The Erode District Co-operative Milk Producers' Union Ltd., Erode V. ACIT, Erode

ITA 759/CHNY/2011

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 51730 (ITAT-CHENNAI)
• Duration Of Justice: 3 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-08-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2003-2004
• Appeal Filed On: 26-04-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR I VIJAYAKUMAR
• Assessee Lawyers: S SRIDHAR ERODE
• Section: 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHENNAI BENCH C : CHENNAI [BEFORE SHRI HARI OM MARATHA, JUDICIAL MEMBER AND SHRI N.S. SAINI, ACCOUNTANT MEMBER] I.T.A.NO.759/MDS/2011 ASSESSMENT YEAR : 2003-04 THE ERODE DISTRICT CO-OPERATIVE MILK PRODUCERS UNION LTD VASAVI COLLEGE POST ERODE 638 316 VS THE ACIT CIRCLE II ERODE [PAN AAAAE0560A ] (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI S.SRIDHAR, ADVOCATE, ERODE RESPONDENT BY : DR.I.VIJAYAKUMAR, CIT/DR O R D E R PER HARI OM MARATHA, JUDICIAL MEMBER: THIS APPEAL OF THE ASSESSEE, FOR ASSES SMENT YEAR 2003-04, IS DIRECTED AGAINST THE ORDER OF THE LD. CIT(A), COIMB ATORE, DATED 25.2.2011. 2. THE ONLY ISSUE INVOLVED IN THIS APPEAL IS AS TO WHETHER THE AMOUNT TAKEN AS LOAN FROM THE GOVERNMENT OF TAMILNA DU UNDER THE NAME WAYS AND MEANS ADVANCE (WMA) ON INTEREST THR OUGH TWO CHEQUES DATED 16.4.2001 [FOR ` 1 CRORE] AND ON 23.4.2001 [FOR ` 3 CRORES] TOTALLING TO ` 4 CRORES, WHICH WAS SUBSEQUENTLY CONVERTED INTO ITA 759/11 :- 2 -: SUBSIDY BY THE TAMILNADU GOVERNMENT ON THE REQUE ST MADE BY VARIOUS CO-OPERATIVE SOCIETIES INCLUDING THE ASSESS EE. THE TAMILNADU GOVERNMENT CONVERTED WMA INTO SUBSIDY THROUGH G.O NO.162 DATED 2.11.2001 AND LATER RATIFIED (CLARIFIED/REITERATED) THE SAME BY G.O.NO.84 DATED 28.8.2002. THE QUESTION IS AS TO IN WHICH YEAR IT IS TO BE TAXED; EITHER IN THE ASSESSMENT YEAR UNDER CO NSIDERATION [WHICH IS 2003-04] OR IN THE EARLIER ASSESSMENT YEAR VIZ A.Y 2002-03. 3. BEFORE WE DECIDE THIS ISSUE, WE WOULD LIKE TO BRIE FLY NARRATE THE RELEVANT FACTS OF THE CASE. THE ASSESSEE-UNION IS A CO-OPERATIVE SOCIETY ESTABLISHED IN THE YEAR 1981, WHICH IS ONE OF THE MILK PRODUCERS CO-OPERATIVE SOCIETIES IN THE ERODE DIST RICT, TAMILNADU. THE MAIN SOCIETY SO ESTABLISHED BY THE GOVERNMENT IS KNOWN AS MILK PRODUCERS CO-OPERATIVE SOCIETIES AND THE ASSESSEE IS ONE OF ITS MEMBERS. THE ASSESSEE-UNION COLLECTS (PURCHASES) M ILK FROM ITS MEMBER SOCIETIES AND CONVERTS IT INTO WHOLE MILK OF A PARTICULAR PERCENTAGE OF FAT CONTENT, BUTTER, GHEE, KNOVA, SKI MMED MILK