ACIT, Kota V. KOTA ZILA DUGDH UTPADAK SAHAKARI SANGH LTD., Kota

ITA 581/JPR/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 5416 (ITAT-JAIPUR)
• Duration Of Justice: 2 year(s) 10 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-04-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 30-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: G R PARIKH
• Keywords: Capital receipt
• Section: 43B; 142(1)

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR JH VH-VKJ-EHUK] YS[KK LNL; ,OA JH YFYR DQEKJ] U;KF; D LNL; DS LE{K BEFORE:SHRI T.R. MEENA,AM & SHRI LALIET KUMAR, JM VK;DJ VIHY LA-@ ITA NO. 581/JP/2013 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2009-10 THE ACIT CIRCLE- 1 KOTA CUKE VS. M/S. KOTA ZILA DUGDH UTPADAK SAHAKARI SANGH LTD., RAWATBHATA ROAD, AKELGARH, KOTA LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO .: AAACK 7348 E VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT C.O. NO.49/JP/2013 (ARISING OUT OF VK;DJ VIHY LA-@ ITA NO. 581/JP/2013) FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2009-10 M/S. KOTA ZILA DUGDH UTPADAK SAHAKARI SANGH LTD., RAWATBHATA ROAD, AKELGARH, KOTA CUKE VS. THE ACIT CIRCLE- 1 KOTA LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO .: AAACK 7348 E VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT JKTLO DH VKSJ LS@ REVENUE BY : SHRI G.R. PARIKH, JCIT -DR FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : NONE LQUOKBZ DH RKJH[K@ DATE OF HEARING : 04/04/2016 ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 12 /04/2016 VKNS'K@ ORDER PER LALIET KUMAR, JM- THE REVENUE HAS FILED AN APPEAL WHILE THE ASSESS EE HAS FILED THE CROSS OBJECTION AGAINST THE ORDER OF THE LD. CIT (A), KOTA DATED 22-03- 2013 FOR THE ASSESSMENT YEAR 2010-11. ITA NO.581//JP/2013 THE ACIT, CIRCLE- 1, KOTA VS. KOTA ZILA DUGDH UTPAD AK SAHAKARI SANGH LTD., KOTA . 2 2.1 NONE APPEARED ON BEHALF OF THE ASSESSEE IN SPIT E OF SERVICE OF NOTICE OF THIS HEARING. CONSEQUENTLY WE ARE LEFT WI TH NO ALTERNATIVE BUT TO DECIDE THE C.O. ON MERITS, EX PARTE QUA THE ASSESS EE, AFTER HEARING LD. DR AND AFTER PERUSAL OF THE MATERIALS AVAILABLE ON REC ORD. 3.1 DURING THE COURSE OF HEARING, THE BENCH OBSERVED TH AT THE C.O. OF THE ASSESSEE IS FILED LATE BY 02 DAYS AS PER THE PR ESCRIBED LIMIT UNDER THE I.T. ACT, 1961. THE ASSESSEE HAS ALSO NOT FILED ANY CONDONATION APPLICATION FOR LATE OF FILING OF THE C.O. HOWEVER, THE BENCH HAS TAKEN A LENIENT VIEW TO CONDONE THE DELAY SUO MOTU FOR LATE FILING THE CROSS OBJECTION BY TWO DAYS. 4.1 FIRSTLY, WE TAKE UP THE GROUNDS OF APPEAL OF TH E REVENUE WHICH IS AS UNDER:- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE , THE LD. CIT(A) HAS ERRED IN:- (I) DELETING THE DISALLOWANCE OF PROVISION OF RS. 89,25,724/- ON ACCOUNT OF PAY ARREAR PAYMENT (II) DELETING THE DISALLOWANCE OF PROVISION FOR AUD IT FEES AT RS. 5,59,294/- IN THE ABSENCE OF DETAILS OF PAYMENT S UPTO DATE OF FILING OF RETURN (III) DELETING THE DISALLOWANCE OF RS. 2,05,000/- O N ACCOUNT OF PROVISION FOR INTEREST. (IV) DELETING THE DISALLOWANCE OF RS. 16,34,209/- OUT OF PROPOSED COMMISSION IN THE ABSENCE OF PAYMENTS DETAILS. ITA NO.581//JP/2013 THE ACIT, CIRCLE- 1, KOTA VS. KOTA ZILA DUGDH UTPAD AK SAHAKARI SANGH LTD., KOTA . 3 (V) DELETING THE ADDITION OF RS. 8K73,729/- ON ACCOUNT OF UNUTILIZED SUBSIDY WHICH WAS TREATED AS CESSATION O F LIABILITY U/S 41. 5.1 BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE C OMPANY IS A COOPERATIVE SOCIETY ENGAGED IN PROCUREMENT OF MILK FROM MILK PRODUCERS/ FARMERS AND AFTER PROCESSING THE SAME, MANUFACTURES OF DIFFERENT MILK PRODUCTS AND SUPPLIES THE SAME IN THE MARKET. THE A SSESSEE COMPANY FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2009-1 0 ON 30-09-2009 DECLARING TOTAL INCOME OF RS. 1,35,99,290/-.THE RET URN OF THE ASSESSEE WAS PROCESSED U/S 143(1) OF THE ACT ON 23-07-2010 AND T HE CASE OF THE ASSESSEE COMPANY WAS SELECTED FOR SCRUTINY THROUGH CASS (COMPUTER ASSISTED SCRUTINY SYSTEM) ON AST . ACCORDINGLY THE NOTICE U/S 143(2) AND 142(1) WERE WAS ISSUED ON 25-05-2011 TO THE ASS ESSEE COMPANY FOR HEARING ON 6-06-2011. THEREAFTER A QUESTIONNAIRE AL ONGWITH NOTICE U/S 142(1) OF THE ACT DATED 30-06-2011 WAS ISSUED BY TH E DEPARTMENT FOR FIXING THE CASE OF HEARING ON 7-07-2011 AND THE BOO KS OF ACCOUNT MAINTAINED ALONGWITH BILLS AND VOUCHERS BY THE ASSE SSEE COMPANY WERE PRODUCED BEFORE THE ASSESSING AUTHORITY FOR VERIFIC ATION OF THE SAME WHO MADE TOTAL ADDITION OF RS. 1,22,23,801/- UNDER VA RIOUS HEADS AND ADDED THE SAME TO THE INCOME OF THE ASSESSEE AMOUNTING TO RS. 2,58,22,370/-. ITA NO.581//JP/2013 THE ACIT, CIRCLE- 1, KOTA VS. KOTA ZILA DUGDH UTPAD AK SAHAKARI SANGH LTD., KOTA . 4 6.1 NOW WE COME TO GROUND NO.1 OF THE REVENUE WHERE IN THE REVENUE IS AGGRIEVED THAT THE LD. CIT(A) HAS ERRED IN DELET ING THE DISALLOWANCE OF PROVISION OF RS. 89,25,724/- ON ACCOUNT OF PAY ARR EAR PAYMENT. IN THIS GROUND, THE AO OBSERVED THAT AS PER P&L THE ASSESSE E HAS CLAIMED PROVISION OF RS. 89.25 LACS UNDER VI PAY ARREAR P AYMENT FOR WHICH AO REQUIRED THE ASSESSEE TO FILE THE DETAILS OF THE SAME AND THE ASSESSEE FILED THE DETAILS AS PER ANNEXURE 1 OF ITS LETTER D ATED 25-07-2011 BEFORE THE AO. AFTER PERUSAL OF THE DETAILS, THE AO OBSERV ED THAT THE ASSESSEE HAS CLAIMED PROVISION FOR VI PAY ARREAR PAYMENT AMO