THE ACIT-2(1), Bhopal V. M/s. M.P. RAJYA VAN VIKAS NIGAM, Bhopal

ITA 724/IND/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 5809 (ITAT-INDORE)
• Duration Of Justice: 8 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-08-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2012-2013
• Appeal Filed On: 04-12-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MOHD JAVED
• Assessee Lawyers: ANIL KHAA

Judgement Text

ACIT VS. M.P.RAJYA VAN VIKAS NIGAM ITA NOS.724 & 725/IND/2015 1 IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI D.T. GARASIA, JM & SHRI O.P. MEENA, AM ITA NO. 724/IND/2015 A.Y.2012-13 ACIT 2(1) BHOPAL ::: APPELLANT VS M/S M.P. RAJYA VAN VIKAS NIGAM BHOPAL ::: RESPONDENT APPELLANT BY SHRI MOHD. JAVED RESPONDENT BY SHRI ANIL KHABYA DATE OF HEARING 27.7 .2016 DATE OF PRONOUNCEMENT 27.7 .2016 O R D E R PER SHRI D.T. GARASIA, JM THIS IS AN APPEAL PREFERRED BY THE REVENUE AGAINST THE ORDER OF THE LEARNED CIT(A)-I, BHOPAL DATED 30.9.2015 . 2. GROUND NO. 1 READS AS UNDER :- 1. DELETING THE ADDITION MADE ON ACCOUNT OF PROFIT OF THE GOVERNMENT ACCOUNT TERMED AS LEASE RENT ACIT VS. M.P.RAJYA VAN VIKAS NIGAM ITA NOS.724 & 725/IND/2015 2 AMOUNT TO RS.57,09,92,161/- WHICH WAS RIGHTLY ADDED BY THE ASSESSING OFFICER. 3. WE HAVE HEARD BOTH THE SIDES. WE FIND THAT AN IDENTICAL ISSUE WAS DECIDED BY ITAT, INDORE BENCH, IN DORE, IN THE CASE OF THE ASSESSEE FOR THE ASSESSMENT YEARS 2 010- 11 AND 2011-12 AND VIDE ITS ORDER DATED 4.8.2015 THE TRIBUNAL OBSERVED AS UNDER :- I.T.A.NO. 558/IND/2013 : 2. THE GROUND NO. 1 READS AS UNDER :- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION MADE ON A CCOUNT OF PROFIT OF GOVERNMENT ACCOUNT TERMED AS LEASE RENT AMOUNTING TO RS. 50,85,34,496/-, DESPITE THE FACT T HAT THE NCA EVOLVED THE FORMULA FOR DETERMINING THE LEASE R ENT ALLOWABLE ONLY TO THE EXTENT OF RS. 63,67,826/-. 3. THE SHORT FACTS OF THE CASE ARE AS UNDER. 4. DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTICED ON PERUSAL OF SCHEDULE-J-1 AND INC OME & EXPENDITURE INCURRED FOR FOREST DEPARTMENT FORMING PART OF THE AUDITED ACCOUNTS OF THE APPELLANT THAT THE APPE LLANT HAD SHOWN 'SURPLUS-EXCESS OF REVENUE OVER EXPENDITURE IN GOVERNMENT ACCOUNT AT RS.54,44,32,671/- WHICH WAS T ERMED AS LEASE RENT PAYABLE TO GOVT. OF M.P., FOREST DEPA RTMENT. THE AO OBSERVED THAT IN ASSESSMENT ORDERS OF EARLIE R YEARS, IT HAD BEEN CONSISTENTLY HELD BY THE DEPARTMENT THA T LEASE RENT TO THE EXTENT OF RS.63,67,826/- IS ONLY ALLOWA BLE EXPENDITURE IN THIS REGARD AND THE EXCESS LEASE REN T HAD ACIT VS. M.P.RAJYA VAN VIKAS NIGAM ITA NOS.724 & 725/IND/2015 3 BEEN BROUGHT TO THE TAX SINCE A.Y. 1997-98. EVEN TH OUGH BOTH LD. CIT (A) AND HONBLE ITAT HAD DELETED THE S AID ADDITION BUT THE DEPARTMENT DID NOT ACCEPT THE DECI SION AND THE SAME WAS CHALLENGED BEFORE THE HON'BLE M.P. HIG H COURT WHICH IS YET PENDING FOR DECISION. ACCORDINGLY, IN ORDER TO MAINTAIN CONSISTENCY AND FOR THE REASONS MENTIONED IN ASSESSMENT ORDERS FOR EARLIER ASSESSMENT YEARS, THE AO DISALLOWED A SUM OF RS. RS.50,28,34,496/- ON ACCOUN T OF EXCESS LEASE RENT CLAIMED. 