The ACIT, 1(1), V. M/s M.P.State Co-Opretive Marketing Federation Ltd.,

ITA 547/IND/2006

• Counselvise Citation: [2009] 115 COUNSELVISE.COM (IT) 0026 (ITAT-INDORE)
• Duration Of Justice: 3 year(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-08-2009
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 27-08-2009
• Assessment Year: 2000-2001
• Appeal Filed On: 02-08-2006
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K K SINGH
• Keywords: Business income; Difference of opinion; Corroborative evidences; Change of opinion; Reassessment proceedings
• Section: 43B; 143(3); 80P; 147; 10; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE BEFORE SHRI BHAVNESH SAINI, JM & SHRI M.L. GUSIA, A M ITA NOS.547 & 548/IND/2006 AYS 2000-01 & 2001-02 ASSISTANT COMMISSIONER OF INCOME TAX, 1(1), BHOPAL APPELLANT VS. M/S. M.P. STATE CO-OPE. MARKETING FEDERATION LTD., JEHANGIRABAD, BHOPAL (PAN AACCM 0331 R) RESPONDENT CO NOS. 100 & 101/IND/2006 ARISING OUT OF ITA NOS.547 & 548/IND/2006 AYS 2000-01 & 2001-02 M/S. M.P. STATE CO-OPE. MARKETING FEDERATION LTD., JEHANGIRABAD, BHOPAL (PAN AACCM 0331 R) OBJECTOR VS. ASSISTANT COMMISSIONER OF INCOME TAX, 1(1), BHOPAL RESPONDENT DEPARTMENT BY SHRI K.K. SINGH, CIT, DR ASSESSEE BY NONE O R D E R PER SHRI M.L. GUSIA, AM THE ABOVE APPEALS OF THE REVENUE DEPARTMENT AND CO S OF THE ASSESSEE ARE DIRECTED AGAINST THE DIFFERENT ORDERS PASSED BY LD. CIT(A)-I, BHOPAL ON 22.5.2006 FOR THE ABOVE AYS. 2 2. NONE APPEARED ON BEHALF OF THE ASSESSEE ON THE DATE OF HEARING I.E. 27.8.2009 DESPITE THE FACT THAT ON THE EARLIER DATE OF HEARING I.E. 25.5.2009, THESE PRESENT CASES WERE ADJOURNED TO 27.8.2009 ON THE WRITTEN REQUEST OF LD. COUNSEL FOR ASSESSEE, WHO WAS PRESENT ON 25.5.2009 BEFORE THIS BENCH. THEREFORE, ASSESSEE IS PROCEEDED EXPARTE. WE HAVE H EARD LD. DR AND HAVE GONE THROUGH THE MATERIAL AVAILABLE ON RECORD AND CONSIDERED THE ORDERS OF THE AUTHORITIES BELOW. 3. IN THE BOTH THE APPEALS OF THE REVENUE, THE GROUNDS OF APPEALS ARE ALMOST COMMON, THEREFORE, BOTH THE APPEALS ARE DISCUSSED SIMULTANEOUSLY IN THE FOLLOWING PARAGRAPHS. ITA NOS.547 & 548/IND/2006 (DEPARTMENTAL APPEALS) 4. THE FIRST GROUND OF APPEAL FOR BOTH THE AYS IS THAT THE LD. CIT(A) HAS ERRED IN DELETING ADDITIONS OF RS.59,22, 588/- (AY 2000-01) & RS.87,17,758/- (AY 2001-02) MADE BY THE AO ON ACCOUNT OF NOT MAKING PAYMENT OF CONTRIBUTION RECEI VED FROM EMPLOYEES AS PROVIDENT FUND BEFORE DUE DATE HOLDING THAT THE SAME HAS BEEN PAID WITHIN THE GRACE PERIOD. 5. THE FACTS OF THE CASE ARE THAT THE LD. CIT(A) AT PA GE 4 OF HIS BOTH THE ORDERS FOR BOTH THE AYS HAVE DEMONSTRATED BY THE CHART HOLDING THAT ALL THE PAYMENTS WERE MADE AFTER DUE DATE BUT WITHIN THE GRACE PERIOD. THEREFORE, IN VIEW OF THE DECISION OF THE ITAT, INDORE BENCH, INDORE IN THE CASE OF JC IT VS. M/S. 3 SHREE BALAJI IND., BURHANPUR REPORTED AT 5 TTJ 239 AND IN VIEW OF THE DECISION OF ANOTHER CASE OF THIS BENCH I.E. JCIT VS. MADHYA PRADESH FINANCIAL CORPN. REPORTED AT 4 TTJ 3 07 DELETED THE ADDITION OF RS.59,29,588 FOR AY 2000-01 & RS.87,17,758 FOR AY 2001-02. 