POWER AND SELLS THEM DIRECTLY IN THE LOCAL MARKET(S) AND ALSO IN OTHER STATES THROUGH THE TAMILNADU CO-OPERATIVE MILK PRODUCERS F EDERATION LTD (TCMPF), CHENNAI. THE PURCHASE PRICE HAS TO BE PAI D TO THE DAIRY FARMERS AND THE SALE PRICE OF THESE ITEMS IS FIXED BY THE STATE GOVERNMENT AS A MATTER OF PUBLIC POLICY. THERE AR E 17 SUCH UNIONS ITA 759/11 :- 3 -: [CO-OPERATIE SOCIETIES] FUNCTIONING IN THE STATE OF TAMILNADU. SOME OF THESE UNIONS EXPERIENCED A GRAVE FINANCIAL CRUNCH, THEREFORE, A COMMON REQUEST WAS MADE TO THE GOVERNMENT OF TAMILN ADU TO SAVE THEM. THE GOVERNMENT HELPED THEM OUT BY GIVING A L OAN UNDER THE SCHEME WAYS AND MEANS ADVANCE, A SORT OF LOAN TO BE REPAID TO THE GOVERNMENT OVER A STIPULATED PERIOD OF TIME AND THA T TOO WITH A CERTAIN RATE OF INTEREST. UNDER THIS SCHEME, THE ASSESSEE RECEIVED TOTAL AMOUNT OF ` 4 CRORES AS STATED ABOVE DURING THE PERIOD RELEVAN T TO ASSESSMENT YEAR 2002-03, TO BE REPAID IN FOUR QU ARTERLY INSTALLMENTS AND AT AN INTEREST RATE OF 17%. THIS ADVANCE WAS G IVEN BASICALLY FOR MAKING PAYMENT TO DAIRY FARMERS TO WHOM THE ASSESSE E HAD PENDING DUES. THE ASSESSEE COULD PARTIALLY MAKE PAYMENT TO DAIRY FARMERS UNDER INFORMATION TO THE GOVERNMENT OF TAMILNADU BY SUBMITTING COMPLIANCE CERTIFICATE. BEING IN FINANCIAL CONSTRA INT, AGAIN, SUCH UNIONS APPEALED TO THE TAMILNADU GOVERNMENT THROUGH THE FEDERATION TO WAIVE ITS RIGHTS TO RECOVER THE LOAN EXTENDED AN D THE RELATED INTEREST ACCRUED THEREON. THE GOVERNMENT OF TAMIL NADU, AFTER CONSIDERING THE ACTUAL PLIGHT OF THESE UNIONS, WAIV ED THE LOAN LIABILITY AND ALSO THE INTEREST ACCRUED THEREON BY ACCOUNTING THE SAME AS SUBSIDY. THESE FACTS WERE ALLEGEDLY BROUGHT TO THE NOTICE OF THE DEPARTMENT IN THE RETURNS OF INCOME FILED FOR ASSES SMENT YEARS 2002- ITA 759/11 :- 4 -: 03 AND 203-04. THE DY. CIT, CIRCLE II, ERODE, CALL ED FOR THE ENTIRE DETAILS OF SUCH RECEIPT OF WAYS AND MEANS ADVANCE AND THE PROVISION FOR INTEREST, IF ANY, AND THE ASSESSEE REPLIED THRO UGH LETTER DATED 2.8.2005 DETAILING THE ENTIRE FACTUAL MATRIX. SUBS EQUENTLY, A NOTICE U/S 148 DATED 17.7.2007WAS RECEIVED BY THE ASSESSEE AN D IN COMPLIANCE THEREOF THE ASSESSEE AGAIN FILED RETURN OF INCOME O N 20.8.2007 FOR ASSESSMENT YEAR 2003-04AND ALSO REQUESTED TO FURNIS H A COPY OF THE REASONS FOR REOPENING OF THE ASSESSMENT . FROM THE COPY OF REASONS SUPPLIED VIDE LETTER DATED 18.9.2007, IT WAS NOTICE D THAT THE RECEIPT AS A RESULT OF CESSATION OF WAYS AND MEANS ADVANCE R ECEIVED FROM THE GOVERNMENT OF TAMILNADU ALONGWITH