Tikaula Sugar Mills Ltd., V. DCIT, Circle-I,

ITA 63/DEL/2006

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 8373 (ITAT-DELHI)
• Duration Of Justice: 10 year(s) 2 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-04-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: H
• Next Hearing Date: 08-02-2016
• Assessment Year: 2001-2002
• Appeal Filed On: 06-01-2006
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S K JAIN SR DRE
• Assessee Lawyers: AKHILESH KR
• Keywords: Business expenditure; Capital receipt
• Section: 143(3); 142(1); 148

Judgement Text

ITA NOS. 63&443/DEL2006 & 116&924/DEL2007 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH H, NEW DELHI BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER AND SHRI L.P. SAHU, ACCOUNTANT MEMBER ITA NOS. 63/DEL/2006 & 924/DEL/2007 A.YRS. : 2001-02 & 2003-04 M/S TIKAULA SUGAR MILLS LTD., 118-B, NEW MANDI, MUZAFFARNAGAR, (PAN: AAAFT9423F) VS. DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-1, MUZAFFARNAGAR AND ITA NOS. 443/DEL/2006 & 116/DEL/2007 A.YRS. : 2001-02 & 2003-04 DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-1, MUZAFFARNAGAR VS. M/S TIKAULA SUGAR MILLS LTD., 118-B, NEW MANDI, MUZAFFARNAGAR, (PAN: AAAFT9423F) ASSESSEE BY : SH. AKHILESH KR. ADV. DEPARTMENT BY : SH. S.K. JAIN, SR. DRE DATE OF HEARING : 08-02-2016 DATE OF ORDER : 04-04-2016 ORDER PER H.S. SIDHU : JM THESE FOUR CROSS APPEALS BY ASSESSEE AND REVENUE EMANATE FROM THE ORDERS OF THE LD. CIT(A), MUZAFFARNAGAR DATED 30. 11.2005 & 12.12.2006 RESPECTIVELY RELEVANT FOR THE ASSESSMENT YEARS 2001 -02 & 2003-04. SINCE THE ISSUES INVOLVED IN THESE CROSS APPEALS ARE IDENTICA L AND COMMON, HENCE, THESE ITA NOS. 63&443/DEL2006 & 116&924/DEL2007 2 APPEALS ARE BEING CONSOLIDATED AND DISPOSED OF BY T HIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 2. THE GROUNDS RAISED IN ASSESSEES APPEAL NO. 63/D EL/2006 (AY 2001-02) READS AS UNDER:- 1. THAT THE AUTHORITIES BELOW HAVE ERRED IN LAW AN D ON FACTS IN REJECTING ASSESSEES CLAIM OF RS. 2,64,49,347/- BEI NG INCENTIVE WHICH WAS OF CAPITAL NATURE. THAT THE LD. CIT(A) HA S NOT PROPERLY APPRECIATED THE EVIDENCE ON RECORD IN THIS REGARD AND HAS SUMMARILY REJECTED THE CONTENTION OF THE ASSESSEE. 2. THAT THE AUTHORITIES BELOW HAVE FURTHER ERRED IN NOT ALLOWING CLAIM OF RS. 2,85,000/- WHICH AMOUNT WAS CONTRIBUTED TO WARDS CONSTRUCTION OF DAM WHICH RESULTED IN IMPROVING THE QUALITY OF CANE VIS--VIS YIELD OF SUGAR. 