The Haryana State Co-operative Supply and Marketing Federation Ltd., Panchkula V. DCIT, Panchkula

ITA 791/CHANDI/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 90197 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 10 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-06-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 08-06-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 18-07-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: JYOTI KUMARI
• Keywords: Search and seizure
• Section: 143(3); 14A; 246; 144; 154; 15

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI T.R.SOOD, ACCOUNTANT MEMBER ITA NO. 791/CHD/2013 (ASSESSMENT YEAR : 2007-08) THE HARYANA STATE CO-OPERATIVE VS. THE D.C.I.T., SUPPLY & MARKETING FEDERATION LTD., PANCHKULA CIRCLE, SECTOR 5, PANCHKULA. PANCHKULA. PAN: AAAJH0022R (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI AMAN PARTI RESPONDENT BY : SMT.JYOTI KUMARI, CIT DR DATE OF HEARING : 08.06.2015 DATE OF PRONOUNCEMENT : 16.06.2015 O R D E R PER BHAVNESH SAINI, J.M. : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (AP PEALS), PANCHKULA DATED 7.5.2013 FOR ASSESSMENT YEAR 2007-0 8. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESS EE HAS FILED RETURN OF INCOME DECLARING INCOME OF RS.80,6 2,76,210/- ON 31.10.2007. THE ASSESSMENT IN THIS CASE WAS COM PLETED UNDER SECTION 143(3) OF THE ACT ON 24.12.2009 WHERE IN THE ASSESSING OFFICER DISALLOWED THE DEDUCTION CLAIMED UNDER SECTION 80P)(2)(D) AMOUNTING TO RS.2,91,55,456/-. THE ASSESSEE FILED APPEAL AGAINST THE SAID ASSESSMENT O RDER 2 BEFORE THE LEARNED CIT (APPEALS), PANCHKU!A, WHO VI DE HIS ORDER DATED 4.6.2010 UPHELD THE ORDER OF THE ASSESS ING OFFICER RESTRICTING THE DEDUCTION UNDER SECTION 8 0P(2)(D) OF THE ACT. AGAINST THE SAID ORDER OF THE LEARNED CI T (APPEALS), AN APPEAL WAS FILED BEFORE THE TRIBUNAL. THE TRIB UNAL VIDE ITS ORDER DATED 18.2.2011 IN ITA NO.1081/CHD/2010 A ND ITA NO.1095/CHD/2010 REMANDED BACK THE MATTER TO THE ASSESSING OFFICER FOR THE PURPOSE OF DETERMINING THE QUANTUM OF DEDUCTION AVAILABLE TO THE ASSESSEE UNDER SECTIO N 80P(2)(D) OF ACT. 3. THE ASSESSING OFFICER IN PURSUANCE TO THE ORDER OF THE TRIBUNAL REMANDING THE MATTER BACK, DISALLOWED THE DEDUCTION CLAIMED UNDER SECTION 80P(2)(D) OF THE AC T AMOUNTING TO RS.1,18,81,092/- (20% OF THE GROSS DIV IDEND AND INTEREST EARNED) ASSUMING THE SAME TO BE THE EX PENDITURE INCURRED BY THE ASSESSEE FOR EARNING THE DIVIDEND A ND INTEREST INCOME FROM CO-OPERATIVE INSTITUTIONS. BEI NG AGGRIEVED BY THE ABOVE DISALLOWANCE THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LEARNED CIT (APPEALS), PANCHKU LA, WHO AFTER CONSIDERING THE PROVISIONS OF SECTION 14A OF THE ACT AS WELL AS SECTION 57 OF THE ACT VIDE ORDER DATED 24.0 5.2012 DIRECTED THE ASSESSING OFFICER TO COMPUTE THE QUANT UM OF DEDUCTION ADMISSIBLE TO THE ASSESSEE UNDER SECTION 80P(2)(D) OF THE ACT BY TAKING INTO CONSIDERATION ONLY THE EX PENSES INCURRED BY WAY OF COMMISSION /REMUNERATION PAID TO THE BANKER OR ANY OTHER PERSON FOR REALIZING SUCH DIVID END AND EXPENDITURE INCURRED WHOLLY AND EXCLUSIVELY FOR EAR NING OF 3 THE DIVIDEND AND INTEREST INCOME. THE LEARNED CIT ( APPEALS) VIDE HER ORDER HELD AS UNDER:- THEREFORE THE LD. AO IS DIRECTED TO COMPUTE THE DEDUCTION IN VIEW THE EXPENSES INCURRED BY WAY OF COMMISSION/ REMUNERATION PAID TO THE BANKER OR ANY OTHER PERSON FOR REALIZING SUCH DIVIDEND AND EXPENDITURE INCURRED WHOLLY AND EXCLUSIVELY FOR EARNING SUCH INCOME. 4. THE ASSESSING OFFICER WHILE GIVING APPEAL EFFEC T TO THE ORDER OF THE LEARNED CIT (APPEALS) VIDE HIS ORD ER DATED 24.1.2013 APPLIED THE PROVISIONS OF SECTION 14A OF THE ACT. THE ASSESSEE FEELING AGGRIEVED AGAINST THESE FINDIN GS OF THE ASSESSING OFFICER PREFERRED APPEAL BEFORE THE LEARN ED CIT (APPEALS) AGAINST THE ORDER OF THE ASSESSING OFFICE R DATED 24.1.2013. THE ASSESSEE CONTENDED BEFORE THE LEAR NED CIT (APPEALS) THAT THE PROVISIONS OF SECTION 14A OF THE ACT COULD NOT BE APPLIED WHILE COMPUTING THE DEDUCTION UNDER SECTION 80P(2)(D) OF THE ACT. 5. THE LEARNED CIT (APPEALS), HOWEVER, DISMISSED T HE APPEAL OF THE ASSESSEE BEING NOT MAINTAINABLE AGAIN ST THE APPEAL EFFECT ORDER PASSED BY THE ASSESSING OFFICER . HIS FINDINGS IN THE IMPUGNED ORDER IN PARAS 4.1 AND 5 A RE REPRODUCED AS UNDER : 4.1 THE APPELLANT HAS MOVED AN APPEAL AGAINST APPE AL EFFECT ORDER BY THE A.O. THE APPELLANT IS AGGRIEVED WITH CO MPUTATION OF DISALLOWANCE U/S 14A READ WITH RULE 8D. THE RIGHT C OURSE FOR THE APPELLANT IS TO MOVE A RECTIFICATION APPLICATION U/S 15 4 BEFORE THE ASSESSING OFFICER. NO APPEAL LIES AGAINST APPEAL EF FECT ORDER PASSED 4 WRONGLY U/S 250/154 OF THE INCOME TAX ACT BY THE A SSESSING OFFICER. THEREFORE THE APPEAL IS DISMISSED. THE APPELLANT MA Y APPLY TO THE ASSESSING OFFICER FOR RECTIFICATION U/S 154 OF THE I NCOME TAX ACT, 1961. 5. IN RESULT, THE APPEAL IS DISMISSED. 5. THE LEARNED COUNSEL FOR ASSESSEE SUBMITTED THAT AS PER THE DIRECTIONS OF THE LEARNED CIT (APPEALS), IT WAS BROUGHT TO THE KNOWLEDGE OF THE ASSESSING OFFICER T HAT NEITHER ANY COMMISSION/REMUNERATION WAS PAID TO ANY BANKER OR ANY OTHER PERSON FOR REALIZING SUCH DIVID END, NOR ANY ADMINISTRATIVE, OFFICE EXPENSES, ETC. HAVE BEEN INCURRED FOR EARNING OF THE DIVIDEND AND INTEREST INCOME. THE LEARNED COUNSEL FOR ASSESSEE SUBMITTED THAT THE ASSESSING O FFICER WHILE GIVING APPEAL EFFECT APPLIED THE PROVISIONS O F SECTION 14A OF THE ACT IN COMPLETE DEFIANCE OF THE ORDER PA SSED BY THE LEARNED CIT (APPEALS) BECAUSE THE LEARNED CIT ( APPEALS) DIRECTED THE ASSESSING OFFICER