M/s. LIC of India staff Co-op Bank Ltd, Trivandrum V. The ITO, Trivandrum

ITA 544/COCH/2009

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 4510 (ITAT-COCHIN)
• Duration Of Justice: 1 year(s) 8 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-07-2011
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Next Hearing Date: 16-06-2011
• Assessment Year: 2004-2005
• Appeal Filed On: 18-11-2009
• Court: TRIBUNAL
• Department Lawyers: VIJAYAPRABHADR
• Assessee Lawyers: N VASUDEV RAJKUMAR CAAR
• Keywords: Depreciation; Principle of natural justice; Onus to prove

Judgement Text

IN THE INCOME TAX APPELLAT E TRIBUNAL COCHIN BEN CH, COCHIN BEFORE S/SHRI N.VIJAYAKUMARAN, JM AND SANJAY AR ORA, AM I.T.A. NO. 544/COCH/2009 ASSESSMENT YEAR:2004-05 M/S. LIC OF INDIA STAFF CO- OPERATIVE BANK LTD., JEEVAN PRAKASH, PATTOM, TRIVANDRUM- 695 004 [PAN AAALL 0085C]. VS. THE INCOME TAX OFFICER, WARD- 1(1), TRIVANDRUM. (ASSESSEE -APPELLANT) (REVENUE-RESPONDENT) ASSESSEE BY SHRI N. VASUDEV RAJKUMAR, CA-AR REVENUE BY MS. VIJAYAPRABHA,DR O R D E R PER SANJAY ARORA, AM: THIS AN APPEAL BY THE ASSESSEE, ARISING OUT THE OR DER BY THE COMMISSIONER OF INCOME-TAX (APPEALS)-I, TRIVANDRUM (CIT(A) FOR SH ORT) DATED 15.9.2009, AND THE ASSESSMENT YEAR UNDER REFERENCE IS 2004-05. 2.1 EXPLAINING ITS CASE, IT WAS SUBMITTED BY THE L D. AR, THE ASSESSEES COUNSEL, THAT THE ASSESSEE IS A CO-OPERATIVE SOCIETY, IN EXISTENCE SI NCE 1953, WITH A SOUND SYSTEM OF ACCOUNTING; ITS ANNUAL ACCOUNTS, DULY AUDITED, BEIN G PLACED BEFORE AND PASSED IN THE GENERAL BODY MEETING OF ITS MEMBERS FROM YEAR TO YE AR. IT RETURNED ITS INCOME FOR THE YEAR AT ` 157411/- ON 4.3.2008; ITS INCOME (I.E., IN THE MAIN ) BEING EXEMPT U/S. 80P OF THE INCOME-TAX ACT, 1961 ('THE ACT', HEREINAFTER). THE CONSEQUENT ASSESSMENT LED TO ADDITIONS AS BY WAY OF DISALLOWANCE OF 10% OF THE ADMINISTRAT IVE EXPENSES (AT ` 608768/-); DEPRECIATION DISALLOWED ( ` 57073/-); DONATIONS, ` 19,000/-, BESIDES ` 40852/-, BOOKED UNDER THE HEAD OTHER INCOME, WHICH WAS NOT CONSID ERED AS ELIGIBLE FOR DEDUCTION U/S. 80P. THE ASSESSEE IS IN APPEAL ONLY AGAINST THE FI RST TWO ADDITIONS, HAVING BEEN SINCE I.T.A. NO. 544/COCH/2009 2 SUSTAINED BY THE FIRST APPELLATE AUTHORITY VIDE THE IMPUGNED ORDER. CONTINUING FURTHER, IT WAS SUBMITTED THAT THE ASSESSEE HAS DULY MAINTAINED BOOKS OF ACCOUNTS AND THE CORRESPONDING VOUCHERS, WHICH COULD HAVE BEEN FURNI SHED BEFORE THE ASSESSING OFFICER, I.E., IF SO REQUIRED BY HIM. THE LD. CIT(A), HOWEVE R, HAS UPHELD THE DISALLOWANCE ON THE BASIS THAT THE ASSESSEE WAS UNABLE TO SUBSTANTIATE ITS CLAIM QUA EXPENDITURE UNDER THE HEAD `ADMINISTRATIVE