Dr.Manu Jacob Abraham, CHENNAI V. ITO, CHENNAI

MA 2/CHNY/2016

• Counselvise Citation: [2016] 124 COUNSELVISE.COM (IT) 4299 (ITAT-CHENNAI)
• Duration Of Justice: 3 month(s) 24 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 05-05-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Next Hearing Date: 01-04-2016
• Assessment Year: 2006-2007
• Appeal Filed On: 12-01-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: A V SREEKANTH

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, CHENNAI ... , . !'# ! , % !& BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER M.P. NO. 2/MDS/2016 (IN I.T.A. NO.1132/MDS/2013) ' (' / ASSESSMENT YEAR : 2006-07 DR. MANU JACOB ABRAHAM, L/R OF LATE T.C. ABRAHAM, NO.1A, ROSSY IN PLACE, NO.5, GURUSWAMY ROAD, CHETPET, CHENNAI - 600 031. PAN : AAAPA 8466 C V. THE INCOME TAX OFFICER, BUSINESS WARD XIII(1), CHENNAI - 600 034. (*+' /PETITIONER) (*,+-/ RESPONDENT) *+' / 0 /PETITIONER BY : SH. PHILIP GEORGE, ADVOCATE *,+- / 0 / RESPONDENT BY : SHRI A.V. SREEKANTH, JCIT 1 / 2% / DATE OF HEARING : 01.04.2016 3'( / 2% / DATE OF PRONOUNCEMENT : 05.05.2016 / O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER: THE ASSESSEE HAS FILED THE PRESENT MISCELLANEOUS PETITION ON THE GROUND THAT THERE IS AN ERROR IN THE ORDER O F THIS TRIBUNAL DATED 18.09.2015. 2 M.P. NO.2/MDS/16 2. SH. PHILIP GEORGE, THE LD.COUNSEL FOR THE ASSESS EE, SUBMITTED THAT THE CAUSE TITLE OF THE ORDER OF THIS TRIBUNAL HAS MENTIONED NAME OF THE RESPONDENT AS SHRI T.C. ABRA HAM. IN FACT, SHRI T.C. ABRAHAM EXPIRED DURING THE PENDENCY OF TH E APPEAL BEFORE THE CIT(APPEALS) AND THE APPEAL BEFORE THIS TRIBUNAL WAS FILED BY THE REVENUE AGAINST THE LEGAL REPRESENTATI VE OF SHRI T.C. ABRAHAM, NAMELY, DR. MANU JACOB ABRAHAM. THEREFORE , THE CAUSE TITLE OF THE ORDER SHOULD BE IN THE NAME OF DR. MAN U JACOB ABRAHAM, LEGAL HEIR OF LATE SHRI T.C. ABRAHAM. THIS IS AN E RROR INADVERTENTLY CREPT IN THE ORDER OF THIS TRIBUNAL. 3. WE HAVE HEARD SHRI A.V. SREEKANTH, THE LD. DEPAR TMENTAL REPRESENTATIVE ALSO. THE LD. D.R. HAS FAIRLY SUBMI TTED THAT IT IS AN ERROR WHICH NEEDS TO BE RECTIFIED. 4. WE HAVE CONSIDERED THE SUBMISSIONS OF LD.COUNSEL FOR THE ASSESSEE AND THE LD. DEPARTMENTAL REPRESENTATIVE. ADMITTEDLY, THE APPEAL OF THE REVENUE WAS FILED AGAINST THE LEG AL REPRESENTATIVE OF SHRI T.C. ABRAHAM, NAMELY, DR. MA NU JACOB ABRAHAM. THEREFORE, AS RIGHTLY SUBMITTED BY THE LD .COUNSEL FOR THE ASSESSEE, THE RESPONDENT IN THE CAUSE TITLE OF THE ORDER OF THIS TRIBUNAL SHOULD BE IN THE NAME OF DR. MANU JACOB AB RAHAM, LEGAL REPRESENTATIVE OF LATE SHRI T.C. ABRAHAM. HOWEVER, BY MISTAKE, 3 M.P. NO.2/MDS/16 THIS TRIBUNAL MENTIONED IN THE CAUSE TITLE AS SHRI T.C. ABRAHAM. THIS IS AN INADVERTENT TYPOGRAPHICAL ERROR CREPT IN THE ORDER, THEREFORE, NEEDS TO BE RECTIFIED. ACCORDINGLY, FOL LOWING SHOULD BE DELETED IN THE CAUSE TITLE OF THE ORDER: SHRI T.C. ABRAHAM INSTEAD, THE FOLLOWING SHOULD BE INSERTED IN THE CA USE TITLE DR. MANU JACOB ABRAHAM L/R OF LATE T.C. ABRAHAM 5. SH. PHILIP GEORGE, THE LD.COUNSEL FOR THE ASSESS EE, SUBMITTED THAT THE ISSUE RAISED BEFORE THIS TRIBUNA L BY THE DEPARTMENT WAS WITH REGARD TO APPLICABILITY OF RULE 7B OF THE INCOME-TAX RULES, 1962, INCOME FROM SALE OF COFFEE AND EXPENDITURE TO THE EXTENT OF ` 11,90,535/-. REFERRING TO THE ORDER OF THIS TRIBUNAL DATED 18.09.2015, MORE PARTICULARLY P ARA 3 AT PAGE 3, THE LD.COUNSEL SUBMITTED THAT THIS TRIBUNAL HAS OBS ERVED AS FOLLOWS:- ..ACCORDING TO THE LD. COUNSEL, IT IS NOT THE CASE OF THE ASSESSEE THAT THE ASSESSEE WAS NOT ENGAGED IN ANY COFFEE CURING ACTIVITIES. THEREFORE, THE FABRICATION OF 25% OF INCOME IS NOT APPLICABLE.. 4 M.P. NO.2/MDS/16 ACCORDING TO THE LD. COUNSEL, IN THE ABOVE SENTENCE IN THE TRIBUNALS ORDER, FIRST NOT NEEDS TO BE DELETED. MOREOVER, THE WORD FABRICATION APPEARS TO BE AN ERROR WHICH NEEDS TO BE DELETED. 6. WE HAVE HEARD SHRI A.V. SREEKANTH, THE LD. DEPA RTMENTAL REPRESENTATIVE ALSO. THE LD. D.R. VERY FAIRLY SUBM ITTED THAT THE FIRST NOT IN THE ABOVE REPRODUCED SENTENCE NEEDS TO BE OMITTED AND THE WORD FABRICATION NEEDS TO BE SUBSTITUTED WITH THE WORD BIFURCATION. 7. WE HAVE HEARD SUBMISSIONS OF THE LD. COUNSEL FOR THE ASSESSEE AND LD. DEPARTMENTAL REPRESENTATIVE. AS R IGHTLY SUBMITTED BY THE LD. COUNSEL FOR THE ASSESSEE AND T HE LD. DEPARTMENTAL REPRESENTATIVE, THE FIRST NOT IN THE ABOVE REPRODUCED SENTENCE NEEDS TO BE DELETED. MOREOVER, THE WORD FABRICATION HAS TO BE SUBSTITUTED BY THE WORD BI FURCATION. ACCORDINGLY, THE FIRST NOT IS DELETED AND THE WOR D FABRICATION IS SUBSTITUTED BY THE WORD BIFURCATION. AFTER THIS AMENDMENT, THE ORDER AT PAGE 3 SHALL BE READ AS FOLLOWS:- ACCORDING TO THE LD. COUNSEL, IT IS THE CASE OF THE ASSESSEE THAT THE ASSESSEE WAS NOT ENGAGED IN ANY COFFEE CURING ACTIVITIES. THEREFORE, THE BIFURCATION OF 25% OF INCOME IS NOT APPLICABLE. THE ORDER OF THE TRIBUNAL IS RECTIFIED AS ABOVE. 