The Raiganj Co-operative Marting Society Ltd., Uttar Dinajpur V. DCIT, Malda Range, Malda, Malda

ITA 957/KOL/2011

• Counselvise Citation: 95723514 RSA 2011
• Duration Of Justice: 3 year(s) 1 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-08-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2006-2007
• Appeal Filed On: 30-06-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RAVI JAIN
• Assessee Lawyers: S M SURANA; SUNIL SURANA
• Keywords: Bad and doubtful debts
• Section: 194C

Judgement Text

I.T.A. NO. 957/KOL./2011 ASSESSMENT YEAR: 2006-2007 PAGE 1 OF 5 IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA A BENCH, KOLKATA BEFORE SHRI SHAMIM YAHYA (ACCOUNTANT MEMBER), AND SHRI GEORGE MATHAN (JUDICIAL MEMBER) I.T.A. NO. 957/KOL/ 2011 ASSESSMENT YEAR : 2006-2007 THE RAIGANJ CO-OPERATIVE MARKETING SOCIETY LTD., ...APPELLANT LINE BAZAR, RAIGANJ, UTTARDINAJPUR, PIN-733 134 (W.B.) [PAN : AAAAR 1859 D] -VS.- DEPUTY COMMISSIONER OF INCOME TAX,................. .RESPONDENT NETAJI COMMERCIAL MARKET, INCOME TAX OFFICE, MALDA RANGE, MALDA-732 101(WB) APPEARANCES BY: SHRI S.M. SURANA, ADVOCATE, AND SHRI SUNIL SURANA, FCA, FOR THE ASSESSEE SHRI RAVI JAIN, CIT, D.R., FOR THE DEPARTMENT DATE OF CONCLUDING THE HEARING : AUGUST 07, 2014 DATE OF PRONOUNCING THE ORDER : AUGUST 11, 2014 O R D E R PER GEORGE MATHAN: THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST TH E ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS), JALPAIGURI IN APPEAL NO. 624/CIT(A)/JAL/08-09 DATED 04.03.2011 FOR THE ASSES SMENT YEAR 2006- 07. 2. SHRI S.M. SURANA, ADVOCATE AND SHRI SUNIL SURANA , FCA, REPRESENTED ON BEHALF OF THE ASSESSEE AND SHRI RAVI JAIN, CIT, D.R., REPRESENTED ON BEHALF OF THE REVENUE. I.T.A. NO. 957/KOL./2011 ASSESSMENT YEAR: 2006-2007 PAGE 2 OF 5 3. IN THE ASSESSEES APPEAL, ASSESSEE HAS RAISED TH E FOLLOWING TWO GROUNDS:- (1) FOR THAT THE LD. CIT(A) ERRED IN CONFIRMING THE ADDITION OF RS.7,40,86,289/- BEING PROCESS CHARGES PAID BY THE GOVERNMENT TO RICE MILLS THROUGH HIM AND THE APPELLANT WAS ONLY AN AGENT. (2) FOR THAT THE LD. CIT(A) ERRED IN CONFIRMING THE ADDITION OF RS.22,62,999/- WRITTEN OFF DURING THE Y EAR BEING RECEIVABLE AND DULY CREDITED AS INCOME IN THE EARLIER YEARS. 4. IN RESPECT OF GROUND NO. 1, IT WAS SUBMITTED BY THE LD. A.R. THAT THE ASSESSEE IS A COOPERATIVE SOCIETY. IT WAS THE SUBMI SSION THAT THE ASSESSEE IS MAINLY ENGAGED IN THE JOB OF PROCUREMENT FROM TH E PADDY OF THE FARMERS AND SUPPLYING THE SAME TO THE SPECIFIED RIC E MILLS FOR CONVERSION INTO RICE WHICH IS LIFTED BY THE GOVERNMENT FROM TH E RICE MILLS FOR THE PURPOSE OF PDS. IT WAS THE SUBMISSION THAT THE GOVE RNMENT APPOINTS COOPERATIVE SOCIETIES SUCH AS THE ASSESSEE TO PROCU RE THE PADDY AND COMMISSION IS PAID ON THE SAME. THE COOPERATIVE SOC IETIES ARE INSTRUCTED TO DELIVER THE PADDY TO SPECIFIED RICE MILLS. IT WA S THE SUBMISSION THAT THE GOVERNMENT LIFTS THE RICE FROM SUCH RICE MILLS. LD. A.R. DREW OUR ATTENTION TO PAGES 25 & 26 OF THE PAPER BOOK, WHICH WERE COPI ES OF THE LETTERS ISSUED BY THE WEST BENGAL STATE CONSUMERS COOPERAT IVE FEDERATION LTD., WHEREIN IT HAS BEEN SPECIFICALLY MENTIONED THAT THE ASSESSEE IS TO