5. DURING THE COURSE OF APPELLATE PROCEEDINGS, THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSE E IS A GOVERNMENT COMPANY ENGAGED IN ENRICHING THE FOREST OF THE STATE OF MP THROUGH PLANTATION AND SILVICULTURAL WO RKING IN DEGRADED FOREST AREAS TRANSFERRED TO IT BY THE GOVE RNMENT OF MADHYA PRADESH, FOREST DEPARTMENT. IN THE INITIAL Y EARS OF THE NIGAM (APPELLANT) THOUGH THE LAND WITH EXISTING FOREST GROWTH WERE TRANSFERRED BY THE GOVT. OF MADHYA PRAD ESH, THE TERMS AND CONDITIONS OF SUCH TRANSFER / LEASE W ERE DECIDED ON 14.11.1979 BY GOVERNMENT OF MADHYA PRADE SH. IN THE ABSENCE OF SUCH AN AGREEMENT, THE AO CALCULA TED A REASONABLE LEASE RENT ON THE BASIS OF RECOMMENDATIO N OF NATIONAL COMMISSION ON AGRICULTURE (NCA). THE GOVT. OF MADHYA PRADESH VIDE ORDER DATED 14.11.1979 DECIDED THAT THE ASSESSEE SHALL GET 2 % COMMISSION ON GROSS SALE AND THAT THE ENTIRE SALE PROCEEDS OF SUCH PROJECT WOULD BELONG TO GOVT. OF MADHYA PRADESH AND SIMILARLY, ALL EXPENSES OF SUCH PROJECT WAS ALSO TO BE BORNE BY THE GOVT. OF MADHYA PRADESH. THE NET SURPLUS WAS TERMED AS LEASE RENT A ND THE SAME BELONGED TO GOVT. OF MADHYA PRADESH. THE APPEL LANT WAS ENTITLED TO ONLY 2% OF THE COMMISSION ON SUCH S ALES. IT WAS CONTENDED THAT THE AO WAS NOT JUSTIFIED IN MAKI NG ADDITION OF RS.50,28,34,496/- OUT OF SURPLUS LEASE RENT. IT WAS ALSO POINTED OUT THAT THIS ISSUE HAS BEEN CONSI STENTLY DECIDED IN FAVOUR OF THE APPELLANT BY THE LD. CSIT (A) AS WELL AS HON'BLE ITAT. THE HON'BLE ITAT INDORE BENCH IN A PPEAL ITA NO.21/IND/2011 FOR THE A.Y. 2007-08 HAS RECENTL Y ALLOWED THE CLAIM OF THE APPELLANT IN ORDER DATED 31.10.2011. THUS, IT WAS PRAYED THAT THE ADDITION O F ACIT VS. M.P.RAJYA VAN VIKAS NIGAM ITA NOS.724 & 725/IND/2015 4 RS.50,28,34,496/- PROFIT ON GOVT. ACCOUNT TERMED AS LEASE RENT MAY PLEASE BE DELETED. 6. THE MATTER CARRIED TO LD. CIT(A). THE LD. CIT(A) DE LETED THE ADDITION OBSERVING AS UNDER :- 4.4 I HAVE CAREFULLY CONSIDERED THE SUBMISSION OF T HE APPELLANT AND FACTS OF THE CASE. IT MAY BE NOTED TH AT THE AO MADE THIS ADDITION MAINLY TO MAINTAIN CONSISTENCY I N THE ASSESSMENT OF THE APPELLANT. IT IS NOTICED THAT THE FIRST APPELLATE AUTHORITY [CIT (A)] AS WELL AS THE HON'BL E ITAT HAVE DELETED SUCH ADDITION IN EARLIER YEARS. THE HON'BLE ITAT, INDORE BENCH VIDE ITS ORDER DATED 31.10.2011 IN ITA NO.21/IND/2011 FOR THE A.Y. 2007-08 ALLOWED THE CLA IM OF THE APPELLANT AND DISMISSED THE DEPARTMENTAL APPEAL . THE CONCLUDING PARA OF THIS ORDER OF HON'BLE ITAT READS AS UNDER :- 5. IF THE CONCLUSION DRAWN IN THE IMPUGNED ORDER , THE ORDERS OF THE TRIBUNAL FOR EARLIER ASSESSMENT YEARS AND UN - CONTROVERTED FACTS AS ABOVE ARE KEPT IN JUXTAPOSITI ON AND ANALYZED, WE FIND THAT BOTH THE ISSUES I.E. LEASE R ENT AND CORPORATE EXPENSES ARE COVERED