M/s. Orissa Food Products, Sambalpur V. DCIT, Circle-1(1), Sambalpur, Sambalpur

ITSSA 15/CTK/2013

• Counselvise Citation: [2017] 122 COUNSELVISE.COM (IT) 3027 (ITAT-CUTTACK)
• Duration Of Justice: 3 year(s) 10 month(s) 25 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 17-02-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 14-02-2017
• Assessment Year: 2008-2009
• Appeal Filed On: 22-03-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 43B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK BEFORE SHRI N.S SAINI, ACCOUNTANT MEMBER AND SHRI A BY T. VARKEY, JUDICIAL MEMBER IT (SS) A NO. 15/CTK/2013 ASSESSMENT YEAR : 2008 - 09 M/S. ORISSA FOOD PRODUCTS, C/O. SRI NARSINGHLAL AGARWAL, NAYAPARA, SAMBALPUR VS. DCIT, CIRCLE 1(1), SAMBALPUR PAN/GIR NO. AAAFO 6944 P (APPELLANT ) .. ( RESPONDENT ) ASSESSEE BY : SHRI P.R.MOHANTY/SAMBULAL AGARWAL, AR REVENUE BY : SHRI ASIT KUMAR MOHAPATRA, CIT , DR DATE OF HEARING : 14 /02 / 2017 DATE OF PRONOUNCEMENT : 17 /02 / 2017 O R D E R PER BENCH THIS IS AN APPEAL FILED BY THE ASSESSEE AGA INS T THE ORDER OF CIT(A) - BERHAMPUR , DATED 19.12.2012 , FOR THE ASSESSMENT YEAR 2008 - 09 . 2. THE SOLE ISSUE INVOLVED IN THIS APPEAL IS THAT THE LD CIT(A) ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER DISALLOWING MARKETING FEE OF RS.1,02,000/ - . 2 IT (SS) A NO. 15/CTK/2013 ASSESSMENT YEAR :2008 - 09 3. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF LOWER AUTHORITIES AND MATERIALS AVAILABLE ON RECORD. IN THE INSTANT CASE, THE ASS ESSEE IS ENGAGED IN THE BUSINESS OF MANUFACTURIN G AND TRADING IN PADDY AND RICE . THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAS CLAIMED AN AMOUNT OF RS.1,02,000/ - UNDER THE HEAD MARKETING FEES WHICH RELATES TO EARLIER YEARS AND DO E S NOT RELATE TO THE IMPUGNED ASSESSMENT YEAR. ACCORDINGLY, HE DISALLOWED THE ABOVE AMOUNT AS NOT RELATING TO THE CURRENT ASSESSMENT YEAR. 4. ON APPEAL, THE CIT(A) CONFIRMED THE ACTION OF THE ASSESSING OFFICER ON THE GROUND THAT THERE WAS NO DISPUTE TO THE FACT THAT THE M ARKETING FEES OF RS.1,02,0000/ - DOES NOT RELATE TO THE IMPUGNED ASSESSMENT YEAR. THE ASSESSEE HAS CLAIMED THAT THE DEDUCTION SHOULD BE ALLOWED U/S.43B ON THE BASIS OF ACTUAL PAYMENT. U/S.43B OF THE ACT, ANY SUM PAYABLE BY THE ASSESSEE BY WAY OF TAX, DUTY , CESS OR FEE, BY WHATEVER NAME CALLED, UNDER ANY LAW FOR THE TIME BEING IN FORCE, SHALL BE ALLOWED AS A DEDUCTION ONLY ON ACTUAL PAYMENT IN THE YEAR SUCH PAYMENT IS MADE. THUS, SECTION 43B IS APPLICABLE IN RESPECT OF ANY PAYMENT UNDER ANY LAW. THE ASSE SSEE HAS CLAIMED THAT MARKETING FEE IS A FEE UNDER THE ODISHA AGRICULTURAL PRODUCE MARKETING ACT, 1956. HOWEVER, THIS CONTENTION IS NOT FACTUALLY CORRECT. UNDER THE ABOVE ACT, THE REGULATED MARKETING COMMITTEE HAS BEEN SET UP WHO HAS BEEN AUTHORIZED TO C HARGE AN AMOUNT FOR A SERVICE RENDERED. IN OTHER WORDS THE REGULATED MARKETING COMMITTEE COLLECT THE FEES FOR 3 IT (SS) A NO. 15/CTK/2013 ASSESSMENT YEAR :2008 - 09 PROVIDING A SERVICE AND, THEREFORE, THE SAME WAS NOT A NATURE OF TAX OR DUTY UNDER A LAW. HE, ACCORDINGLY, CONFIRMED THE ACTION OF THE ASSESSING OFFICER. 5. BEFORE US, THE A.R. OF THE ASSESSEE FILED A COPY OF THE ORDER OF THIS BENCH OF THE TRIBUNAL IN THE CASE OF M/S. SRI ANNAPURNA RICE MILS VS DCIT IN IT(SS) A NO.07 & 08/CTK/2013 FOR ASSESSMENT YEAR 2005 - 06 AND 2006 - 07 ORDER DATED 13.12.2013, WH EREIN, THE TRIBUNAL HAS ALLOWED THE CLAIM OF THE ASSESSEE OBSERVING AS UNDER: . WE FIND THAT THE AO CAN REOPEN ASSESSMENT ORDER BUT THE ASSESSING OFFICER HAS TO DISALLOW THE EXPENDITURE WHICH WAS SHOWN IN THE ORIGINAL RETURN BUT IN THE YEAR UNDER CONSI DERATION THE ASSESSEE HAS ALREADY DEBITED THE MARKET FEES IN HIS PROFIT AND LOSS ACCOUNT IN RESPECT TO ASSESSMENT YEAR. THEREFORE, THE QUESTION REMAINS BEFORE US, WHETHER THIS MARKETING FEE S IS ALLOWABLE DEDUCTION OR NOT UNDER SECTION - 43B(A). WE CLEARLY SAYS THAT IT CAN BE ALLOWED IRRESPECTIVE OF PREVIOUS YEAR A ND WHICH LIABLE TO PAY SUCH SUM WAS INCURRED BY THE ASSESSEE ACCORDING TO THE METHOD OF ACCOUNTING REGULARLY EMPLOYED BY HIM. THEREFORE, IN OUR OPINION C1T(A) IS NOT JUSTIFIED IN DISALLOWING THE SA ME, THEREFORE, WE ALLOW THE APPEALS. 6. WE FIND THAT THE FACTS IN THE PRESENT CASE ARE IDENTICAL TO THE FACTS OF THE CASE OF M/S. SRI ANNAPURNA RICE MILLS, SAMBALPUR. IN THE INSTANT CASE ALSO, THE ASSESSEE IS REGULARLY FOLLOWING THE METHOD OF ACCOUNTING OF CLAIMING MARKETING FEE EXPENDITURE IN THE YEAR OF PAYMENT . THEREFORE, RESPECTFULLY FOLLOWING THE PRECEDENT, WE SET ASIDE THE ORDER OF THE LOWER AUTHORITIES AND DIRECT THE ASSESSING OFFICER TO ALLOW RS.1,02,000/ - AS 4 IT (SS) A NO. 15/CTK/2013 ASSESSMENT YEAR :2008 - 09 MARKETING FEES FOR THE YEAR UNDER CONS IDERATION AND, ACCORDINGLY, ALLOW THIS GROUND OF APPEAL OF THE ASSESSEE. 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOU NCED IN THE OPEN COURT ON 17 /02 /2017 IN THE PRESENCE OF PARTIES. SD/ - SD/ - ( ABY T. VARKEY) ( N.S SAINI) JUDICIAL MEMBER A CCOUNTANT MEMBER CUTTACK; DATED 17 /02 /2017 B.K.PARIDA, SPS COPY OF THE ORDER FORWARDED TO : BY ORDER, SR.PRIVATE SECRETARY ITAT, CUTTACK 1. THE APPELLANT: M/S. ORISSA FOOD PRODUCTS, C/O. SRI NARSINGHLAL AGARWAL, NAYAPARA, SAMBALPUR 2. THE RESPONDENT. DCIT, CIRCLE 1(1), SAMBALPUR 3. THE CIT(A) BERHAMPUR 4. CIT , SAMBALPUR 5. DR, ITAT, CUTTACK 6. GUARD FILE. //TRUE COPY//