INTEREST THEREON DURING THE PREVIOUS YEAR RELEVANT TO ASSESSMENT YEAR 2003-04 H AS TO BE TREATED AS A REVENUE RECEIPT AND THUS TAXABLE IN THE YEAR I N ASSESSEES HANDS. THE ASSESSEE-UNION OBJECTED TO THIS NOTICE BY STATI NG THROUGH ITS LETTER DATED 26.11.2007 THAT THIS AMOUNT IS DISCLOSED AS L OAN AND CANNOT CHANGE ITS CHARACTER EVEN IF THE GOVERNMENT HAS TER MED IT SUBSIDY IN ITS RECORDS. HENCE, IT CANNOT BE TREATED AS INCOME U/S 2(24) R.W.S 28(II) OF THE ACT. IN THE ALTERNATIVE, IT WAS PLEA DED THAT EVEN IF THIS AMOUNT IS TO BE TREATED AS SUBSIDY, IT CANNOT BE TREATED AS A REVENUE RECEIPT BUT THE ASSESSING OFFICER REJECTED THE SA ME AND PROCEEDED TO TAX THIS RESULTANT AMOUNT IN ASSESSMENT YEAR 2003-0 4. AGGRIEVED, THE ITA 759/11 :- 5 -: ASSESSEE RAISED LEGAL AS WELL AS MERITORIOUS GROUND S BEFORE THE LD. CIT(A), WHO HAS ALSO NOT AGREED WITH THE ASSESSEE. THE ASSESSEE IS FURTHER AGGRIEVED AND HAS FILED THIS SECOND APPEAL. THE GROUNDS RAISED BEFORE US, READ AS UNDER: 1. T H E O RD E R OF TH E L E A R NE D C I T (A) I S B A D A ND ER RO N EO U S IN L AW A ND AGA IN S T TH E PRIN C IPL E S OF NATU R A L J U S TICE. 2) REGARDING YEAR OF TAXABILITY OF WAYS AND MEANS ADVANCE CONVERTED INTO SUBSIDY: T H E L EARNED C I T (A) ER R E D IN NOT A P PREC I A T I N G T H E VITA L FAC T THAT THE O RD E R DAT E D 2 8 / 08 / 2 00 2 I S ON L Y A R A T IF I CA T IO N O RD ER . A) T H E LEA RN E D C I T (A) E R RE D IN G I V IN G A F INDIN G , IN PA R A - 8 , PAGE - 9 OF HIS ORD E R , TH A T ' TH E CO MM ISS I O N ER , D E P A R T M E N T OF M IL K A ND D IAR Y D E VE L OPMENT REQUE S T S THE DEPARTME NT OF A N IMA L HU SBA NDR Y A ND F I S H ER I E S T O SE ND A N O RD E R TO T H E D E P A R T M E NT OF F IN A NC E T O SA N CT I ON T H E FUN DS ' , W H I L E TH E FAC T I S , A S C OULD B E SE EN F R OM THE ORDER DT . 28 / 08 / 2002 , T H AT T H E S A M E I S FOR R E - S AN C TI O N O F T H E FU N D S . ( QUOT ES, BO L D , ITA L ICS A ND UN DE R L IN E S UPPLI E D ). C) TH E L EA RN E D C I T (A), TH O U G H , IN PA R A -1 0 , P AGE - 10 OF HI S OR D E R , ACCEP T S T H AT T H E O RD E R DATED 28 / 08 / 2002 I S O NL Y A RA TI F I CA T IO N O RDE R , E R R ED IN H O LDI N G THAT TH E O R DE R CA M E IN T O EFFEC T O NL Y F R O M 2 8 / 08 / 2 00 2 A ND N O T F R O M 02 / 11 / 200 1 . D) T H E L EA RN E D C I T (A) ER R E D IN HO L D I N G T H A T TH E ASSESS IN G O F F ICER AT TH E TI ME O F I SS UING N O TICE U / S .148 OR W HI LE COMP L ETING TH E ASSESS M E N T WAS COM PL ETE L Y U NAWA R E O F TH E ORDER N O : 1 62 DT . 2.11.2001 , F O R I N TH E CO MM U NI CAT I O N DT . 06.05.200 5 I SS U E D B Y TH E ASSESS IN G OF FI CE R , A R EFE R E N CE TO TH A T O RD E R D ATED 2 8 . 08 . 20002 (W H EREIN OR D E R N O . 162 D ATE D 02. 11 . 2001 I S R E FER R ED ) HA S B EE N MAD E. E) T H E LE A RN ED C I T ( A ) ERR E D IN H O LDIN G T H AT T H E S A M E I S TAXA BL E I N TH E AS S ESS M E NT Y E AR 2003-04 , SI N CE TH E A PP E L L A N T H A D T R A N SFE RR E D T H E S A M E T O S UB S I D Y IN TH E BAL A NCE S H EET I N THE AS S ESSME N T YEAR 2003 - 04 , W ITH O U T A PP REC I A TIN G TH E SE TTL E D P OS IT I O N OF L AW TH A T TH E M A KIN G OF A N E N T R Y OR ABSENCE OF AN ITA 759/11 :- 6 -: ENTRY CANNOT DETERMINE THE RIGHTS AND LIABILITIES O F PARTIES. 3) TAXABILITY OF WAYS AND MEANS ADVANCE CONVERTE D INTO SUBSIDY . A) THE LEARNED CIT(A) ERRED IN NOT CONSIDERING THE WRI TTEN SUBMISSIONS IN PROPER PERSPECTIVE. B) T HE LEARNED C I T ( A ) ER R E D I N N O T A PPRE C I AT IN G T H E DI S TIN G U IS HIN G FEAT U R ES O F T HE DE C ISIO N S RE P ORTED I N 222 IT R 1 12 (SC) A ND 222 I T R 3 44 ( S C) W ITH T H E CASE OF T H E APPELLA N T. C) T H E L E A RN E D C I T(A ) E R R E D IN N O T A PP R E C I A TIN G T H E F A CT T H A T T H E D EC I S I O N B Y T H E S UPR E M E CO URT R E P O RT E D IN 228 I T R 253 I S NOT AP PLI CA BL E FOR T H E CASE OF T H E A PP E LL A NT . 4) THE LEA RN ED C I T(A) E R RE D IN NOT A PP REC I AT IN G TH E V I TA L FAC T TH AT WH IL E TH E R E A SO N S RECO RD E D R ES U L TIN G IN T H E I SS U E O F N O TI CE U / S .1 48 AR E O N E , T H E R EASO N S W HI C H H A D CULMI N ATE D IN TH E ASSESS M E N T WERE DI FFE R E NT . IN O T H ER WORD S , W HIL E T H E REASO N S RECO RD E D WE R E T H AT ' O MI SS I O N O N TH E P A R T OF T H E APPE LL A NT TO DEC L A R E A S R EVE NU E R ECE IPT S T H E CESSA T I O N OF WAYS A N D M EA N S ADVA N C E RECE I VED FRO M TH E GOVE RNM E NT OF TA MI LN A D U A L O N G W ITH INT E R ES T ACCR U E D T H EREO N ', THE ORDER P ASSE D B Y TH E ASSESS IN G O F FI CER T AXE D T H E SA M E AS REVE NU E RECEIPT U/S 28(IV) OF THE ACT. AND F O R O THER R E ASO N S T H AT M AY B E A D DUCE D A T TH E TIM E OF H EA RIN G , T H E APPE LL A N T P R A YS THAT THI S APPEA L BE A DMI T T ED, CO N SI D ERE D A ND J U S TI CE B E RE ND E R E D . 