TO COMPUTE THE DEDUC TION AVAILABLE TO THE ASSESSEE BY TAKING INTO CONSIDERAT ION ONLY THE EXPENSES INCURRED BY WAY OF COMMISSION/REMUNERA TION PAID TO THE BANKERS OR TO ANY OTHER PERSON FOR REAL IZING SUCH DIVIDEND INCOME. THE LEARNED COUNSEL FOR ASSESSEE SUBMITTED THAT THE ASSESSEE IS AGGRIEVED AGAINST THE ACTION O F THE ASSESSING OFFICER IN GIVING THE APPEAL EFFECT BECAU SE THE ASSESSING OFFICER EXCEEDED HIS JURISDICTION BY APPL YING THE PROVISIONS OF SECTION 14A OF THE ACT. THEREFORE, THE APPEAL OF THE ASSESSEE WAS MAINTAINABLE AND THE APPEAL LIE S AGAINST THE ORDER OF THE ASSESSING OFFICER GIVING APPEAL EF FECT. IN SUPPORT OF HIS CONTENTION HE RELIED UPON THE FOLLOW ING DECISIONS : 5 I) THE DECISION OF HON'BLE ANDHRA PRADESH HIGH COUR T IN THE CASE OF BAKELITE HYLAM LTD. VS. CIT, 37 TAX MAN 210, IN WHICH IN PARA 4 IT WAS HELD AS UNDER : 4. TWO ISSUES ARISE FOR CONSIDERATION AS INDICATED BY THE QUESTION REFERRED TO THIS COURT. THE FIRST QUESTION IS, WHET HER THE ASSESSEE CAN APPEAL AGAINST A MODIFICATION ORDER PASSED BY THE I TO GIVING EFFECT TO THE ORDER OF THE APPELLATE AUTHORITY ? IN OTHER WOR DS, COULD IT BE SAID THAT THE MODIFICATION ORDER PARTAKES THE NATUR E OF THE ORDER UNDER SECTION 143 OF THE ACT SO AS TO SUBJECT ITSEL F TO AN APPEAL UNDER SECTION 246 OF THE ACT NOW, THE REVENUE'S CONT ENTION IS THAT THE ORDER/ORDERS PASSED BY THE ITO GIVING EFFE CT TO THE APPELLATE DECISIONS CANNOT BE DESCRIBED AS ASSESSMENT ORDER I N THE SENSE THEY ARE UNDERSTOOD UNDER SECTION 143. IT IS, THEREFORE, SUBMITTED THAT NO APPEAL LIES. WE ARE AFRAID, THE CONTENTION URGED BY THE REVENUE IS NOT TENABLE. AN ORDER OF ASSESSMENT IS ONE IN WHICH THE RE IS COMPUTATION OF INCOME OR COMPUTATION OF TAX OR BOTH. THAT COMP UTATION OF INCOME AND TAX CAN BE MADE BY THE ITO NOT ONLY IN REGULAR AS SESSMENT MADE UNDER SECTION 143 BUT ALSO IN ORDERS PASSED FR OM TIME TO TIME GIVING EFFECT TO THE DECISIONS OF THE APPELLATE AUT HORITIES. THE ORDER PASSED BY THE ITO GIVING EFFECT TO THE DECISION OF THE APPELLATE AUTHORITY IS AS MUCH AN ASSESSMENT ORDER AS THE ONE PASSED BY HIM BY WAY OF REGULAR ASSESSMENT UNDER SECTION 1 43. WE ARE FORTIFIED IN THIS VIEW BY THE DECISION OF THE CALCU TTA HIGH COURT IN KOOKA SIDHWA & CO. V. CIT [1964] 54 ITR 54 AND THE DECISION OF THE PUNJAB HIGH COURT IN GOPI LAL V. CIT [1967] 65 ITR 477. WE, THEREFORE, HOLD THAT AN ASSESSEE HAS A RIGHT TO APP EAL AGAINST A MODIFICATION ORDER AS IF IT WERE AN ASSESSMENT ORDE R ITSELF, AND THE APPELLATE AUTHORITY IS BOUND TO ENTERTAIN AN APPEAL AND DECIDE IT ON MERITS. II) THE DECISION OF HON'BLE BOMBAY HIGH COURT IN TH E CASE OF CALTEX OIL REFINING (INDIA) LTD. VS. CIT, 73 TAXMAN 231, IN WHICH IN PARA 12 IT WAS HELD AS UNDE R : 6 12. IN THE LIGHT OF THESE DECISIONS AND FOR THE REASONS GIVEN ABOVE, WE ARE OF THE OPINION THAT THE IMPUGNED ORDER OF THE ASSESSMENT PASSED BY THE ITO PURSUANT TO THE DIRECTIONS OF THE APPELLATE AUTHORITIES WITH A VIEW TO GIVING EFFECT TO THE DIRECTIONS CONTAINED THEREIN IS AN ORDER OF ASSESSMENT WITHIN THE MEANING OF SECTION 143 OR SECTION 144 OF THE ACT AND AN APPEAL LIES UNDER SECTION 2246(C) AGAINST SUCH AN ORDER. 6. THE LEARNED COUNSEL FOR ASSESSEE, THEREFORE, SUBMITTED THAT THE ORDER OF THE LEARNED CIT (APPEAL S) MAY BE SET ASIDE. 7. ON THE OTHER HAND, THE LEARNED D.R FOR THE REVE NUE RELIED UPON THE IMPUGNED ORDER. 8. ON CONSIDERATION OF THE RIVAL SUBMISSIONS, WE A RE OF THE VIEW THAT THE ORDER OF THE LEARNED CIT (APPEALS ) CANNOT BE SUSTAINED IN LAW. THE LEARNED CIT (APPEALS) EARLI ER DIRECTED THE ASSESSING OFFICER TO COMPUTE THE DEDUCTION IN V IEW OF THE EXPENSES INCURRED BY WAY OF COMMISSION/REMUNERATION PAID TO BANKERS OR TO ANY OTHER PERSON FOR REALIZING SUC H DIVIDEND INCOME. APPARENTLY, THE LEARNED CIT (APPEALS) HAS NOT ISSUED ANY DIRECTION TO THE ASSESSING OFFICER FOR APPLYING THE PROVISIONS OF SECTION 14A OF THE ACT. THEREFORE, I F THE ASSESSING OFFICER HAS APPLIED THE PROVISIONS OF SEC TION 14A OF THE ACT AS PER THE CONTENTION OF THE LEARNED COUNSE L FOR ASSESSEE, IT SHOULD BE CONSIDERED AS APPEAL EFFECT GIVEN IN DEFIANCE OF THE ORDER OF THE LEARNED CIT (APPEALS). THUS THE APPEAL EFFECT ORDER PASSED BY THE ASSESSING OFFICER IS 7 APPEALABLE AND APPEAL LIES AGAINST HIS ORDER BEFORE THE LEARNED CIT (APPEALS). THE DECISIONS RELIED UPON BY THE LEARNED COUNSEL FOR ASSESSEE IN THE CASE OF BAKELI TE HYLAM LTD. (SUPRA) AND IN THE CASE OF CALTEX OIL REFININ G (INDIA) LTD. (SUPRA) CLEARLY SUPPORT THE CONTENTION OF LEAR NED COUNSEL FOR ASSESSEE. THE LEARNED CIT (APPEALS) WAS, THER EFORE, NOT JUSTIFIED IN HOLDING THAT NO APPEAL LIES AGAINST TH E APPEAL EFFECT ORDER PASSED WRONGLY UNDER SECTION 250/154 O F THE ACT BY THE ASSESSING OFFICER. THE APPEAL EFFECT ORDE R PASSED BY THE ASSESSING OFFICER IN CONTRAVENTION OF THE ORDER OF THE LEARNED CIT (APPEALS) IS APPEALABLE ORDER AND APPEA L LIES AGAINST THE ORDER OF THE ASSESSING OFFICER BEFORE T HE LEARNED CIT (APPEALS). THE ORDER OF THE LEARNED CIT (APPE ALS) IS THUS SET ASIDE AND CONSEQUENTLY THE MATTER IN ISSUE IS R ESTORED TO THE FILE OF THE LEARNED CIT (APPEALS), PANCHKULA WI TH DIRECTION TO REDECIDE THE APPEAL OF THE ASSESSEE ON MERITS BY GIVING REASONABLE SUFFICIENT OPPORTUNITY OF BEING H EARD TO THE ASSESSEE. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 16 TH DAY OF JUNE, 2015. SD/- SD/- (T.R.SOOD) (BHAVNESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 16 TH JUNE, 2015 *RATI* COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT(A)/TH E CIT/THE DR. ASSISTANT REGISTRAR, ITAT, CHANDIGARH 8