Assam State Agricultural Marketing Board, Guwahati V. Income Tax Officer, Ward-3(1), Guwahati

ITA 74/GTY/2019

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 8545 (ITAT-GUWAHATI)
• Duration Of Justice: 4 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-07-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2006-2007
• Appeal Filed On: 01-03-2019
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: RAMESHGOENKA SHRI AMITGOENKA; D K BISWAS J
• Keywords: Capital asset; Revenue expenditure
• Section: 143(3)

Judgement Text

] \ ' \ ' , ' , IN THEINCOMETAXAPPELLATE TRIBUNAL GUWAHATI BENCH, GUWAHATI BEFORE SHRIS.S.GODARA,JUDICIALMEMBER AND DR. A.L. SAINI, ACCOUNTANTMEMBER S A NO. 16 - 18 / GAU / 2019 (A/O ITA NO.74-76/GAU/2019) ASSESSMENT YEARS : 2006-07 TO 2008-09 ASSAM STATE AGRICULTURAL MARKETING BOARD, BIPANAN BHAWAN, R.K. MISSION ROAD, ULUBARI, GUWAHATI- 781007 [ PAN NO.AAAJA 2073 R ] V/S . INCOME TAX OFFICER WARD-3(1), 7 TH FLOOR, AAYAKAR BHAWAN, CHRISTIAN BASTI, G.S. ROAD, GUWAHATI-781005 \ ' /APPLICANT .. / RESPONDENT ] ' J /BYASSESSEE SHRI RAMESHGOENKA,ADVOCATE SHRI AMITGOENKA,ADVOCATE & SHRI D.K.BISWAS, ADVOCATE J /BYREVENUE SHRI SANDEEP SENGUPTA, JCIT-DR ' _ /DATEOFHEARING 08-07-2019 /DATEOFPRONOUNCEMENT 12-07-2019 / ORDE R PERBENCH:- THE ASSESSEES THREE INSTANT STAY PETITION(S) SEEKING TO RESTRAIN THE DEPARTMENT FROM EFFECT THE RECOVERY OF IMPUGNED OUTSTANDING DEMAND(S) OF RS.1,01,50,000/-, RS.3,47,58,539/- & RS.3,39,55,890/-; RESPECTIVELY AS WELL AS ITS AS MANY AS APPEALS FOR ASSESSMENT YEARS 2006-07 TO 2008-09 ARISE AGAINST THE COMMISSIONER OF INCOME TAX (APPEALS)-2 GUWAHATIS COMMON ORDER DATED 31.01.2019 PASSED IN CASE NOS.604345161280117, ITA NO. 74-76/GAU/2019 &SA 16-18/GAU/19 AYS06-07 TO 08-09 ASSAM STATE AGRICULTURAL MARKETING BOARD VS. ITXO WD-3(1)GUWA PAGE2 604395411280117 & 604436401280117, INVOLVING PROCEEDINGS U/S 143(3) R.W.S254OFTHEINCOMETAXACT,1961;IN SHORTTHEACT. HEARD BOTH THE PARTIES. CASE FILE(S) INCLUDING MAIN APPEAL(S) AS WELL AS ABOVESTAYPETITIONS STANDPERUSED. 2. IT TRANSPIRES AT THE OUTSET THAT THIS IS SECOND ROUND OF LITIGATION BETWEEN THE PARTIES IN ALL THREE ASSESSMENT YEAR(S). THE ASSESSEES EARLIER THREE APPEAL(S) ITA NO.74 TO 76/GAU/2019 HAD COME UP FOR HEARING BEFORE THIS TRIBUNAL. LEARNED CO-ORDINATE BENCHS ORDER DATED 12.06.2015 RESTORED THE SAMEBACKTO THEASSESSING OFFICER ASFOLLOWS:- ALL THESE APPEALS INVOLVE COMMON ISSUES. THEREFORE, THE GROUNDS TAKENIN ITANO.07/GAU/2013ARE BEINGREPRODUCEDAS UNDER:- 1. THAT THE ORDER PASSED U/S 143(3)/147 BY THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-3, GUWAHATI-781005 MENTIONING APPELLANT PAN AS AAAAA5830B THE PAN MENTIONED IS NOT IN THE NAME OF THE APPE. THE ORDER PASSED UNDER PAN AAAAA5830B IS NOT A VALID ORDER AND IS LIABLE TO BE ANNULLED. 