS. 9 , 000 / - MADE BY THE AO U/S.35D. 5 ITA NO. 486 /201 3 4 .1 BOTH THE PARTIES AGREED THAT THIS ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE TRIBUNAL IN ITA NO. 242 & 243/CTK/2013, IN WHICH THIS TRIBUNAL VIDE ORDER DATED 10 - 6 - 2013 CONFIRMED THE ORDER OF THE CIT(A) DELETING THE ADDITION MADE IN THE ASSESSMENT YEAR 2009 - 2010 U/S.35D. 4 .2 WE HEARD RIVAL SUBMISSIONS AND CAREFULLY CONSIDERED THE SAME. WE NOTED THAT SIMILAR GROUND HAS BEEN TAKEN BY THE REVENUE IN THE ASSESSMENT YEAR 2009 - 10 AND THIS TRIBUNAL VI DE ORDER DATED 10 - 6 - 2013 DISMISSED THE APPEAL OF THE REVENUE. RESPECTFULLY FOLLOWING THE DECISION OF THE TRIBUNAL, WE DISMISS THIS GROUND ALSO. 5 . IN THE RESULT, APPEAL FILED BY THE REVENUE IS DISMISSED . ORDER PRONOUNCED IN THE OPEN COURT ON THIS 2 3 RD APRIL, 201 4 . 2 3 RD APRIL,2014 SD/ - SD/ - ( . . ) ( D.T.GARASIA ) ( . . ) ( P.K.BANSAL ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER CUTTACK ; DATED 2 3 /04/2014 . . /PKM , . / PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) , BHUBANESWAR 4. / CIT , BHUBANESWAR 5. , , / DR, ITAT, CUTTACK 6. / GUARD FILE. 6 ITA NO. 486 /201 3 / BY ORDER, / ( ASSTT. REGISTRAR) , / ITAT, CUTTACK //TRUE COPY//