6. DURING THE COURSE OF THE HEARING BEFORE US, THE LD. DR WAS FAIR ENOUGH AND CONCEDED THAT THE ISSUE IS COVERED BY TH E DECISION OF THIS BENCH REFERRED IN THE ORDER OF THE LD. CIT( A). IT IS FURTHER MENTIONED THAT HONBLE HIGH COURT OF MADRAS IN THE CASE OF GANPATI MILLS LTD., 243 ITR 879 HELD THAT T HE CONTRIBUTIONS TOWARDS PROVIDENT FUND AND EMPLOYEES STATE INSURANCE PAID WITHIN THE GRACE PERIOD IS TO BE ALL OWED UNDER THE RELEVANT STATUTE. AS THE CONTRIBUTION HAS BEEN PAID WITHIN THE GRACE PERIOD AVAILABLE TO THE ASSESSEE FOR BOTH THE AYS, THEREFORE, NO DISALLOWANCE CAN BE MADE IN THIS REGA RD. HENCE, WE UPHELD THE ORDER OF THE LD. CIT(A) AND DISMISS F IRST GROUND OF APPEALS FOR BOTH THE AYS OF REVENUE. 7. THE SECOND GROUND OF APPEALS FOR BOTH THE AYS IS TH AT THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITIONS OF RS.30 ,64,874/- FOR AY 2000-01 & RS.42,26,182/- FOR AY 2001-02 MADE BY THE AO ON ACCOUNT OF NOT MAKING PAYMENT OF EMPLOYERS CONT RIBUTION OF PROVIDENT FUND BEFORE DUE DATE, HOLDING THAT THE SAME HAS BEEN PAID WITHIN THE GRACE PERIOD. 4 8. THE LD. CIT(A) AT PAGE 6 OF HIS BOTH THE ORDERS FOR BOTH THE AYS HAS DEMONSTRATED BY THE CHART AND HELD THAT ALL THE PAYMENTS WERE MADE AFTER DUE DATE BUT WITHIN THE GR ACE PERIOD. THE LD. CIT(A) PLACING RELIANCE ON THIS BE NCH INCASE OF JCIT VS. M/S. SHREE BALAJI IND. (SUPRA) AND JCIT VS . MADHYA PRADESH FINANCIAL CORPORATION (SUPRA) HAD DELETED T HE ADDITIONS FOR BOTH THE AYS. AS IN THE INSTANT CASES , ALL THE PAYMENTS WERE MADE WITHIN GRACE PERIOD AND BEFORE T HE DATE OF FILING OF RETURN OF INCOME DUE, THE SAME IS ALLO WABLE DEDUCTION IN VIEW OF THE DECISION OF HON'BLE SUPREM E COURT IN THE CASE OF VINAY CEMENT LTD., 213 CTR 268. THUS, T HESE GROUNDS OF APPEALS FOR BOTH THE AYS OF THE REVENUE ARE DISMISSED. 9. THE THIRD GROUND OF APPEAL FOR THE AY 2000-01 IS TH AT THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS.2,53,00 6/- OUT OF ADDITION OF RS.4,23,158/- MADE BY THE AO ON ACCOUNT OF ALLOWABLE EXPENDITURE HOLDING THAT INTEREST FOR DEL AYED PAYMENTS OF SALES-TAX IS ALLOWABLE DEDUCTION. 10. THE FACTS OF THE CASE ARE THAT THE AO MENTIONED IN THE ASSESSMENT ORDER THAT AS PER AUDIT REPORT, A SUM OF RS.4,23,158/- WAS DEBITED TO THE P & L A/C WHICH IS NOT ALLOWABLE DEDUCTION AS IT PERTAINS TO THE PENALTY L EVIED BY SALES-TAX DEPARTMENT. IT WAS CONTENDED BEFORE THE L D. CIT(A) 5 THAT OUT OF AN AMOUNT OF RS.4,23,158/-, A SUM OF RS.2,53,006/- RELATES TO INTEREST FOR DELAYED PAYME NT OF SALES- TAX. INTEREST FOR DELAYED PAYMENT OF SALES-TAX IS C HARGEABLE U/S 26(4A) OF MP COMMERCIAL TAX ACT AND THE SAME IS AN ALLOWABLE DEDUCTION. THE ASSESSEE FURTHER ADMITTED THAT THE REMAINING AMOUNT RELATES TO THE PENALTY FOR NOT MAK ING THE PAYMENT OF SALES-TAX IN TIME. KEEPING IN VIEW THE A BOVE FACTS, THE LD. CIT(A) DELETED THE ADDITION OF RS.2,53,006/ -. 