Shahabad Co-op Sugar Mills Ltd., Kurukshetra V. ACIT, Kurukshetra

ITA 9/CHANDI/2012

• Counselvise Citation: 921514 RSA 2012
• Duration Of Justice: 1 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-02-2012
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 04-01-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: S K MUKHI
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES A CHANDIGARH BEFORE SHRI H.L.KARWA, HON'BLE, VICE PRESIDENT AND SHRI MEHAR SINGH, ACCOUNTANT MEMBER ITA NO. 9/CHD/2012 ASSESSMENT YEAR: 2008-09 SHAHBAD CO-OP SUGAR MILLS LTD., VS THE ACIT, SHAHBAD (M), KURUKSHETRA CIRCLE, KURUKSHETRA PAN NO. AAAAP038IN (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI S.K.MUKHI RESPONDENT BY : SHRI AKHILESH GUPTA DATE OF HEARING : 15.2.2012 DATE OF PRONOUNCEMENT : 15.2.2012 ORDER PER H.L.KARWA, VP THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER OF CIT(A), KARNAL DATED 17.10.2011 RELATING TO ASSESSM ENT YEAR 2008-09. 2. IN THIS APPEAL, THE ASSESSEE HAS TAKEN THE FOLLO WING GROUNDS :- 1. THAT THE LD. CIT(A) IS NOT JUSTIFIED IN CONCURRING WITH THE ORDERS PASSED BY THE A.O. U/S 143(3) OF THE INCOME TAX ACT, 1961 AND THEREBY CONFIRMING THE ACTION OF LD. A.O. SO THAT SO THE ORDERS OF THE FIRST APPELLATE AUTHORITY IS BAD IN LAW, ERRONEOUS AND PERVERSE AND THUS NEEDS TO BE QUASHED. 2. THAT THE LD. CIT(A) IS NOT JUSTIFIED IN CONCURRING WITH THE FINDINGS OF A.O., IN MAKING AN ADDITION OF RS.92,44 ,458/- U/S 36(L)(III) OF INCOME TAX ACT, 1961 ON ACCOUNT O F INTEREST BY HOLDING THAT THE APPELLANT SHOULD HAVE CHARGED INTEREST ON THE IMPUGNED STICKY LOANS WHEREIN THERE WAS 2 NO CHANCE OF EVEN RETURN OF PRINCIPAL AMOUNT IN VIE W OF ESTABLISHED PRINCIPLES OF LAW. 3. THAT WITHOUT PREJUDICE TO THE ABOVE GROUNDS OF APPE AL THE APPELLANT DISPUTES THE QUANTUM OF ADDITION CONFIRME D BY THE FIRST APPELLATE AUTHORITY AS HIGHLY EXCESSIVE. 4. THAT THE APPELLANT CRAVES LEAVE TO ADD, AMEND AN D DELETE ANY OF THE GROUNDS OF APPEAL ON OR BEFORE THE DISPO SAL OF THE PRESENT APPEAL. 3. AT THE TIME OF HEARING, SHRI S.K. MUKHI, LD. COU NSEL FOR THE ASSESSEE SUBMITTED THAT THE GROUND NOS. 1, 3 & 4 ARE GENERAL AND, THEREFORE, DO NOT REQUIRE ADJUDICATION. 4. AS REGARDS GROUND NO.2, THE RELEVANT FACTS NOTED BY THE ASSESSING OFFICER ARE AS UNDER:- 2. IN RESPONSE THERETO SHRI R.L. GUPTA, ADVOCATE ATTENDED THE PROCEEDINGS ALONGWITH SHRI RAJIV SINGH ACCOUNTANT OF THE ASSESSEE AND FURNISHED THE REQUIS ITE DETAILS / INFORMATION. THE CASE WAS DISCUSSED WITH THEM. HOWEVER, DURING THE COURSE OF ASSESSMENT PROCEEDINGS, IT HAS BEEN FOUND THAT THE ASSESSEE HA S ADVANCED LOAN TO OTHER SUGAR MILLS AT RS. 7,70,37,151/- BUT NO INTEREST ON ACCOUNT OF THIS HA S BEEN CHARGED. HOWEVER, AFTER DISCUSSION THE INTERE ST @ 12% ON THE AMOUNT OF RS. 7,70,37,151/- HAS BEEN WORKED OUT AT RS. 92,44,458/- AND THE SAME IS ADDED TO THE INCOME / LOSS OF THE ASSESSEE. 