Kreem Drinks Private Ltd, Cochin V. DCIT, Ernakulam

ITA 598/COCH/2010

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 64745 (ITAT-COCHIN)
• Duration Of Justice: 1 year(s) 8 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-08-2012
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Next Hearing Date: 09-08-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 16-11-2010
• Court: TRIBUNAL
• Department Lawyers: VANI RAJ
• Assessee Lawyers: A S NARAYANAMOORTHY

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE S/SHRI N.R.S.GANESAN, JM AND B.R.BASKAR AN, AM I.T.A. NO. 598/COCH/2010 ASSESSMENT YEAR: 2007-08 M/S. KREEM DRINKS (P) LTD., DOOR NO. XXVIII/3030, CHERUPARAMPATHU ROAD, KADAVANTHRA, KOCHI-682020. [PAN : AAACK 8718N] VS. THE DEPUTY COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE-1, ERNAKULAM. (ASSESSEE -APPELLANT) (REVENUE-R ESPONDENT) ASSESSEE BY SHRI A.S.NARAYANAMOORTHY, CA REVENUE BY MS. VANI RAJ, JR. DR DATE OF HEARING 09/08/2012 DATE OF PRONOUNCEMENT 09/08/2012 O R D E R PER B.R.BASKARAN, ACCOUNTANT MEMBER: THE APPEAL OF THE ASSESSEE IS DIRECTED AGAINS T THE ORDER DATED 20-08-2010 PASSED BY THE LD. CIT(A)-I, KOCHI AND IT RELATES TO THE AS SESSMENT YEAR 2007-08. 2. THE ONLY ISSUE URGED IN THIS APPEAL IS WHETHER T HE LD. CIT(A) IS JUSTIFIED IN CONFIRMING THAT THE FREEZER DEPOSIT RECEIVED FROM V ARIOUS DEALERS SHOULD BE ASSESSED AS INCOME OF THE ASSESSEE. 3. AT THE TIME OF HEARING, THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED A COPY OF THE ORDER DATED 25-05-2012 PASSED BY THIS BENCH IN THE CASE OF JOJO FROZEN FOOD (P) LTD. AND CREAM PACKS (P) LTD. IN I.T.A. NOS. 655 & 654/C OCH/2010 WHEREIN THE TRIBUNAL HAS I.T.A. NO. 598/COCH/2010 2 CONSIDERED AN IDENTICAL ISSUE AND DECIDED THE SAME IN FAVOUR OF THE ASSESSEE. FOR THE SAKE OF CONVENIENCE, WE EXTRACT BELOW THE OPERATIVE PORTION OF THE SAID ORDER IN RESPECT OF THE ABOVE SAID ISSUE. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND C AREFULLY PERUSED THE RECORD. WE HAVE ALSO GONE THROUGH THE COPY OF THE ORDER PA SSED BY THE CO-ORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF HIGH RANGE FOODS (P ) LTD, REFERRED SUPRA. IN RESPECT OF THE FIRST ISSUE, I.E., WHETHER THE DEPOSITS REC EIVED FROM THE DEALERS CAN BE CONSIDERED AS INCOME OF THE ASSESSEE, THE TRIBUNA L HAS OBSERVED AS UNDER. THE ASSESSEE RECEIVED DEPOSIT FOR THE SUPPLY OF FR EEZER FROM THE CONCERNED VENDORS. THE FREEZERS ARE REQUIRED TO SAFE KEEP TH E EDIBLE ICE-CREAMS. THEY ARE REQUIRED FOR THE PURPOSE OF BUSINESS. THE SMA LL VENDORS MAY NOT BE INCLINED TO PURCHASE THE FREEZERS AS THEY ARE NOT AFFORDABLE TO THEM CONSIDERING THEIR STATUS. THIS MADE THE ASSESSEE COMPANY TO SUPPLY FREEZER ON THE RECEIPT OF FIXED DEPOSIT AND THE COMPENSATI ON OF THE SPREAD-OVER PERIOD. THEY ARE ATTACHED WITH A LIABILITY. THE ACCRUAL COMES ONLY ON TERMINATION OF AGREEMENT. THE BUSINESS NECESSITY R EQUIRES CORDIAL RELATIONSHIP WITH VENDORS. THE ASSESSEE CANNOT TRE AT THESE TWO AMOUNTS AS RECEIPTS IN THE NATURE OF INCOME UNLESS THE SO-CAL LED AGREEMENT TERMINATED. IN OTHER WORDS IT IS NOT A DEBT OWNED BY THE ASSESSEE . HENCE, UNDER THE ABOVE FACTS AND CIRCUMSTANCES OF THE CASE, THIS ISSUE TO BE DECIDED IN FAVOUR OF THE ASSESSEE BY SETTING ASIDE THE ORDERS OF THE AUTHOR ITIES. BESIDES THE ASSESSEE NEVER TREATED THIS AS INCOME IN THE BOOKS. THE ASSESSEE CONSISTENTLY HOLDING IT SO AS THE AMOUNT ATTACHED WITH A LIABILITY TO REFUND. THE ASSESSEE NEVER ADMITTED THIS AMOUNT AS INCOME IN THE BOOKS. ONLY ACCRUED INCOME AROSE TO THE ASSESSEE DURING THE RE LEVANT PREVIOUS YEAR ALSO CAN BE BROUGHT TO TAX UNDER THE INCOME-TAX PROVISI ONS WHICH IS A SETTLED LAW. IN OTHER WORDS, THERE MUST BE A DEBT OWNED TO THE ASSESSEE AND UNTIL THIS IS CREATED IN FAVOUR OF THE ASSESSEE AS A DEBT DUE TO THE ASSESSEE, IT CANNOT BE SAID AS INCOME ACCRUED. HENCE, THE DECISION RELIE D BY THE JR. D.R. IN THE CASE OF CIT VS. T.V. SUNDARAM IYENGAR AND SONS CITED SU PRA, IS CLEARLY DISTINGUISHABLE ON FACTS. IN THAT CASE, ASSESSEE ITSELF ADMITTED THIS AS INCOME AS PER THE BOOK ENTRIES. HENCE, IT IS DISTINGUISH ABLE. THE DECISION RELIED BY THE LD. COUNSEL FOR THE ASS ESSEE IN THE CASE OF CIT VS. REALEST BUILDERS AND SERVICES LTD. 307 ITR 202 ( SC) IN ADDITION TO THE FOLLOWING CASES (A) SIDDHESWAR SAHAKARI SAKHAR KARKHANA LTD. VS . CIT & OTHERS 270 ITR 1 (SC); I.T.A. NO. 598/COCH/2010 3 (B) BHARAT PETROLEUM CORPORATION LTD. VS . CIT 202 ITR 492 (CAL). (C) SUGAULI SUGAR WORKS (IMPUGNED) LTD. 236 ITR 518 (SC); (D) STAR INDIA P. LTD. VS. ADDL. CIT 3 11 ITR (ST) 235 (MUMBAI). (E) GOVIND PRASAD PRABHU NATH 171 ITR 4 17 (ALL.); (F) HINDUSTAN HOUSING AND LAND DEVELOPME NT TRUST LTD. 161 ITR 524 (SC); (G) ACE BUILDERS PVT. LTD. VS. CIT 225 ITR 746 (SC); (H) MANTRA TANTA YANTRA VIGYAN VS. CIT 3 00 ITR 140 (RAJ.); AND (I) GUARDIAN INDUSTRIES CORPN. VS. ASSIS TANT DIRECTOR OF INCOME-TAX 7 DTR 594 (DEL.). ARE ALSO SUPPORTS THE PLEA OF THE ASSESSEE. THE AC CRUAL HAS BEEN DEALT WITH IN THE RELIED JUDGEMENTS. HENCE, UNDER THE GIVEN SET O F FACTS AND CIRCUMSTANCES, WE BY RELYING ON THE ABOVE DECISIONS SET ASIDE THE ORDERS OF THE AUTHORITIES AND ALLOW THIS GROUND OF THE ASSESSEE AS IT CANNOT BE TREATED AS INCOME FOR THE YEAR RELEVANT UNDER APPEAL. 7. SINCE THE CO-ORDINATE BENCH HAS ALREADY TAKEN A VIEW ON IDENTICAL ISSUE, BY FOLLOWING THE SAID DECISION, WE HOLD THAT THE DEPO SITS COLLECTED FROM VENDORS CANNOT BE CONSIDERED AS THE INCOME OF THE ASSESSEE SO LONG AS THE AGENCY AGREEMENT CONTINUES. ACCORDINGLY, WE SET ASIDE TH E ORDER OF LD CIT(A) ON THIS ISSUE IN THE HANDS OF BOTH THE ASSESSEES AND DIREC T THE AO TO DELETE THE ADDITION MADE ON THIS ISSUE IN THE HANDS OF BOTH THE ASSESS EES HEREIN. 4. THE LD A.R SUBMITTED THAT THE AGENCY AGREEMENTS IN THE INSTANT CASE ARE LIVE AND CONTINUING. ACCORDINGLY, CONSISTENT WITH THE V IEW TAKEN IN THE ABOVE SAID CASE, WE ALSO HOLD THAT THE DEPOSITS COLLECTED FROM VENDORS CANNOT BE CONSIDERED AS INCOME OF THE ASSESSEE SO LONG AS THE AGENCY AGREEMENT CONTIN UES. ACCORDINGLY, WE SET ASIDE THE ORDER OF THE LD. CIT(A) ON THIS ISSUE AND DIRECT TH E ASSESSING OFFICER TO DELETE THE ADDITION RELATING THERETO. I.T.A. NO. 598/COCH/2010 4 5. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. PRONOUNCED ACCORDINGLY O N 09-08-2012 SD/- SD/- (N.R.S.GANESAN) (B.R.BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE: KOCHI DATED: 9TH AUGUST, 2012 GJ COPY TO: 1. M/S. KREEM DRINKS PVT. LTD., DOOR NO. XXVIII/30 30, CHERUPARAMPATHU ROAD, KADAVANTHRA, KOCHI-682020. 2.THE DEPUTY COMMISSIONER OF INCOME-TAX, CENTRAL CI RCLE-1, ERNAKULAM. 3.THE COMMISSIONER OF INCOME-TAX(APPEALS)-I, KOCHI. 4.THE COMMISSIONER OF INCOME-TAX, CENTRAL KOCHI. 5. D.R., I.T.A.T., COCHIN BENCH, COCHIN. 6. GUARD FILE. BY ORDER (ASSISTANT REGISTRAR) I.T.A.T, COCHIN