4. AT THE TIME OF HEARING, SHRI S.SRIDHAR, ADVOCATE, HAS ACTUALLY PRESSED ONLY GROUND NOS.2 & 3. WHEN IT WAS FOUND THAT THIS AMOUNT, GIVEN INITIALLY AS WAYS AND MEANS ADVANCE AND SU BSEQUENTLY ITA 759/11 :- 7 -: CONVERTED INTO SUBSIDY HAS TO BE TAXED AS ASSESSE ES INCOME AND THIS FACT WAS CONVEYED TO THE PARTIES IN THE OPEN COURT, THE LD.AR RESTRICTED HIS ARGUMENT TOWARDS GROUND NO.2 WHICH D EALS WITH THE YEAR OF TAXABILITY OF THIS AMOUNT. WITH REFERENCE TO THIS ISSUE, IT WAS ARGUED THAT WAYS AND MEANS ADVANCE WAS CONVERTED INTO SUBSIDY ON THE REQUEST OF THE ASSESSEE THROUGH G.O NO.162 DAT ED 2.11.2001 AND HENCE, THIS AMOUNT CAN BE TAXED IN ASSESSMENT YEA R 2002-03 AND NOT IN ASSESSMENT YEAR 2003-04. WITH REFERENCE TO ANOT HER G.O.NO.84 DATED 28.8.2002 IT WAS STATED THAT IT IS ONLY A R ATIFICATION G.O AND RELATED BACK TO G.O.NO.162. PER CONTRA, THE LD. C IT/ DR ARGUED THAT THIS IS A SUBSIDY AND HAS TO BE TAXED IN THE HAND S OF THE ASSESSEE AND SINCE THE EARLIER G.O WAS NOT PROPERLY DRAFTED, THE SANCTION IN G.O.NO.84 DATED 28.8.2002 IS ONLY RELEVANT ON WHI CH THE WAYS AND MEANS ADVANCE WAS ACTUALLY CONVERTED INTO SUBSIDY . 5. AFTER HEARING BOTH SIDES, WE HAVE TREADED THROUGH THE G.O.NO.162 DATED 2.11.2001 AND G.O.NO.84 DATED 28.8 .2002, WHICH IS IN TAMIL LANGUAGE, WHOSE CERTIFIED ENGLISH TRANS LATION HAS ALSO BEEN PROVIDED. G.O.NO.162 DATED 2.11.2001 READS AS UN DER: GOVERNMENT OF TAMIL NADU ABSTRACT TAMIL NADU CO-OPERATIVE MILK PRODUCERS FEDERATION/ DISTRICT CO-OPERATIVE MILK PRODUCERS UNIONS PAYMENT OF DUES TO MILK PR ODUCERS PAYMENT ITA 759/11 :- 8 -: OUTSTANDING WAYS AND MEANS ADVANCE OF ` 28 CRORE SANCTIONED WAYS AND MEANS ADVANCE TREATED AS SUBSIDY ORDERS ISS UED. ANUMAL HUSBANDRY AND FISHERIES MP.I) DEPARTMENT G.O. MS. NO. 162 DATED : 2.11.2001. (1) G.O. MS. 62, ANIMAL HUSBANDRY & FISHERIES (MP. I) DEPARTMENT, DT. 31.3.2001. (2) G.O. MS. 73, ANUMAL HUSBANDRY & FISHERIES (MP. I) DEPARTMENT, DT. 19.4.2001. (3) FROM THE MANAGING DIRECTOR, TAMIL NADU CO-OPERA TIVE MILK PRODUCERS FEDERATION, REF. NO.6574/ACCTS.I-4/ 2001, DATED 17.7.2001. ------- ORDER: IN DECEMBER 2000,THE MANAGING DIRECTOR, TAMILNADU CO-OPERATIVE MILK PRODUCERS FEDERATION REQUESTED THE GOVERNMENT TO SANCTION ` 36.98 CRORE AS SUBSIDY TO MAKE PAYMENT TO MILK PRODUCERS FOR THE MILK PROCURED. AS THE FINANCIAL POSITION OF THE GOVERNMENT DID NOT PERMIT THE GOVERNMENT TO PROVIDE SUCH HUGE AMOUNT AND AS THE FINANCIAL YEAR WAS HEADING TOWARDS A CLOSE, THE MANAGING DIRECTOR WAS INFORMED ACCORDING LY. AS THE OUTSTANDING OF PAYMENT TO MILK PRODUCERS WAS BROUGHT TO THE NOT ICE OF THE GOVERNMENT, THE GOVERNMENT SANCTIONED A WAYS AND MEANS ADVANCE OF ` 28 CRORE IN TWO INSTALMENTS OF ` 8 CRORE AND ` 20 CRORE IN THE GOVERNMENT ORDERS FIRST AND SECOND READ ABOVE RESPECTIVELY. 