11. AS THE SAID AMOUNT RELATES TO INTEREST FOR DELAYED PAYMENT OF SALES-TAX, THEREFORE, THE LD. CIT(A) HAS RIGHTLY DE LETED THE ADDITION OF RS.2,53,006/- OUT OF RS.4,23,158/-. THU S, THIS GROUND OF APPEAL FOR AY 2000-01 IS DISMISSED. 12. THE FOURTH GROUND FOR AY 2000-01 AND THIRD GROUND F OR AY 2001-02 ARE THAT THE LD. CIT(A) HAS ERRED IN DELETI NG THE ADDITIONS OF RS.26,33,134/- (FOR AY 2000-01) AND RS.7,90,648/- (FOR AY 2001-02) MADE BY THE AO ON AC COUNT OF DISALLOWANCE OF PRIOR PERIOD EXPENSES IGNORING THE FACT THAT THE MERCANTILE METHOD OF ACCOUNT BEING FOLLOWED BY THE ASSESSEE. 13. THE FACTS OF THE CASE FOR BOTH THE AYS ARE THAT IT WAS CONTENDED BEFORE THE LD. CIT(A) THAT THE AO WAS NOT JUSTIFIED IN MAKING THE ADDITIONS WITH REGARD TO PRIOR PERIOD EXPENSES AS ALL THESE SUMS REPRESENT LIABILITY OF THE ASSESS EE FOR PAYMENTS PERTAINING TO PREVIOUS YEARS BUT SETTLED D URING THIS 6 YEAR. IT IS PLEADED BEFORE THE LD. CIT(A) THAT THES E ARE THE COMMERCIAL LIABILITIES WHICH HAVE BECOME DUE AND AS CERTAINED DURING THE CONCERNED YEAR AND THE SAME ARE ALLOWABL E IRRESPECTIVE THAT THE SAID AMOUNTS PERTAIN TO THE E ARLIER YEAR. THEREFORE, THE LD. CIT(A) DELETED BOTH THE ADDITION S FOR BOTH THE AYS. THE LD. CIT, DR PLACED RELIANCE ON THE ASS ESSMENT ORDER. WE NOTED THAT THE AO HAD NOT HELD THAT SUCH EXPENSES ARE NOT ALLOWABLE AS DEDUCTION. HE ONLY SAID THAT T HE SAME ARE NOT ALLOWABLE AS THE SAME DID NOT PERTAIN TO THIS A CCOUNTING YEAR. HOWEVER, CONSIDERING THE FACT THAT THE ABOVE LIABILITY CRYSTALLIZED DURING THE AYS UNDER DISCUSSION, THERE FORE, THERE IS NO INFIRMITY IN THE ORDERS OF THE LD. CIT(A). THERE FORE, BOTH THE GROUNDS OF APPEALS OF THE REVENUE FOR BOTH THE AYS ARE DISMISSED. 14. THE FIFTH GROUND OF APPEAL FOR THE AY 2000-01 AND F OURTH GROUND OF APPEAL FOR THE AY 2001-02 ARE THAT THE LD . CIT(A) HAS ERRED IN DELETING THE ADDITIONS OF RS.90,27,510 /- FOR THE AY 2000-01 AND RS.1,98,40,613/- FOR THE AY 2001-02 MAD E BY THE AO ON ACCOUNT OF DISALLOWANCE OF DEDUCTION U/S 80P OF THE IT ACT CLAIMED BY THE ASSESSEE. 15. THE FACTS OF THE CASE ARE THAT IN THE AY 2000-01, T HE AO NOTED THAT THE FOLLOWING TRADE RECEIPTS OF RS.90,27,510/- AS INCOME 7 FROM OTHER SOURCES FOR WHICH DEDUCTION U/S 80P HAS WRONGLY BEEN CLAIMED: I. INTEREST ON VEHICLE LOAN RECEIVED FROM EMPLOYEES RS.7,35,500 II. CASH DISCOUNT RS.77,04,361 III. INTEREST RECEIVED FROM SUB-OFFICES FOR BUSINESS PURPOSES RS.5,89,649 TOTAL: RS.90,27,510 16. SIMILARLY, FOR AY 2001-02, FOLLOWING RECEIPTS WERE TREATED AS INCOME FROM OTHER SOURCES: I. INTEREST ON VEHICLE LOAN RECEIVED FROM EMPLOYEES RS.6,84,000 II. CASH DISCOUNT RS.1,88,10,103 III. INTEREST RECEIVED FROM SUB-OFFICES FOR BUSINESS PURPOSES RS.3,20,510 TOTAL: RS.1,98,14,614 17. IT IS SUBMITTED BEFORE THE LD. CIT(A) THAT THE ASSE SSEE IS A COOPERATIVE SOCIETY ENGAGED IN THE BUSINESS OF MARK ETING OF FERTILIZERS, PESTICIDES, FOOD GRAINS, AGRICULTURAL EQUIPMENTS ETC. IN THE STATE OF MADHYA PRADESH. THE ASSESSEE PURCHA SES THESES ITEMS WHICH ARE MOSTLY AGRICULTURAL INPUTS F ROM VARIOUS AGENCIES UNDER PURCHASE CONTRACT. THE ASSESSEE RECE IVES CASH DISCOUNT ON PURCHASE PRICE FOR TIMELY PAYMENTS. IT IS CONTENDED THAT IT IS A USUAL TRADE PRACTICE. THE AS SESSEE SUBMITTED BEFORE THE LD. CIT(A) THAT THE DEFINITION OF THE SALE PRICE UNDER COMMERCIAL ACT READS AS UNDER: SALE PRICE MEANS THE AMOUNT PAYABLE TO THE DEALER AS VALUABLE CONSIDERATION FOR SALE OF ANY 8 GOODS LESS ANY SUM ALLOWED AS CASH DISCOUNT ACCORDING TO ORDINARY TRADE PRACTICE BUT INCLUSIVE OF ANY SUM CHARGED FOR ANYTHING DONE BY THE DEALER IN RESPECT OF GOODS AT THE TIME OF OR BEFORE DELIVERY THEREOF OTHER THAN THE COST OF FREIGHT OR DELIVERY OR COST OF INSTALLATION WITH SUCH COST AS CHARGED SEPARATELY . 18. IT IS FURTHER CONTENDED THAT DISCOUNT HAS BEEN REC OGNIZED AS DEDUCTION FROM SALE PRICE UNDER COMMERCIAL TAX ACT. IT IS SUBMITTED THAT CASH DISCOUNT RECEIVED BY THE ASSESS EE INFACT GOES TO REDUCE THE PURCHASES MADE BY IT FROM VARIOU S AGENCIES. IT IS A PURELY TRADE RECEIPT. THE SAME CA NNOT BE ASSESSED AS INCOME FROM OTHER SOURCES BECAUSE IT IS IN THE COURSE OF THE BUSINESS. THE ASSESSEE HAS CREDITED A BOVE AMOUNTS IN RELEVANT P & L A/C WHICH IS THE PURE BUS INESS RECEIPT. CASH DISCOUNT INFACT REDUCES THE PURCHASE PRICE OF GOODS. THIS RECEIPT CANNOT BE COMPARED WITH THE INT EREST EARNED ON DEPLOYMENT OF SURPLUS FUND TO EARN INTERE ST. BRANCH OFFICES HAVE ALSO EARNED SIMILAR CASH DISCOUNT. THE SE RECEIPTS ARE PURELY BUSINESS RECEIPTS. ASSESSEE HAS GIVEN VE HICLE LOAN TO STAFF AND HAD EARNED INTEREST WHICH HAS BEEN CRE DITED TO THE P & L A/C. IT IS FURTHER CONTENDED BEFORE THE LD. C IT(A) THAT THE ISSUE WHETHER INTEREST EARNED FROM NON-COOPERATIVE SECTOR I.E. CASH DISCOUNT, INTEREST ON STAFF LOAN, INTEREST ON DELAYED 9 PAYMENTS IS ENTITLED TO DEDUCTION U/S 80P(2)(E) HAS ALREADY BEEN SETTLED IN FAVOUR OF THE ASSESSEE BY THIS VERY BENCH FOR AY 1990-91 & 1992-93 IN THE CASE OF THE ASSESSEE IT SELF. IT IS FURTHER CONTENDED BEFORE THE LD. CIT(A) THAT THE LD . AO HAD RELIED UPON THE DECISIONS WHICH ARE NOT AT ALL APPL ICABLE TO THE FACTS OF THE ASSESSEES CASE. HE HAS REFERRED THE C ASES WHEREIN SURPLUS FUNDS WERE INVESTED AND INTEREST WAS EARNED WHICH IS NOT THE CASE OF THE ASSESSEE. FOLLOWING THE DECISIO N OF THIS VERY BENCH IN ASSESSEES OWN CASE FOR AY 1991-92 & 1992-93 IN ITA NO.36/IND/1995 AND 35/IND/1996 DATED 8.4.200 2 ON THE SAME ISSUE DELETED THE ADDITIONS. 