3. THE GROUNDS RAISED IN REVENUES APPEAL NO. 443/ DEL/2006 (AY 2001-2) READS AS UNDER:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS. 2,68,310/ - MADE BY THE AO ON ACCOUNT OF CREATION OF RESERVE FUND FOR MOLASSES STORAGE TANK HOLDING THAT CLAIM OF THE ASSESSEE FOR CONSTRUCTION / PROVISION OF EXPENSES IN RESPECT OF MOLASSES TANK IS A CAPITAL E XPENDITURE. 1.1 THAT THE ORDER OF THE CIT(A) BE SET ASIDE AND T HAT OF THE AO BE RESTORED. 4. THE GROUNDS RAISED IN REVENUES APPEAL NO. 116/D EL/2007 (AY 2003-04) READS AS UNDER:- ITA NOS. 63&443/DEL2006 & 116&924/DEL2007 3 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS. 27 ,65,640/- MADE BY THE AO ON ACCOUNT OF TREATING THE INCENTIVE OF R S. 27,65,640/- ON SALE OF LEVY SUGAR AS FREE SUGAR AS REVENUE RECEIPT S AS AGAINST CAPITAL RECEIPTS CLAIMED BY THE ASSESSEE. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS. 3,33,7 67/- MADE BY THE AO ON ACCOUNT OF PROVISION MADE FOR STORAGE OF MOLA SSES STORAGE TANK. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LD. CIT(A) ERRED IN DELETING THE DISALLOWANCE OF MISCE LLANEOUS EXPENSES OF RS. 20,000/- MADE BY THE AO. 4. THE ORDER OF THE CIT(A) BE SET ASIDE AND THAT OF AO IS RESTORED. 5. THE GROUNDS RAISED IN ASSESSEES APPEAL NO. 924 /DEL/2007 (AY 2003-04) READS AS UNDER:- 1. THAT THE AUTHORITIES BELOW HAVE ERRED IN LAW A ND ON FACTS IN NOT ALL OWING ASSESSEES CLAIM OF RS. 1,50,000/- BE ING CONTRIBUTION TOWARDS CONSTRUCTION OF DAM. THE EXPENDITURE / CON TRIBUTION WAS MADE FOR THE BENEFIT OF COMPANYS BUSINESS, HENCE T HE SAME IS ALLOWABLE EXPENDITURE. ASSESSEES APPEAL (AY 2001-02) - APPEAL NO. 63/DE L/2006 6. BRIEFLY STATED, THE FACTS OF THE CASE ARE THE AS SESSEE COMPANY IS RUNNING SUGAR MILL AND HAD FILED ITS RETURN ON 31.10.2011 D ECLARING LOSS OF RS. ITA NOS. 63&443/DEL2006 & 116&924/DEL2007 4 9,51,92,580/-. THE RETURN WAS PROCESSED U/S. 143(1 )(A) ON THE DECLARED LOSS ON 31.12.2004. LATER ON THE CASE WAS TAKEN UP FOR SCR UTINY AND NOTICE U/S. 143(2) WAS ISSUED ON 9.4.2002 AND NOTICES U/S. 142(1) AND 143(2) WERE ISSUED ALONGWITH QUESTIONNAIRE. ASSESSEES AUTHORISED REPR ESENTATIVE ATTENDED THE PROCEEDINGS ON BEHALF OF THE ASSESSEE AND FILED THE DETAILS ALONGWITH WRITTEN EXPLANATIONS AS REQUIRED FROM TIME TO TIME. THE BO OKS WERE PRODUCED AND CHECKED ON TEST BASIS. THEREAFTER, THE AO MADE THE VARIOUS ADDITIONS AND COMPLETED THE ASSESSMENT ON TOTAL LOSS OF RS. 6,80 ,52,380/- VIDE HIS ORDER DATED 27.2.2004 PASSED U/S. 143(3) OF THE I.T. ACT, 1961. AGGRIEVED WITH THE ADDITIONS, ASSESSEE APPEALED BEFORE THE LD. CIT(A) WHO VIDE IMPUGNED ORDER DATED 30.11.2015 HAS PARTLY ALLOWED THE APPEAL OF T HE ASSESSEE. AGAINST THE AFORESAID ORDER DATED 30.11.2015 OF THE LD. CIT(A), BOTH ASSESSEE AND REVENUE ARE IN CROSS APPEALS BEFORE THE TRIBUNAL. 