EXPENSES AS BEING FULLY SUPPO RTED BY VOUCHERS. LIKEWISE, FOR THE OTHER DISALLOWANCE IN RESPECT OF DEPRECIATION, WHIC H WAS ALSO FOR THE REASON OF LACK OF EVIDENCE IN SUPPORT OF THE PURCHASE. IN FACT, ITS E NTIRE INCOME, SAVE THAT ALREADY DENIED EXEMPTION U/S. 80P, IS SUBJECT TO DEDUCTION U/S. 80 P, SO THAT, IRRESPECTIVE OF THE MERITS OF THE DISALLOWANCES MADE, THE SAME WOULD NOT RESULT I N ANY ADDITION TO ITS TOTAL INCOME UNDER THE ACT. 2.2 THE LD. DR, ON THE OTHER HAND, WOULD SUB MIT THAT THE ASSESSEE HAS NOWHERE DENIED THAT IT FAILED TO PRODUCE THE VOUCHERS, I.E. , THE SOURCE DOCUMENTS, IN SUBSTANTIATION OF ITS CLAIMS, FAILING WHICH ONLY THE IMPUGNED DISA LLOWANCES STAND EFFECTED. AS SUCH, THE ASSESSING AUTHORITY WAS FULLY JUSTIFIED IN DISALLOW ING THE IMPUGNED CLAIMS. THE ASSESSEE HAS FAILED TO FURNISH ANY EVIDENCE IN REBUTTABLE OF THE FINDINGS BY THE AUTHORITIES BELOW, BOTH OF WHOM ALLOWED IT AMPLE OPPORTUNITY TO DO SO, OR OF EVEN ADDUCE SOME EVIDENCE TOWARD THE SAME EVEN BEFORE THE TRIBUNAL. NO INTERF ERENCE WITH THE ORDERS OF THE REVENUE AUTHORITIES IS CALLED FOR, AND THE ASSESSEES GRIEV ANCE IS MISCONCEIVED. RELIANCE WAS PLACED BY HER ON THE DECISIONS IN THE CASE OF T.V. SUNDARAM IYENGAR & SONS LTD. V. CIT , 241 ITR 420 (MAD.); ANNAMMA ALEXANDER V. CIT ,176 ITR 229 (KER.); AND CIT V. S. DEVRAJ , 73 ITR 1 (MAD.), BESIDES BY THE TRIBUNAL, AS IN T HE CASE OF GOODYEAR INDIA LTD. VS. CIT , 66 TTJ 164; JAMMU RURAL BANK VS. ITO , 92 TTJ (ASR) 791; AND CIT VS. NAGPUR ZILLA KRISHI AUDYOKIK SAHAKARI SANGH LTD . 209 ITR 481 (BOM.). WITH REGARD TO THE ASSESSEES ALTERNATIVE CONTENTION, THE SAME WOULD R EQUIRE A SPECIFIC FINDING OF FACT, I.E., TO THE EFFECT HAT THE DISALLOWANCE AS EFFECTED IS QUA THE INCOME WHICH IS SUBJECT TO DEDUCTION U/S. 80P, AS IT MAY WELL BE THAT THE SAME HAS NO RE LEVANCE OR BEARING ON THE SAID INCOME. I.T.A. NO. 544/COCH/2009 3 3. WE HAVE HEARD THE PARTIES, AND PERUSED THE MATER IAL ON RECORD, AS WELL AS THE CASE LAW CITED. 3.1 WHERE THE ASSESSEE IS UNABLE TO SUBSTANTIATE ITS CASE WITH THE RELEVANT EVIDENCE/S, THE ASSESSING AUTHORITY IS FULLY JUSTIFIED IN EFFECTING THE DISALLOWANCE TO THE SAID EXTENT; THE ONUS TO PROVE ITS RETURN BEING ONLY ON THE ASSESSEE , AND THE POWER OF THE ASSESSING AUTHORITY IN THE MATTER OF ASSESSMENT BEING PLENARY . THE ONLY LIMITATION THERETO WOULD BE WITH REGARD TO THE OBSERVANCE OF THE PRINCIPLES OF NATURAL JUSTICE, OF WHICH WE FIND NO BREACH, NOR ANY STANDS PLEADED; THE ASSESSEE HAVING BEEN AFFORDED AMPLE OPPORTUNITY TO PRESENT ITS CASE. THE ASSESSEE HAS THROUGHOUT FAILE D TO SUBSTANTIATE ITS CLAIM BY PRODUCING THE DOCUMENTS FOR VERIFICATION BEFORE THE AUTHORITI ES BELOW, SO THAT ITS CLAIM OF HAVING DULY MAINTAINED THE VOUCHERS AND OTHER SUPPORTING D OCUMENTS WOULD BE OF LITTLE RELEVANCE. THE DISALLOWANCE OF THE EXPENSES CONSIDE RED NOT GENUINE OR VERIFIABLE IS, THUS, VALID IN LAW, WHICH WE FIND TO BE AT 10% OF THE ADM INISTRATIVE EXPENSES, AS WELL AS THE DEPRECIATION CLAIM ON THE ASSETS, OSTENSIBLY PURCHA SED FOR ` 107600/-, ALBEIT UNEVIDENCED. THE SAME, IN OUR VIEW, SATISFIES THE TEST OF REASON ABILITY, WHICH IS THE OTHER OVER-ARCHING CONSIDERATION THAT HAS TO BE SATISFIED, EVEN AS NO SPECIFIC PLEA QUA THE SAME STANDS RAISED AT ANY STAGE, INCLUDING BEFORE US. 3.2 WITH REGARD TO THE ASSESSEES ALTERNATIVE CLAIM , RAISED PER ITS GROUND NO. 3 BEFORE US, I.E., THAT ITS ENTIRE INCOME BEING SUBJECT TO D EDUCTION U/S. 80P, THE DISALLOWANCE/S WOULD BE TO NO EFFECT, WE FIND THE SAME AS MAINTAIN ABLE. THIS IS FOR THE REASON THAT WHERE THE DISALLOWANCE RESULTS IN ADDITION TO ITS INCOME, WHICH IS SUBJECT TO DEDUCTION, INFLATION THERETO ON ASSESSMENT, EXCEPT WHERE SPECIFICALLY PR ECLUDED BY LAW, WOULD LEAD TO A CORRESPONDING INCREASE IN SAID DEDUCTION AS WELL; T HE SAME ONLY OPERATING TO INCREASE THE QUALIFYING INCOME. THIS IS AS THE CHARACTER OF THE INCOME, WHICH IS ONLY ON THE BASIS OF THE ACTIVITIES GIVING RISE TO THE INCOME SUBJECT TO EXEMPTION, WOULD REMAIN UNCHANGED. SO, HOWEVER, WE AGREE WITH THE LD. DR THAT THE SAME WOULD REQUIRE A FINDING OF FACT, AS IT IS NOT CLEAR FROM THE MATERIAL ON RECORD, IF THE DI SALLOWANCE/S RELATES TO INCOME ON WHICH DEDUCTION U/S. 80P STANDS CLAIMED AND ALLOWED. WE, THEREFORE, ONLY CONSIDER IT FIT AND PROPER TO, IN THE FACTS AND CIRCUMSTANCES OF THE CA SE, AS WELL AS IN THE INTEREST OF JUSTICE, I.T.A. NO. 544/COCH/2009 4 RESTORE THE ASSESSMENT BACK TO THE FILE OF THE ASSE SSING OFFICER WITH A LIMITED PURVIEW TO EXAMINE AND ADJUDICATE, PER A SPEAKING ORDER, AND A FTER HEARING THE ASSESSEE IN THE MATTER, IF EITHER OF THE DISALLOWANCES IS IN RELATION TO TH E INCOME WHICH HAS BEEN ALLOWED AS DEDUCTIBLE U/S. 80P, AND MODIFY THE ASSESSMENT ACCO RDINGLY. WE DECIDE ACCORDINGLY. 4. IN THE RESULT, THE ASSESSEES APPEAL IS PARTLY A LLOWED FOR STATISTICAL PURPOSES. SD/- SD /- (N.VIJAYAKUMARAN) (SANJAY ARORA) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE: ERNAKULAM DATED: 18TH JULY, 2011 GJ COPY TO: 1. M/S. LIC OF INDIA STAFF CO-OPERATIVE BANK LTD., JEEVAN PRAKASH, PATTOM, TRIVANDRUM- 695004. 2. THE INCOME TAX OFFICER, WARD-1(1), TRIVANDRUM. 3 . THE COMMISSIONER OF INCOME-TAX (APPEALS)-I, TRI VANDRUM. 4. THE COMMISSIONER OF INCOME-TAX, T RIVANDRUM. 5. D.R., I.T.A.T., COCHIN BENCH, COCHIN. 6. GUARD FILE.