2. THAT THE LEAR5NED COMMISSIONER OF INCOME TAX (APPEALS), GUWAHATI ERRED IN LAW AS WELL AS ON FACTS WHILE CONFIRMING FOLLOWING ADDITIONS AND OR NOT FALLOWING RELIEFS:- (A) THAT THE ASSESSEE IS AN AGRICULTURAL PRODUCE MARKET BOARD CONTINUED UNDER A LAW AND THE INCOME OF THE ASSESSEE IS EXEMPTED U/S10(26AAB). (B) THAT THE ASSESSING OFFICER ERRED IN LAW AND FACT IN NOT ACCEPTING THE REVISED STATEMENTS OF ACCOUNT AND AUDIT REPORT SUBMITTED BY THE ASSESSEE, WHICH WAS DULY APPROVED BY A BOARD RESOLUTION ON 29.8.2011. (C) THAT THE ASSESSING OFFICER WHILE PASSING THE ORDER 26.12.2011 ONLY RELIED UPON THE EARLIER AUDIT DTD. 6.2.2010, WHICH WAS NOT APPROVED BY THE BOARD AND COMPLETELY IGNORED THE AUDIT REPORT DTD.16.9.2011, WHICH WAS APPROVED BY THE BOARD AND WAS SIN CONFORMITY WITH THE ACCOUNTING STANDARDS. HENCE THE ASSESSMENT ORDER DTD.26.12.201IS BAD IN LAW AND LIABLE TOBESETASIDE. (D) THAT THE ASSESSING OFFICER FAILED TO CONSIDER THE FACT THAT THE REVISED STATEMENTS OF ACCOUNTS AND AUDIT AND AUDIT REPORT WAS IN ACCORDANCEWITH LAW. (E) THAT THE ASSESSING OFFICER FAILED TO CONSIDER THE CONTENTION OF THE ASSESSEE THAT THE AMOUNT RECEIVABLE AS OUTSTANDING LOAN AND RECEIVABLE FROM WEAK MARKET COMMITTEES COULD NOT HAVES BEEN REALIZED BY THE ASSESSEE AND AS SUCH THE SAME COULD NOT BE INCLUDED IN THE INCOME OFTHE APPELLANT. (F) THAT THEASSESSINGOFFICERERRED IN LAW ANDFACTS IN NOTCONSIDERING THE EXPENDITURE FROM THE AGRICULTURE DEVELOPMENT FUND AS REVENUE EXPENSES AND DISALLOWING THE ADJUSTMENTS MADE BY THE BOARD. IN THIS CONTEXT, IT IS SUBMITTED THAT SUCH EXPENDITURE MADE BY THE BOARD AS MANDATED BY THE BOARD IS IN THE NATURE OF REVENUE EXPENDITURE SINCE ITA NO. 74-76/GAU/2019 &SA 16-18/GAU/19 AYS06-07 TO 08-09 ASSAM STATE AGRICULTURAL MARKETING BOARD VS. ITXO WD-3(1)GUWA PAGE3 THE SAME IS RECURRING IN NATURE AND NO CAPITAL ASSET IS CREATED BY SUCH EXPENDITURE. (G) THAT THE ASSESSING OFFICER ERRED IN LAW AND FACTS IN NOT APPRECIATING THE FACT THAT THE BOARD HAS OBLIGATION TO PAY THE CPF OF THE EMPLOYEES OF THE MARKET COMMITTEES AND AS SUCH, THE ADJUSTMENTS EFFECTED BY THE ASSESSEE WAS IN ACCORDANCE WITH LA, WHICHWASNEGATEDBYTHE ASSESSINGOFFICER. 3. THE ASSESSEE HAS ALSO FILED THE FOLLOWING COMMON REFRAMED AND/OR ADDITIONAL GROUNDS OF APPEAL BEFORE US VIDE ITS APPLICATION DATED 18.5.2015 FOR ALL HE ABOVE ASSESSMENTYEARS [WHICH IS ONRECORD]:- 1. THAT BOTH THE LEARNED CIT(A) AND THE LEARNED ASSESSING OFFICER ERRED IN LAW AS WELL AS ON FACTS IN ASSESSING THE APPELLANT IN THE STATUS OF ASSOCIATION OF PERSONS INSTEAD OF ARTIFICIAL JUDICIAL PERSON 2. (A) THAT BOTH THE LEARNED CIT(A) AND THE LEARNED ASSESSING OFFICER FAILED TO TAKE NOTE OF THE PROVISIONS OF ASSAM AGRICULTURAL PRODUCE MARKET ACT, 1972 AND THE RULES MADE THERE-UNDER WHILE DETERMINING THETAXLIABILITY OFTHE APPELLANT. (B) FOR THAT BOTH THE LEARNED CIT(A) AND THE LEARNED ASSESSING OFFICER HAVE NOT TAKEN INTO CONSIDERATION THE FACT THAT THE RECEIPTS OF THE APPELLANT OUT OF CESS, LICENSE, FEE ETC. FROM THE MARKETING COMMITTEES DID NOT CONSTITUTE INCOME OF THE APPELLANT AS THE APPELLANT CAME INTO EXISTENCE AS A BOARD AS PER ASSAM AGRICULTURAL PRODUCE MARKET ACT, 1972 WHICH IS ENACTED FOR PROVIDING BETTER REGULATION OF BUYING & SELLING OF AGRICULTURAL PRODUCE IN THE STATE OF ASSAM. 3. THAT THE LEARNED CIT(A) HAS NOT TAKEN INTO CONSIDERATION THE RELEVANT PROVISIONS OF ASSAM AGRICULTURAL PRODUCE MARKET ACT, 1972 AS WELL AS ASSAM AGRICULTURAL PRODUCE MARKET (GENERAL) RULES, 1975 WHILE CONFIRMING THE TOTAL INCOME FROM, BUSINESS AS DETERMINED BY THE LEARNED ASSESSING OFFICER AT RS.63653106/- VIDE ORDER DATED 16.12.2011PASSEDU/S143(3)\/147 OFTHEINCOME TAX ACT,1961. 4. THAT BOTH THE LEARNED CIT(A) AND THE ASSESSING OFFICER FAILED TO APPRECIATE THE FACT THAT THE APPELLANT WAS NOT ENGAGED IN CARRYING ON OF ANY BUSINESS AS DEFINED IN SECTION 2(13) OF THE INCOME TAX ACT, 1961. 5. THAT THE LEARNED CIT(A) DESPITE HOLDING THAT THE ASSESSING OFFICER WAS NOT JUSTIFIED IN REJECTING REVISED AUDIT REPORT & STATEMENT OF ACCOUNTS DATED 16.9.2011 FOR DETERMINING THE TAX LIABILITY OF THE APPELLANT UNDER THE INCOME TAX ACT, 1961, HIMSELF WENT ON TO DECIDE THE SAME ON THE BASIS OF UN-APPROVED AUDIT REPORT & STATEMENT OF ACCOUNTSDATED06.02.2010. 6.(A) THAT NEITHER THE LEARNED AO WAS JUSTIFIED IN HOLDING THAT THE EXPENSES INCURRED BY THE APPELLANT OUT OF AGRICULTURAL DEVELOPMENT FUND FOR FINANCING THE SCHEMES APPROVED BY THE BOARD OF THE APPELLANT ARE CAPITAL IN NATURE NOR THE LEARNED CIT(A), GUWAHATI WAS JUSTIFIED IN UPHOLDING THE ACTIN OF THE LEARNING ASSESSING OFFICER WITHOUT TAKING INTO CONSIDERATION RELEVANT PROVISIONS OF THE APM ACT, 1972 &THE APM(GENERAL) RULES, 1975. (B) THAT THE LEARNED CIT(A), GUWAHATI AND THE LEARNED AO OUGHT TO HAVE HELD THAT THE EXPENDITURE INCURRED AS MENTIONED IN GROUND 6(A) ABOVE BY THE APPELLANT DID NOT GIVE ANY ENDURING BENEFIT TO THE APPELLANT INASMUCH AS THE OWNERSHIP OF SUCH CAPITAL ITA NO. 74-76/GAU/2019 &SA 16-18/GAU/19 AYS06-07 TO 08-09 ASSAM STATE AGRICULTURAL MARKETING BOARD VS. ITXO WD-3(1)GUWA PAGE4 ASSET/EXPENDITURE DID NOT LIE WITH THE APPELLANT AND HENCE THE SAID EXPENDITURE OUGHTTOHAVE BEEN HELD ASREVENUEEXPENDITURE. 7.THAT THE LEARNED CIT(A), GUWAHATI WAS NOT JUSTIFIED IN CONFIRMING THE DISALLOWANCES MADE BY THE AO ON ACCOUNT OF CPF CONTRIBUTION CLAIMED BY THE APPELLANT AS THE APPELLANT IS UNDER OBLIGATION TO DEPOSIT THE SAID CPF ON BEHALF ITS EMPLOYEES INCLUDING EMPLOYEES OF THE MARKET COMMITTEES CONSTITUTED UNDER THE ASSAM AGRICULTURAL PRODUCE MARKET ACT, 1972. 