7. APROPOS GROUND NO. 1 RAISED IN ASSESSEES APPEAL IS CONCERNED, LD. COUNSEL OF THE ASSESSEE HAS STATED THAT THIS I SSUE IS SQUARELY COVERED BY THE TRIBUNALS DECISION DATED 21.1.2016 WHEREIN SIMILAR ISSUE HAS BEEN DEALT IN THE ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2000-01 AND REQUESTED THAT THE SAME MAY BE FOLLOWED. LD. DR RELIED UPON THE ORDER OF THE AUTHORITIES BELOW. 8. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE R ECORDS ESPECIALLY THE ORDERS OF THE REVENUE AUTHORITIES AND DECISION OF T HE TRIBUNAL DATED 21.1.2016 IN ASSESSEES OWN CASE. WE FIND THAT THE TRIBUNAL VI DE ITS ORDER DATED 21.1.2016 ITA NOS. 63&443/DEL2006 & 116&924/DEL2007 5 HAS DEALT THE SIMILAR ISSUE IN THE ASSESSEEES OWN CASE FOR THE ASSESSMENT YEAR 2000-01 VIDE PARA NO. 5 TO 7 AT PAGES 5 TO 9. FOR THE SAKE OF CLARITY, WE ARE REPRODUCING THE PARA NO. 5 TO 7 AT PAGES 5 TO 9 O F THE TRIBUNALS ORDER DATED 21.1.2016 IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2000-01 AS UNDER:- 5. THE FIRST REASON TAKEN BY THE AO FOR INITIATING REASSESSMENT IS TREATING THE SALE OF ADDITIONAL QUOTA OF SUGAR I N FREE MARKET AMOUNTING TO RS.35,11,976/- AS REVENUE RECEIPT AGAI NST THE ASSESSEES CLAIM OF CAPITAL RECEIPT. THE ASSESSEE E ARNED PROFIT OF RS.35.11 LAC FROM THE SALE OF ADDITIONAL FREE SUGAR UNDER INCENTIVE SCHEME OF THE GOVERNMENT OF INDIA, WHICH AMOUNT WAS NOT OFFERED FOR TAXATION ON THE GROUND THAT IT WAS A RECEIPT OF CAPITAL NATURE. THE ASSESSEE WAS CALLED UPON TO SHOW CAUSE AS TO WH Y THIS AMOUNT BE NOT TREATED AS A REVENUE RECEIPT IN THE LIGHT OF THE JUDGMENT OF THE HONBLE SUPREME COURT IN THE CASE OF KCP LTD. 2 45 ITR 421 (SC). THE ASSESSEE SUBMITTED THAT THE FACTS OF THE CASE OF KCP LTD. (SUPRA) WERE DISTINGUISHABLE. IT WAS FURTHER EXPLA INED THAT THE SAID AMOUNT OF RS.35.11 LAC WAS IN THE NATURE OF INCENTI VE GIVEN BY THE GOVERNMENT FOR REPAYMENT OF TERM LOANS. THE ASSESS EE RELIED ON CERTAIN JUDGMENTS IN SUPPORT OF ITS CONTENTION THAT THE AMOUNT WAS NOT A REVENUE RECEIPT. NOT CONVINCED WITH THE ASSE SSEES CONTENTIONS, THE AO CAME TO HOLD THAT SINCE THE SAI D RECEIPT WAS TO ITA NOS. 63&443/DEL2006 & 116&924/DEL2007 6 BE USED FOR THE RUNNING OF BUSINESS AND, HENCE, CON STITUTED A TRADING RECEIPT. THE LD. CIT(A) UPHELD THE ACTION OF THE AO BY NOTICING THAT THE ASSESSEE DID NOT PRODUCE ANY EVID ENCE TO SHOW THAT THE AMOUNT OF RS.35.11 LAC WAS UTILIZED FOR RE PAYMENT OF LOAN DURING THE YEAR. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. IT IS NOTICED THAT TH E GOVERNMENT OF INDIA CAME OUT WITH AN INCENTIVE SCHEME FOR SETTING UP OF NEW SUGAR FACTORIES AND EXPANSION PROJECTS LICENSED/TO BE LICENSED DURING THE PERIOD 7.9.1990 TO 31.3.1994, A COPY OF WHICH HAS BEEN PLACED AT PAGE 22 OF THE PAPER BOOK. THE OBJECT OF THIS SCHEME IS `AUGMENTING INDIGENOUS SUGAR PRODUCTION AND PROVID ING ASSISTANCE TO THE ENTREPRENEURS IN SETTING UP SUGAR FACTORIES THROUGH HIGHER FREE SALE QUOTA FOR REPAYMENT OF TE RM LOANS ADVANCED BY THE CENTRAL FINANCIAL INSTITUTIONS. CL AUSE 12 OF THIS SCHEME PROVIDES THAT THE BENEFICIARIES OF THE INCEN TIVE SCHEME SHALL ENSURE THAT THE SURPLUS FUNDS GENERATED THROU GH SALE OF THE INCENTIVE SUGAR ARE UTILIZED FOR THE REPAYMENT OF T ERM LOANS, IF ANY, OUTSTANDING FROM THE CENTRAL FINANCIAL INSTITUTIONS /SUGAR DEVELOPMENT FUND. IT FURTHER PROVIDES THAT THE SUG AR FACTORIES SHALL SUBMIT UTILIZATION CERTIFICATE ANNUALLY FROM A CHARTERED/COST ITA NOS. 63&443/DEL2006 & 116&924/DEL2007 7 ACCOUNTANT. THE ABOVE CLAUSE OF THE SCHEME FAIRLY INDICATES THAT HIGHER FREE SALE QUOTA WAS GRANTED TO NEW SUGAR FAC TORIES LICENSED BETWEEN 7.9.1990 TO 31.3.1994 FOR ENABLING THEM TO REPAY THE TERM LOANS ADVANCED BY THE CENTRAL FINANCIAL INSTITUTION S FOR THEIR SETTING UP. THIS SHOWS THAT THE OBJECT OF THIS SCHEME IS T O ENCOURAGE THE SETTING UP OF NEW SUGAR FACTORIES AND HIGHER FREE S ALE QUOTA IS A MODE OF GIVING INCENTIVE FOR REPAYMENT OF TERM LOAN S UTILIZED FOR THEIR SETTING UP. IT IS A SETTLED LEGAL POSITION T HAT IF SUBSIDY OR INCENTIVE IS GIVEN FOR SETTING UP NEW UNITS, THEN, IT IS A CAPITAL RECEIPT. THE DECISIVE FACTOR IN THIS REGARD IS TO SEE THE `OBJECT OF THE INCENTIVE AND NOT THE SOURCE OR MODE OF PAYMENT . SO LONG AS THE OBJECT OF AN INCENTIVE SCHEME REMAINS TO ENCOUR AGE THE SETTING UP OF NEW UNITS, THE INCENTIVE GIVEN IN ANY SHAPE O R AT ANY TIME, WHETHER BEFORE OR AFTER THE COMMENCEMENT OF BUSINES S, RETAINS ITS CAPITAL NATURE. IF, ON THE OTHER HAND, SUBSIDY IS GIVEN TO INCENTIVIZE THE RUNNING OF BUSINESS MORE APPROPRIATELY, WHOSE O BJECT IS NOT TO ENCOURAGE THE SETTING UP OF UNITS, BUT, TO FACILITA TE THE CARRYING ON OF BUSINESS, IT ASSUMES THE CHARACTER OF A REVENUE RECEIPT. THE HONBLE SUPREME COURT IN CIT VS. PONNI SUGAR AND CH EMICALS LTD. AND ORS. (2008) 306 ITR 392 (SC) HAS HELD THAT THE SUBSIDY FOR SETTING UP SUGAR MILLS, TO BE UTILIZED FOR REPA YMENT OF TERM LOANS UNDERTAKEN FOR SETTING UP NEW UNITS/EXPANSION OF EXISTING ITA NOS. 63&443/DEL2006 & 116&924/DEL2007 8 BUSINESS, IS A CAPITAL RECEIPT AND NOT CHARGEABLE T O TAX. ADVERTING TO THE FACTS OF THE INSTANT CASE, WE FIND THAT THE ASSESSEE IS COVERED UNDER THE INCENTIVE SCHEME DATED 10.3.1993 AS IT WA S SET UP IN 7.3.1994. IT IS SO BORNE OUT FROM THE LETTER DATED 10.7.2000 ISSUED TO THE ASSESSEE BY THE GOVERNMENT OF INDIA, MINISTR Y OF FOOD, DIRECTORATE OF SUGAR, A COPY OF WHICH IS PLACED AT PAGE 175 OF THE PAPER BOOK, GIVING LICENCE AND COVERING IT UNDER TH E INCENTIVE SCHEME DATED 10.3.1993. PURSUANT TO THE REQUIREMEN T OF SUBMISSION OF UTILIZATION CERTIFICATE FROM A CHARTE RED ACCOUNTANT, THE ASSESSEE SUBMITTED SUCH CERTIFICATE, A COPY OF WHICH IS AVAILABLE AT PAGES 38 AND 39 OF THE PAPER BOOK. SUCH CERTIFI CATE INDICATES REPAYMENT OF INTEREST ON LOAN TO THE FINANCIAL INST ITUTIONS TO THE TUNE OF RS.2.65 CRORE AGAINST WHICH THE AMOUNT OF S UBSIDY IS ONLY A SUM OF RS.35.11 LAC. THIS EXHIBITS THAT THE OBJECT OF SUBSIDY GIVEN TO THE ASSESSEE IS SETTING UP OF SUGAR MILL AND THE MODE OF DISCHARGE OF SUBSIDY IS FREE SALE OF ADDITIONAL QUO TA, WHICH IS MEANT TO BE UTILIZED FOR THE REPAYMENT OF TERM LOAN S TAKEN FROM THE FINANCIAL INSTITUTIONS ETC. 7. THE RELIANCE OF THE AO ON THE JUDGMENT OF THE HONBLE SUPREME COURT IN KCP LTD. VS. CIT (2000) 245 ITR 42 1 (SC) IS MISCONCEIVED. IN THAT CASE, THE EXCESS AMOUNT WAS REALIZED AND ITA NOS. 63&443/DEL2006 & 116&924/DEL2007 9 RETAINED THOUGH THE RIGHT TO REALIZE THE AMOUNT WAS SUBJECT OF DISPUTE. INTERIM ORDER WAS PASSED BY THE HONBLE H IGH COURT PURSUANT TO WHICH THE EXCESS REALIZATION WAS MADE. IT WAS UNDER THOSE CIRCUMSTANCES THAT THE HONBLE SUPREME COURT HELD THAT THE PRICE OF SUGAR REALIZED BY THE SUGAR MANUFACTURER I N EXCESS OF LEVY PRICE FIXED BY THE GOVERNMENT AND RETAINED AS SUCH WAS TRADING RECEIPT LIABLE TO TAX. IN CONTRAST TO THE FACTUAL POSITION PREVAILING IN KCP LTD. (SUPRA), WE FIND THAT IN THE INSTANT CA SE, THE ASSESSEE HAS SIMPLY REALIZED EXCESS PRICE IN TERMS OF INCENT IVE SCHEME DATED 10.3.1992 AND THERE IS NO EXCESS REALIZATION OVER A ND ABOVE THE SANCTIONED REALIZABLE AMOUNT. THUS, IT IS MANIFEST THAT THE FACTS OF THE INSTANT CASE ARE STRICTLY GOVERNED BY THE JUDGM ENT IN THE CASE OF PONNI SUGAR RATHER THAN KCP LTD. WE, THEREFORE, OV ERTURN THE IMPUGNED ORDER ON THIS ISSUE. 8.1 RESPECTFULLY, FOLLOWING THE COORDINATE BENCH DE CISION DATED 21.1.2016 IN ASSESSEES OWN CASE, AS AFORESAID, WE DECIDE THE ISSUE IN DISPUTE IN FAVOUR OF THE ASSESSEE AND ACCORDINGLY, ALLOW THE GROUND NO . 1 RAISED IN THE ASSESSEES APPEAL. 