Andhra Pradesh Beverages Corpn. Ltd., Hyd, Hyderabad V. ITO, Ward-1(1),Hyd, Hyderabad

ITA 903/HYD/2016

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 6081 (ITAT-HYDERABAD)
• Duration Of Justice: 8 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-03-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 18-01-2017
• Assessment Year: 2013-2014
• Appeal Filed On: 16-06-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: PALLAVI AGARWAL
• Keywords: Gift; Business expenditure; Charitable institution; Diversion of income
• Section: 115JB; 37(1); 80G

Judgement Text

1 ITA.NOS.901 TO 903/H/2016 & 918 TO 920/H/2016 M/S. ANDHRA PRADESH BEVERAGES CORPORATION LTD., HY DERABAD. IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES A : HYDERABAD BEFORE SHRI D. MANMOHAN, VICE PRESIDENT AND SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA. NO. A.Y. APPELLANT RESPONDENT 901/H/2016 2011-2012 M/S. ANDHRA PRADESH BEVERAGES CORPORATION LTD., HYDERABAD. PANAABCA7385A THE INCOME TAX OFFICER, WARD-1(1) HYDERABAD. 902/H/2016 2012-2013 903/H/2016 2013-2014 ITA. NO. A.Y. APPELLANT RESPONDENT 918/H/2016 2011-2012 THE DCIT, CIRCLE-1(1), HYDERABAD. M/S. ANDHRA PRADESH BEVERAGES CORPORATION LTD., HYDERABAD. PANAABCA7385A 919/H/2016 2012-2013 920/H/2016 2013-2014 FOR ASSESSEE : SHRI Y. RATNAKAR FOR REVENUE : SMT. PALLAVI AGARWAL DATE OF HEARING : 18.01.2017 DATE OF PRONOUNCEMENT : 10.03.2017 ORDER PER D. MANMOHAN, V.P. THESE APPEALS, FILED AT THE INSTANCE OF THE ASSESSEE- COMPANY, ARE DIRECTED AGAINST THE ORDERS PASSED BY THE CIT(A)-1, HYDERABAD AND THEY PERTAIN TO THE A.YS. 2011-2012 TO 201 3-2014. THE REVENUE HAS ALSO FILED CROSS-APPEALS FOR THE SAME AS SESSMENT YEARS. THE ASSESSEE RAISED SEVERAL GROUNDS IN ITS GROUNDS OF APPEAL AND THEREAFTER FILED REVISED AND CONCISE GROUNDS WHICH A RE ALSO EQUALLY NARRATIVE AND CONTAINS 09 GROUNDS. 2. THE FACTS GIVING RAISE TO THE APPEALS FILED BY THE ASSESSEE AS WELL AS THE REVENUE ARE STATED IN BRIEF. FOR THE SAKE OF BREVITY, WE REFER TO THE FACTS NARRATED IN THE APPEAL FOR THE A.Y. 2011-2 012 ONLY. THE 2 ITA.NOS.901 TO 903/H/2016 & 918 TO 920/H/2016 M/S. ANDHRA PRADESH BEVERAGES CORPORATION LTD., HY DERABAD. ASSESSEE-COMPANY IS A STATE GOVERNMENT OWNED CORPORATIO N AND ENGAGED IN WHOLESALE TRADE IN IMFL AND FOREIGN LIQUO R AND OTHER ALCOHOLIC PRODUCTS IN THE STATES OF ANDHRA PRADESH AND TELANGANA. IT DECLARED NIL INCOME AS PER THE REGULAR PROVISIONS AN D BOOK PROFIT OF RS.6,85,489 UNDER SECTION 115JB OF THE ACT. THE RETURN WAS SELECTED FOR SCRUTINY AND NOTICE UNDER SECTION 143(2) WAS ISSUE D. DURING THE COURSE OF EXAMINATION OF THE BOOKS OF ACCOUNT THE A.O. NOTICED THAT AS PER A.P. REGULATION OF TRADE (INDIAN MADE FOREIGN LI QUOR, FOREIGN LIQUOR) ACT, 1993, HEREINAFTER REFERRED TO AS ACT, T HE ASSESSEE- COMPANY IS WHOLLY OWNED AND CONTROLLED BY THE GOVERNM ENT AND IT HAS THE EXCLUSIVE PRIVILEGE OF IMPORTING, EXPORTING AND CA RRYING ON THE WHOLESALE TRADE AND DISTRIBUTION OF LIQUOR PRODUCTS. TH E ASSESSEE- COMPANY DECLARED A TURNOVER OF RS.13,453.25 CRORES O N WHICH PROFIT OF RS.6,85,459 WAS SHOWN UNDER THE COMPANIES ACT. AS PER THE PROFIT AND LOSS ACCOUNT, THE EXPENDITURE CLAIMED INCLUDED PRIVILE GE FEE ETC., OF RS.2,532 CRORES PAID TO GOVERNMENT OF A.P. DETAILS OF WHICH ARE AS UNDER: (I) PRIVILEGE FEE TO GOVT. OF A.P. RS.2,065.09 (II) SPL. PRIVILEGE FEE RS. 441.96 (III) SPL. PRIVILEGE FEE FOR SPORTS RS. 25.00 --------------- RS.2,532.05 --------------- 3. ACCORDING TO THE A.O. THE SAID AMOUNTS ARE NOT A LLOWABLE AS DEDUCTION. THE A.O. ALSO NOTICED THAT THE ASSESSEE PAID AN AMOUNT OF RS.524.20 CRORES TOWARDS CHIEF MINISTERS RELIEF FUN D. IN HIS OPINION, THE ASSESSEE IS NOT ENTITLED TO DEDUCTION UNDER SECTION 8 0G SINCE IT IS NOT VOLUNTARY IN NATURE. HE FURTHER NOTICED THAT THE ASSES SEE CORPORATION CONTRIBUTED TO GROUP LEAVE ENCASHMENT SCHEME WITH LIC OF INDIA ON WHICH AN AMOUNT OF RS.51,24,246 IS RECEI VABLE AS INTEREST WHICH HAS NOT BEEN OFFERED TO TAX AND IN THE OPINION O F THE A.O. THE 3 ITA.NOS.901 TO 903/H/2016 & 918 TO 920/H/2016 M/S. ANDHRA PRADESH BEVERAGES CORPORATION LTD., HY DERABAD. SAME OUGHT TO HAVE BEEN REFLECTED AS THE INCOME OF THE ASSESSEE IN THIS YEAR. THE ISSUES WERE DEALT WITH IN GREAT DETAIL. BUT TH E PLEA OF THE ASSESSEE WAS REJECTED BY THE A.O. BY OBSERVING AS UND ER : 10. ALL THE OBJECTIONS, SUBMISSIONS, CASE LAWS ET C., NOW MADE BY THE ASSESSEE HAVE ALSO BEEN MADE BEFORE THE HON'BLE ITAT. THE HON'BLE ITAT IN ITS ORDER IN ITA.NO.302-3 03 & 545/HYD/13 DT. 21.01.2014 HAS CONSIDERED ALL THE OB JECTIONS AND THE CATENA OF DECISIONS RELIED UPON BY THE ASSESSEE IN ITS FAVOUR IN ITS ORDER AND HELD THAT THE PRIVILEGE FEE ETC., PAI D BY THE ASSESSEE CORPORATION TO THE GOVERNMENT IS ONLY AN APPLICATIO N OF INCOME AND THEREFORE LIABLE TO INCOME TAX. IN VIEW OF THE DECI SION OF THE HON'BLE ITAT IN ITS OWN CASE FOR THE A.YS. 2006-07, 2008-09 & 2009-10, THE FACTS & CIRCUMSTANCES BEING THE SAME, THE DEDUCTION CLAIMED TOWARDS AMOUNTS PAID AS PRIVILEGE FEE, SPECIAL PRIV ILEGE FEE AND SPECIAL PRIVILEGE FOR SPORTS OF RS.2391,89,30,220/- IS NOT ADMISSIBLE AND IS ACCORDINGLY DISALLOWED. 11. ON THE ISSUE OF DENIAL OF DEDUCTION U/S.80G OF THE IT ACT, 1961, THE ASSESSEE SUBMITTED THAT THE CONTENTI ON OF THE AO REGARDING REMITTANCES TO CMRF ARE NOT BASED ON FACT S. 11.1. THE CONTENTION OF THE ASSESSEE IS NOT ACCEPT ABLE IN VIEW OF THE FACT THAT CHAPTER-VIA READS AS UNDER: 'DEDUCTION IN RESPECT OF DONATIONS TO CERTAIN FUNDS , CHARITABLE INSTITUTIONS ETC.' IT IS CLEAR FROM THE ABOVE THAT THE DONATIONS MADE TO THE FUNDS LISTED UNDER THE PROVISIONS OF SEC.80G QUALIFY FOR DEDUCTI ON. NOW COMING TO THE MEANING OF WHAT 'DONATION' IS AS PER THE LEG AL DICTIONARIES, THE SAME IS REPRODUCED AS UNDER: 'DONATION 1. THE MAKING OF AN ESP. CHARITABLE GIFT 2. IN THE CIVIL LAW OF LOUISIANA A VOLUNTARY TRANSFER OF OWNERSHIP OF PROPERTY FROM ONE PERSON TO ANOTHER COMPARE' 'WHAT IS DONATION ? IN ECCLESIASTICAL LAW. A MODE OF ACQUIRING A BENEFI CE BY DEED OF GIFT ALONE, WITHOUT PRESENTATION, INSTITUTION, OR I NDUCTION.' 4 ITA.NOS.901 TO 903/H/2016 & 918 TO 920/H/2016 M/S. ANDHRA PRADESH BEVERAGES CORPORATION LTD., HY DERABAD. 'DONATION, CONTRACTS. THE ACT BY WHICH THE OWNER OF A THING, VOLUNTARILY TRANSFERS THE TITLE AND POSSESSION OF T HE SAME, FROM HIMSELF TO ANOTHER PERSON, WITHOUT ANY CONSIDERATIO N; A GIFT. 11.2. IT IS CLEAR FROM THE ABOVE THAT ANY CONTRIBU TION TO BE CALLED A DONATION HAS TO BE VOLUNTARY IN NATURE. TH EREFORE, THE CONTRIBUTION BY THE ASSESSEE TO THE CHIEF MINISTER' S RELIEF FUND OF RS.524,20,00,000/- PAID IN PURSUANCE TO LETTER OF P RINCIPAL SECRETARY TO GOVERNMENT IN LETTER NO.2430/EX.II/200 6-5 DT.04/04/2006 IS NOT TREATED AS A DONATION AND THER EFORE THE CLAIM OF DEDUCTION U/S.80G IS DENIED. 12. ON THE ISSUE OF INTEREST ACCRUED OF RS.51,24,2 46/- ACCRUED ON THE GROUP LEAVE ENCASHMENT WITH LIC OF I NDIA, THE ASSESSEE SUBMITTED AS UNDER: ' THE AO, BASED ON A LETTER OF LIC PROPOSED TO TR EAT THE INTEREST CREDITED OF RS.51,24,246 AS INCOME. THE AS SESSEE IS OF THE VIEW THAT THE AO HAS NOT EXAMINED THE ISS UE IN RIGHT PERSPECTIVE. THE AO MAY PLEASE VERIFY WITH TH E LIC AS TO WHEN THEY CREDITED THE AMOUNT TOWARDS FUND AN D REDUCE THE CLAIMS FROM FUND TO ARRIVE AT THE INTERE ST CREDITED. FURTHER REASON IS THE INTEREST THOUGH CRE DITED DOES NOT BELONG TO US AND IT IS USED AS FUND FOR DI SBURSAL BY LIC. THAT IS THE TERMS OF THE POLICY. THE AMOUNT OF CONTRIBUTION PAYABLE BY THE CORPORATION FOR THE YEA R IS CALCULATED BY LIC AFTER TAKING INTO ACCOUNT THE INT EREST EARNED BY THE FUND DURING THE YEAR AND ONLY THE NET AMOUNT IS DETERMINED AS PAYABLE. IF THE INTEREST IS TO BE ACCOUNTED AS INCOME BY THE CORPORATION, THE CONTRIB UTION PAYABLE WILL GO UP BY AN EQUIVALENT AMOUNT. HENCE, THERE IS NO IMPACT ON THE PROFIT FOR THE YEAR. THEREFORE, THERE IS NO CASE FOR MAKING ADDITION OF THE INTEREST AS INCO ME. 12.1 . THE LEARNED CIT(A) IN THE CASE OF M/S. ANDHRA BANK FOR THE A.Y.2010-11, VIDE ORDER IN ITA NO.0237/CIT(A)-I I, HYD/2012- 13, DT. 06.11.2013 DISMISSED THE APPEAL OF THE ASSE SSEE ON THE SIMILAR ISSUE. THEREFORE, THE INTEREST CREDITED BY THE LIC OF RS.51,24,246/- ON THE AMOUNTS DEPOSITED IN THE SCHE ME WHICH IS NOT OFFERED TO TAX IS ADDED TO INCOME NOW. III) IN LIGHT OF THE ABOVE, INTEREST OF RS.51,24,2 46/- CREDITED BY LIC IS BROUGHT TO TAX. 5 ITA.NOS.901 TO 903/H/2016 & 918 TO 920/H/2016 M/S. ANDHRA PRADESH BEVERAGES CORPORATION LTD., HY DERABAD. THE ASSESSMENT WAS THEREFORE COMPLETED AS UNDER : INCOME RETURNED RS. -NIL- ADD: (A) DISALLOWANCE ON ACCOUNT OF PRIVILEGE FEE, SPECIAL PRIVILEGE FEE AND SPECIAL PRIVILEGE FEE (SPORTS) (B) DENIAL OF DEDUCTION U/S.80G (C) INTEREST CREDITED BY LIC ON GROUP LEAVE ENCASHMENT SCHEME NOT OFFERED TO TAX. RS.2,532,06,41,994 RS. 524,20,00,000 RS. 51,24,246 INCOME ASSESSED RS.3,523,74,13,889 4. AGGRIEVED BY THE ORDER OF THE A.O. THE ASSESSEE PR EFERRED AN APPEAL BEFORE THE CIT(A) CONTENDING, INTER ALIA, THAT THE SPECIAL PRIVILEGE FEE ETC., OUGHT TO HAVE BEEN ALLOWED AS DEDUCTION SINCE THE VIEW TAKEN BY THE ITAT IN THE EARLIER YEARS WAS STAYED BY THE HON BLE HIGH COURT AND THEREFORE, CANNOT BE SAID TO BE BINDING ON THE A.O. IT WAS ALSO CONTENDED THAT THE PAYMENTS MADE TO STATE IS ALLOWABLE AS DEDUCTION SINCE PROVISIONS OF SECTION 23A OF THE ACT MANDATES PAY MENT IN CONSIDERATION, IN LIEU OF CONFERRED RIGHTS TO CARRY O N BUSINESS AND THEREFORE, SUCH PAYMENTS ARE FOR BUSINESS PURPOSE. SI MILARLY, THE DENIAL OF EXEMPTION REFERRABLE TO CHIEF MINISTERS RELIEF FU ND AND TAXABILITY OF INTEREST CREDITED BY LIC ON ACCRUAL BASIS WAS ALSO CH ALLENGED BEFORE THE FIRST APPELLATE AUTHORITY. 5. THE LD. CIT(A) FOLLOWED THE DECISION OF THE ITAT, HYDERABAD BENCH IN ASSESSEES OWN CASE FOR THE A.YS. 2006-07, 2008-09 AND 2009- 2010 (ITA.NOS.302, 303 & 545/HYD/2013) TO HOLD THAT THE PAYMENTS MADE TO STATE GOVERNMENT AS PRIVILEGE FEE, SPECIAL PRIV ILEGE FEE ETC., WOULD AMOUNT TO APPLICATION OF INCOME BY THE ASSESSEE A ND THEREFORE, TAXABLE. 5.1. AS REGARDS THE DISALLOWANCE OF PAYMENT TOWARDS C HIEF MINISTERS RELIEF FUND, THE LD. CIT(A) REFERRED TO PAR A 22 OF THE ORDER OF 6 ITA.NOS.901 TO 903/H/2016 & 918 TO 920/H/2016 M/S. ANDHRA PRADESH BEVERAGES CORPORATION LTD., HY DERABAD. THE ITAT (SUPRA) TO HOLD THAT THE SALE PROCEEDS HAVING BEEN TAXED IN THE HANDS OF THE CORPORATION, THE ASSESSEE IS ENTITLED TO DED UCTION OF AMOUNT PAID TOWARDS CMRF. IT WAS CLARIFIED THAT THE AFORE MENTIONED GROUND OF APPEAL IS ALLOWED ONLY IF THE WHOLE SALE P ROCEEDS ARE TREATED AS THE INCOME OF THE ASSESSEE. 5.2. AS REGARDS THE INTEREST CREDITED BY LIC, THE LD. CIT(A) OBSERVED THAT IF PAYMENT MADE TOWARDS LIC GROUP LEAVE E NCASHMENT FUND IS ALLOWABLE IN THE EVENT OF TAXABILITY OF SALE RECEIPTS IN THE HANDS OF THE CORPORATION; IT IS ALSO OBSERVED THAT AN AMOUNT OF RS.51,24,246, BEING INTEREST ACCRUED IN LIC ACCOUNT HAS TO BE TREATED AS INCOME BUT WHILE DETERMINING THE PREMIUM PAYABLE, THE INTEREST AC CRUED IS REDUCED FROM THE PREMIUM PAYABLE AND THUS AS AND WHEN THE LIC DOES SO, THE INTEREST ACCRUED CAN BE ALLOWED AS DEDUCTION. 6. AGGRIEVED BY THE ORDERS PASSED BY THE LD. CIT(A), BOTH THE ASSESSEE AS WELL AS THE REVENUE ARE IN APPEAL BEFORE US. IN THE GROUNDS OF APPEAL, THE ASSESSEE-COMPANY NOT ONLY REITERATED TH E GROUNDS URGED BEFORE THE CIT(A) BUT RAISED AN ADDITIONAL ISSUE I.E., SALE PROCEEDS BEING THE INCOME OF THE COMBINED STATE OF ANDHRA PRADESH IT I S IMMUNE FROM TAXATION UNDER THE PROVISIONS OF ARTICLE 289(1) OF THE CONSTITUTION OF INDIA AND IN THE ALTERNATIVE, IT WAS SUBMITTED THAT IF THE I NCOME IS TO BE TAXED, THE PRIVILEGE FEE AND SPECIAL PRIVILEGE FEE ETC ., IS ALLOWABLE AS EXPENDITURE UNDER SECTION 37(1) OF THE ACT. IN SO-CALLE D REVISED AND CONCISED GROUNDS OF APPEAL FILED ON 13.10.2016, THE ASSESSEE CONTENDS THAT NO PORTION OF THE SALE PROCEEDS ARE TAXABLE SINCE I T BELONGS TO THE COMBINED STATE OF ANDHRA PRADESH AND NOT TO THE ASSESS EE. IT WAS ALSO CONTENDED IN THE ALTERNATIVE, THAT THE PRIVILEGE FEE, SPEC IAL PRIVILEGE FEE AND SPECIAL PRIVILEGE FEE (SPORTS) PAID BY THE ASSESS EE TO THE STATE OF ANDHRA PRADESH IS AN ALLOWABLE EXPENDITURE UNDER SE CTION 37(1) OF THE I.T. ACT. IT WAS ALSO CONTENDED THAT THE ORDER OF THE ITAT IN THE 7 ITA.NOS.901 TO 903/H/2016 & 918 TO 920/H/2016 M/S. ANDHRA PRADESH BEVERAGES CORPORATION LTD., HY DERABAD. ASSESSEES OWN CASE FOR THE EARLIER YEARS (SUPRA), I S INAPPLICABLE SINCE THE ITAT HAS NOT CONSIDERED SEVERAL DECISIONS OF THE H ONBLE SUPREME COURT APART FROM THE DECISION OF HONBLE KARNATAKA HIGH COURT WHICH WAS DELIVERED LATER THOUGH IT IS A DIRECT DECISION COV ERING THE ISSUE IN FAVOUR OF THE ASSESSEE. 7. AS REGARDS THE CHIEF MINISTERS RELIEF FUND (IN S HORT CMRF), THE CASE OF THE ASSESSEE WAS THAT THE LD. CIT(A ) ERRED IN HOLDING THAT THE SAME IS ALLOWABLE ONLY IF THE SALE PR OCEEDS ARE TAXABLE IN THE HANDS OF THE ASSESSEE CORPORATION WHEREAS THE CM RF IS EVEN OTHERWISE ALLOWABLE AS DEDUCTION. 8. AS REGARDS THE TREATMENT OF INCOME REFERRABLE TO INTE REST EARNED FROM THE LIC, IT WAS CONTENDED, VIDE GROUND NO. 7, AS UNDER : 7. THE LD. CIT(A) SHOULD HAVE APPRECIATED THAT THE NET PREMIUM INTIMATED BY THE LIC IS AFTER DEDUCTING THE INTERES T ACCRUED ON THE FUND AND CONSTITUTES REDUCTION OF PREMIUM AT TH E TIME OF INTIMATION OF THE PREMIUM. THE INTEREST EARNED BY T HE LIC CANNOT THEREFORE BE TREATED AS THE INCOME OF THE AP PELLANT CORPORATION OR IF TREATED AS INCOME THE DEDUCTION O F PREMIUM HAS TO BE CORRESPONDINGLY INCREASED, TO OFFSET SUCH ADDITION OF INTEREST. 9. THOUGH THE APPEALS FILED BY THE REVENUE ARE SIMIL AR, THE ONLY CHANGE IS THAT IN RESPECT OF THE A.Y. 2011-2012 TH E REVENUE URGED TWO GROUNDS ORIGINALLY BUT BECAUSE THE APPROVAL WAS GRANTED ONLY TO ONE GROUND, IN THE REVISED GROUNDS OF APPEAL DATED 19.09.2016, THE FOLLOWING GROUND WAS URGED FOR THE A.Y. 2011-2012 AN D IDENTICAL GROUNDS WERE URGED EVEN IN THE OTHER TWO YEARS. 1. IN THE FACTS AND IN CIRCUMSTANCES OF CASE, THE LD. CIT(A) ERRED IN DIRECTING THE A.O. TO ALLOW DEDUCTION OF RS.524, 20,00,000 UNDER SECTION 80G OF THE INCOME TAX ACT. 8 ITA.NOS.901 TO 903/H/2016 & 918 TO 920/H/2016 M/S. ANDHRA PRADESH BEVERAGES CORPORATION LTD., HY DERABAD. 10. BOTH THE PARTIES ADMITTED THAT THE ISSUES RAISED IN TH E GROUNDS FILED BY BOTH THE PARTIES ARE COVERED BY THE OR DER OF THE ITAT IN THE ASSESSEES OWN CASE FOR THE A.Y. 2010-2011 (ITA.N O.360 AND 417/2015 DATED 21.12.2016) WHEREIN THE BENCH ELABORAT ELY DISCUSSED THE ISSUES AND IN PARTICULAR THE CLAIM OF THE ASSESSEE THAT THE ISSUES ARE COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF HONBLE KARNATAKA HIGH COURT BUT UPON CONSIDERING THE GROUNDS TH E ASSESSEES APPEAL IS PARTLY ALLOWED AND REVENUE APPEAL IS DISMI SSED. IN THE WRITTEN SUBMISSIONS FILED BY THE ASSESSEE IN THE REVENUES AP PEALS, IT WAS SUBMITTED THAT THE ISSUE IS COVERED BY THE ORDER OF THE I TAT DATED 21.12.2016 WHEREIN IT WAS HELD THAT JUST AS PRIVILEGE F EE, SPECIAL PRIVILEGE FEE ETC., THE CONTRIBUTION TO THE CMRF IS ALS O AN ALLOWABLE DEDUCTION, BEING BUSINESS EXPENDITURE. 11. IN RESPECT OF THE APPEALS FILED BY THE ASSESSEE TH OUGH IT WAS CONTENDED THAT THE ASSESSEE CORPORATION IS IMMUNE FROM UNION TAXATION UNDER ARTICLE 289(1) OF THE CONSTITUTION OF I NDIA, THE SAID ISSUE WAS NOT SERIOUSLY ARGUED IN THE LIGHT OF DECISION OF TH E ITAT IN ASSESSEES OWN CASE FOR THE EARLIER YEARS. 12. WITH REGARD TO OTHER ISSUES, IT WAS CONTENDED THAT I N THE EVENT OF TREATING SALE PROCEEDS AS THE INCOME OF THE ASS ESSEE, THE PRIVILEGE FEE AND SPECIAL PRIVILEGE FEE AND THE SPEC IAL PRIVILEGE FEES (SPORTS) AMOUNTING TO RS.2,532 CRORES IS AN ALLOWABLE EXPENDITURE UNDER SECTION 37(1) OF THE ACT AND THE TRIBUNAL IN THE ORDER DATED 21.12.2016 DECIDED THE AFORECITED ISSUE AND THE OTHER ISSUES BY OBSERVING THAT - A) THE INCOME BELONGS TO THE CORPORATION AND THERE IS NO DIVERSION OF INCOME BY OVERRIDING TITLE TO THE A.P. STATE GOV ERNMENT (PARAS 16 & 32 OF THE ORDER) 9 ITA.NOS.901 TO 903/H/2016 & 918 TO 920/H/2016 M/S. ANDHRA PRADESH BEVERAGES CORPORATION LTD., HY DERABAD. B) THE PAYMENT OF PRIVILEGE FEE, SPECIAL PRIVILEGE FEE , SPECIAL PRIVILEGE FEE (SPORTS) ETC., BY WHATEVER NAME CALLE D, IS AN ALLOWABLE EXPENDITURE AND DIRECTED THE A.O. TO ALLO W THE PRIVILEGE FEE, SPECIAL PRIVILEGE FEE AND SPECIAL PR IVILEGE FEE (SPORTS) AS EXPENDITURE OF THE ASSESSEE U/S.37 OF T HE ACT (PARA 31 OF THE ORDER). C) IF INTEREST CREDITED BY LIC IS TAXED AS INCOME OF T HE ASSESSEE, THE PREMIUM PAYABLE BY THE ASSESSEE FOR THE NEXT ASSESS MENT YEAR TO LIC SHOULD BE CORRESPONDINGLY INCREASED AND TO B E CONSIDERED AS EXPENDITURE OF THE ASSESSEE. (PARA-34 OF THE ORD ER). 12.1. IT WAS ADMITTED THAT THE SAME ISSUES ARE THE SUBJE CT MATTER OF THE APPEALS BEFORE US IN THE A.YS.2011-2012, 2012- 2013 AND 2013- 2014. 13. LD. D.R. ADMITTED THAT THE ISSUES STAND COVERED BY THE DECISION OF THE ITAT (SUPRA) BUT HE STRONGLY RELIED UP ON THE ORDER PASSED BY THE A.O. 14. WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTION S AND PERUSED THE RECORD. CONSISTENT WITH THE VIEW TAKEN IN THE ORDER OF THE TRIBUNAL (SUPRA), WE REJECT THE ONLY GROUND URGED BY THE REVENUE AND PARTLY ALLOW THE APPEALS FILED BY THE ASSESSEE BY DIRE CTING THE A.O. TO FOLLOW THE CONCLUSIONS REACHED BY THE ITAT IN THE ASS ESSEES OWN CASE FOR THE A.Y. 2010-2011. 15. IN THE RESULT, APPEALS FILED BY THE REVENUE ARE D ISMISSED AND THE APPEALS FILED BY THE ASSESSEE ARE PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 10.03. 2017 SD/- SD/- (S. RIFAUR RAHMAN) (D. MANMOHAN) ACCOUNTANT MEMBER VICE PRESIDENT HYDERABAD, DATED 10 TH MARCH, 2017. VBP/- 10 ITA.NOS.901 TO 903/H/2016 & 918 TO 920/H/2016 M/S. ANDHRA PRADESH BEVERAGES CORPORATION LTD., HY DERABAD. COPY TO 1. M/S. ANDHRA PRADESH BEVERAGES CORPORATION LTD., HY DERABAD. C/O. VENUGOPAL & CHENOY, CHARTERED ACCOUNTANTS, 4-1-889/16/2, TILAK ROAD, HYDERABAD 500 001. 2. THE INCOME TAX OFFICER, WARD-1(1), HYDERABAD. 3. CIT(A)-1, 2 ND FLOOR ANNEXE, AAYAKAR BHAVAN, BASHEERBAGH, HYDERABAD 500 004. 4. PR. CIT-1, HYDERABAD. 5. D.R. ITAT A BENCH, HYDERABAD. 6. GUARD FILE.