BY THE AFORESAID DEC ISIONS OF THE TRIBUNAL, WHICH HAVE BEEN FOLLOWED BY THE LD. C IT (A) IN THE IMPUGNED ORDER, THEREFORE, IN THE ABSENCE OF AN Y CONTRARY FACTS, WE FIND NO INFIRMITY IN THE STAND O F THE LD. CIT(A). IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED. RESPECTFULLY FOLLOWING THE DECISIONS OF MY PREDECES SOR CSIT (A) AS ALSO THE JURISDICTIONAL HON'BLE ITAT ON THIS ISSUE, THE ADDITION ON ACCOUNT OF DISALLOWANCE IN RESPECT OF P ROFIT OF GOVERNMENT ACCOUNT TERMED AS LEASE RENT AMOUNTING T O RS.50,28,34,496/- IS HEREBY DELETED. THIS GROUND OF APPEAL IS ALLOWED. 7. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PAR TIES. LOOKING TO THE FACTS AND CIRCUMSTANCES OF THE CASE, WE FIND THAT THE LD. CIT(A) HAS FOLLOWED THE ORDER OF I.T.A .T. IN ASSESSEES OWN CASE IN I.T.A.NO. 21/IND/2011 FOR ASSESSMENT YEAR 2007-08. ACIT VS. M.P.RAJYA VAN VIKAS NIGAM ITA NOS.724 & 725/IND/2015 5 8. DURING THE COURSE OF HEARING, THE LD. SENIOR D.R. C OULD NOT PRODUCE ANYTHING CONTRARY TO THE FINDING AGAINS T THE DECISION OF THE TRIBUNAL. THEREFORE, RESPECTFULLY F OLLOWING THE SAME, WE DISMISS THE DEPARTMENTAL APPEAL ON THIS GR OUND. WE, THEREFORE, FOLLOWING THE ABOVE ORDER OF THE TRI BUNAL, DISMISS THIS GROUND OF APPEAL. 4. GROUND NO. 2 OF THE REVENUE READS AS UNDER :- DELETING THE ADDITION MADE ON ACCOUNT OF DISALLOWA NCE OF CORPORATE EXPENSES AMOUNTING TO RS.2,79,01,167/- 5. WE HAVE HEARD BOTH THE SIDES. WE FIND THAT AN IDENTICAL ISSUE WAS DECIDED BY ITAT, INDORE BENCH, IN DORE, IN THE CASE OF THE ASSESSEE FOR THE ASSESSMENT YEARS 2 010- 11 AND 2011-12 AND VIDE ITS ORDER DATED 4.8.2015 THE TRIBUNAL OBSERVED AS UNDER :- 9. GROUND NO. 2 READS AS UNDER :- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE CIT(A) HAS ERRED IN DELETING THE ADDITION MADE ON A CCOUNT OF CORPORATE EXPENSES AMOUNTING TO RS. 1,71,34,978/ - DESPITE THE FACT THAT THE HON'BLE HIGH COURT IN ITS ORDER FOR ASSESSMENT YEAR 1990-91 HAS HELD THAT THE ASSESSEE ACIT VS. M.P.RAJYA VAN VIKAS NIGAM ITA NOS.724 & 725/IND/2015 6 EXCEPT PRODUCING THE RESOLUTION ADOPTED BY THE BOAR D IN ITS WISDOM DID NOT FEEL IT NECESSARY TO LEAD ANY OTHER EVIDENCE. 10. THE BRIEF FACTS ARE AS UNDER. 11. DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSING OF FICER NOTICED THAT THE ASSESSEE HAS CLAIMED CORPORATE EXP ENSES OF RS. 1,71,34,978/- DURING THE YEAR. THE AO OBSERVED THAT THE CLAIM OF THE ASSESSEE NIGAM HAS BEEN DISALLOWED IN THE ORDERS OF EARLIER ASSESSMENT YEARS. EVEN THOUGH THE ADDITION MADE WAS DELETED BY THE LD. CIT (A) AS WELL AS HON' BLE ITAT FOR EARLIER YEARS IN ASSESSEES OWN CASE BUT THE DE PARTMENT DID NOT ACCEPT THE DECISIONS OF HON'BLE ITAT AND CH ALLENGED THE SAME BEFORE THE HON'BLE HIGH COURT OF MADHYA PR ADESH WHICH IS YET PENDING FOR DECISION. ACCORDINGLY, TO MAINTAIN CONSISTENCY IN THE ASSESSMENT FOR THIS YEAR ALSO AN D FOR THE REASONS MENTIONED IN ORDERS FOR EARLIER ASSESSMENT YEARS, THE AO DISALLOWED A SUM OF RS. 1,71,34,978/- ON ACCOUNT OF CORPORATE EXPENSES. 12. THE MATTER CARRIED TO LD. CIT(A). THE LD. CIT(A) DE LETED THE ADDITION OBSERVING AS UNDER :- 5.4 I HAVE CONSIDERED THE SUBMISSION OF THE LD. AR AS A LSO THE FINDINGS OF THE ASSESSING OFFICER REGARDING THI S ADDITION. IT IS NOTICED THAT THE AO MADE THIS ADDITION FOR SAKE OF CONSISTENCY IN THE ASSESSMENT. THE FIRST APPELLATE AUTHORITY AND THE HONBLE ITAT HAS CONSISTENTLY DELETED SUCH ADDITION IN EARLIER ASSESSMENT YEARS. THE HONBLE ITAT. INDO RE BENCH VIDE ITS ORDER DATED 13.03.2009 IN ITA NO. 537 FOR A.Y.2004- 05 ALLOWED THE CLAIM OF THE APPELLANT AND DISMISSED THE DEPARTMENTAL APPEAL. THE OPERATING PARA OF THE ABOV E ORDER OF HONBLE ITAT IS REPRODUCED AS UNDER :- THE LEARNED COUNSEL FOR THE ASSESSEE AT THE OUTSET SUBMITTED THAT BOTH THE ISSUES ARE COVERED BY EARLIER ORDER O F THIS BENCH IN THE CASE OF THE SAME ASSESSEE VIDE ORDER DATED 2 8 LH ACIT VS. M.P.RAJYA VAN VIKAS NIGAM ITA NOS.724 & 725/IND/2015 7 DECEMBER 2007FOR THE ASSESSMENT YEAR 1997-98 AND 19 98- 99 IN ITA NOS. 87 & 88 /1ND/2004. THE ABOVE ORDER H AS ALSO BEEN FOLLOWED BY THIS BENCH FOR THE ASSESSMENT YEAR 2001-02 & 2003-04 IN ITA NOS. 723 & 724 DATED 20' H MARCH 2008. HENCE, FOLLOWING OUR EARLIER ORDER, THIS APPEAL OF THE REVENUE IS DISMISSED. SIMILARLY, AS MENTIONED HEREIN ABOVE, THE HON'BLE I TAT INDORE BENCH HAD DELETED THE SIMILAR ADDITION IN A.Y. 2007 -08 IN APPEAL ITA NO.21/IND/2011 ORDER DATED 31.10.2011 IN APPELLANTS OWN CASE AND DISMISSED THE APPEAL OF TH E REVENUE. THE FACTS OF THE APPELLANT IN THE ASSESSMENT YEAR U NDER CONSIDERATION ARE EXACTLY THE SAME AS WERE IN EARLI ER YEARS. THEREFORE, RESPECTFULLY FOLLOWING THE DECISIONS OF MY PREDECESSOR CSLT(A) AND ALSO OF THE JURISDICTIONAL HONBLE ITAT IN APPELLANTS OWN CASE ON THIS ISSUE, THE ADD ITION ON ACCOUNT OF CORPORATE EXPENSES AMOUNTING TO RS. 1,71 ,34,978/- IS DELETED. THIS GROUND IS ALLOWED. 13. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PAR TIES. LOOKING TO THE FACTS AND CIRCUMSTANCES OF THE CASE, WE FIND THAT THE LD. CIT(A) HAS FOLLOWED THE ORDER OF I.T.A .T. IN ASSESSEES OWN CASE IN I.T.A.NO. 21/IND/2011 FOR ASSESSMENT YEAR 2007-08. 14. DURING THE COURSE OF HEARING, THE LD. SENIOR D.R. C OULD NOT PRODUCE ANYTHING CONTRARY TO THE FINDING AGAINST TH E DECISION OF THE TRIBUNAL. THEREFORE, RESPECTFULLY FOLLOWING THE SAME, WE DISMISS THE DEPARTMENTAL APPEAL ON THIS GROUND. 15. IN THE RESULT, APPEAL OF THE REVENUE FOR THE ASSESS MENT YEAR 2010-11 IS DISMISSED. WE, THEREFORE, FOLLOWING THE ABOVE ORDER OF THE TRI BUNAL, DISMISS THIS GROUND OF APPEAL. ACIT VS. M.P.RAJYA VAN VIKAS NIGAM ITA NOS.724 & 725/IND/2015 8 6. IN THE RESULT, THE APPEALS OF THE REVENUE STAND DISMISSED. PRONOUNCED IN OPEN COURT ON 27 TH JULY, 2016 SD/ SD/- (O.P. MEENA) (D.T. G ARASIA) ACCOUNTANTMEMBER JUDICIAL MEMB ER 22 ND AUGUST, 2016 DN/- ACIT VS. M.P.RAJYA VAN VIKAS NIGAM ITA NOS.724 & 725/IND/2015 9