9. APROPOS GROUND NO. 2 RAISED IN ASSESSEES APPEAL IS CONCERNED, WE FIND THAT THE ASSESSEE HAS MADE THIS PAYMENT TO BAB A JAGTAR SINGHJI DERA GANGA BANDH, RAMRAJ. THE ASSESSEES CLAIM WAS THAT THE IT WILL ALSO BE BENEFITED BY ITA NOS. 63&443/DEL2006 & 116&924/DEL2007 10 CONSTRUCTION OF THE DAM BECAUSE RECOVERY OF SUGAR C ANE FROM KHADAR AREA WILL INCREASE. THE AO DISALLOWED THE CLAIM OF THE ASSES SEE ON THE GROUND THAT THERE WAS NO OBLIGATION ON THE ASSESSEE COMPANY TO MAKE S UCH CONTRIBUTION AND THUS, IT IS NOT FOR THE BUSINESS PURPOSES. WE ALSO FIND THAT SIMILAR CONTENTIONS WERE RAISED BEFORE THE LD. CIT(A) DURING APPELLATE PROCE EDINGS, WHICH WERE NOT ACCEPTABLE TO THE LD. CIT(A), HENCE, LD. CIT(A) CO NFIRMED THE ADDITION IN DISPUTE MADE BY THE AO. WE NOTE THAT THE CONTRIBUTI ON HAS BEEN CLEARLY MADE TO A RELIGIOUS BODY, APPARENTLY FOR RELIGIOUS / CHARIT ABLE PURPOSES. THE PAYMENT WAS NOT MADE BY ANY OBLIGATION, BUT RATHER IT HAS B EEN MADE VOLUNTARILY. NO PAYMENT WAS MADE TO ANY GOVERNMENT BODY OR ANY ORGA NIZATION APPROVED BY THE GOVT. / CANE COMMISSIONER FOR THE PURPOSE OF C ONSTRUCTION OF DAM. THE ASSESSEE HAS ALSO FAILED TO PROVE THE NEXUS BETWEEN THE PAYMENT MADE TO BABA JAGTAR SINGHJI AND DEVELOPMENT WORK OF THE AREA. THE ASSESSEE WAS UNABLE TO PRODUCE ANY SUFFICIENT EVIDENCE TO SHOW THAT IN CAS E THESE PAYMENTS WERE NOT MADE, THE AREA WOULD HAVE BEEN ASSIGNED TO SOME OT HER FACTORY. IN VIEW OF THE ABOVE, LD. CIT(A) HAS RIGHTLY CONFIRMED THE ADDITIO N IN DISPUTE AND PASSED A WELL REASONED ORDER ON THIS ISSUE, WHICH DOES NOT N EED ANY INTERFERENCE ON OUR PART, HENCE, WE UPHOLD THE SAME AND DISMISS THE GRO UND NO. 2 RAISED BY THE ASSESSEE IN ITS APPEAL. AS A RESULT, THE APPEA L OF THE ASSESSEE IS PARTLY ALLOWED. ITA NOS. 63&443/DEL2006 & 116&924/DEL2007 11 ASSESSEES APPEAL (AY- 2003-04)- APPEAL NO. 924/DE L/2007 10. APROPOS GROUND NO. 1 RAISED IN ASSESSEES APPEAL (AY 2003-04) IS CONCERNED. THIS IS A SIMILAR ISSUE DEALT BY US IN THE ASSESSMENT YEAR 2001-02 IN ASSESSEES OWN CASE, AS AFORESAID VIDE PARA NO. 9 O F THIS ORDER WHEREIN WE UPHELD THE ORDER OF THE LD. CIT(A) AND DISMISS THE GROUND RAISED BY THE ASSESSEE. THEREFORE, FOLLOWING THE CONSISTENT V IEW, WE DISMISS THE GROUND NO. 1 RAISED BY THE ASSESSEE IN THE ASSESSMENT YEAR 2003-04. AS A RESULT, THE APPEAL OF THE ASSESSEE IS DISMISSED. REVENUES APPEAL (AY- 2001-02)- APPEAL NO. 443/DEL/ 2006 11. APROPOS GROUND NO. 1 RAISED IN THE REVENUES APPEAL IS CONCERNED, LD. COUNSEL OF THE ASSESSEE HAS STATED THAT THIS I SSUE IS SQUARELY COVERED BY THE TRIBUNALS DECISION DATED 21.1.2016 WHEREIN SIMILAR ISSUE HAS BEEN DEALT IN THE ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2000-01 AND REQUESTED THAT THE SAME MAY BE FOLLOWED AND LD. CIT(A)S ORDER MAY BE UPHELD. LD. DR RELIED UPON THE ORDER OF THE AUTHORITIES BELOW. 12. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE RECORDS ESPECIALLY THE ORDERS OF THE REVENUE AUTHORITIES AND DECISION OF T HE TRIBUNAL DATED 21.1.2016 IN ASSESSEES OWN CASE. WE FIND THAT THE TRIBUNAL VI DE ITS ORDER DATED 21.1.2016 HAS DEALT THE SIMILAR ISSUE IN THE ASSESSEEES OWN CASE FOR THE ASSESSMENT YEAR 2000-01 VIDE PARA NO. 8 TO 9 AT PAGES 10 TO 11. FO R THE SAKE OF CLARITY, WE ARE ITA NOS. 63&443/DEL2006 & 116&924/DEL2007 12 REPRODUCING THE PARA NO. 8 TO 9 AT PAGES 10 TO 11 OF THE TRIBUNALS ORDER DATED 21.1.2016 IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2000-01 AS UNDER:- 8. THE SECOND REASON TAKEN BY THE AO FOR ISSUING N OTICE U/S 148 IS THAT THE ASSESSEE CREATED A RESERVE FUND FOR CON STRUCTION OF MOLASSES STORAGE TANK DURING THE YEAR AT RS.1,30,62 5/- WHICH WAS CREDITED TO RESERVE ACCOUNT AFTER DEBITING THE SAME TO THE PROFIT & LOSS ACCOUNT. IN THE OPINION OF THE AO, THIS WAS N OT AN ALLOWABLE EXPENDITURE. THE ASSESSEES CONTENTION THAT THE SA ID AMOUNT WAS AN ALLOWABLE DEDUCTION IN TERMS OF SEVERAL DECISION S CITED BEFORE HIM, DID NOT CONVINCE THE AO IN GRANTING DEDUCTION. HE, THEREFORE, DISALLOWED A SUM OF RS.1,30,625/-. THE LD. CIT(A), AFTER CONSIDERING THE ASSESSEES CONTENTIONS AND THE CASE LAW RELIED BEFORE HIM, ALLOWED DEDUCTION. THE REVENUE IS AGGR IEVED AGAINST THE GRANT OF DEDUCTION. 9. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. THE UNDISPUTED FACTS ARE THAT THE ASSESSEE CREATED MOLASSES RESERVE FUND FOR CONSTRUC TION OF MOLASSES STORAGE TANK BY CREDITING A SUM OF RS.1,30 ,625/- TO THIS ACCOUNT IN ACCORDANCE WITH UP SHEERA NIYANTRAN NIYA MAVALI. THE HONBLE CALCUTTA HIGH COURT IN CIT VS. UPPER GA NGES SUGAR MILLS LTD. (1994) 206 ITR 215 (CAL) HAS HELD THAT C ONTRIBUTION ITA NOS. 63&443/DEL2006 & 116&924/DEL2007 13 TOWARDS MOLASSES STORAGE FUND IS ELIGIBLE FOR DEDUC TION AS BUSINESS EXPENDITURE. SIMILAR VIEW HAS BEEN TAKEN BY THE HONBLE MADRAS HIGH COURT IN CERTAIN DECISIONS INCLUDING CI T VS. SALEM COOPERATIVE SUGAR MILLS LTD., 229 ITR 285 (MAD). IN VIEW OF SEVERAL DECISIONS TAKEN NOTE OF BY THE LD. CIT(A) I N THE IMPUGNED ORDER SUPPORTING THE ASSESSEES CONTENTION, WHICH H AVE NOT BEEN CONTROVERTED BY THE LD. DR WITH ANY CONTRARY DECISI ON, WE ARE OF THE CONSIDERED OPINION THAT THE LD. FIRST APPELLATE AUTHORITY HAS TAKEN AN UNIMPEACHABLE VIEW ON THIS ISSUE. WE, THE REFORE, UPHOLD THE IMPUGNED ORDER ON THIS SCORE. 12.1 RESPECTFULLY, FOLLOWING THE COORDINATE BENCH D ECISION DATED 21.1.2016 IN ASSESSEES OWN CASE, AS AFORESAID, WE DECIDE THE ISSUE IN DISPUTE IN FAVOUR OF THE ASSESSEE AND ACCORDINGLY, DISMISS THE GROUND NO . 