2. IN HIS LETTER THIRD READ ABOVE, THE MANAGING D IRECTOR, TAMIL NADU CO-OPERATIVE MILK PRODUCERS FEDERATION HAS INFORME D THAT THE DISTRICT UNIONS ARE NOT IN A POSITION TO REPAY WAYS AND MEAN S ADVANCE TO THE GOVERNMENT DUE TO CARRYOVER LOSSES OVER YEARS AND A LSO UNABLE TO PAY 17% INTEREST, PER ANNUM AND REQUESTED THE GOVERNMENT TO TREAT THE WAYS AND MEANS ADVANCE AS SUBSIDY AND TO WAIVE THE INTEREST OF 17% PER ANNUM. 3. THE GOVERNMENT CAREFULLY EXAMINED THE PROPOSAL OF MANAGING DIRECTOR, TAMIL NADU CO-OPERATIVE MILK PRODUCERS F EDERATION AND HAVE DECIDED TO CONCEDE TO THE REQUEST OF MANAGING DIREC TOR, TAMIL NADU CO- OPERATIVE MILK PRODUCERS FEDERATION. THE GOVERNM ENT THEREFORE ORDER THAT THE WAYS AND MEANS ADVANCE OF ` 28 CRORE SANCTIONED IN THE GOVERNMENT ORDERS FIRST AND SECOND READ ABOVE BE TREATED AS S UBSIDY. ITA 759/11 :- 9 -: 4. SANCTION IS, THEREFORE, ACCORDED FOR THE PAYM ENT OF A SUBSIDY AMOUNT EQUAL TO THE WAYS AND MEANS ADVANCE SANCTION ED TO THE TAMIL NADU CO-OPERATIVE MILK PRODUCERS FEDERATION LIMIT ED I.E. ` 28 CRORES UNDER THE FOLLOWED HEAD OF ACCOUNTS :- 2404.00 DAIRY DEVELOPMENT-191. ASSISTANCE TO CO- OPERATIVES AND OTHER BODIES I. NON PLAN AA. SUB SIDY TO TAMIL NADU CO-OPERATIVE MILK PRODUCERS FEDERATION- 11. SUBSIDIES-20. GENERAL SUBSIDY (D.P. CODE 200400 191 AA 1120) 5. THE SUBSIDY SANCTIONED IN PARA 4 ABOVE SHALL B E GIVEN CONTRA- CREDIT TO THE FOLLOWING HEAD OF ACCOUNTS :- WAYS & MEANS ADVANCE 6403.00 LOANS FOR ANIMAL HUSBANDRY-190. LOANS TO PUBLIC SECTOR AND OTHER UNDERTAKINGS-2. NON PLAN-AC. WA YS AND MEANS ADVANCE TO TAMIL NADU CO-OPERATIVE MILK PRODU CERS FEDERATION LIMITED CONTROLLED BY THE SPECIAL COMMISSIONER FOR MILK PRODUCTION AND DAIRY DEVELOPM ENT- 01. WAYS AND MEANS ADVANCE TO THE TAMIL NADU CO- OPERATIVE MILK PRODUCERS FEDERATION LIMITED (D.P.C. 6403 00 190 AC O/O G (RECEIPTS)). INTEREST: 0049 INTEREST RECEIPTS-04. INTEREST RECEIPTS OF S TATE/UNION TERRITORY GOVERNMENTS-190. INTEREST FROM PUBLIC SE CTOR AND OTHER UNDERTAKAINGS AN. WAYS AND MEANS ADVANCES TO STATUTORY CORPORATION, BOARD AND GOVERNMENT COMPANI ES (DPC 0049 04 190 AN 0008). INTEREST SHALL BE CALCULATED UPTO THE DATE OF ADJU STMENT OF WAYS AND MEANS ADVANCE TO BE CONVERTED AS SUBSIDY. 