UNTING TO RS. 89,25,724/- AND THE AO VIDE ENTRY SHEET DATED 01-11 -2011 GRANTED OPPORTUNITY TO THE ASSESSEE COMPANY TO JUSTIFY THE CLAIM MADE UNDER THE ABOVE PROVISION. THE ASSESSEE THUS FILED THE REPLY VIDE LETTER DATED 29-12- 2011 IN RESPONSE TO QUERY RAISED BY THE AO WHICH IS REPRODUCED AS UNDER:- PROVISION OF RS. 2.26 CRORE HAVE BEEN MADE AGAINS T THE EXPENSES ACCRUED DURING THE FINANCIAL YEAR BUT ACTUALLY PAID IN 2009-10. PROVISION OF RS. 89.25 LAC HAS BEE N MADE FOR PAYMENT VITH PAY COMMISSION ARREAR PAYMENT TO T HE EMPLOYEES AND HAS BEEN ADJUSTED 50% DURING 2011-12 AND BALANCE 50% WILL BE ADJUSTED IN2012-13 AS PER ORDER OF REGISTRAR OF COOPERATIVE SOCIETIES GOVT. OF RAJASTH AN OF JODHPUR. THE COPY OF THE LEDGER ACCOUNT IS ENCLOSED FOR YOUR PERUSAL. ITA NO.581//JP/2013 THE ACIT, CIRCLE- 1, KOTA VS. KOTA ZILA DUGDH UTPAD AK SAHAKARI SANGH LTD., KOTA . 5 THE REPLY OF THE ASSESSEE WAS CONSIDERED BY THE AO BUT HE DID NOT ACCEPT THE SAME BY OBSERVING THAT THE ASSESSEE HAS NOT PAI D THE AMOUNT CLAIMED DURING THE YEAR UNDER CONSIDERATION. THE AO OBSERVE D THAT OUT OF RS. 89.29 LACS CLAIMED, 50% WAS PAID DURING THE PERIOD 2011-12. THEREFORE, THE PROVISION MADE AT RS. 89,25,724/- WAS DISALLO WED BY THE AO SINCE THE ASSESSEE HAD NOT MADE EXPENDITURE DURING THE YE AR UNDER CONSIDERATION. 6.2 AGGRIEVED, THE ASSESSEE CARRIED THE MATTER BEFO RE THE LD. CIT(A) WHO DELETED THE AMOUNT OF RS. 89,25,724/- ON ACCOU NT OF ARREAR PAYMENT BY OBSERVING AT 4.12 OF HIS ORDER AS UNDER:- THE ASSESSEE HAS MADE THE PROVISION FOR ARREARS AS PER SIXTH PAY COMMISSION RECOMMENDATION WHICH WAS APPROVED BY RAJASTHAN COOPERATIVE DAIRY FEDERATION VIDE LETTER DATED 20-02-2009. MOREOVER, IN MY VIEW ANY PRUDENT BUSINESSMAN HA TO ACCOUNT FOR ANTICIPATED EXPENSES AND PROVIDE FOR TH E SAME. WHEREAS IN THE PRESENT CASE THE LIABILITY WAS A CLE AR LIABILITY AND PROVISION OF THE SAME HAS TO BE MADE. IN THE CASE OF SALARY, THERE IS NO PROVISION OF LAW TO DISALLOW THE EXPENSES, IF THE SAME IS NOT PAID. THE ASSESSING OFFICER IS THEREFORE, DIRECTED TO DEL ETE THE ADDITION OF RS. 89,25,724/- . 6.3 NOW THE REVENUE IS BEFORE US WHEREIN THE LD. DR RELIED ON THE ORDER OF THE AO. ITA NO.581//JP/2013 THE ACIT, CIRCLE- 1, KOTA VS. KOTA ZILA DUGDH UTPAD AK SAHAKARI SANGH LTD., KOTA . 6 6.4 WE HAVE HEARD THE LD. DR AND PERUSED THE MATERI ALS AVAILABLE ON RECORD. WE FIND FROM THE RECORDS THAT THE NOTIFICAT ION WAS ISSUED BY THE FINANCE DEPARTMENT, GOVT.OF RAJASTHAN TO PAY THE AR REAR OF SIXTH PAY COMMISSION TO THE GOVT. EMPLOYEES IN TWO EQUAL INST ALMENTS AND THE SANCTION WAS ALSO ACCORDED BY THE REGISTRAR OF COOP ERATIVE SOCIETY, GOVT. OF RAJASTHAN, JAIPUR ALSO VIDE ITS ORDER DATE D 5-07-2011 IN THE ASSESSEE COMPANYS EMPLOYEES. WE FIND THAT THE LD. CIT(A) HAS RIGHTLY DELETED THE ADDITION OF RS. 89,25,724/- MADE BY THE AO. HENCE, GROUND NO. 1 OF THE REVENUE IS DISMISSED. 