1 RAISED IN THE REVENUES APPEAL BY UPHOLDING THE ORDER OF THE LD. CIT(A) ON THIS ISSUE. AS A RESULT, THE REVENUES APPEAL IS DISMISSED. REVENUES APPEAL (AY 2003-04)- APPEAL NO. 116/DE L/2007 13. APROPOS GROUND NO. 1 RAISED IN THE REVENUES APPEAL IS CONCERNED. THIS IS A SIMILAR ISSUE WHICH WE HAVE DEALT IN ASSE SSEES APPEAL FOR THE ASSESSMENT YEAR 2001-02, AS AFORESAID VIDE PARA NO. 8 TO 8.1. SINCE WE HAVE ALLOWED THE SIMILAR ISSUE IN FAVOUR OF THE ASSESSEE , AS AFORESAID, BY RESPECTFULLY FOLLOWING THE DECISION OF THE TRIBUNAL DATED 21.1. 2016 PASSED IN ASSESSEES ITA NOS. 63&443/DEL2006 & 116&924/DEL2007 14 OWN CASE FOR THE ASSESSMENT YEAR 2000-01, AS AFORES AID. FOLLOWING THE CONSISTENT VIEW, WE ALLOW THIS ISSUE IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE AND DISMISS THE GROUND NO. 1 RAISED IN THE REVENUES APPEAL AND ALSO UPHOLD THE ORDER OF THE LD. CIT(A) ON THIS ISSUE. 14. APROPOS GROUND NO. 2 RAISED IN REVENUES APPEAL (AY 2001-02) IS CONCERNED. THIS IS A SIMILAR ISSUE DEALT BY US IN THE ASSESSMENT YEAR 2001-02 IN ASSESSEES OWN CASE IN THE REVENUES APPEAL, AS AFO RESAID VIDE PARA NO. 12 TO 12.1 OF THIS ORDER WHEREIN WE UPHELD THE ORDER OF T HE LD. CIT(A) BY RESPECTFULLY FOLLOWING THE COORDINATE BENCH ORDER DATED 21.1.20 16 IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2001-02. THEREFORE, FOLLO WING THE CONSISTENT VIEW, WE DISMISS THE GROUND NO. 2 RAISED BY THE REVENUE IN T HE ASSESSMENT YEAR 2003-04. 15. APROPOS GROUND NO. 3 RAISED IN REVENUES APPEA L IS CONCERNED, WE FIND THAT THE DISALLOWANCE OF RS. 20,000/- HAS VIRTUALL Y VIRTUALLY BEEN MADE OUT OF MISC. EXPENSES OF RS. 31,414/- AND WE ARE OF THE VIEW THAT CONSIDERING THE MAGNITUDE OF THE BUSINESS OF THE ASSESSEE COMPANY, THE MISCELLANEOUS EXPENSES CLAIMED AT RS. 31,414/- APPEAR TO BE REASONABLE AND NO DISALLOWANCE OUT OF THE SAME IS CALLED FOR. ACCORDINGLY, THE LD. CIT(A) H AS RIGHTLY DELETED THE ADDITION IN DISPUTE, WHICH IN OUR OPINION NEEDS NO INTERFERE NCE ON OUR PART, HENCE, WE UPHOLD THE SAME AND ACCORDINGLY, DISMISS THE GROUND NO. 3 RAISED IN THE REVENUES APPEAL. AS A RESULT, THE REVENUES APPEAL IS DISMISSED. ITA NOS. 63&443/DEL2006 & 116&924/DEL2007 15 16. IN THE RESULT, THE ASSESSEES APPEAL NO. 63/DE L/2006 (AY 2001-02) IS PARTLY ALLOWED AND REVENUES APPEAL NO. 443/DEL/200 6 IS DISMISSED AND ASSESSEES APPEAL NO. 924/DEL/2007 (AY 2003-04) IS DISMISSED AND REVENUES APPEAL NO. 116/DEL/2007 (AY 2003-04) IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 04/04/2016. SD/- SD/- [L.P. SAHU] [H.S. SIDHU] ACCOUNTANT MEMBER JUDICIAL MEMBER DATE 04/04/2016 SRBHATNAGAR COPY FORWARDED TO: - 1. APPELLANT - 2. RESPONDENT - 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR, ITAT, DELHI BENCHES