Haryana Warehousing Corporation, Panchkula V. DCIT, Panchkula

ITA 656/CHANDI/2011

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 51629 (ITAT-CHANDIGARH)
• Duration Of Justice: 6 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-12-2011
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 13-12-2011
• Assessment Year: 2008-2009
• Appeal Filed On: 08-06-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: JYOTI KUMARI
• Assessee Lawyers: B K NOHRIA
• Keywords: Charitable institution
• Section: 12; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH A CHANDIGARH BEFORE MS.SUSHMA CHOWLA, JUDICIAL MEMBER AND SHRI MEHAR SINGH, ACCOUNTANT MEMBER ITA NO.656/CHD/2011 ASSESSMENT YEAR: 2008-09 HARYANA WAREHOUSING CORPORATION, V DCIT, BAY NO. 15-18, SECTOR 2, PANCHKULA CIRCLE, PANCHKULA. PANCHKULA. PAN: AAACH-3948K (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI B.K.NOHRIA RESPONDENT BY : SMT.JYOTI KUMARI DATE OF HEARING : 13.12.2011 DATE OF PRONOUNCEMENT : 27.12.2011 ORDER PER MEHAR SINGH, AM THE PRESENT APPEAL FILED BY THE ASSESSEE IS AGAINST THE ORDER DATED 28.03.2011 PASSED BY THE LD. CIT(A) U/S 250(6) OF THE INCOME-TAX ACT,1961 (IN SHORT 'THE ACT'). 2. IN THIS APPEAL, THE ASSESSEE HAS RAISED THE FOLL OWING GROUNDS OF APPEAL: 1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A) PANCHKULA HAS ERRED IN LAW AND FACTS IN DIRECTING THE LD. AO TO ALLOW THE EXPENSES SUBJECT TO VERIFICATION THAT THE LIABILITIES OF THESE EXPENSES AROSE DURING THE YEAR UNDER APPEAL INSTEAD OF TAKING THE EXPENSES AS APPLICATION OF INCOME AS THE ASSESSEE I S A CHARITABLE INSTITUTION. 2. THAT THE APPELLANT RESERVES THE RIGHT TO ADD, AMEND OF DELETE ONE OR MORE OF THE GROUNDS OF APPEA L BEFORE THE SAME IS TAKEN UP FOR FINAL HEARING. 2 3. IN THE COURSE OF PRESENT APPELLATE PROCEEDINGS B EFORE THE BENCH, LD. 'AR' CONTENDED THAT THE DIRECTIONS GIVEN BY THE CIT(A) ARE NOT JUSTIFIED. IT WAS CONTENDED IN THE SINGLE SUBSTANTIVE GROUND OF APPEAL THAT THE CIT(A) ERRED IN LAW AND ON FACTS IN DIRECTING THE AO TO ALLOW THE EXPENSES SUBJECT TO VERIFICATION THAT THE LIABILITIES OF THESE EXPENSES AROSE DURING THE YEAR UNDER APPEAL INSTEAD OF TAKING THE EXPENSE S AS APPLICATION OF INCOME AS THE ASSESSEE IS A CHARITAB LE INSTITUTION. LD. 'AR' CONTENDED THAT THE EXPENSES WERE CLAIMED O N PAYMENT BASIS BEING CHARITABLE INSTITUTION AND SUCH EXPENSE S WERE GOT VERIFIED WHILE COMPLETING THE ASSESSMENT. 4. LD. 'DR', ON THE OTHER HAND, CONTENDED THAT NO S UCH VERIFICATION WAS CONDUCTED BY THE AO AT THE TIME OF COMPLETING THE ASSESSMENT. LD. 'DR' PLACED RELIANCE ON THE OR DER OF THE CIT(A) AND THE ASSESSMENT ORDER. 5. WE HAVE CAREFULLY PERUSED THE FACTS OF THE CASE, RIVAL SUBMISSIONS AND THE DETAILS AVAILABLE ON RECORD. T HE AO NOTICED THAT THE APPELLANT CLAIMED PRIOR PERIOD EXP ENSES OF RS.83,45,876/-. THE AO AFFORDED OPPORTUNITY TO THE ASSESSEE AS TO WHY SUCH EXPENSES SHOULD NOT BE DISALLOWED. IN RESPONSE TO SUCH QUERY AND OPPORTUNITY PROVIDED BY THE AO, I T WAS SUBMITTED BY THE ASSESSEE, THAT THESE EXPENSES HAVE ARISEN DURING THE YEAR AND ARE CLAIMED ON PAYMENT BASIS BE ING A CHARITABLE INSTITUTION. THE AO FOUND SUCH EXPLANAT ION AS NOT TENABLE ON THE GROUND THAT THE EXEMPTION CLAIMED U/ S 11 & 12 OF THE ACT HAD BEEN DENIED TO THE ASSESSEE. IT WAS SPECIFICALLY RECORDED BY THE AO IN THE FINDING THAT THE ASSESSEE IS FOLLOWING MERCANTILE SYSTEM OF ACCOUNTING. ACCORDINGLY, PRIO R PERIOD 3 EXPENSES, WHICH DID NOT PERTAIN TO THE YEAR UNDER CONSIDERATION, WERE DISALLOWED AND AN ADDITION OF RS.83,45,876/- WAS MADE BY THE AO. 6. LD. CIT(A), ON APPRECIATION OF THE SUBMISSIONS F ILED BY THE ASSESSEE HELD THAT THE ADDITION MADE BY THE AO IS N OT JUSTIFIED AND THE SAME IS ORDERED TO BE DELETED SUBJECT TO VE RIFICATION BY THE AO THAT THE LIABILITIES OF THESE EXPENSES AROSE DURING THE YEAR UNDER APPEAL. CONSEQUENTLY, THIS GROUND OF AP PEAL RAISED BY THE ASSESSEE WAS ALLOWED BY THE CIT(A), SUBJECT TO ABOVE OBSERVATIONS. 7. THE RELEVANT FINDINGS OF THE CIT(A), AS CONTAINE D IN PARA 6 OF THE IMPUGNED APPELLATE ORDER, ARE REPRODUCED HER EUNDER : THE THIRD GROUND OF APPEAL IS REGARDING ADDITION O F RS.83,45,876/- AS PRIOR PERIOD EXPENSES. THE AO ASK ED THE ASSESSEE WHY PRIOR PERIOD EXPENSES SHOULD NOT B E DISALLOWED. THE ASSESSEE STATED THAT THESE EXPENSE S HAVE BEEN CLAIMED ON PAYMENT BASIS BEING CHARITABLE INSTITUTION. THE AO DID NOT ACCEPT THE REPLY OF THE ASSESSEE AND HELD THAT EXEMPTION U/S 11 AND 12 HAS BEEN DENIED AND THE ASSESSEE IS FOLLOWING MERCANTIL E SYSTEM OF ACCOUNTING AND HENCE PRIOR PERIOD EXPENSE S ARE NOT ALLOWABLE. THE COUNSEL ON THE OTHER HAND, ARGUED THAT THESE EXPENSES HAVE ARISEN DURING THE Y EAR ONLY AND HAVE BEEN PAID DURING THE YEAR. THE AO HA S DISALLOWED THESE EXPENSES ON THE GROUND THAT THE ASSESSEE HAS BEEN DENIED THE CLAIM U/S 11 & 12 OF T HE IT ACT. THE AO HAS NOT GIVEN ANY FINDING THAT THESE EXPENSES HAVE NOT ARISEN DURING THE YEAR AND HOW THESE EXPENSES ARE NOT INCIDENTAL TO THE RUNNING OF THE BUSINESS. AS IT HAS BEEN HELD THAT THE APPELLANT I S ELIGIBLE FOR EXEMPTION U/S 11 OF THE ACT. THE ONLY REASON GIVEN BY THE AO TO DISALLOW THE EXPENSES NO 4 LONGER HOLDS GOODS. THEREFORE, THE ADDITION MADE B Y THE AO IS NOT JUSTIFIED AND THE SAME IS ORDERED TO BE DELETED SUBJECT TO VERIFICATION BY THE AO THAT THE LIABILITIES OF THESE EXPENSES AROSE DURING THE YEAR UNDER APPEAL. THIS GROUND OF APPEAL IS ALLOWED SUBJECT TO ABOVE. 8. WE HAVE CAREFULLY PERUSED THE IMPUGNED ASSESSME NT ORDER, FINDINGS OF THE LD. CIT(A) AND FOUND THAT TH E FINDINGS OF LD. CIT(A) ARE BASED ON APPRECIATION OF THE FACT SITUATION OF THE CASE AND MATERIAL BROUGHT BEFORE HER. THE F INDINGS OF LD. CIT(A) ARE FAIR AND REASONABLE, HENCE NEED NO INTERFERENCE. CONSEQUENTLY, FINDINGS OF THE CIT(A) ARE UPHELD AND THE GROUND OF APPEAL OF THE ASSESSEE IS DISMISSED. 9. IN THE RESULT, APPEAL OF THE ASSESSEE IS DI SMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 27 TH DEC.,2011. SD/- SD/- (SUSHMA CHOWLA) (MEHAR SINGH) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 27 TH DEC.,2011. POONAM COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT(A), THE CIT ,DR ASSISTANT REGISTRAR, ITAT CHANDIGARH