5. ON APPEAL, THE CIT(A) CONFIRMED THE DISALLOWANCE FOR THE REASONS STATED IN PARA 1.03 OF THE IMPUGNED ORDER AND HENCE THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 6. BEFORE US, SHRI S.K MUKHI, LD. COUNSEL FOR THE A SSESSEE FAIRLY CONCEDED THAT THE ISSUE IS COVERED AGAINST THE ASSE SSEE BY THE ORDER PASSED BY THIS TRIBUNAL DATED 28.5.2008 IN ASSESSEES OWN APP EAL BEARING ITA NO. 3 797/CHANDI/2005 FOR THE ASSESSMENT YEAR 2002-03. T HE TRIBUNAL DISMISSED THE SIMILAR GROUND OF APPEAL OF THE ASSESSEE IN ASS ESSMENT YEAR 2002-03 OBSERVING AS UNDER:- 8. THE RELEVANT FACTS RELATING TO THIS ISSUE ARE T HAT THE ASSESSEE HAD ADVANCED LOANS TO SOME OTHER COOPERATI VE SOCIETIES. THE INTEREST WAS BEING PROVIDED ON SUCH LOANS AT THE AGREED RATES. THE ASSESSEE CLAIMED THAT NO IN TEREST HAD BEEN RECEIVED FROM SPECIFIED COOPERATIVE SOCIETY SI NCE 1992- 93. INTEREST IN RESPECT OF SUCH LOANS, ACCORDING TO THE ASSESSEE, WAS CREDITED TO THE SUSPENSE ACCOUNT. I T WAS CLAIMED THAT SINCE THE RECOVERY OF INTEREST WAS DOU BTFUL, THE ASSESSEE HAD MADE A CLAIM FOR DEDUCTION. THE ASSE SSING OFFICER HAS DISALLOWED THE CLAIM AND THE COMMISSION ER OF INCOME-TAX (A) HAS CONFIRMED THE DISALLOWANCE BY PO INTING OUT THAT THE ASSESSEE HAD NOT PROVED THAT THE RECOVERY OF INTEREST WAS DOUBTFUL. IT HAS BEEN POINTED OUT THAT IN THE CASE OF BHUNNA CO-OP.SUGAR MILLS THE ASSESSEE HAS CHARGED I NTEREST OF RS.55,37,651/- BUT THE ASSESSEE CLAIMED THAT NO INT EREST WAS RECEIVED FROM THE SAID PARTY SINCE ASSESSMENT YEAR 1992-93. THE ASSESSEE HAD ADVANCED ANOTHER LOAN OF RS.54 LAC S TO THIS VERY CONCERN IN FINANCIAL YEAR 2000-01. ACCORDING TO THE COMMISSIONER OF INCOME-TAX (A), THIS LOAN HAS BEEN RECEIVED BACK DURING THE YEAR UNDER APPEAL. THE COMMISSION ER OF INCOME-TAX (A) HAS FURTHER POINTED OUT THAT THE ASS ESSEE HAD ADVANCED RS.25 LACS TO PANIPAT COOPERATIVE SUGAR MI LL DURING THE FINANCIAL YEAR 1991-92 AND RECEIVED BACK PART O F THE LOAN AND INTEREST AMOUNT OF RS.5,12,500/- IN ASSESSMENT YEAR 1993- 94. THE COMMISSIONER OF INCOME-TAX (A) HAS FURTHE R HELD THAT THE ASSESSEE HAS FAILED TO FILE ANY DOCUMENT WHATSO EVER TO SUPPORT THE CLAIM THAT THE RECOVERY OF INTEREST FRO M THE TWO CONCERN WAS DOUBTFUL. THE COMMISSIONER OF INCOME-T AX (A) HAS ACCORDINGLY UPHELD THE ADDITION. 9. THE CLAIM OF THE ASSESSEE IN RESPECT OF THE INTE REST U/S 80P(2)(D) HAS ALSO BEEN REJECTED ON THE GROUND THAT NO SUCH CLAIM WAS MADE BEFORE THE ASSESSING OFFICER. 10. THE LEARNED COUNSEL FOR THE ASSESSEE CONTENDED BEFORE US THAT THE DEPARTMENT HAS GRANTED EXEMPTION IN RES PECT OF INTEREST EARNED ON LOANS AND, THEREFORE, THERE WAS NO JUSTIFICATION FOR DENYING THE EXEMPTION TO THE ASSE SSEE IN RESPECT OF THE INTEREST FROM PARTIES. IT WAS CONTE NDED THAT THE ASSESSEE HAD CLAIMED THAT NO INTEREST HAD ACCRUED F ROM THE PARTIES AND ACCORDINGLY EXEMPTION U/S 80P(2)(D) WAS NOT CLAIMED. RELIANCE WAS PLACED ON THE DECISION OF T HE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS. PUNJAB FINANCIAL CORPORATION LTD., 295 ITR 510 TO SUPPORT THE CONTENTION THAT NO INTEREST WAS ASSESSABLE ON STICK Y LOANS OF THE ASSESSEE. RELIANCE WAS ALSO PLACED ON THE DECI SION OF THE 4 PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS. ABHISHEK INDUSTRIES LTD., 286 ITR 1 TO SUPPORT THE CONTENTIO N THAT IN CASE NO INTEREST IS RECEIVED IN RESPECT OF THE MONE Y ADVANCED, NO INCOME IS ASSESSABLE TO TAX. 11. THE LEARNED D.R., ON THE OTHER HAND, CONTENDED THAT THE ASSESSEE HAD ADVANCED FRESH LOANS AT LEAST TO ONE O F THE PARTIES AND, THEREFORE, IT WAS WRONG ON ITS PART TO CLAIM THAT INTEREST FROM THE COOPERATIVE SOCIETIES WAS NOT RE COVERABLE. IT WAS FURTHER POINTED OUT THAT THE COMMISSIONER OF INCOME-TAX (A) HAS RECORDED A FINDING OF FACT THAT THE ASSESSE E HAD FAILED TO ESTABLISH THAT THE INTEREST FROM TWO PARTIES WAS IRRECOVERABLE. 12. IN REGARD TO DEDUCTION U/S 80P(2)(D), THE LEARN ED D.R. CONTENDED THAT THE ASSESSEE HAD FAILED TO MAKE THE CLAIM BEFORE THE ASSESSING OFFICER AND ACCORDINGLY, THE R EVENUE WAS JUSTIFIED IN DENYING THE EXEMPTION U/S 80P(2)(D). 13 WE HAVE CAREFUL CONSIDERATION TO THE RIVAL CONT ENTIONS. THERE ARE TWO ISSUES INVOLVED IN THIS GROUND OF APP EAL. ONE IS AS TO WHETHER THE ASSESSEE WAS JUSTIFIED IN CLAIMIN G THAT THE INTEREST FROM THE TWO PARTIES REFERRED TO IN THE AS SESSMENT ORDER AS WELL AS IN THE ORDER OF THE COMMISSIONER O F INCOME- TAX (A) WAS IRRECOVERABLE. IN THIS REGARD, WE HARD LY NEED TO SAY THAT THE BURDEN WAS TO BE DISCHARGED BY THE AS SESSEE. APART FROM CREDITING THE INTEREST TO THE SUSPENSE A CCOUNT, NO EVIDENCE HAS BEEN PLACED ON RECORD TO ESTABLISH THA T THE INTEREST FROM TWO PARTIES WAS IRRECOVERABLE. THE M AIN DISPUTE IS RELATING TO INTEREST IN RESPECT OF BHUNNA CO-OP. SUGAR MILLS. THE INTEREST DUE FROM THE PARTY FOR THE YEAR WAS TO THE TUNE OF RS.55,37,651/-. THE ASSESSEE HAD ADVANCED FURTHER LOAN OF RS.54 LACS TO IT IN THE FINANCIAL YEAR 2000-01. T HEREFORE, THERE IS A FALLACY IN THE CONTENTION ADVANCED ON BE HALF OF THE ASSESSEE THAT THE INTEREST FROM THE SAID CONCERN WA S IRRECOVERABLE. SIMILARLY IN RESPECT OF THE OTHER CONCERN, NO EVIDENCE HAS BEEN PLACED ON RECORD TO ESTABLISH THA T THE INTEREST FROM THAT PARTY WAS IRRECOVERABLE. AS PO INTED OUT EARLIER, THE BURDEN WAS UPON THE ASSESSEE TO ESTABL ISH THAT THE INTEREST FROM THE PARTIES WAS IRRECOVERABLE. THE ASSESSEE HAVING FAILED TO DISCHARGE THE ONUS, THE DISALLOWAN CE OF THE CLAIM, IN OUR VIEW, IS JUSTIFIED. THE GROUND RAISE D BY THE ASSESSEE IN THIS REGARD IS THUS DISMISSED. 7. IT IS OBSERVED THAT THE TRIBUNAL HAS DECIDED A S IMILAR ISSUE IN ASSESSMENT YEAR 2003-04 IN ASSESSEES OWN CASE IN I TA NO. 501/CHANDI/2006. THE ORDER OF THIS TRIBUNAL DATED 31.10.2008 READS A S UNDER:- 5 IN THE PRESENT ASSESSMENT YEAR THE ASSESSEE ADVANC ED A LOAN OF RS. 75.00 LAKH TO M/S BHUNA COOP SUGAR MILL DURING FINANCIAL YEAR 1991-92 AND IDENTICALLY A L OAN OF RS. 25.00 LAKH WAS GIVEN TO M/S PANIPAT COOP SUG AR MIL. INITIALLY FOR FEW YEARS THE ASSESSEE ACCOUNTE D FOR, THE INTEREST ON ACCRUAL BASIS BUT LATER ON, NO INT EREST WAS BOOKED IN ITS ACCOUNT BY CLAIMING THAT NEITHER ANY INTEREST NOR PRINCIPLE HAS BEEN RECEIVED SO FAR, THEREFORE, THE LOAN IS CLAIMED TO BE A STICKY LOAN. THE LD. ASSESSING OFFICER ASSESSED THE INTEREST ON ACCR UAL BASIS AND MADE THE IMPUGNED ADDITION OF RS. 67,67, 142 AS STICKY LOAN TO THE INCOME OF THE ASSESSEE. ADMI TTEDLY THE ONUS / BURDEN IS ON EH ASSESSEE TO DISCHARGE T HE SAME AND NO RECORD HAS BEEN PRODUCED TO ESTABLISH T HAT THE AFORESAID INTEREST / AMOUNT WAS IRRECOVERABLE. SINCE THE FACTS ARE CLEARLY IDENTICALLY TO ASSESSMENT YEA R 2002-03, RESPECTFULLY FOLLOWING THE SAME THIS GROUN D OF ASSESSEE IS DISMISSED. 8. IT IS OBSERVED THAT A SIMILAR ISSUE CAME UP FOR CONSIDERATION IN ITA NO. 955/CHD/2011 IN ASSESSEES OWN CASE RELATING TO ASS ESSMENT YEAR 2007-08. THE TRIBUNAL VIDE ITS ORDER DATED 30.10.2011 FOLLOW ING THE ORDER PASSED BY THIS TRIBUNAL ON 31.10.2008 IN ASSESSEES OWN APPEA L BEARING ITA NO. 501/CHD/2008 FOR THE ASSESSMENT YEAR 2003-04 DISMIS SED THE APPEAL OF THE ASSESSEE. 9. IN VIEW OF THE ABOVE ORDERS OF THE TRIBUNAL, WE DO NOT FIND ANY MERIT IN THE APPEAL. ACCORDINGLY, WE DISMISS THE SAME. 10. IN THE RESULT, THE APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 15 TH DAY OF FEBRUARY, 2011. SD/- SD/- (MEHAR SINGH) (H.L.KARWA) ACCOUNTANT MEMBER VICE PRESIDENT DATED : 15 TH FEBRUARY, 2012 RKK 6 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR TRUE COPY BY ORDER ASSISTANT REGISTRAR