5 M.P. NO.2/MDS/16 8. THE NEXT MISTAKE POINTED OUT BY THE LD. COUNSEL FOR THE ASSESSEE IS IN PARA 5. 9. SHRI PHILIP GEORGE, THE LD. COUNSEL FOR THE ASSE SSEE, SUBMITTED THAT THIS TRIBUNAL AT PARA 5 OF THE ORDER , AFTER EXTRACTING RULE 7B OF THE INCOME-TAX RULES, 1962, OBSERVED THA T THE CIT(APPEALS) FOUND THAT THE ASSESSEE WAS SELLING ON LY SUN DRIED COFFEE SEEDS. REFERRING TO SECTION 3(D) OF COFFEE ACT, 1942, THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT CURING ME ANS THE PROCESSING OF RAW COFFEE BY MECHANICAL PROCESSES OT HER THAN PULPING FOR THE PURPOSE OF PREPARING IT FOR MARKETI NG. IN THIS CASE, ACCORDING TO THE LD. COUNSEL, ASSESSEE IS NOT ENGAG ED IN ANY MECHANICAL PROCESSING ACTIVITY IN PROCESSING COFFEE APART FROM SUN DRIED COFFEE SEEDS AND SELLING THE SAME. THEREFORE , THE OBSERVATION OF THIS TRIBUNAL THAT THE ASSESSEE WAS SELLING CURE D COFFEE IS FACTUALLY INCORRECT. SINCE THE ASSESSEE HAS NOT US ED ANY MECHANICAL PROCESS FOR CURING COFFEE SEEDS FOR MARK ETING, RULE 7B IS NOT APPLICABLE AT ALL. 10. ON THE CONTRARY, SHRI A.V. SREEKANTH, THE LD. D EPARTMENTAL REPRESENTATIVE, SUBMITTED THAT THIS TRIBUNAL FOUND THAT THE ASSESSEE WAS NOT ENGAGED IN THE COFFEE PROCESSING ACTIVITY A ND HE WAS SELLING ONLY SUN DRIED COFFEE SEEDS. THE PROVISION S OF COFFEE ACT, 6 M.P. NO.2/MDS/16 1942 WAS NOT BROUGHT TO THE NOTICE OF THE BENCH WHE N THE APPEAL WAS ARGUED AND IT IS FIRST TIME BROUGHT TO THE NOTI CE OF THE BENCH IN THE MISCELLANEOUS PETITION. SINCE THE ISSUE HAS BE EN REMITTED BACK TO THE FILE OF THE ASSESSING OFFICER FOR RECONSIDER ATION, THE APPLICABILITY OF RULE 7B OF THE INCOME-TAX RULES, 1 962 MAY ALSO BE CONSIDERED BY THE ASSESSING OFFICER. 11. WE HAVE HEARD SUBMISSIONS OF LD. COUNSEL FOR TH E ASSESSEE AND THE LD. DEPARTMENTAL REPRESENTATIVE. THE OBJEC TION OF THE ASSESSEE BEFORE THIS TRIBUNAL IS THAT THE ASSESSEE IS SELLING ONLY SUN DRIED COFFEE SEEDS AND NOT CURED COFFEE SEEDS. REFERRING TO THE PROVISIONS OF COFFEE ACT, 1942, MORE PARTICULARLY S ECTION 3(D), THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE WOR D CURING MEANS THE PROCESSING OF RAW COFFEE BY MECHANICAL PR OCESSES. SINCE THE ASSESSEE IS NOT USING ANY MECHANICAL PROC ESS AND SELLING ONLY SUN DRIED COFFEE SEEDS, THE PROVISIONS OF RULE 7B IS NOT APPLICABLE. THIS IS A FACTUAL ASPECT NEEDS TO BE V ERIFIED WHETHER THE ASSESSEE IS SELLING SUN DRIED COFFEE SEEDS OR THE C OFFEE SEEDS WHICH WERE PROCESSED MECHANICALLY. THEREFORE, AS R IGHTLY SUBMITTED BY THE LD. DEPARTMENTAL REPRESENTATIVE, T HE ASSESSING OFFICER HAS TO RECONSIDER THE ISSUE AND BRING ON RE CORD WHETHER THE ASSESSEE IS SELLING SUN DRIED COFFEE OR COFFEE SEED S PROCESSED 7 M.P. NO.2/MDS/16 MECHANICALLY AND THEREAFTER FIND OUT WHETHER RULE 7 B IS APPLICABLE OR NOT. THEREFORE, TO THAT EXTENT, THE ORDER OF TH IS TRIBUNAL DATED 18.09.2015 IS MODIFIED AND THE ASSESSING OFFICER SH ALL FIND OUT THE APPLICABILITY OF RULE 7B AFTER VERIFYING THE FACTUA L ASPECT AS INDICATED ABOVE. 12. REFERRING TO PARA 7 AT PAGE 7 OF THE ORDER, THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THIS TRIBUNAL OBSERVED THAT IT IS NOT KNOWN WHETHER THE EXPENDITURE OF ` 11,90,535/- WAS CLAIMED AGAINST AGRICULTURAL INCOME OR FROM INCOME TAXABLE UNDER IN COME-TAX ACT, 1961. IN FACT, THE EXPENSES WERE DEBITED IN THE P ROFIT & LOSS ACCOUNT AGAINST THE AGRICULTURAL RECEIPT. THESE EX PENSES ARE NOT AT ALL CONSIDERED BY THE ASSESSEE WHILE COMPUTING THE TAXABLE INCOME. THEREFORE, THE CIT(APPEALS) HAS RIGHTLY ALLOWED THE CLAIM OF THE ASSESSEE. 13. WE HAVE HEARD SHRI A.V.SREEKANTH, THE LD. DEPAR TMENTAL REPRESENTATIVE ALSO. ACCORDING TO THE LD. D.R., SI NCE THE MATTER HAS BEEN REMITTED BACK TO THE ASSESSING OFFICER FOR RECONSIDERATION, THE ASSESSING OFFICER CAN VERY WELL VERIFY WHETHER THIS WAS DEBITED IN THE PROFIT & LOSS ACCOUNT AS CLAIMED BY THE ASSE SSEE. 8 M.P. NO.2/MDS/16 14. WE HAVE HEARD THE LD. COUNSEL FOR THE ASSESSEE AND THE LD. DEPARTMENTAL REPRESENTATIVE. AS RIGHTLY SUBMITTED BY THE LD. D.R., THIS ISSUE IS REMITTED BACK TO THE FILE OF THE ASSE SSING OFFICER, THEREFORE, THE ASSESSING OFFICER SHALL FIND OUT WHE THER THE EXPENSES WERE DEBITED IN THE PROFIT & LOSS ACCOUNT AGAINST T HE AGRICULTURAL RECEIPT OR NOT. THIS ALSO NEEDS TO BE CONSIDERED B Y THE ASSESSEE WHETHER THESE EXPENSES WERE CONSIDERED BY THE ASSES SEE WHILE COMPUTING TAXABLE INCOME. SINCE THE MATTER IS REMI TTED BACK TO THE ASSESSING OFFICER, HE SHALL EXAMINE THE SAME AFTER GIVING REASONABLE OPPORTUNITY TO THE ASSESSEE. 15. IN THE RESULT, THE MISCELLANEOUS PETITION FILED BY THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 5 TH MAY, 2016 AT CHENNAI. SD/- SD/- (. !'# ! ) ( ... ) (A. MOHAN ALANKAMONY) (N.R.S. GANESAN) % / ACCOUNTANT MEMBER /JUDICIAL MEMBER /CHENNAI, 5 /DATED, THE 5 TH MAY, 2016. KRI. 9 M.P. NO.2/MDS/16 / *267 87(2 /COPY TO: 1. *+' / PETITIONER 2. *,+- /RESPONDENT 3. 1 92 () /CIT(A) 4. 1 92 /CIT 5. 7: *2 /DR 6. ' ; /GF.