6. THIS ORDER ISSUES WITH THE CONCURRENCE OF FINA NCE DEPARTMENT, VIDE ITS U.O.NO.73200/AH&F/2001, DATED 24.10.2001. (BY ORDER OF THE GOVERNOR) D. RAJENDRAN, SECRETARY TO GOVERNMENT. ITA 759/11 :- 10 - : 6. ENGLISH VERSION OF G.O.NO.84 DATED 28.8.2002 READS AS UNDER: GOVERNMENT OF TAMILNADU GIST TO RATIFY THE EARLIER ORDER ISSUED TO COMPENSATE TH E LOSS INCURRED BY THE DAIRY FARMERS ATTACHED TO TAMILNADU COOPERATIVE MILK PRODUCERS FEDERATION LTD. AND DIS TRICT MILK PRODUCERS UNION, BY ADVANCING A SUM OF ` 28 CRORES AS WAYS AND MEANS ADVANCE NOW BEING CONVERTED INTO SUBSIDY RELEASE OF THE ORDER --------------------------------------------------- ----------------------- DEPARTMENT OF ANIMAL HUSBANDRY AND FISHERIES ORDER NO.84 DATED 28.8.2002 1. ORDER NO:162 DATED 02.11.2001, DEPARTMENT OF ANIMAL HUSBANDRY AND FISHERIES. 2. COMMISSIONER, DEPARTMENT OF MILK AND DAIRY DEVELOPMENT, ORDER NO.9010/F2/2001, DATED 15.05.2002. --------- ORDER: 1. TO RATIFY THE EARLIER ORDER ISSUED TO COMPENSATE THE LOSS INCURRED BY THE DAIRY FARMERS ATTACHED TO TAMILNADU COOPERATIVE MILK PRODUCERS' FEDERATION LTD. AND DISTRICT MILK PRODUCERS UNION, BY ADVANCING A SUM OF ` 28 CRORES WAS SANCTIONED EARLIER. LATER THE SAID SANCTIONED AMOUNT WAS CONVERTED INTO SUBSIDY. 2. THE COMMISSIONER, DEPARTMENT OF MILK AND DAIRY DEVELOPMENT IN HIS LETTER DATED 15.05.2002, SUBMITTED TO THE SALARY ACCOUNTS OFFICER (NORTH), THE NECESSARY DETAILS FOR THE WAYS AND MEANS ADVANCES. SINCE THERE WAS NO APPROVAL FOR SANCTION OF FUNDS, THE LETTER WAS ITA 759/11 :- 11 - : WITHDRAWN AND THE SAID AMOUNT WAS SURRENDERED TO THE GOVERNMENT. SO AS PER THE ORDER NO: 162, DATED 02.11.2001, THE DEPARTMENT OF MILK AND DAIRY DEVLOPMENT ONCE AGAIN APPROACHED THE DEPARTMENT OF ANIMAL HUSBANDRY AND FISHERIES AND REQUESTED FOR THE RE-SANCTION OF THE FUNDS. 3. AFTER SCRUTINISING THE NECESSARY RECORDS, THE REQUEST OF THE DEPARTMENT OF MILK AND DAIRY DEVELOPMENT WERE ACCEPTED BY THE GOVERNMENT DIRECTING THEM TO AVOID LOSSES IN FUTURE BY MINIMIZING THE OFFICE EXPENSES THE COST OF PRODUCTION IN PROCESSING THE MILK TO THE POSSIBLE EXTENT. IN THIS REGARD, THE GOVERNMENT DIRECTS THE DEPARTMENT OF ANIMAL HUSBANDRY AND FISHERIES TO RATIFY THE EARLIER ORDER. THE FUNDS ARE TO BE ALLOCATED IN THE 2002-2003 BUDGET. 4. THE COMMISSIONER, DEPARTMENT OF MILK AND DAIRY DEVELOPMENT REQUESTS THE DEPARTMENT OF ANIMAL HUSBANDRY AND FISHERIES TO SEND AN ORDER TO THE DEPARTMENT OF FINANCE TO SANCTION THE FUNDS. 5. THE ORDER WAS PASSED WITH THE PERMISSION OF FINANCE DEPARTMENT VIDE THE ORDER NO: 204/ES (SF)/2002-1 DATED 29.08.2002. 7. AFTER GOING THROUGH THESE GOVERNMENT ORDERS CAREFUL LY, WE FIND THAT THE WAYS AND MEANS ADVANCE GIVEN TO THE ASSE SSEE-UNION WAS CONVERTED INTO SUBSIDY VIDE G.O.NO.162 DATED 2.11 .2001 AND THE G.O.NO.84 DATED 28.8.2002 STARTS WITH THE OPENING W ORDS TO RATIFY THE EARLIER ORDER ISSUED TO COMPENSATE THE LOSS INC URRED BY THE DAIRY FARMERS ATTACHED TO TAMILNADU COOPERATIE MILK PRODU CERS FEDERATION ITA 759/11 :- 12 - : LTD. AND DISTRICT MILK PRODUCERS UNION, BY ADVANCIN G A SUM OF ` 28 CRORES WAS SANCTIONED EARLIER. LATER THE SAID SANC TIONED AMOUNT WAS CONVERTED INTO SUBSIDY. THIS LATTER ORDER NO.84 DATED 28.8.2002 IS WITH REFERENCE TO G.O. NO.162 DATED 2.11.2001 WHICH IS CLEARLY EVIDENCED FROM THE ABOVE EXTRACTED ORDERS. THE LAT TER G.O HAS NOT SUPERSESSED THE EARLIER G.O.NO.162 DATED 2.11.200 1, BUT IT HAS ONLY RATIFIED THE EARLIER ONE. THEREFORE, IT IS AMPLY C LEAR FROM THE BARE PERUSAL OF THESE TWO ORDERS THAT THE ADVANCE GIVEN TO THE ASSESSEE WAS CONVERTED INTO SUBSIDY VIDE ORDER DATED 2.11.20 01. HENCE, IT IS THE RELEVANT YEAR IN WHICH THIS AMOUNT OF SUBSIDY C AN BE TAXED IN THE HANDS OF THE ASSESSEE. SINCE THE FIGURE OF ` 28 CRORES HAS BEEN MENTIONED IN THE GO AND TO RELATE THE SAME, WE HAVE FOUND THAT IT IS THE TOTAL AMOUNT WHICH WAS GIVEN TO FOUR UNIONS INC LUDING THE ASSESSEE-UNION. THUS, IT IS CLEARLY ESTABLISHED T HAT THIS AMOUNT HAS TO BE ASSESSED IN THE HANDS OF THE ASSESSEE-UNION IN A SSESSMENT YEAR 2002-02 AND NOT IN ASSESSMENT YEAR 2003-04. 8. IN THE CASE OF IDENTICALLY PLACED CO-OPERATIVE SO CIETY, M/S SALEM DISTRICT CO-OPERATIVE MILK PRODUCERS UNION LT D., WHICH IS ONE OF THE FOUR UNIONS/SOCIETIES, THE TRIBUNAL HAS TAKEN S IMILAR VIEW VIDE ITS ORDER DATED 23.5.2011 IN I.T.A.NO. 423/MDS/2011, FO R ASSESSMENT YEAR 2003-04, A COPY OF WHICH PLACED ON RECORD IN WHICH IT HAS BEEN HELD, ITA 759/11 :- 13 - : UNDER IDENTICAL FACTS, THAT THIS SUBSIDY DOES NOT R ELATE TO ASSESSMENT YEAR 2003-04. CONSEQUENTLY, BY FOLLOWING THE TRIBU NAL ORDER (SUPRA) AS WELL AS IN VIEW OF OUR FOREGOING DISCUSSION, THI S AMOUNT CANNOT BE ASSESSED DURING THE YEAR UNDER CONSIDERATION. THE ASSESSING OFFICER IS AT LIBERTY TO ASSESS THIS AMOUNT IN THE PROPER A SSESSMENT YEAR AS DISCUSSED ABOVE. THEREFORE, WE SET ASIDE THE FINDI NG OF THE LD. CIT(A) AND DELETE THE ENTIRE ADDITION FROM THE HANDS OF TH E ASSESSEE. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE STANDS AL LOWED. THE ORDER PRONOUNCED IN THE OPEN COURT ON 09.08.2011. SD/- SD/- (N.S. SAINI) ACCOUNTANT MEMBER ( HARI OM MARATHA ) JUDICIAL MEMBER DATED: 9 TH AUGUST, 2011 RD COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR