M/s Patiala District Co-Operative Milk Producers Union, Patiala V. ACIT, Patiala

ITA 604/CHANDI/2013

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 68559 (ITAT-CHANDIGARH)
• Duration Of Justice: 5 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-11-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 21-10-2013
• Assessment Year: 2009-2010
• Appeal Filed On: 24-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANJEET SINGH
• Keywords: Cost of acquisition; Revenue expenditure

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES B CHANDIGARH BEFORE SHRI T.R. SOOD, ACCOUNTANT MEMBER AND MS. SUSHMA CHOWLA, JUDICIAL MEMBER ITA NO. 604/CHD/2013 ASSESSMENT YEAR: 2009-10 M/S PATIALA DISTRICT CO-OPERATIVE MILK VS THE ACIT, PRODUCERS UNION, PATIALA PATIALA PAN NO. AAAAT0459K (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI. DEEPAK AGGARWAL RESPONDENT BY : SHRI. MANJEET SINGH DATE OF HEARING : 21/10/2013 DATE OF PRONOUNCEMENT : 07/11/2013 ORDER PER T.R.SOOD, A.M. THE APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER PASSED BY THE CIT(A), PATIALA DATED 22.3.2013. 2. IN THIS APPEAL, THE ASSESSEE HAS RAISED THE FOLL OWING GROUNDS:- 1. THAT THE LD. CIT(A) HAS ERRED IN NOT DELETING THE A DDITION AMOUNTING TO RS. 1,24,604/- MADE BY THE ASSESSING OFFICER ON THE GROUND THAT THE PURCHASE PRICE OF TESTING EQUIPMENT CANT BE TREATE D AS REVENUE EXPENDITURE AS THE SAID EQUIPMENT IS OF ENDURING NA TURE WHEREAS AS PER THE ASSESSEE THE SAID EQUIPMENT WAS SOLD TO THE MILK COLLECTION CENTRE ON NO PROFIT BASIS AFTER PURCHASE AND THE SA ID IS NOT APPEARING IN THE LIST OF FIXED ASSETS MAINTAINED BY THE ASSES SEE AND THE ASSESSEE IS JUST A CONDUIT FOR SUPPLYING THE SAID EQUIPMENT TO THE MILK COLLECTION CENTRES, THEREFORE THE ADDITION ON THIS ACCOUNT NEE DS TO BE DELETED. 2 2. THAT THE ASSESSEE PRAYS FOR ANY CONSEQUENTIAL RELIE F AND/OR LEGAL CLAIM ARISING OUT OF THIS APPEAL BEFORE THE DISPOSAL OF T HE SAME. 3. AFTER HEARING BOTH THE PARTIES WE FIND THAT DURI NG ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTICED THAT ASS ESSEE HAS DEBITED EXPENSES OF RS. 1,24,604/- AS MILK TESTING EQUIPMEN T. IN RESPONSE, IT WAS MAINLY EXPLAINED THAT ASSESSEE HAD PROCURED THIS EQ UIPMENT TO PROCURE THE GOOD QUALITY OF MILK . THE EQUIPMENT WAS SOLD TO V ARIOUS SUPPLIERS ON NO PROFIT AND NO LOSS BASIS AND SALES HAVE BEEN SHOWN IN THE TRADING ACCOUNT. THE ASSESSING OFFICER AFTER CONSIDERING THE SUBMISS IONS WAS OF THE VIEW THAT EXPENSE IS OF ENDURING NATURE AND, THEREFORE, THE SAME IS NOT ALLOWABLE AND ACCORDING HE DISALLOWED THIS AMOUNT. ON APPEAL, LD. CIT(A) CONFIRMED THE ADDITION. 4. BEFORE US LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT TESTING EQUIPMENT WERE ALREADY SOLD BY THE ASSESSEE AND THE RECEIPTS WERE CREDITED TO THE TRADING ACCOUNT, THEREFORE, IN THE RESULT PRACTICALLY, NO CLAIM HAS BEEN MADE. 5. ON THE OTHER HAND, THE LD. DR SUPPORTED THE ORD ER OF CIT(A). 6. AFTER CONSIDERING THE RIVAL SUBMISSIONS WE FIND THAT BEFORE THE ASSESSING OFFICER FOLLOWING SUBMISSIONS WERE GIVEN: - AS STATED EARLIER THAT OUR SOCIETY IS A COOPERATIV E SOCIETY UNDERTAKING VARIOUS ACTIVITIES OF MILK PRODUCERS AN D DUE TO HARD COMPETITION IN THE MARKET AND TO RUN THE UNIT AT OPTIMUM LEVEL IT IS VERY MUCH NECESSARY TO PROCURE ADEQUATE QUANTITY OF RAW MILK TO INCREASE ITS SALE AND PROFI T MARGINS FOR THE PURPOSE IT HAS TO ESTABLISH MILK COLLECTION CENTERS AT UNCOVERED VILLAGES AND TO PROVIDE NECESSARY TESTING EQUIPMENTS TO ENSURE GOOD QUALITY OF MILK. THIS EQU IPMENTS WERE NOT RETURNABLE TO OUR UNIT. THE TOTAL COST OF SUCH 3 EQUIPMENTS REPRESENT PURCHASE COST OF EQUIPMENT AND THERE EXPENSES WHICH WAS SOLD FOR A PRICE. THIS EQUIPMENT WAS SOLD ON NO PROFIT AND NO LOSS BASIS, THE SALES OF W HICH WERE SHOWN IN OUR ANNEXURE D TO TRADING ACCOUNT UNDER TH E HEAD M.T. EQUIPMENT. THE FOLLOWING DOCUMENTS ARE ATTACHE D HEREUNDER:- SO IN THIS WAY MILK TESTING EQUIPMENT WAS GIVEN FOR BUSINESS DEVELOPMENT AND KEEPING IN VIEW THE FUTURE PROSPECT S HENCE FULLY ALLOWABLE SO IT IS REQUESTED NOT TO TAKE ANY ADVERSE VIEW IN THE MATTER. 7. THE ABOVE CLEARLY SHOWN THAT ASSESSEE HAS ALREAD Y SOLD THESE TESTING EQUIPMENTS AND EVEN SALE PROCEEDS HAVE BEEN CREDITE D UNDER THE HEAD M.T. EQUIPMENT. THEREFORE, PRACTICALLY NO CLAIMS O N THIS ACCOUNT HAVE BEEN MADE. THE ASSESSING OFFICER HAS MADE ADDITION MECHANICALLY WITHOUT UNDERSTANDING THE ISSUE OR POINTING OUT THA T NO SUCH SALES WAS MADE. THEREFORE, WE ARE OF THE OPINION THAT THERE IS NO MERIT IN THE ADDITION AND WE SET ASIDE THE ORDER OF LD. CIT(A) A ND DELETE THE ADDITION. 8. IN THE RESULT, THE APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 7.11.2013. SD/- SD/- (SUSHMA CHOWLA) (T.R. SOOD) JUDICIAL MEMBER ACCOUNTANT MEMER DATED : 7 TH NOVEMBER, 2013 RKK COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR 4