DCIT, Jaipur V. THE RAJASTHAN STATE CO-OPERATIVE BANK LTD., Jaipur

ITA 793/JPR/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 87523 (ITAT-JAIPUR)
• Duration Of Justice: 2 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-02-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 25-11-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJ MEHRA
• Assessee Lawyers: P C PARWAL CA DHK
• Keywords: Business expenditure; Commercial expediency
• Section: 147; 148

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 VKJ-IH-RKSYKUH] U;KF;D LNL; ,OA JH FOE FLAG ;KN O] YS[KK LNL; DS LE{K BEFORE: SHRI R.P. TOLANI, JM & SHRI VIKRAM SINGH YA DAV, AM VK;DJ VIHY LA-@ ITA NO.739/JP/2013 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2005-06 THE ACIT CIRCLE- 5 JAIPUR CUKE VS. M/S. RAJASTHAN COOPERATIVE DAIRY FEDERATION LTD. SARAS SANKUL, JAIPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AAAAR 0278A VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT C.O. NO.56/JP/2013 (ARISING OUT OF VK;DJ VIHY LA-@ ITA NO.739/JP/2013) FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2005-06 M/S. RAJASTHAN COOPERATIVE DAIRY FEDERATION LTD. SARAS SANKUL, JAIPUR CUKE VS. THE ACIT CIRCLE- 5 JAIPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AAAAR 0278A VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT JKTLO DH VKSJ LS@ REVENUE BY :SHRI RAJ MEHRA, JCIT-. DR FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI P.C. PARWAL, CA LQUOKBZ DH RKJH[K@ DATE OF HEARING : 03/12/2015 ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 4 /12/2015 VKNS'K@ ORDER PER R.P. TOLANI, JM THE REVENUE HAS FILED AN APPEAL AGAINST THE ORDER OF THE LD. CIT(A)II, JAIPUR DATED 12-07-2013 FOR THE ASSESSMENT YEAR 200 5-06. THE ASSESSEE HAS FILED THE C.O. RESPECTIVE GROUNDS ARE RAISED BY BOTH THE PARTIES. ITA NO. 739/JP/2013 ACIT , CIRCLE- 5, JAIPUR VS. RAJ ASTHAN COOPERATIVE DAIRY FEDERATION LTD. , JAIPUR 2 REVENUES GROUND IN ITA NO. 739/JP/2013 THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS. 1,30,60,000/- MADE BY THE AO ON ACCOUNT OF DCS DEVELOPMENT EXPENSES IGNORING THE RELEVANT FACTS OF THE CASE THAT THESE EXPENSES WAS TO BE ADJUSTED FIRST OUT OF UNUTILIZED GRANT RECEIVED BY THE ASSESSEE FOR THIS PURPOSE THU S MAKING THE ORDER TO BE PERVERSED. ASSESSEE'S GROUND IN C.O. NO.56/JP/2013 THE LD. CIT(A) HAS ERRED ON FACTS AND IN LAW IN U PHOLDING THE VALIDITY OF ORDER PASSED U/S 147 OF THE ACT. 2.1 THE LD. COUNSEL FOR THE ASSESSEE AT THE OUTSET CONTENDS THAT THE ISSUE ON MERIT STANDS COVERED IN FAVOUR OF THE ASSESSEE BY THE JUDGMENT OF HON'BLE RAJASTHAN HIGH COURT IN ASSESSEE'S OWN CASE (ITA NO S. 75 & 245 OF2012 AND 13 OF 2014 DATED 25-08-2014 HOLDING THAT DCS DEVELO PMENT EXPENSES ARE ALLOWABLE BY FOLLOWING OBSERVATION. ON PERUSAL OF HE OBJECTIVE, IT IS CLEAR THAT THE PRIMARY DUTY OF THE RESPONDENT ASSESSEE IS TO TAKE INTO CONSID ERATION THAT AMOUNT INCURRED TOWARDS THE PRIMARY LEVEL SOCIETIES FROM WHICH IS IT ENGAGED IN PROCUREMENT OF MILK. THE RESPONDENT ASSESSEE HAS INCURRED THE AID AMOUNT FOR INCREASING THE PROCUREM ENT OF MILK AND PROTECTING THE DAIRY FARMERS FROM THE THREAT OF THE PRIVATE MILK VENDOR, LAUNCHED VARIOUS SCHEMES FROM TIME TO TIME FOR INDUCING MORE AND MORE MILK PRODUCERS TO JOIN MILK DEVELOPME NT COOPERATIVE SOCIETIES IN FURTHERANCE OF ITS FUNDAME NTAL OBJECTIVES, WHICH IN OUR OPINION, IS CERTAINLY IN THE NATURE OF BUSINESS EXPENSES. IT IS ALSO A FINDING OF FACT THAT ONE OF THE OBJECTIVES OF THE RESPONDENT ASSESSEE IS TO CARRY OUT SUCH ACTIVITI ES AS MAY BE CONDUCIVE FOR THE PROMOTION OF THE DAIRY INDUSTRY A ND IMPROVEMENT AND PROTECTION OF MILK ANIMALS AND IN PURSUANCE OF THE SAID OBJECTIVE, IT HAS TO RUN TECHNICAL ADMINISTRATIVE, FINANCIAL AND OTHER NECESSARY SPORT TO THE SOCIETIES. THE RESPONDENT ASSESSEE COLLECTS MILK FROM ITS MEMBER UNIONS I.E. PRIMARY DAIRY COOP ERATIVE SOCIETY (DCS) AND SELLS THE MILK AND MILK PRODUCTS TO THE C ONSUMER UNDER ITA NO. 739/JP/2013 ACIT , CIRCLE- 5, JAIPUR VS. RAJ ASTHAN COOPERATIVE DAIRY FEDERATION LTD. , JAIPUR 3 ITS BRAND NAME SARAS . FOR INCREASING THE PROCURE MENT OF MILK AND PROTECTING THE DAIRY FARMERS, IT HAS TO LAUNCH VARIOUS SCHEMES FOR INDUCING MORE AND MORE MILK PRODUCES TO JOIN TH E PRIMARY DAIRY COOPERATIVE SOCIETY AND FOR THIS PURPOSE, IT HAS INCURRED EXPENDITURE AND THUS, IN OUR VIEW, THESE EXPENSES A RE DIRECTLY RELATED TO THE BUSINESS OF THE RESPONDENT ASSESSE E AND INCURRED FOR COMMERCIAL EXPEDIENCY. IT IS ALSO A FINDING OF FACT THAT THE RESPONDENT ASSESSEE HAS ALSO CHARGED CESS @ 1% OF THE SALE VALUE FROM MILK UNIONS FOR WHICH RECEIPTS OF RS. 9, 12,27,490/- HAVE BEEN OFFERED AS INCOME OF THE ASSESSEE AND WHEN INC OME HAS BEEN OFFERED BY THE RESPONDENT ASSESSEE THEN THE SAID EXPENDITURE IS CERTAINLY ALLOWABLE AS BUSINESS EXPENDITURE. FURTHE R MORE, WHEN SUCH INCOME OF RS. 9,12,27,490/0 IS ALREADY OFFERED FOR TAXATION THEN QUESTION OF ADJUSTMENT AGAINST GRANT FROM NDDB DOES NOT ARISE. 2.2 THE LD. DR IS HEARD. 2.3 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. RESPECTFULLY FOLLOWING THE DECISION OF H ON'BLE RAJASTHAN HIGH COURT IN ASSESSEE'S OWN CASE (SUPRA), THE APPEAL OF THE R EVENUE IS DISMISSED AND THE ORDER OF THE LD. CIT(A) IS SUSTAINED ON THIS ISSUE. 2.4 THE C.O. OF THE ASSESSEE IS REGARDING CHALLENG ING THE ASSESSMENT U/S 148 OF THE ACT. RESPECTFULLY, FOLLOWING THE DECISION OF HON'BLE RAJASTHAN HIGH COURT IN ASSESSEE'S OWN CASE (SUPRA), WE HAVE ALLOW ED THE CLAIM OF THE ASSESSEE ON MERIT. THUS THERE IS NO NEED TO GO INTO THE DETA ILS OF THE ASSESSEE'S C.O. WHICH IS ACADEMIC IN NATURE AND THE SAME IS ALSO DI SMISSED. 2.5 IN VIEW THEREOF, THE REVENUES APPEAL AS WELL A S C.O. OF THE ASSESSEE ARE DISMISSED. ITA NO. 739/JP/2013 ACIT , CIRCLE- 5, JAIPUR VS. RAJ ASTHAN COOPERATIVE DAIRY FEDERATION LTD. , JAIPUR 4 3.0 IN THE RESULT, APPEAL OF THE REVENUE AS WELL AS C.O. OF THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 4/12/2015 . SD/- SD/- FOE FLAG ;KNO VKJ-IH-RKSYKUH (VIKRAM SINGH YADAV) (R.P.TOLANI) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 4 /12/ 2015 *MISHRA VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- THE ACIT, CIRCLE- 5, JAIPUR 2. IZR;FKHZ@ THE RESPONDENT- M/S. RAJASTHAN COOPERATIVE DAIRY F EDERATON LTD. , JAIPUR 3. VK;DJ VK;QDRVIHY ) @ CIT(A) 4. VK;DJ VK;QDR@ CIT 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR 6. XKMZ QKBZY@ GUARD FILE (ITA NO.739/JP/2013) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR