ACIT, Jaipur V. JAIPUR ZILA DUGDH UTPADAK SAHAKARI SANGH LTD., Jaipur

ITA 758/JPR/2013

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 5604 (ITAT-JAIPUR)
• Duration Of Justice: 2 year(s) 3 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-01-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2010-2011
• Appeal Filed On: 04-10-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: O P BHATEJA
• Assessee Lawyers: P C PARWAL CA DHK
• Keywords: Business expenditure; Opportunity of being heard
• Section: 80G; 12AA; 12; 28

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR JH VH-VKJ-EHUK] YS[KK LNL; ,OA JH YFYR DQEKJ] U;KF; D LNL; DS LE{K BEFORE:SHRI T.R. MEENA,AM & SHRI LALIET KUMAR, JM VK;DJ VIHY LA-@ ITA NO. 758/JP/2013 FU/KZKJ.K O'K Z@ ASSESSMENT YEARS : 2010-11 THE ACIT CIRCLE- 6, JAIPUR CUKE VS. M/S. JAIPUR ZILA DUGDH UTPADAK SAHAKARI SANGH LTD. JAIPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO .: AAAAJ 0767 G VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT C.O. NO. 58/JP/2013 (ARISING OUT OF VK;DJ VIHY LA-@ ITA NO. 758/JP/2013) FU/KZKJ.K O'K Z@ ASSESSMENT YEARS : 2010-11 M/S. JAIPUR ZILA DUGDH UTPADAK SAHAKARI SANGH LTD. JAIPUR CUKE VS. THE ACIT CIRCLE- 6, JAIPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO .: AAAAJ 0767 G VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT JKTLO DH VKSJ LS@ REVENUE BY: SHRI O.P. BHATEJA, ADDL. CIT -DR FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI P.C. PARWAL , CA LQUOKBZ DH RKJH[K@ DATE OF HEARING : 30/11/2015 ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 08/01/2016 VKNS'K@ ORDER PER LALIET KUMAR, JM THE REVENUE HAS FILED AN APPEAL AGAINST ORDER OF THE LD. CIT(A)- II, JAIPUR DATED 11-07-2013 FOR THE ASSESSMENT YEAR S 2010-11. THE ASSESSEE HAS FILED THE CROSS OBJECTION. ITA NO. 758//JP/2013 ACIT, CIRCLE- 6, JAIPUR VS. M/S. JAIPUR ZILA DUGDH UTPADAK SAHAKARI SANGH LTD. , JAIPUR . 2 2.1 THE SOLITARY GROUND OF THE REVENUE IS AS UNDER: - WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) HAS ERRED IN DELETIN G ADDITION MADE BY THE AO BY WAY OF DISALLOWANCE OF RS. 1,14,0 7,817/- PAID AS CONTRIBUTION TO SPARSH TRUST REGISTERED U/S 12AA OF THE I.T. ACT, 1961 TREATING THE SAME AS BUSINESS EXPENDITURE IN PLACE OF DONATION ALLOWABLE U/S 80G OF THE I.T. ACT DESPITE THE FACT THAT THE SAID RECEIPT OF DONATION WAS DECLARED BY THE TRUST AS DONATION INCOME AND CORRES PONDING EXPENDITURE WAS CLAIMED AS APPLICATION OF INCOME. 2.2 THE SOLITARY GROUND RAISED BY THE ASSESSEE IN I TS C.O. IS AS UNDER:- THE LD. CIT(A) HAS ERRED ON FACTS AND IN LAW IN CONFIRMING THE DISALLOWANCE OF RS. 4,58,981/- BEING CONTRIBUTION MADE TOWARDS REHABILITATION FUND TO RAJASTHAN COOPERATIVE DAIRY FEDERATION (RCDF) BY HOLDING IT AS NOT DEDUCTIBLE U/S 28 OR 37. 3.1 WE TAKE UP THE SOLITARY GROUND OF REVENUES AP PEAL WHEREIN THE LD. CIT(A) HAS ALLOWED THE CLAIM OF THE PAYMENTS TO SPARSH TRUST RELYING ON ITATS ORDER IN ASSESSEE'S OWN CASE IN I TA NO. 820/JP/2011 DATED 15-03-2012 HOLDING AS UNDER:- AFTER CONSIDERING THE SUBMISSIONS, ORDERS OF THE AUTHORITIES BELOW, WE FIND THAT ASSESSEE DESERV E TO SUCCEED IN ITS GROUND RAISED. IT IS NOTICED THAT BE FORE CREATING SPARSH, THE ASSESSEE WAS DOING ALL THESE EXPENDITUR E ITSELF. JUST FOR BETTERMENT OF ADMINISTRATIVE SERVICES, THE ASSESSEE ITA NO. 758//JP/2013 ACIT, CIRCLE- 6, JAIPUR VS. M/S. JAIPUR ZILA DUGDH UTPADAK SAHAKARI SANGH LTD. , JAIPUR . 3 CREATED THE TRUST THROUGH WHOM THESE EXPENSES ARE I NCURRED. THE PROFIT & LOSS ACCOUNT OF THE TRUST IS MAINTAINE D, COPY OF WHICH IS PLACED IN THE COMPILATION AND IT IS SEE N THAT WHATEVER THE AMOUNT HAS BEEN GIVEN BY ASSESSEE OR REIMBURSED BY ASSESSEE THAT HAS BEEN SPENT BY THE T RUST ON THE ANIMALS TO GET BETTER QUALITY AND QUANTITY OF M ILK. THE ASSESSEE HAD CONTRIBUTED @ RS. 0.05 PAISE PER LITER OF MILK PROCURED TO ITS TRUST FOR THE PURPOSE OF INCURRING EXPENDITURE FOR BETTER QUALITY OF MILK. AN AGENDA NOTE WAS PRE PARED WHICH CLEARLY STATES THAT THE PURPOSE OF THE CONTRI BUTION IS FOR MEDICALS AND HEALTH FACILITY OF THE ANIMALS OF THE MILK PRODUCERS AT THE DISTRICT LEVEL. THE CONTRIBUTION M ADE BY THE ASSESSEE TO TRUST IS THUS DIRECTLY LINKED WITH THE PROCUREMENT OF BETTER QUALITY, HYGIENIC AND MORE QUANTITY OF TH E MILK. IT IS IN THE INTEREST OF THE ASSESSEE THAT THE MILK ANIMA LS AT THE VILLAGE LEVEL FROM WHERE IT PROCURES THE MILK ARE H EALTHY & FOR THIS PURPOSE, SPARSH TRUST INCURRED EXPENDITURE IN PROVIDING VATERNITY CARE, REGULAR TREATMENT, EMERGE NCY CARE, PREVENTIVE CARE, BREED IMPROVEMENT THROUGH A.I. UNINTERRUPTED SUPPLY OF NUTRITIONAL SUPPLEMENT ETC. THEREFORE, IN OUR CONSIDERED VIEW, CONTRIBUTION MAD E BY ASSESSEE TO THIS TRUST IS AN EXPENDITURE INCURRED W HOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS WHICH IS AL LOWABLE UNDER SECTION 37(1). FROM THE INCOME AND EXPENDITUR E ACCOUNT OF THE TRUST, IT CAN BE NOTED THAT IT HAS I NCURRED AN EXPENDITURE OF RS. 80,35,447/- IN PURSUANCE OF ITS OBJECTIVE AND AFTER CONSIDERING THE RECEIPTS, THERE IS A DEFI CIT OF RS. 23,48,303/- TO THE TRUST SIN THE YEAR UNDER CONSIDE RATION. SUCH DEFICIT IS MET OUT OF THE CONTRIBUTION MADE BY THE ASSESSEE TO THE TRUST. IT IS FURTHER SEEN THAT BEFO RE CREATING THIS TRUST, THE ASSESSEE WAS INCURRING ALL THESE EX PENSES ITSELF AND ALL THESE EXPENSES WERE ALLOTTED BY THE DEPARTM ENT WHILE COMPLETING ASSESSMENT UNDER SECTION 143(3). THEREFO RE, THIS IS NOT A CASE THAT ASSESSEE HAS MADE ANY DONATION T O ANY TRUST AND, THEREFORE, THE SAME CANNOT BE ALLOWED AS BUSINESS EXPENDITURE. THE LD. CIT (A) HAS DISALLOWED THE CLA IM OF THE ASSESSEE BY OBSERVING THAT SINCE ASSESSEE HAS MADE DONATION UNDER SECTION 80G AND, THEREFORE, DEDUCTION UNDER S ECTION 80G IS ALLOWABLE WHEREAS THE FACTS ARE OTHERWISE. T HE ASSESSEE HAS NOT MADE ANY DONATION BUT HAS CONTRIBU TED TO ITA NO. 758//JP/2013 ACIT, CIRCLE- 6, JAIPUR VS. M/S. JAIPUR ZILA DUGDH UTPADAK SAHAKARI SANGH LTD. , JAIPUR . 4 THE TRUST FOR A SPECIFIC PURPOSE I.E. TO INCUR THE EXPENDITURE TO GET BETTER MILK FROM MILK ANIMAL. VARIOUS CASE LAW RELIED UPON BY ASSESSEE ARE IN SUPPORT OF THE CASE OF THE ASSESSEE. WE ARE NOT GETTING INTO DETAILS IN RESPECT TO THOSE CASES AS THEY HAVE ALREADY HAVE MENTIONED IN THE WRITTEN SUB MISSIONS WHICH ARE REPRODUCED HEREIN ABOVE. IN VIEW OF THESE FACTS AND CIRCUMSTANCES, WE HOLD THAT THE EXPENDITURE/CON TRIBUTION MADE BY ASSESSEE IS ALLOWABLE AS BUSINESS EXPENDITU RE. ACCORDINGLY, THE ADDITION MADE AND CONFIRMED BY THE LOWER AUTHORITIES IS DELETED. 3.2 WE HAVE HEARD BOTH THE PARTIES ON THE ISSUE. SI NCE THE ISSUE IN QUESTION IS SQUARELY COVERED IN FAVOUR OF THE ASSES SEE BY THE ITAT JUDGMENT IN ITS OWN CASE, ESPECIALLY FOLLOWING THE SAME, WE UPHOLD THE ORDER OF LD. CIT (A). THUS REVENUES APPEAL IS DIS MISSED. 4.1 NOW WE TAKE UP THE GROUND OF THE ASSESSEE'S CO WHEREIN THE ASSESSEE IS AGGRIEVED THAT THE LD. CIT(A) HAS ERRED IN CONFIRMING THE DISALLOWANCE OF RS. 4,58981/- BEING CONTRIBUTION MA DE TOWARDS REHABILITATION FUND TO RAJASTHAN DAIRY FEDERATION ( RCDF) BY HOLDING IT AS NOT DEDUCTIBLE U/S 28 OR 37. 4.2 WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIALS AVAILABLE ON RECORD. AT THE OUT SET, WE FIND THAT COORDINATE BENCH IN ASSESSEE'S OWN CASE FOR THE ASSESSMENT YEAR 2009-10 (ITA NO. 142/J P/2013) VIDE ITS ORDER DATED 17-07-2015 HAS SET ASIDE THE MATTER TO DECIDE THE SAME AFRESH IN ACCORDANCE WITH LAW AFTER GIVING ASSESSEE AN OPP ORTUNITY OF BEING HEARD BY OBSERVING AS UNDER:- ITA NO. 758//JP/2013 ACIT, CIRCLE- 6, JAIPUR VS. M/S. JAIPUR ZILA DUGDH UTPADAK SAHAKARI SANGH LTD. , JAIPUR . 5 4. IN THE ASSESSEES APPEAL THE ONLY GROUND RAIS ED IS AS UNDER :- THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED ON FACTS AND IN LAW IN CONFIRMING THE DISALLOWANCE OF RS. 20 ,18,213/- BEING CONTRIBUTION MADE TO REHABILITATION FUND. 5. THE LD. COUNSEL FOR THE ASSESSEE CONTENDED THAT IN THE CASE OF ASSESSEES APEX BODY M/S. RAJASTHAN COOPERATIVE DAI RY FEDERATION LTD. SIMILAR DISALLOWANCE WAS MADE IN EARLIER YEAR. THE LD. CIT (A) FOLLOWING THAT ORDER REJECTED THE CLAIM OF THE ASSESSEE. HOWEVER , IN THE CASE OF RAJASTHAN COOPERATIVE DAIRY FEDERATION, THE FACTS ARE DISTING UISHABLE IN AS MUCH AS A SEPARATE REHABILITATION FUND HAS BEEN CREATED BY RC DF WHICH IS REGISTERED UNDER SECTION 12AA. IN RCDFS CASE ALSO IN A.Y. 201 0-11 THE LD. CIT (A) HOLDING THAT THE CONTRIBUTION WAS MADE TO SEPARATE REHABILITATION FUND CREATED BY IT WHICH WAS REGISTERED UNDER SECTION 12 AA ALLOWED THE CLAIM OF THE ASSESSEE. IN VIEW THEREOF THE CLAIM MAY BE ALL OWED OR ALTERNATIVELY SUBMITTED THAT THE CASE MAY BE SET ASIDE TO THE FIL E OF A.O. TO DECIDE AFRESH AFTER CONSIDERING THE RELEVANT ASPECTS. 6. THE LD. D/R IS HEARD. 7. WE HAVE HEARD RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. WE FUND MERIT IN THE ALTERNATIVE CONTENTION OF LD. COUNSEL FOR THE ASSESSEE. IN VIEW OF THE FACT THAT ASSESSEE CREATED A SEPARATE R EHABILITATION TRUST WHICH IS REGISTERED UNDER SECTION 12AA OF THE IT ACT AND IN THE CASE OF RCDF ON THESE FACTS THE CLAIM HAS BEEN ALLOWED IN A.Y. 2010-11, W E SET ASIDE THE MATTER TO DECIDE THE SAME AFRESH IN ACCORDANCE WITH LAW AFTER GIVING ASSESSEE AN OPPORTUNITY OF BEING HEARD. IN VIEW OF THE SIMILAR FACTS AND CIRCUMSTANCES OF T HE CASE, THIS GROUND OF THE C.O. OF THE ASSESSEE IS ALSO SET ASIDE TO DECID E THE SAME AFRESH IN ACCORDANCE WITH LAW AFTER GIVING ASSESSEE AN OPPORT UNITY OF BEING HEARD ITA NO. 758//JP/2013 ACIT, CIRCLE- 6, JAIPUR VS. M/S. JAIPUR ZILA DUGDH UTPADAK SAHAKARI SANGH LTD. , JAIPUR . 6 5.0 IN THE RESULT, REVENUES APPEAL IS DISMISSED AN D ASSESSEES C.O. IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 08 /01/20 16. SD/- SD/- (T.R. MEENA) (LALIET KUMAR) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 08/01/ 2016 *MISHRA VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- THE ACIT, CIRCLE- 6, JAIPUR 2. IZR;FKHZ@ THE RESPONDENT- M/S.JAIPUR ZILA DUGDH UTPADAK SAHA KARI SANGH LTD., JAIPUR 3. VK;DJ VK;QDRVIHY ) @ CIT(A) 3. VK;DJ VK;QDR@ CIT, 4. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR 5. XKMZ QKBZY@ GUARD FILE (ITA NO. 758/JP/2013) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR