The ACIT, Vapi Circle, Vapi V. Dadra Nagar Haveli Sahakari Khand Udyog Mandali Ltd., SILVASSA

ITA 87/AHD/2015

• Counselvise Citation: [2018] 118 COUNSELVISE.COM (IT) 2161 (ITAT-SURAT)
• Duration Of Justice: 3 year(s) 8 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-09-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2009-2010
• Appeal Filed On: 08-01-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANIL DHAKA
• Section: 271(1)(c)

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL, SURAT BENCH, SURAT , , BEFORE SHRI C.M.GARG, JUDICIAL MEMBER AND SHRI O.P.MEENA, ACCOUNTANT MEMBER . / ITA NOS.87/AHD/2015/SRT / ASSESSMENT YEAR: 2009-10 ASST. COMMISSIONER OF INCOME TAX, VAPI CIRCLE, VAPI. VS. DADRA NAGAR HAVELI SAHAKARI KHAND UDYOG MANDALI LTD., 16-17, NEW MARKETING CENTRE, OPP. POST OFFICE, SILVASA. [PAN: AAAAK 0901F] ( ' / APPELLANT) ( #$' /RESPONDENT) . / ITA NOS.115/AHD/2015/SRT / ASSESSMENT YEAR: 2009-10 DADRA NAGAR HAVELI SAHAKARI KHAND UDYOG MANDALI LTD., SURVEY NO.287/1, VILLAGE SURANGI, VIA KHADOLI, DAPADA PATELAD, UT OF DADRA & NAGAR HAVELI, SILVASA 396 230. [PAN: AAAAK 0901F] VS. INCOME TAX OFFICER, WARD-1, VAPI. ( ' / APPELLANT) ( #$' /RESPONDENT) / ASSESSEE BY : SHRI HIREN R. VEPARI, C.A /REVENUE BY : SHRI ANIL DHAKA, SR. D.R /DATE OF HEARING : 19-09-2018 / DATE OF PRONOUNCEMENT : 27-09-2018 2 ITA NOS.87 & 115/AHD/2015/SRT (AY: 2009-10) DADRA NAGAR HAVELI SAHKARI KHAND UDHYOG MANDALI LTD . / ORDER PER C.M.GARG, JUDICIAL MEMBER: THESE TWO APPEALS HAVE BEEN FILED BY THE REVENUE A ND THE ASSESSEE AGAINST THE ORDERS OF COMMISSIONER OF INCO ME TAX (APPEALS), VALSAD (CIT(A) FOR SHORT) DATED 14.11.2014 & 12.0 3.2012 RESPECTIVELY FOR THE ASSESSMENT YEAR (A.Y) 2009-10. 2. THE GROUNDS RAISED BY ASSESSEE IN ITA NO.115/AHD /2015/SRT READ AS FOLLOWS: I. ADDITION OF INTEREST FROM BANK: (1) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND AS PER LAW, THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) ERRED IN TREATING A SUM OF RS.92,93,840 AS INCOME OF THE APPELLANT WH EN INTEREST BELONGED TO THE CENTRAL GOVERNMENT. (2) THE APPELLANT SUBMITS THAT THE LEARNED COMMISSI ONER OF INCOME- TAX (APPEALS) FAILED TO PROPERLY APPRECIATE THE LEGAL ASPECTS IN CONFIRMING THE ABOVE ADDITION. II. MISCELLANEOUS: (1) THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS ) ERRED IN NOT DEALING WITH GROUNDS OF CHARGE OF INTEREST U/S.234A , 234B, 234C AND 234D OF THE ACT. (2) THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR VAR Y ANY OF THE GROUNDS OF APPEAL. 3. THE GROUNDS OF APPEAL RAISED BY THE REVENUE IN I TA NO.87/AHD/2015/SRT READ AS FOLLOWS: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE LD. CIT(A) HAS ERRED IN DELETING THE PENALTY LEVIED OF RS. 28,68,800/-, ON THE ACCOUNT OF ADDITION MADE ON INT EREST INCOME EARNED OF RS. 92,93,843/- FROM DEPOSITS WITH NON-CO- 3 ITA NOS.87 & 115/AHD/2015/SRT (AY: 2009-10) DADRA NAGAR HAVELI SAHKARI KHAND UDHYOG MANDALI LTD . OPERATIVE BANKS, WHICH IS CONTRADICTORY U/S. 80P(2) (D) OF THE ACT. 2. IT IS, THEREFORE, PRAYED THAT THE ORDER OF THE L D. CIT(A) BE SET ASIDE AND THAT OF THE ORDER OF THE AO BE RESTORED. ASSESSEES APPEAL ITA NO.115/AHD/2015/SRT FOR AY 20 09-10 : 4. GROUNDS NO.1 & 2: APROPOS GROUND NOS.1 & 2, WE HAVE HEARD THE ARGUMEN TS OF BOTH SIDES AND CAREFULLY PERUSED THE RELEVANT MATERIAL P LACED ON THE RECORD OF THE TRIBUNAL. THE LD. ASSESSEES REPRESENTATIVE ( AR) SUBMITTED THAT THE ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE O RDER OF ITAT, AHMEDABAD B BENCH DATED 31.07.2013 IN ASSESSEES OWN APPEALS FOR AY 2002-03, 2003-04, 2004-05 & 2007-08, WHEREIN PAR A 6 THE ISSUE OF INTEREST EARNED ON FD HAS BEEN HELD AS EXCLUSIVELY BELONG TO GOVT. OF INDIA AS PER THE RIDER IN THE AGREEMENT BETWEEN THE ASSESSEE AND THE GOVT. OF INDIA. THE LD. AR ALSO SUBMITTED THAT THE ISSUE IS ALSO COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF HON'BLE H IGH COURT OF GUJARAT IN THE CASE OF GUJARAT POWER CORPORATION LTD. VS. ITO REPORTED IN 354 ITR 201 (GUJ.). 5. REPLYING TO THE ABOVE, THE LD. DEPARTMENTAL REPR ESENTATIVE (DR) SUBMITTED THAT THE AO WAS RIGHT IN MAKING ADDITION AND THE LD. CIT(A) HAS RIGHTLY CONFIRMED THE SAME BY HOLDING THAT AS PER H IS OWN ORDER FOR AY 2002-03, 2003-04, 2004-05, 2007-08 & 2008-09, THE I SSUE HAS BEEN DECIDED AGAINST THE ASSESSEE ON THE IDENTICAL FACTS AND CIRCUMSTANCES 4 ITA NOS.87 & 115/AHD/2015/SRT (AY: 2009-10) DADRA NAGAR HAVELI SAHKARI KHAND UDHYOG MANDALI LTD . THEREFORE, THE APPEAL OF THE ASSESSEE MAY KINDLY BE DISMISSED. HOWEVER, THE LD. DR COULD NOT CONTROVERT THE FACT THAT AS PE R ORDER OF THE TRIBUNAL DATED 31.07.2013 (SUPRA) PARA 6 THE ISSUE OF INTERE ST EARNED ON FD HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE AND ON BEING ASKED BY THE BENCH THE LD. DR SUBMITTED THAT TO THE BEST OF HIS KNOWLE DGE AND ON PERUSAL OF THE RELEVANT RECORD THERE IS NO APPEAL AGAINST ORDE R OF THE TRIBUNAL BEFORE HON'BLE HIGH COURT. 6. ON CAREFUL CONSIDERATION OF ABOVE RIVAL SUBMISSI ONS, FROM THE TRIBUNAL ORDER DATED 31.07.2013 PARA 6, IT IS DISCE RNABLE THAT THE IDENTICAL ISSUE/GROUND PERTAINING TO INTEREST EARNED ON FD ON BEHALF OF GOVT. OF INDIA HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE. FOR THE SAKE OF COMPLETENESS IN OUR FINDINGS THE RELEVANT PARA 6 IS BEING REPRODUCED BELOW: WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED TH E MATERIAL ON RECORD. THE ASSESSEE IS A CO-OPERATIVE SOCIETY AND HAS ENGAGED IN THE BUSINESS OF ESTABLISHING SUGAR FACTORY IN NO TIFIED BACKWARD AREA OF DADARA AND NAGAR HAVELI, THE UNION TERRITORY TO GRANT BENEFIT TO THE TRIBAL POPULATION OF THIS AREA, THE CENTRAL GOVERN MENT HAS GIVEN A PACKAGE ACCORDING TO WHICH THE GOVERNMENT WAS TO CO NTRIBUTE SHARE CAPITAL OF THE FACTORY TO THE EXTENT OF 32.5% OF TO TAL PROJECTS COST AND 7.5% OF PROJECTS' COST WAS TO BE CONTRIBUTED BY THE SUGARCANE GROWER MEMBERS AND CO-OPERATIVE INSTITUTIONS IN THE AREA T HE BALANCE 60% OF THE PROJECT COST WAS TO BE RAISED BY WAY OF TERM LO AN THE INITIAL PROJECT COST ESTIMATED BY THE SOCIETY HAS GONE UP. ACCORDINGLY, THE SHARE CAPITAL OF GOVERNMENT OF INDIA ALSO HAD GONE UP SUBSTANTIALLY AND FINALLY TOTAL CONTRIBUTION FROM THE GOVERNMENT OF INDIA WAS RS.16.25 CRORE. THIS AMOUNT AS PER THE AGREEMENT IS TO BE DEPOSITED IN THE NATIONALIZED BANK IN FDS. IF ANY INTEREST EA RNED ON IT IS TO BE ADJUSTED AGAINST THE SHARE PROFIT CAPITAL OF THE GO VERNMENT OF INDIA. THE INTEREST EARNED ON FDS. IS EXCLUSIVELY BELONGED TO GOVERNMENT OF INDIA AS PER THE RIDER IN THE AGREEMENT. ACCORDINGL Y, THE SOCIETY HAD 5 ITA NOS.87 & 115/AHD/2015/SRT (AY: 2009-10) DADRA NAGAR HAVELI SAHKARI KHAND UDHYOG MANDALI LTD . CREDITED INTEREST AMOUNT IN RESERVE AND SURPLUS AND AFTER TIME-TO-TIME THE SOCIETY HAS ISSUED SHARES BY DEBITING THE RESER VE IN THE NAME OF GOVERNMENT OF INDIA. THE POSITION OF SHARE CAPITAL, INTEREST EARNED AND SHARE ALLOTTED AS UNDER: A.Y. GOVERNMENT SHARE INTEREST EARNED SHARE ALLOTTED 02-03 RS. 7.25 CRORE RS. 1.79 CRORE - - - - - - 03-04 RS. 7.25 CRORE RS. 1.33 CRORE - - - - - - 04-05 RS. 7.25 CRORE RS. 1.118 CRORE - - - - - - 06-07 RS. 7.25 CRORE RS.1.33 CRORE - - - - - - 07-08 RS. 15.79 CRORE RS. 1.79 CRORE RS. 8.53 CRORE 08-09 RS. 15.79 CRORE RS. 1.23 CRORE RS. 10.66 LACS. 09-10 RS. 15.79 CRORE RS. 92.93 LACS RS. 6.47 LACS. THUS, IT IS CLEAR THAT THE ASSESSEE IS A CUSTODIAN OF INTEREST EARNED ON FUND PROVIDED BY THE GOVERNMENT ON BEHALF OF IT, WHICH HAD BEEN RETURNED BACK TO THE GOVERNMENT OF INDIA IN FO RM OF SHARE CAPITAL AS PER ITS AGREEMENT. THE RATIO OF DECISION OF HON'BLE GUJARAT HIGH COURT IN THE CASE OF GUJARAT POWER CORPORATION LTD. VS. ITO(SUPRA) IS SQUARELY APPLICABLE ON FACTS OF THIS CASE. ACCORDINGLY, WE ARE REVERSING THE ORDER OF LD. CIT(A). THE ASSE SSEES APPEAL ON THIS GROUND IS ALLOWED IN ALL THE YEARS. 7. IN VIEW OF ABOVE, IT IS CLEAR THAT THE TRIBUNAL HAS DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE BY FOLLOWING THE RATIO OF THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF GUJARAT POWER CORPORATION LTD. (SUPRA) IN FAVOUR OF THE ASSESSEE AND UNDISPUTEDLY FACTS AND CIRCUMSTANCES OF THE PRESENT YEAR IS ALSO SIMILAR AND IDENTICAL TO THE CASE OF PRECEDING ASSESSMENT YEARS FOR WHICH THE TRIBUNA L HAS PASSED SAID ORDER IN FAVOUR OF THE ASSESSEE ON THE ISSUE OF TRE ATMENT OF INTEREST EARNED ON FDS. THEREFORE, RESPECTFULLY FOLLOWING O RDER OF THE TRIBUNAL (SUPRA) AND THE RATIO OF THE DECISION OF HONBLE JU RISDICTIONAL HIGH COURT IN THE CASE OF GUJARAT POWER CORPORATION LTD . (SUPRA), THE ISSUE IS DECIDED 6 ITA NOS.87 & 115/AHD/2015/SRT (AY: 2009-10) DADRA NAGAR HAVELI SAHKARI KHAND UDHYOG MANDALI LTD . IN FAVOUR OF THE ASSESSEE. ACCORDINGLY, GROUND NOS .1 & 2 OF THE ASSESSEE ARE ALLOWED. GROUNDS NOS.3 & 4: 8. GROUND NO.4 IS GENERAL IN NATURE WHICH REQUIRED NO ADJUDICATION. SO FAR AS GROUND NO.3 IS CONCERNED, WE HAVE DECIDED GROUND NO.1 & 2 IN FAVOUR OF THE ASSESSEE AND THE AO HAS DIRECTED TO D ELETE THE ADDITION THEREFORE, GROUND NO.3 BEING CONSEQUENTIAL BECOMES IN FRUCTUOUS AND WE ARE NOT ADJUDICATING THE SAME AS HAVING BECOME INFR UCTUOUS. REVENUES APPEAL ITA NO.87/AHD/2015/SRT FOR AY 2009 -10 : 9. SINCE, BY THE EARLIER PART OF THIS ORDER, WE HAV E DELETED THE QUANTUM ADDITION ON THE STRENGTH OF WHICH THE AO IMPOSED PE NALTY U/S. 271(1)(C) OF THE ACT. CONSEQUENTLY, THE ADDITION ON THE STRENGT H OF WHICH PENALTY WAS LEVIED ON THE ASSESSEE IS NOT IN EXISTENCE. THE LD . CIT(A) HAS DELETED THE PENALTY BY FOLLOWING THE ORDER OF ITAT, AHMEDABAD D ATED 31.07.2013 (SUPRA) IN ASSESSEES OWN APPEALS. FINALLY, WE HOL D THAT IN CONSEQUENCE TO THE EARLIER PART OF THIS ORDER, WHEREIN QUANTUM ADDITION ON THE ISSUE OF INTEREST EARNED ON FD HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE BY FOLLOWING THE SAME ORDER OF THE TRIBUNAL DATED 31.0 7.2013 (SUPRA) THEN, PENALTY IMPOSED BY THE AO CANNOT BE HELD AS SUSTAIN ABLE AND THE LD. CIT(A) WAS RIGHT IN DELETING THE PENALTY BY FOLLOWI NG THE TRIBUNAL ORDER ON THE SAME ISSUE ON IDENTICAL FACTS AND CIRCUMSTANCES FOR IMMEDIATELY 7 ITA NOS.87 & 115/AHD/2015/SRT (AY: 2009-10) DADRA NAGAR HAVELI SAHKARI KHAND UDHYOG MANDALI LTD . PRECEDING YEARS. THEREFORE, WE ARE UNABLE TO SEE A NY REASON TO INTERFERE WITH THE SAME AND THUS, WE UPHOLD THE SAME. ACCORD INGLY, SOLE EFFECTIVE GROUND OF REVENUE IN THIS APPEAL STANDS DISMISSED. 10. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D AND THAT OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS DAY OF 2 7 TH SEPTEMBER, 2018. / SURAT ; DATED : 27 TH SEPTEMBER, 2018 EDN # & / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT ; 2. / THE RESPONDENT ; 3. $ ( ) / THE CONCERNED CIT(A); 4. THE CONCERNED PRL. CIT; 5. , , / DR, ITAT, SURAT; 6. / GUARD FILE . / BY ORDER , // TRUE COPY // * / ASSISTANT REGISTRAR , / ITAT, SURAT SD/- SD/- ( ) ( O.P.MEENA ) / ACCOUNTANT MEMBER ( ) (C.M.GARG) /JUDICIAL MEMBER