ACIT, Chandigarh V. M/s Punjab State Coop. Supply & Marketing Federation Ltd., Chandigarh

ITA 710/CHANDI/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 9928 (ITAT-CHANDIGARH)
• Duration Of Justice: 2 year(s) 11 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-06-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 17-02-2016
• Assessment Year: 2002-2003
• Appeal Filed On: 12-06-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AMIT RAJ

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, CHANDIGARH BEFORE SHRI H.L.KARWA, VICE PRESIDENT AND MS. RANO JAIN, ACCOUNTANT MEMBER ITA NO.710/CHD/2013 (ASSESSMENT YEAR : 2002-03) THE A.C.I.T., VS. M/S PUNJAB STATE COOP. SUPPLY CIRCLE 4(1), & MARKETING FEDERATION LTD., CHANDIGARH. PLOT NO.4, SECTOR 35-A, CHANDIGARH. PAN: AAAAT3454G (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI AMIT RAJ, DR RESPONDENT BY : SHRI ATUL GOYAL DATE OF HEARING : 09.05.2016 DATE OF PRONOUNCEMENT : 07.06.2016 O R D E R PER RANO JAIN, A.M . : THE APPEAL FILED BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS)I, CHANDIGARH DATED 1.3.2013, RELATING TO ASSESSMENT YEAR 2002-03, PASSED UNDER SECTION 250(6 ) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT). 2. BRIEFLY, THE FACTS ARE THAT THE ASSESSEE IS ENGAGED IN THE PROCUREMENT OF FOOD-GRAINS ON BEHALF OF THE FOOD CORPORATION OF INDIA (FCI) AND HAD PAID AN AMO UNT OF RS.39,33,16,443/- TO THE STATE GOVERNMENT AS CES S IN 2 PURSUANCE TO THE LAW ENACTED BY THE PUNJAB GOVERNME NT. THE ASSESSEE SOUGHT TO CLAIM THE AFORESAID AMOUNT F ROM FCI. HOWEVER, THE FCI CHALLENGED THE VALIDITY OF L AW BY WHICH THE CESS WAS LEVIED BEFORE THE HON'BLE HIGH C OURT. THE HON'BLE HIGH COURT DECIDED THE MATTER AGAINST T HE FCI AND AN SLP WAS FILED AGAINST THE SAID ORDER BEFORE THE HON'BLE SUPREME COURT. THE ASSESSEE ALSO FILED A W RIT PETITION BEFORE THE HON'BLE HIGH COURT FOR RECOVERY OF THE AMOUNT PAID ON BEHALF OF FCI TO THE PUNJAB GOVERNME NT. THE HON'BLE HIGH COURT DISPOSED OF THE WRIT PETITIO N BY OBSERVING THAT THE MATTER SHOULD BE RESOLVED ADMINISTRATIVELY. IN ACCORDANCE WITH THIS ORDER, A MEETING WAS HELD AS ON 1.4.2002. THE ASSESSEE WAS NOT ENTI TLED TO RECOVER THE IMPUGNED SUM OF RS.39,33,16,443/- FROM THE FCI. THEREFORE, THE MATTER WAS NOT AGITATED FURTHE R AFTER DECISION WAS TAKEN IN THE SAID MEETING. IN THE FIR ST ROUND OF APPEAL BEFORE THE I.T.A.T., IT WAS CONTENDED BY THE ASSESSEE THAT THE IMPUGNED SUM HAD NEVER ACCRUED TO THE ASSESSEE AS ITS INCOME AND, THEREFORE, WAS NOT LIAB LE TO BE TAXED. AFTER CONSIDERING THE SUBMISSIONS OF THE AS SESSEE, THE I.T.A.T. SENT THE MATTER BACK TO THE FILE OF TH E CIT (APPEALS) FOR A FRESH DECISION IN CONFORMITY WITH L AW AFTER GIVING REASONABLE OPPORTUNITY OF HEARING TO BOTH TH E PARTIES. 3. IN THE SECOND ROUND, THE CIT (APPEALS) DECIDED THE MATTER IN FAVOUR OF THE ASSESSEE STATING THAT T HE ASSESSEE HAD MADE BOOK ENTRY IN ITS BOOKS OF ACCOUN TS 3 ONLY FOR THE PURPOSE THAT IT CAN CLAIM THE AMOUNT F ROM FCI AND CONTEST THE SAME BEFORE THE AUTHORITY. HE FURTHER HELD THAT THE AMOUNT CANNOT BE ASSESSED AS INCOME O F THE ASSESSEE SINCE IT IS A HYPOTHETICAL INCOME AS PER M ANDATE OF THE HON'BLE SUPREME COURT IN THE CASE OF GODHRA ELECTRICITY CO. LTD. (1997) 225 ITR 746 (SC). HE F URTHER STATED THAT IF THE FCI ACCEPTS ITS LIABILITY AT ANY POINT OF TIME IN FUTURE OR IS MADE LIABLE TO PAY THE AMOUNT BY WAY OF COURT ORDER, THE SAME WILL BE DECLARED BY THE AS SESSEE AS ITS INCOME AS PER THE PROVISIONS OF SECTION 41(1 ) OF THE ACT. 4. AGGRIEVED BY THIS, THE DEPARTMENT AHS COME UP IN APPEAL BEFORE US, RAISING THE FOLLOWING GROUNDS OF APPEAL : 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE ID. C1T(A) HAS ERRED IN DELETING ADDI TION OF RS.39.33 PAID TO STATE GOVERNMENT AS CESS, ORIGINALLY OFFERED FOR TAXATION AND LATER REDUCED FRO M THE TAXABLE INCOME. 2. IT IS PRAYED THAT THE ORDER OF THE ID. CIT(A) BE SET ASIDE THAT OF THE ASSESSING OFFICER MAY BE RESTORED. 3. THE APPELLANT CRAVES LEAVE TO ADD OR AMEND ANY GROUNDS OF APPEAL BEFORE THE APPEAL IS HEARD OR IS DISPOSED OFF. 5. THE LEARNED D.R. RELIED ON THE ORDER OF THE ASSESSING OFFICER STATING THAT THE LEGALITY OF THE CESS WHICH IS SAID TO BE RECOVERABLE FROM THE FCI ITSELF HAS 4 BEEN DECIDED AGAINST. THEREFORE, THE INCOME HAS TO BE TAXED IN THE HANDS OF THE ASSESSEE. 6. THE LEARNED COUNSEL FOR THE ASSESSEE RELYING ON THE ORDER OF THE CIT (APPEALS) FURTHER DREW OUR ATT ENTION TO THE ORDER OF THE HON'BLE HIGH COURT IN CIVIL WRI T PETITION NO.9688 OF 2002, A COPY OF WHICH WAS FILED BEFORE US STATING THAT AS PER THIS ORDER THE MATTER IN ISS UE STANDS RESOLVED IN TERMS OF MINUTES OF MEETING HELD AS ON 25.3.2004. FURTHER ATTENTION WAS DRAWN TO THE MINU TES OF THE SAID MEETING, WHEREBY IT WAS DECIDED THAT THE F CI WILL PAY THE CESS WHICH HAS BEEN PAID BY THE ASSESSEE ON ITS BEHALF ONLY W.E.F. 1.4.2002. IN VIEW OF THIS, IT W AS STATED THAT THE AMOUNT OF CESS WHICH WAS PAID TO THE GOVER NMENT BY THE ASSESSEE TILL 1.4.2002 ON BEHALF OF THE FCI HAS REMAINED UN-RECEIVABLE. THEREFORE, THE SAME CANNOT BE TAXED AS INCOME IN THE HANDS OF THE ASSESSEE. 7. WE HAVE HEARD THE LEARNED REPRESENTATIVES OF BOTH THE PARTIES, PERUSED THE FINDINGS OF THE AUTHO RITIES BELOW AND CONSIDERED THE MATERIAL AVAILABLE ON RECO RD. ON PERUSAL OF THE ORDER OF THE HIGH COURT IN WRIT P ETITION NO.9688 OF 2002 DATED 22.4.2004 IT BECOMES QUITE CL EAR TO US THAT ON AN EARLIER OCCASION AS ON 4.3.2004, THE HON'BLE HIGH COURT HAD DIRECTED BOTH THE PARTIES TO CONVENE MEETING WITH RESPECT TO THEIR CLAIM AND TO CONSIDER THE SAME WITHOUT PREJUDICE TO THE FINAL ORDER OF THE CO URT. IN PURSUANCE OF THE SAME, THE MEETING WAS CALLED AS ON 4.3.2004, WHEREBY IT WAS DECIDED THAT THE FC I 5 WILL RELEASE PAYMENTS ON ACCOUNT OF INFRASTRUCTURAL DEVELOPMENT FEE TO THE STATE AGENCY AND MAKE PAYMEN T OF THE SAME W.E.F. 1.4.2002. FURTHER, BY THE FINAL OR DER OF THE HON'BLE HIGH COURT, IT HAS BEEN STATED THAT THE MATTER IN ISSUE STANDS RESOLVED IN TERMS OF THE MINUTES OF MEETING RECORDED AS STATED HERE-IN-ABOVE. IN VIEW OF THE SAME, IT HAS BECOME FINAL THAT THE FCI WILL MAKE TH E PAYMENT TO THE ASSESSEE ONLY ON 1.4.2002 AND NOT BE FORE THAT. THE IMPUGNED SUM OF RS.39,33,16,443/- RELATE S TO THE PERIOD BEFORE THIS DATE. SINCE AS PER THE ORDE R OF THE HON'BLE COURT, THE SAID AMOUNT IS NOW NOT RECOVERAB LE TO THE ASSESSEE, WE ARE OF THE VIEW THAT THE SAME CANN OT BE TREATED AS INCOME IN THE HANDS OF THE ASSESSEE. IN VIEW OF THIS, WE DO NOT INTEND TO INTERFERE IN THE ORDER OF THE CIT (APPEALS). 8. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED . ORDER PRONOUNCED IN THE OPEN COURT ON THIS 7 TH DAY OF JUNE, 2016. SD/- SD/- (H.L.KARWA) (RANO JAIN) VICE PRESIDENT ACCOUNTANT MEMBER DATED : 7 TH JUNE, 2016 *RATI* COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT(A)/THE CIT/THE D R. ASSISTANT REGISTRAR, ITAT, CHANDIGARH 6