4. THE FIRST GRIEVANCE OF THE ASSESSEE IS THAT ITS STATUS HAS WRONGLY BEEN TAKEN ASS ASSOCIATION OF PERSON INSTEAD OF ARTIFICIAL JUDICIAL PERSON. IT IS SEEN THATTHIS ISSUE WAS NOT RAISED BYTHE ASSESSEE BEFORE EITHER OF THE TAXING AUTHORITIES. RATHER, THE ASSESSEE HAD ITSELF SHOWN ITS STATUS AS ARTIFICIAL JUDICIAL PEARSON, THOUGH MISTAKENLY. HOWEVER, THIS BEING A LEGAL ISSUE, IS PERMITTEDTO BERAISED BEFOREUSFORTHEFIRSTTIME. 5. THE ASSESSEE ALSO MAINTAINS THAT THOUGH THE ASSESSEE CAME INTO EXISTENCE AS A BOARD UNDER THE ASSAM AGRICULTURAL PRODUCE MARKET ACT, 1972 AND THE RECEIPTS OF THE ASSESSEE WERE OUT OF CESS AND LICENSE FEES, ETC. FROM THE MARKETING COMMITTEES, SUCH RECEIPTS DID NOT CONSTITUTE THE INCOME OF THE ASSESSEE AS PER THE PROVISIONS OF THE SAID ACT. NEITHER OF THE AUTHORITIES BELOW HAVES TAKEN INTO CONSIDERATION THE PROVISIONS OF THE ASSAM AGRICULTURE PRODUCE MARKET ACT, 1972 AS WELL AS THERULESFRAMEDTHEREUNDER. 6. THIS IS ALSO FOUND TO BE A LEGAL ISSUE, AS THE TAXATION OF THE ASSESSEES INCOME DEPENDS ON ITS MOTHER ACT, I.E.THE ASSAMAGRICULTURE PRODUCE MARKET ACT, 1972 AS WELL AS THE RULES FRAMED THEREUNDER, I.E. THE ASSAM AGRICULTURE PRODUCE MARKET(GENERAL) RULES, 1975. 7. IN THE INTERST OF JUSTICE, WE DEEM IT APPROPRIATE TO REMIT THE MATTER TO THEFILE OF THE AO TO BE DECIDED AFRESH IN ACCORDANCE WITH LAW, FIRST DEALING WITH THE AFORESAID LEGAL ISSUES RAISED BEFORE US AND THEN DECIDING THE MERITS OF THE CASE IN ACCORDANCE WITH THE DECISION TO BE ARRIVED AT THEREON, IN ACCORDANCE WITH LAW. THE ASSESSEE SHALL BE AFFORDED ADEQUATE OPPORTUNITY OF HEARING. THEASSESSEESHALL COOPERATEIN THEREMANDPROCEEDINGS. 8. AS INDICATED IN THE BEGINNING OF THIS ORDER, ALL THESE APPEALS INVOLVE COMMON ISSUES AND AS SUCH, OUR ABOVE OBSERVATIONS SHALL APPLY, MUTATIS MUTANDIS TOALL THEAPPEALS . 3. SUFFICE TO SAY, THE LEARNED ASSESSING OFFICER AS WELL AS CIT(A) HAVE REITERATED THEIR EARLIER FINDINGS IN THEIR RESPECTIVE ORDERS WHILST RAISING THE DEMANDSINISSUE, ONCEAGAIN.THISIS WHATLEAVESTHE ASSESSEE,AGGRIEVED. 4. WE HAVE GIVEN OUR THOUGHTFUL CONSIDERATION TO RIVAL CONTENTIONS. AFTER VEHEMENTLY ARGUING REGARDING ASSESSEE STATES FOR SOMETIME. LEARNED SENIOR ADVOCATE STATES AT THE BAR THAT HE IS CONFINING THE GRIEVANCE ISSUE ONLY QUA COMPUTATION OF ASSESSEES CORRECT TAXABLE INCOME. WE THEREFORE DO NOT TAKE NOTE OF BOTH PARTIES ARGUMENTS REGARDING ASSESSEES STATUS U/S 2(31) OF THE ACT. ITA NO. 74-76/GAU/2019 &SA 16-18/GAU/19 AYS06-07 TO 08-09 ASSAM STATE AGRICULTURAL MARKETING BOARD VS. ITXO WD-3(1)GUWA PAGE5 5. WE NOW ADVERT TO THE FOREGOING CLINCHING ISSUE OF THE CORRECT COMPUTATION OF ASSESSEES TAXABLE INCOME. CASE FILE(S) IDENTICALLY SUGGEST THAT THE ASSESSEES AUDITOR (S) HAD PREPARED TWO BALANCE-SHEETS. FORMER BALANCE-SHEET DATED 06.02.2010 IN ASSESSMENT YEAR 2006-07 IS FORMS PART OF THE CASE RECORDS AT PAGES 1 TO 19 AS AGAINST THE LATTER ONE DATED 16.09.2011. THERE IS NO QUARREL BETWEEN THE PARTIES THAT THE ASSESSEES BOARD OF ADMINISTRATOR(S) HAD APPROVED ONLY THE LATTER BALANCE-SHEET INVOLVING THE CORRESPONDING EXPLANATION QUA CONTRIBUTION FROM MARKET COMMITTEE, ADF EXPENDITURE AND CPF CONTRIBUTION. WE MAKE IT CLEAR THAT THIS ASSESSEE IS A BOARD SET UP UNDER THE ASSAM AGRICULTURAL PRODUCE AND MARKET ACT, 1972. SEC. 3(F) THEREIN MAKES IT CLEAR THAT THE BOARD HAS TO APPROVE THE CORRESPONDING AUDITS REPORT FOR THE PURPOSE PLACING IT BEFORE THE STATE GOVERNMENT. THIS ASSESSEE IS A CREATION OF STATUTE IN OTHER WORDS. MR. SENGUPTA IS FAIR ENOUGH IN POINTING OUT THE FACT THAT LEARNED LOWER AUTHORITIES HAVE ASSISTED THE APPELLANT AS PER BY ITS FINANCIAL STATEMENT IN THE FORMER BALANCE-SHEET ONLY. HE STRONGLY ARGUES THAT ASSESSEES LATTER BALANCE-SHEET IS A MUCH AFTER-THOUGHT ONE NOT DEPICTING THE CORRECT FINANCIAL STATEMENT.WEFIND NO MERIT IN MR. SENGUPTAS ARGUMENTS. THE FACT REMAINS THAT NEITHER THE ASSESSING OFFICER NOR THE CIT(A) HAVE CONSIDERED THE LATTER BALANCE-SHEET AND THEREFORE, WE DOESNOT COMMENT ANYTHING ON CORRECTNESS OF THE FINANCIAL STATEMENTS RECORDED THEREIN. THE ASSESSING OFFICER HAS NOT VERIFIED THE LATTER BALANCE-SHEET IN ANY OF HIS ASSESSMENT(S). WE THEREFORE DEEM IT APPROPRIATE IN THESE PECULIARS FACTS THAT THE ASSESSEES INSTANT SOLE GRIEVANCE REGARDING COMPUTATION OF ITS CORRECT TAXABLE INCOME DESERVES TO BE RESTORED BACK TO THE ASSESSING OFFICER FOR APPROPRIATE CONSEQUENTIAL COMPUTATION AS PER THE RELEVANT FIGURES IN LATTER FINANCIAL STATEMENT(S) FOLLOWED BY ALL FACTUAL VERIFICATIONS. THE ASSESSEE IS DIRECTED TO FILE ALL NECESSARYRECORDS WITHIN THREE EFFECTIVE OPPORTUNITIESOFHEARING BEFORE THEASSESSING OFFICER. 6. SAME ORDER TO FOLLOW IN THE REMAINING TWO APPEALS (SUPRA) IN ASSESSMENT YEARS 2007-08 AND 2008-09; RESPECTIVELY. ITA NO. 74-76/GAU/2019 &SA 16-18/GAU/19 AYS06-07 TO 08-09 ASSAM STATE AGRICULTURAL MARKETING BOARD VS. ITXO WD-3(1)GUWA PAGE6 7. THE ASSESSEES INSTANT APPEALS ARE PARTLY ALLOWED FOR STATISTICAL PURPOSES IN FOREGOING TERMS. ITS AS MANY CORRESPONDING STAY PETITION(S) ARE DISMISSEDASRENDEREDINFRUCTUOUSACCORDINGLY. ORDERPRONOUNCEDINTHEOPENCOURT 12/07/2019 SD/- SD/- ( ' ) ( ' ) ( A.L.SAINI) (S.S.GODARA) (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) GUWAHATI, *DKP ' ' - 12/07 /201 9 ' \ / COPY OF ORDER FORWARDED TO:- 1 . /ASSESSEE-SMT. MOUMITA SAHA,KASARIPATTI,AGARTALA SADAR,WEST TRIPURA-799001 2. /REVENUE-ACIT, CIRCLE-AGARTALA,TRIPURA 3. - ' ] ] ' /CONCERNEDCIT GUWAHATI 4. ] ] - / CIT (A) GUWAHATI 5. ' ' ' , ] \ ' \ ' , ' ' / DR,ITAT,GUWAHATI 6. ' [ /GUARDFILE. BYORDER/ , /TRUECOPY/ SR. PRIVATE SECRETARY(ONTOUR) ] \ ' \ ' ,