PURCHASE SPECIFIED QUINTALS OF PADDY, FOLLOW STRICT LY THE GUIDELINES STATED IN F&S & FCI ISSUED BY CONFED. LD. A.R. FURTHER DRE W OUR ATTENTION TO THE GUIDELINES FOR THE PROCUREMENT OF PADDY BY THE COOP ERATIVE SOCIETIES WHEREIN IT HAS BEEN SPECIFIED THAT THE COOPERATIVE SOCIETIES ARE ENTITLED TO COLLECT ONLY ITS SERVICE CHARGE OF RS.2/- ONLY P ER QUINTAL OF PADDY. THE PROCUREMENT PRICE FOR THE PADDY IS ALSO SPECIFIED I N THE GUIDELINES. LD. A.R. FURTHER DREW OUR ATTENTION TO THE AGREEMENT FO R MILLING OF THE PADDY AND DELIVERY OF THE RICE AT THE INSTANCE OF THE FCI DIRECTLY TO THE PUBLIC DISTRIBUTION SYSTEM BY THE COOPERATIVE SOCIETY THRO UGH THE RICE MILLS I.T.A. NO. 957/KOL./2011 ASSESSMENT YEAR: 2006-2007 PAGE 3 OF 5 WHEREIN IT HAS BEEN SPECIFICALLY IDENTIFIED THAT TH E COOPERATIVE SOCIETY IS TO RETAIN ONLY THE PROCUREMENT PRICE OF THE PADDY A ND RS.2/- SERVICE CHARGE PER QUINTAL OF PADDY AS ITS MARGIN FROM THE CMR PRICE. THUS IT WAS THE SUBMISSION THAT THE ASSESSEE WAS PAID BY THE CO NFED FOR THE PROCUREMENT AND THE PROCESSING OF THE PADDY INTO RI CE. HOWEVER, THE ASSESSEE WAS ENTITLED TO ONLY RS.2/- PER QUINTAL OF THE PADDY PROCURED AND THE PROCUREMENT PRICE AS FIXED BY THE GOVERNMEN T WAS TO BE PAID TO THE FARMERS AND THE BALANCE OF THE CMR PRICE WAS TO BE PAID TO THE RICE MILLS. IT WAS THE SUBMISSION THAT IN THE COURSE OF ASSESSMENT, THE ASSESSING OFFICER TREATED THE PAYMENT MADE BY THE A SSESSEE TO THE RICE MILLS AS PROCESSING CHARGES AND ON ACCOUNT OF THE N ON-DEDUCTION OF TDS ON THE SAME HAD DISALLOWED THE PAYMENT TO THE RICE MILLS. IT WAS THE SUBMISSION THAT THE ASSESSEE HAS NOT MADE ANY PAYME NT FOR ANY WORK DONE ON BEHALF OF THE ASSESSEE TO THE RICE MILLS. I T WAS THE SUBMISSION THAT THE ASSESSEE ONLY RECEIVES THE AMOUNT FROM THE GOVERNMENT AND THE ASSESSEE IS THE AGENT FOR THE PROCUREMENT AND THE D ISTRIBUTION OF THE PROCURED PADDY TO THE RICE MILLS AND THE CONSEQUENT PAYMENT TO THE RICE MILLS ON BEHALF OF THE GOVERNMENT FOR THE PDS SYSTE M. IT WAS THE SUBMISSION THAT THE LD. CIT(APPEALS) ALSO CONFIRMED THE ADDITION MADE BY THE ASSESSING OFFICER BY HOLDING THAT THE ASSESSEE WAS NOT ANY AGENT OF THE GOVERNMENT AGENCIES AND THE ASSESSEE MADE PAYME NT TO THE MILL OWNERS DIRECTLY FOR THE MILLING OF THE PADDY. IT WA S THE SUBMISSION THAT THE AGREEMENTS WITH THE MILL OWNERS AS ALSO THE GUI DELINES FOR THE PROCUREMENT OF THE PADDY AND THE SUPPLY TO THE RICE MILLS ARE CONTROLLED BY THE GUIDELINES AND AS PER CLAUSE (L) OF THE SAID GUIDELINES, IT WAS THE SUBMISSION THAT THE MILLING CHARGES PAYABLE TO THE RICE MILLS WAS BY OVERRIDING TITLE ON ACCOUNT OF THE GOVERNMENT. IT W AS THE FURTHER SUBMISSION THAT AS PER CLAUSE (V) THE MILLING CHAR GE AND OTHER COSTS AS ADMISSIBLE WAS TO BE PAID TO THE RICE MILL ON RECEI PT OF THEIR BILLS BY CONFED. IT WAS THE SUBMISSION THAT THE ADDITION AS MADE BY THE ASSESSING OFFICER AND CONFIRMED BY THE LD. CIT(APPE ALS) WAS LIABLE TO BE DELETED. I.T.A. NO. 957/KOL./2011 ASSESSMENT YEAR: 2006-2007 PAGE 4 OF 5 5. IN REPLY, LD. CIT, D.R. VEHEMENTLY SUPPORTED THE ORDER OF THE ASSESSING OFFICER AND LD. CIT(APPEALS). 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. A PERU SAL OF THE LETTERS ISSUED BY THE WEST BENGAL CONFED AS ALSO THE GUIDEL INES ISSUED BY CONFED AND THE AGREEMENT BETWEEN THE RICE MILLS IDE NTIFIED BY THE GOVERNMENT FOR THE MILLING OF THE PADDY WITH THE AS SESSEE CLEARLY SHOWS THAT THE AMOUNTS PAYABLE TO THE RICE MILLS FOR THE MILLING OF THE PADDY PROCURED BY THE ASSESSEE ON BEHALF OF THE CONFED WA S CLEARLY PAID FOR BY CONFED THOUGH THROUGH THE ASSESSEE. THE ASSESSEE ON LY ACTED AS THE PROCUREMENT AGENT FOR THE PROCUREMENT OF THE PADDY AND DELIVERY TO THE RICE MILLS. FOR THE PURPOSE OF PAYMENT OF THE PROCU REMENT PRICE AND THE MILLING CHARGES THE ASSESSEE HAS ONLY BEEN TREATED AS AN AGENT. THE ASSESSEE HAS NOT MADE ANY PAYMENT TO THE RICE MILLS FOR ANY MILLING WORK DONE ON BEHALF OF THE ASSESSEE. THE WORK, IF ANY, H AS BEEN DONE ON BEHALF OF THE CONFED. EVEN THE RIGHT OF PROCUREMENT OF THE PADDY, THE MILLING AND THE COMMISSION IS SPECIFIED. AS THERE IS NO CON TRACT BETWEEN THE ASSESSEE AND THE RICE MILLS NOR IS THERE SUB-CONTRA CT BETWEEN THE ASSESSEE AND THE RICE MILLS, WE ARE OF THE VIEW THA T THE PROVISIONS OF SECTION 194C OF THE ACT DOES NOT APPLY TO THE FACTS OF THE PRESENT CASE. IN THESE CIRCUMSTANCES, THE ADDITION AS MADE BY THE AS SESSING OFFICER AND AS CONFIRMED BY THE LD. CIT(APPEALS) STANDS DELETED. 7. IN RESPECT OF GROUND NO. 2, IT WAS SUBMITTED BY THE LD. A.R. THAT THE ISSUE WAS AGAINST THE ACTION OF THE LD. CIT(APPEALS ) IN CONFIRMING THE ADDITION OF BAD DEBTS WRITTEN OFF DURING THE YEAR B Y HOLDING THAT THE ASSESSEE HAS NOT WRITTEN OFF THE SAID AMOUNT IN ITS BOOKS OF ACCOUNT. IT WAS FAIRLY AGREED BY THE LD. A.R. THAT THE ISSUE CO ULD BE RESTORED TO THE FILE OF THE ASSESSING OFFICER FOR VERIFICATION AS T O WHETHER THE AMOUNT HAS BEEN WRITTEN OFF. IT WAS THE SUBMISSION THAT THE AS SESSEE WOULD BE ABLE TO PROVE THE WRITE OFF OF BAD DEBTS. I.T.A. NO. 957/KOL./2011 ASSESSMENT YEAR: 2006-2007 PAGE 5 OF 5 8. IN REPLY, LD. CIT, D.R. VEHEMENTLY SUPPORTED THE ORDER OF THE ASSESSING OFFICER AND LD. CIT(APPEALS). 9. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. AS HAS BEEN FAIRLY AGREED BY THE LD. A.R. ON BEHALF OF THE ASSESSEE, THE ISSU E OF THE WRITE OFF OF THE BAD DEBTS IS RESTORED TO THE FILE OF THE ASSESSING OFFICER FOR VERIFICATION AS TO WHETHER THE ASSESSEE HAS WRITTEN OFF THE SAID AM OUNT IN ITS ACCOUNTS. IF THE ASSESSEE IS ABLE TO PROVE THAT IT HAS WRITTEN O FF THE AMOUNT IN ITS BOOKS, THEN IN VIEW OF THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF TRF LIMITED REPORTED IN 323 ITR 397 THE ASS ESSING OFFICER IS DIRECTED TO ALLOW THE CLAIM OF BAD DEBTS. 10. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 11 TH AUGUST, 2014. SD/- SD/- SHAMIM YAHYA GEORGE MATHAN (ACCOUNTANT MEMBER) (JU DICIAL MEMBER) KOLKATA, THE 11 TH DAY OF AUGUST, 2014 COPIES TO : (1) THE RAIGANJ CO-OPERATIVE MARKETING SOCIETY LTD. LINE BAZAR, RAIGANJ, UTTARDINAJPUR, PIN-733 134 (W.B.) (2) DEPUTY COMMISSIONER OF INCOME TAX, NETAJI COMMERCIAL MARKET, INCOME TAX OFFICE, MALDA RANGE, MALDA-732 101(WB) (3) COMMISSIONER OF INCOME-TAX (APPEALS) (4) COMMISSIONER OF INCOME TAX (5) THE DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCHES, KOLKATA LAHA/SR. P.S.