19. AS THIS ISSUE HAS ALREADY BEEN DECIDED IN FAVOUR OF THE ASSESSEE IN HIS OWN CASE FOR AY 1991-92 & 1992-93, THEREFORE, BOTH THE GROUNDS OF APPEALS OF REVENUE ARE DISMISSE D. 20. FOR AY 2001-02, THERE IS ANOTHER GROUND THAT THE LD . CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.1,70,74,61 5/- MADE BY THE AO ON ACCOUNT OF DISALLOWANCE U/S 43B OF THE IT ACT. 21. IT IS CONTENDED BEFORE THE LD. CIT(A) THAT THE AO W AS NOT JUSTIFIED IN DISALLOWING PAYMENT OF SALES-TAX OF RS.1,70,74,615/- U/S 43B WHEN THE ASSESSEE ITSELF H AD ADDED BACK AN AMOUNT OF RS.1,71,35,638/- AS UNPAID SALES- TAX IN COMPUTATION OF TOTAL INCOME. THEREFORE, THE LD. AO ERRED IN MAKING ADDITION OF RS.1,70,74,615/- AS UNPAID SALES -TAX 10 LIABILITY U/S 43B OF THE IT ACT. THUS, THIS AMOUNT ADDED TWICE. CONSIDERING THE ABOVE FACTS, THE LD. CIT(A) DELETED THE ADDITION. 22. THE LD. DR PLACED RELIANCE ON THE ASSESSMENT ORDER. HOWEVER, HE FAILED TO REBUT THE FINDING OF THE LD. CIT(A). C ONSIDERING THE FACT THAT THE ASSESSEE ITSELF HAS OFFERED THE ABOVE AMOUNT FOR TAX IN COMPUTATION OF TOTAL INCOME ENCLOSED WITH TH E RETURN OF INCOME, THEREFORE, NO ADDITION IS CALLED FOR. OTHER WISE, THE SAME AMOUNT WOULD BE TAXED TWICE. HENCE, THIS GROUN D OF APPEAL OF THE REVENUE IS DISMISSED. 23. IN THE RESULT, BOTH THE APPEALS OF THE REVENUE ARE DISMISSED. CO NOS.100 & 101/IND/2006 (FILED BY THE ASSESSEE) 24. THERE IS COMMON GROUND OF BOTH THE COS THAT THE LD. CIT(A) OUGHT TO HAVE ANNULLED AND DECLARED REASSESSMENT BA D IN LAW AS NO REASONS WERE RECORDED BY THE AO FOR REOPENING THE ASSESSMENTS U/S 147 OF THE IT ACT. 25. FACTS OF THE CASE ARE THAT THE ASSESSEE FILED ORIGI NAL RETURNS DECLARING TOTAL INCOME OF RS.NIL FOR AY 2000-01 ON 31.10.2000 AND FOR AY 2001-02 ON 29.10.2001. THEREAFTER, REVIS ED RETURNS WERE FILED ON 31.8.2001 FOR AY 2000-01 AND FOR AY 2 001-02 ON 8.11.2001. BOTH THE RETURNS WERE PROCESSED U/S 143( 1) ON 30.3.2003 AND 25.3.2003 FOR AY 2000-01 & 2001-02 RESPECTIVELY. NO ASSESSMENT FRAMED AFTER SCRUTINY I .E. U/S 11 143(3) OF THE IT ACT. DURING THE COURSE OF THE HEAR ING, NO EVIDENCE WAS FURNISHED TO PROVE EITHER BEFORE THE L D. CIT(A) OR BEFORE US THAT THE REASSESSMENT PROCEEDINGS WERE IN ITIATED WITHOUT RECORDING REASONS FOR REOPENING. IT IS ALSO PERTINENT TO NOTE THAT EARLIER ONLY RETURNS WERE PROCESSED U/S 1 43(1), THEREFORE, QUESTION OF CHANGE OF OPINION ALSO DOES NOT ARISE. IN THE ABSENCE OF ANY SUPPORTING EVIDENCE, WE DO NOT F IND INFIRMITY IN BOTH THE ORDERS OF THE LD. CIT(A), THE REFORE, BOTH THE COS ARE DISMISSED. 26. IN THE RESULT, BOTH THE APPEALS OF THE REVENUE AS W ELL AS COS OF THE ASSESSEE ARE DISMISSED. 27. THIS ORDER HAS BEEN PRONOUNCED IN THE OPEN COURT ON 27.8.2009. SD/- SD/- JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 27.8.2009 {VYAS}