The Dasada Taluka Co.Op. Purchase & Sales Union Limited, Surendranagar V. The Income Tax Officer, Ward-1., Surendranagar

ITA 543/AHD/2014

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 2616 (ITAT-AHMEDABAD)
• Duration Of Justice: 7 year(s) 8 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-10-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 25-07-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 21-02-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S S RATHI
• Assessee Lawyers: S N DIVETIA
• Keywords: Business expenditure
• Section: 143(3); 13

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH, RAJKOT BEFORE: SHRI AMARJIT SINGH, ACCOUNTANT MEMBER AND MS. MADHUMITA ROY, JUDICI AL MEMBER [CONDUCTED THROUGH E-COURT AT AH MEDABAD] THE DASADA TALUKA CO-OP. PURCHASE & SALES UNION LTD., STATION ROAD, PATDI, TAL: DASADA, DIST: SURENDARANAGAR-382765 PAN: AAAAT1193Q (APPELLANT) VS THE ITO, WARD-1, SURENDRANAGAR (RESPONDENT) REVENUE BY: SHRI S.S. RATHI, SR. D.R. ASSESSEE BY: SHRI S.N. DIVETIA, A.R . DATE OF HEARING : 06-10-2021 DATE OF PRONOUNCEMENT : 27-10- 2021 /ORDER PER : AMARJIT SINGH, ACCOUNTANT MEMBER:- THIS ASSESSEES APPEAL FOR A.Y. 2010-11, ARISES FRO M ORDER OF THE CIT(A)-XVI, AHMEDABAD DATED 07-01-2014, IN PROCEED INGS UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961; IN SHOR T THE ACT. ITA NO. 543/AHD/2014 ASSESSMENT YEAR 2010-11 I.T.A NO. 543/AHD/2014 A.Y. 2010-11 PAGE NO THE DASADA TALUKA CO-OP. PURCHASE & SALES UNION LTD . 2 2. THE SOLITARY ISSUE IN THE GROUND OF APPEAL OF TH E ASSESSEE IS CONFIRMING THE DISALLOWANCE OF RENTAL EXPENSES OF R S. 13,11,244/-. 3. THE FACT IN BRIEF IS THAT ASSESSEE HAS FILED RE TURN OF INCOME ON 13 TH OCTOBER, 2010 DECLARING INCOME OF RS. 2,26,690/-. THE CASE WAS SUBJECT TO SCRUTINY ASSESSMENT AND NOTICE U/S. 143( 2) OF THE ACT WAS ISSUED ON 1 ST SEP, 2011. THE ASSESSEE WAS AN ORGANIZATION/PERSO N ENGAGED IN THE BUSINESS OF TRADING OF SEEDS, FERTIL IZER AND RUNNING PETROL PUMP. DURING THE COURSE ASSESSMENT ON VERIFICATION OF THE PROFIT AND LOSS A/C, THE ASSESSING OFFICER NOTICED THAT ASSESS EE HAS CLAIMED RENT EXPENSES OF RS. 13,11,244/- UNDER THE HEAD OF PETRO L PUMP INCOME WHICH INCLUDES LEASE RENT OF EARLIER YEARS I.E. APR IL, 2003, FEB, 2008 AND DELAYED INTEREST. ON QUERY, THE ASSESSEE EXPLA INED THAT THEY HAVE TAKEN GOVERNMENT LAND ON LEASE AND THERE WAS DISPUT E FOR EXTENSION OF LEASE OF THE LAND. THE ASSESSEE FURTHER SUBMITTED T HAT ISSUE OF EXTENSION OF LEASE PERIOD HAD BEEN SETTLED DURING THE YEAR UN DER CONSIDERATION AS PER THE ORDER OF THE DISTT. COLLECTOR SURENDRANAGAR , THEREFORE, THE CLAIM OF EXPENSES WERE ADMISSIBLE DURING THE YEAR. THE AS SESSING OFFICER HAS NOT ACCEPTED THE SUBMISSION OF THE ASSESSEE STATING THAT ASSESSEE HAS MAINTAINED BOOKS OF ACCOUNT ON MERCANTILE SYSTEM, THEREFORE, A SUM OF RS. 13,11,244/- BEING DELAYED RENT AND INTEREST ON EARLIER YEARS WERE NOT ALLOWABLE AS BUSINESS EXPENDITURE AND SAME WAS ADDED TO THE TOTAL INCOME OF THE ASSESSEE. I.T.A NO. 543/AHD/2014 A.Y. 2010-11 PAGE NO THE DASADA TALUKA CO-OP. PURCHASE & SALES UNION LTD . 3 4. ASSESSEE HAS FILED APPEAL BEFORE THE LD. CIT(A). THE LD. CIT(A) HAS DISMISSED THE APPEAL OF THE ASSESSEE HOLDING TH AT ASSESSEE HAS NOT CLAIMED RENTAL EXPENSES, ONLY CLAIMED INTEREST COMP ONENT. 5. DURING THE COURSE OF APPELLATE PROCEEDINGS BEFOR E US, THE LD. COUNSEL CONTENDED THAT ASSESSEE WAS GIVEN ON LEASE THE GOVERNMENT LAND FOR 30 YEARS, AFTER EXPIRY OF LEASE PERIOD THE RE WAS A DISPUTE RELATING TO FURTHER EXTENSION OF LEASE PERIOD WHICH WAS ONLY SETTLED DURING THE YEAR UNDER CONSIDERATION RELEVANT TO THE ASSESSMENT YEAR. THE LD. COUNSEL HAS PLACED THE COPIES OF ORDERS OF THE COLLECTOR DATED 8- 9-2009 AND OTHER RELEVANT DOCUMENTS IN THE PAPER BO OK. THE ASSESSEE SOCIETY WAS REQUIRED TO PAY RENT OF RS. 9,64,150/- AND DELAYED INTEREST OF RS. 3,47,094/- TOTALING TO RS. 13,11,244/- WHICH WAS PAID ON 29 TH AUGUST, 2009 IN THE FINANCIAL YEAR RELEVANT TO THE YEAR UNDER CONSIDERATION. THEREAFTER, THE COLLECTOR DISTRICT SURENDERNAGAR PASSED AN ORDER ON 8 TH SEP, 2009 RENEWING THE LEASE OF THE PETROL PUMP FO R FURTHER PERIOD OF 15 YEARS. THE LD. COUNSEL HAS AL SO PLACED RELIANCE ON THE DECISION OF SAURASTRA CEMENT AND CHEMICAL (213 ITR 523) (GUJ). ON THE OTHER HAND, THE LD. DEPARTMENTAL REPRESENTAT IVE HAS SUPPORTED THE ORDER OF LOWER AUTHORITIES. 6. HEARD BOTH THE SIDES AND PERUSED THE MATERIAL ON RECORD. THE ASSESSEE IS A CO-OPERATIVE SOCIETY AND ENGAGED IN T HE BUSINESS OF RUNNING PUBLIC PUMP AND TRADING IN FERTILIZER, SEED S AND CLOTH. DURING I.T.A NO. 543/AHD/2014 A.Y. 2010-11 PAGE NO THE DASADA TALUKA CO-OP. PURCHASE & SALES UNION LTD . 4 THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER HAD DISALLOWED EXPENSES OF RS. 13,11,244/- ON THE GROUN D THAT EXPENSES RELATING TO EARLIER YEAR WERE NOT ADMISSIBLE. AFTE R PERUSAL OF THE MATERIAL ON RECORD, IT IS OBSERVED THAT THE ASSESS ING OFFICER HAS NOT CONSIDERED THE MATERIAL FACT OF THE CASE THAT ASSES SEE HAS OBTAINED GOVERNMENT LAND ON LEASE AND THE ISSUE OF RENEWAL O F LEASE WAS UNDER DISPUTE AND THE SAME WAS DETERMINED ONLY BY THE DIS TT. COLLECTOR, SURENDRANGAR ON 8.9.2009 IN THE FINANCIAL YEAR RELE VANT TO THE ASSESSMENT YEAR UNDER CONSIDERATION. THE ASSESSEE SOCIETY WAS REQUIRED TO PAY RENT OF RS. 9,64,150/- AND DELAYED INTEREST OF RS. 3,47,094/- TOTALING TO RS. 13,11,244/- WHICH WAS PA ID BY THE ASSESSEE ON 29 TH AUGUST, 2009. ON THE BASIS OF THIS PAYMENT THE DI STRICT COLLECTOR, SURENDRANAGAR HAS PASSED AN ORDER ON 8 TH SEP, 2008 RENEWING THE LEASE OF THE PETROL PUMP LAND FOR FURTHER PERIO D OF 15 YEARS. THE LD. CIT(A) HAS INCORRECTLY STATED IN HIS FINDING THAT A SSESSEE HAS ONLY CLAIMED THE INTEREST COMPONENT AND NOT CLAIMED THE RENTAL EXPENSES OF EARLIER YEAR, AFTER PERUSAL OF THE MATERIAL ON RECO RD, WE FIND THAT AMOUNT OF RS. 13,11,244/- IS COMPRISED OF LEASE RENT OF RS . 9,64,150/- AND INTEREST AMOUNT OF RS. 3,47,094/- PERTAINING TO LEA SE RENT AND INTEREST FOR THE PERIOD 2003 TO 2008. ON PERUSAL OF MATERIA L ON RECORD, IT IS CATEGORICALLY DEMONSTRATED THAT IMPUGNED EXPENSES W ERE CRYSTALLIZED DURING THE YEAR UNDER CONSIDERATION. THERE IS NO D OUBT ABOUT THE GENUINENESS OF THE EXPENDITURE. HAVING CONSIDERED THE MATERIAL ON RECORD, WE DO NOT FIND ANY JUSTIFICATION FOR THE DI SALLOWANCE OF THE I.T.A NO. 543/AHD/2014 A.Y. 2010-11 PAGE NO THE DASADA TALUKA CO-OP. PURCHASE & SALES UNION LTD . 5 CLAIM OF THE ASSESSEE WITHOUT CONSIDERING THE RELEV ANT MATERIAL FACT THAT THE IMPUGNED LIABILITY WAS CRYSTALLIZED DURING THE YEAR UNDER CONSIDERATION. THEREFORE, WE ALLOW THE CLAIM OF THE ASSESSEE. ACCORDINGLY, THE APPEAL OF THE ASSESSEE IS ALLOWED. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON 27-10-2021 SD/- SD/- (MADHUMITA ROY) (AMARJIT SINGH) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD : DATED 27/10/2021 / COPY OF ORDER FORWARDED TO:- 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER, ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, RAJKOT