7.1 IN GROUND NO. 2, THE REVENUE IS AGGRIEVED THAT THE LD. CIT(A) HAS DELETED THE DISALLOWANCE OF PROVISION FOR AUDIT FE ES AMOUNTING TO RS. 5,59,294 WHEREIN THE AO OBSERVED THAT THE ASSESSEE AS PER DETAILS FILED HAS SHOWN PROVISION FOR AUDIT FEES AT RS.5,59,294/- . THE AO FURTHER OBSERVED THAT THE ASSESSEE HAS NOT FILED THE DETAIL S OF PAYMENT MADE UPTO FILING OF RETURN WHICH WAS DISALLOWED BY THE AO U/S 43B OF THE ACT AND ADDED THE SAME TO THE TOTAL INCOME OF THE ASSESSEE. 7.2 AGGRIEVED, THE ASSESSEE CARRIED THE MATTER BEFO RE THE LD. CIT(A) WHO DELETED THE AMOUNT OF RS. 5,59,294/- ON ACCOUN T OF PROVISION FOR AUDIT FEES BY OBSERVING IN HIS ORDER AS UNDER:- ITA NO.581//JP/2013 THE ACIT, CIRCLE- 1, KOTA VS. KOTA ZILA DUGDH UTPAD AK SAHAKARI SANGH LTD., KOTA . 7 AUDIT FEE IS NOT COVERED BY SECTION 43B. THEREFOR E, THE ASSESSING OFFICER IS DIRECTED TO DELETE THE ADD ITION OF RS. 5,59,2,94/- 7.3 NOW THE REVENUE IS BEFORE US WHEREIN THE LD. DR RELIED ON THE ORDER OF THE AO. 7.4 WE HAVE HEARD THE LD. DR AND PERUSED THE MATER IALS AVAILABLE ON RECORD. WE FIND FROM THE INCOME TAX ACT, 1961 THAT AUDIT FEE IS NOT COVERED BY SECTION 43B OF THE I.T. ACT. THE LD. CIT (A) HAS RIGHTLY DELETED THE ADDITION MADE BY THE AO ON ACCOUNT OF AUDIT FE E AS IT IS NOT COVERED BY SECTION 43B OF THE ACT. TO THIS EFFECT, THE DECI SION OF HON'BLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. SHREE WARN A SAHAKARI SAKHAR KARKHANA, (2002) 253 ITR 226 IS RELIED ON WHEREIN I T IS CONFIRMED THAT THE PROVISIONS OF SECTION 43B DO NOT APPLY TO THE G OVERNMENT AUDIT CHARGES. FOR THE SAKE OF CONVENIENCE AND BREVITY, T HE CONCLUDING OBSERVATION OF HON'BLE BOMBAY HIGH COURT IN THE CA SE OF CIT VS. SHREE WARNA SAHAKARI SAKHAR KARKHANA IS REPRODUCED HEREUN DER:- 10. ON THE AFORESAID CANVASS APPLYING THE WELL RE COGNISED PRINCIPLES OF INTERPRETATION THE CONCEPT OF FEES REFERRED TO IN SECTION 43B CANNOT BE EQUATED WITH LEVY OF AUDIT CHARGES PAYABL E FOR GETTING THE AUDIT OF THE ACCOUNTS DONE. THE WORD FEE HAS BEEN USED IN THE BOOKS OF ACCOUNT OF THE ASSESSEE LOOSELY, IN GENERAL COMMERCIAL SENSE, AS NORMALLY UNDERSTOOD IN THE TRADING SOCIETY SINCE PAYMENTS WERE MADE TO THE CO-OPERATIVE DEPARTMENT OF THE STATE THROUGH THE REGISTRAR IN EXCHANGE FOR THE SERVICES OF THE AUDITORS AVAILED OF BY THE ASSESSEE. LEVY OF AUDIT CHARGES A RE NOTHING BUT THE PRICE REQUIRED OR DEMANDED FOR SERVICES RENDERED BY THE G OVERNMENT AUDITORS. IN ITA NO.581//JP/2013 THE ACIT, CIRCLE- 1, KOTA VS. KOTA ZILA DUGDH UTPAD AK SAHAKARI SANGH LTD., KOTA . 8 OTHER WORDS, THE EXPENSES WERE NOTHING BUT PAYMENT MADE OR CHARGED OR COMPENSATION FOR UTILISING SERVICES OF THE AUDITORS , I.E., PAYMENT OF MONEY FOR PROFESSIONAL SERVICES. SUCH PAYMENT, IN OUR VIEW, I S BEYOND THE MISCHIEF OF SECTION 43B. THE FEE CONTEMPLATED OR ENVISAGED UNDE R SECTION 43B IS THE PAYMENT OF THE NATURE REFERRED TO BY THE SUPREME CO URT IN THE CASE OF AMAR CHANDRA CHAKRABORTY, AIR 1972 SC 1863. IT IS AN EXP ENDITURE WHICH THE ASSESSEE HAS INCURRED WHOLLY AND EXCLUSIVELY FOR TH E PURPOSE OF BUSINESS AND IS AN ALLOWABLE EXPENDITURE. THE PROVISIONS OF SECT ION 43B DO NOT APPLY TO THE GOVERNMENT AUDIT CHARGES. THUS, DISALLOWANCE OF RS. 1,63,925 ON ACCOUNT OF OUTSTANDING GOVERNMENT AUDIT FEES COULD NOT HAVE BE EN DONE BY THE ASSESSING OFFICER NOR THE SAME COULD HAVE BEEN AFFIRMED BY TH E COMMISSIONER OF INCOME-TAX (APPEALS). AS SUCH THE TRIBUNAL RIGHTLY ALLOWED THE SAME. IN VIEW OF THE DECISION OF HON'BLE BOMBAY HIGH COU RT IN THE CASE OF CIT VS. SHREE WARNA SAHAKARI SAKHAR KARKHANA (SUPRA ) AND THE ORDER OF THE LD. CIT(A) ON THE ISSUE OF AUDIT FEE, THE GROU ND NO. 2 OF THE REVENUE IS DISMISSED. 8.1 IN GROUND NO. 3, THE REVENUE IS AGGRIEVED THAT THE LD. CIT(A) HAS ERRED IN DELETING THE DISALLOWANCE OF RS. 2,05,000/ - ON ACCOUNT OF PROVISION FOR INTEREST WHEREIN THE AO OBSERVED THAT THE ASSESSEE AS PER DETAILS FILED HAS SHOWN PROVISION FOR INTEREST ON G OVERNMENT LOAN AMOUNTING TO RS. 2.05 LACS. THE AO OBSERVED THAT TH E ASSESSEE HAS NOT FILED THE DETAILS OF PAYMENT MADE UPTO FILING OF RE TURN WHICH WAS DISALLOWED U/S 43B OF THE ACT AND ADDED THE SAME TO THE TOTAL INCOME OF THE ASSESSEE ITA NO.581//JP/2013 THE ACIT, CIRCLE- 1, KOTA VS. KOTA ZILA DUGDH UTPAD AK SAHAKARI SANGH LTD., KOTA . 9 8.2 AGGRIEVED, THE ASSESSEE CARRIED THE MATTER BEFO RE THE LD. CIT(A) WHO DELETED THE AMOUNT OF RS. 2.05 LACS ON ACCOUNT OF PROVISION FOR INTEREST BY OBSERVING IN HIS ORDER AS UNDER:- THE PROVISION DID NOT RELATE TO THIS YEAR, THEREF ORE, THE ASSESSING OFFICER IS DIRECTED TO DELETE THE ADDITIO N OF RS. 2.05 LACS. 8.3 NOW THE REVENUE IS BEFORE US WHEREIN THE LD. DR RELIED ON THE ORDER OF THE AO. 8.4 WE HAVE HEARD THE LD. DR AND PERUSED THE MATER IALS AVAILABLE ON RECORD. WE FEEL THAT WHEN THE PROVISION FOR INTERES T DOES NOT RELATE TO THIS YEAR THEN THE LD. CIT(A) HAS RIGHTLY DELETED THE AD DITION MADE BY THE AO. THUS GROUND NO. 3 OF THE REVENUE IS DISMISSED. 9.1 IN GROUND NO. 4, THE REVENUE IS AGGRIEVED THAT THE LD. CIT(A) HAS ERRED IN DELETING THE DISALLOWANCE OF RS. 16,34,20 9/- OUT OF PROPOSED COMMISSION IN THE ABSENCE OF PAYMENT DETAILS WHEREI N TO AO OBSERVED THAT THE ASSESSEE AS PER BALANCE SHEET HAD SHOWN PR OPOSED COMMISSION AMOUNTING TO RS. 34,45,845/- AS ON 31-03-2008 AND A S ON 31-03-2009 THE SAME HAD BEEN SHOWN AT RS. 50,55,230/-. THE AO OBSE RVED THAT THE ASSESSEE HAD NOT PAID THE COMMISSION CLAIMED DURING THE YEAR AT RS. 16,34,209/- AND THEREFORE, ADDED THE SAME TO THE TO TAL INCOME OF THE ASSESSEE. ITA NO.581//JP/2013 THE ACIT, CIRCLE- 1, KOTA VS. KOTA ZILA DUGDH UTPAD AK SAHAKARI SANGH LTD., KOTA . 10 9.2 AGGRIEVED, THE ASSESSEE CARRIED THE MATTER BEFO RE THE LD. CIT(A) WHO DELETED THE AMOUNT OF RS. 16,34,209/- OUT OF PR OPOSED COMMISSION BY OBSERVING IN HIS ORDER AS UNDER:- THE ASSESSEE WAS REQUIRED TO PROVIDE 1.5% OF PROCUREMENT VALUE AS OVERHEAD EXPENSES. THE SAME WA S PAYABLE TO CO-OPERATIVE SOCIETIES ON PASSING A RESO LUTION. IN MY VIEW THE SAME IS AN ALLOWABLE EXPENDITURE. THE ASSESSING OFFICER IS THEREFORE, DIRECTED TO DELETE THE SAME. 9.3 NOW THE REVENUE IS BEFORE US WHEREIN THE LD. DR RELIED ON THE ORDER OF THE AO. 9.4 WE HAVE HEARD THE LD. DR AND PERUSED THE MATER IALS AVAILABLE ON RECORD. IT IS OBSERVED FROM THE RECORD THAT THE ASS ESSEE SOCIETY AS PER ITS CONSTITUTION AND GUIDELINES HAVE TO PAY 1.5% PROCUR EMENT OVERHEAD EXPENSES (PROPOSED COMMISSION) TO ITS MEMBER COOPER ATIVE SOCIETIES AND PROPOSED COOPERATIVE SOCIETIES AND SUCH EXPENSES AR E DEBITED TO TRADING AND PROFIT AND LOSS ACCOUNT AND CREDITED TO INDIVI DUAL COOPERATIVE SOCIETIES / PROPOSED COOPERATIVE SOCIETIES ACCOUNT. THIS AMOUNT IS PAID TO ITS MEMBER COOPERATIVE SOCIETIES AND PROPOSED COOPE RATIVE SOCIETIES AS AND WHEN REQUIRED AS PER THE BYE LAWS OF ASSESSEE S OCIETY. WE FIND THAT THE LD. CIT(A) HAS RIGHTLY DELETED THE ADDITION MAD E BY THE AO AS TO OVERHEAD EXPENSES WHICH IS PAID TO THE RESPECTIVE S OCIETIES ON PASSING A ITA NO.581//JP/2013 THE ACIT, CIRCLE- 1, KOTA VS. KOTA ZILA DUGDH UTPAD AK SAHAKARI SANGH LTD., KOTA . 11 RESOLUTION. IN VIEW OF THESE DELIBERATIONS, THE GRO UND NO. 4 OF THE REVENUE IS DISMISSED. 10.1 IN GROUND NO. 5, THE REVENUE IS AGGRIEVED THAT THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS. 8,73,729/- ON ACCOUNT OF UNUTILIZED SUBSIDY WHICH WAS TREATED AS CESSATION OF LIABILITY U/S 41 OF THE ACT. IN THIS CASE, THE AO OBSERVED THAT THE ASSESSEE HAS SH OWN RS. 8,73,729/- FOR SUBSIDY UNUTILIZED IN THE BALANCE SHEET FOR WHICH T HE AO REQUIRED THE ASSESSEE VIDE ORDER SHEET ENTRY DATED 01-11-2011 TO FILE THE DETAILS AND JUSTIFY THE CLAIM AND THE ASSESSEE FILED THE REPLY VIDE LETTER DATED 29-12- 2011 AS UNDER:- CREDIT BALANCE OF RS. 8.73 LACS HAS BEEN SHOWN AS SUBSIDY UNUTILIZED. EVEN THE HISTORY OF RECEIPT OF THIS SUB SIDY HAS NOT BEEN EXPLAINED. THIS IS AN OLD SUBSIDY AMOUNT RECEI VED FROM GOVT. OF RAJASTHAN WHICH WILL BE ADJUSTED ON RECEIP T OF ADJUSTMENT ORDER FROM GOVERNMENT. THE AO FURTHER OBSERVED THAT THE SUBSIDY RECEIVED I S STILL UNUTILIZED. THEREFORE, THE AO TREATED THE AMOUNT SHOWN AT RS. 8 ,73,729/- AS CESSATION OF LIABILITY U/S 41 AND THUS DISALLOWED T HE SAME AND ADDED IT TO THE TOTAL INCOME OF THE ASSESSEE. ITA NO.581//JP/2013 THE ACIT, CIRCLE- 1, KOTA VS. KOTA ZILA DUGDH UTPAD AK SAHAKARI SANGH LTD., KOTA . 12 10.2 AGGRIEVED, THE ASSESSEE CARRIED THE MATTER BEF ORE THE LD. CIT(A) WHO DELETED THE AMOUNT BY OBSERVING IN HIS ORDER AS UNDER:- THE AMOUNT OF SUBSIDY DID NOT RELATE TO CURRENT Y EAR. THE ASSESSING OFFICER IS THEREFORE, DIRECTED TO DELETE THE SAME. THIS GROUND OF APPEAL IS THEREFORE, ALLOWED. 10.3 NOW THE REVENUE IS BEFORE US WHEREIN THE LD. D R RELIED ON THE ORDER OF THE AO. 10.4 WE HAVE HEARD THE LD. DR AND PERUSED THE MATER IALS AVAILABLE ON RECORD. IT APPEARS FROM THE RECORD THAT THE SUBSIDY IS NOT A LOSS, EXPENDITURE OR TRADING LIABILITY INCURRED BY THE AS SESSEE. THE UNUTILIZED SUBSIDY IS THE CAPITAL RECEIPT FROM GOVT. OF RAJAST HAN AT THE TIME OF THE INCEPTION OF ORGANIZATION AND RECONCILIATION OF ACC OUNTS AS WHEN IS FINALIZED THEN THE SAME WILL BE PAID BACK TO THE GO VT. HENCE, IT DOES NOT AMOUNT TO CESSATION OF THE LIABILITY AND IT DOES NO T COVER U/S 41 OF THE ACT. THEREFORE, WE FIND THAT THE LD. CIT(A) HAS RIGHTLY DELETED THE ADDITION MADE BY THE AO. HENCE, GROUND NO. 5 OF THE REVENUE IS DISMISSED. 11.1 AS REGARDS THE GROUNDS OF THE C.O. OF THE ASSE SSEE, WE FIND THAT THE GROUNDS OF THE C.O. OF THE ASSESSEE ARE NEITHER SPE CIFIC NOR EXPLICIT. HENCE, THE BENCH IS CONSTRAINED TO DECIDE THE UNSPE CIFIC ISSUES WHICH ARE DISMISSED. THUS THE C.O. OF THE ASSESSEE IS DISMISS ED. ITA NO.581//JP/2013 THE ACIT, CIRCLE- 1, KOTA VS. KOTA ZILA DUGDH UTPAD AK SAHAKARI SANGH LTD., KOTA . 13 12.0 IN THE RESULT, THE APPEAL OF THE REVENUE AS WE LL AS C.O. OF THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 12/04/20 16. SD/- SD/- (T.R. MEENA) (LALIET KUMAR) ( VH-VKJ-EHUK ) ( YFYR DQEKJ ) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 12 /04/ 2016 *MISHRA VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT THE ACIT, CIRCLE- 1, KOTA 2. IZR;FKHZ@ THE RESPONDENT- M/S. KOTA ZILA DUGDH UTPADAK SAHAK ARI SANGH LTD., KOTA 3. VK;DJ VK;QDRVIHY ) @ CIT(A) 3. VK;DJ VK;QDR@ CIT 4. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR 5. XKMZ QKBZY@ GUARD FILE (ITA NO.581/JP/2013) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR