Kaira Dist.Co.Op.Milk Producers Union Ltd., Anand V. The DCIT Anand Circle, Anand

MA 362/AHD/2019

• Counselvise Citation: [2022] 104 COUNSELVISE.COM (IT) 3586 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 7 month(s) 16 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 12-07-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2011-2012
• Appeal Filed On: 26-11-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Depreciation; Capital receipt
• Section: 148; 10; 143(1); 191; 13

Judgement Text

, ‘C’ । IN THE INCOME TAX APPELLATE TRIBUNAL “C” BENCH, AHMEDABAD BEFORE SHRI MAHAVIR PRASAD, JUDICIAL MEMEBR & SHRI WASEEM AHMED, ACCOUNTANT MEMEBR MISCELLANEOUS APPLICATION Nos. 362/Ahd/2019 & 45/Ahd/2020 (in ITA No. 3558/Ahd/2015 A/w. CO No. 19/Ahd/2016) ( Assess ment Ye ar : 2011-12) M / s. Ka ir a Di st . C o. Op . M il k Pr od u cer s U ni on Lt d. A mul D air y R o ad , An an d – 38 80 01 As sis ta nt C o mmi s s io ner o f In co me T ax An an d Cir cl e, R oo m No. 2 04, S P C o mpl e x, Ma y Fai r Ro ad , An an d / V s . & De pu ty C o mmi ss io ner o f In co me T ax An an d Cir cl e, A nan d M / s. Ka ir a Di st . C o. Op . M il k Pr od u cer s U ni on Lt d. A mul D air y R o ad , An an d – 3 88 00 1 / /P A N / G IR N o . : A A A A K 8 6 9 4 R ( Appellant) . . ( / Respondent) / Assessee by : Shri Vimal Desai, A.R. / Revenue by: Shri R. R. Makwana, Sr. D.R. D a t e o f H e a r i n g 22/04/2022 !"# /D a t e o f P r o n o u n c e m e n t 13/07/2022 ORDER MA Nos. 362/Ahd/2019 & 45/Ahd/2020 [M/s. Kaira District Co.Op. Milk Producers Union Ltd.] AY 2011-12 - 2 - PER MAHAVIR PRASAD, JM: Both miscellaneous applications have been filed by the assessee under s.254(2) of the Act against the Tribunal order dated 26.06.2019 to recall the impugned order. 2. Learned AR by this Miscellaneous Application held as under: “This miscellaneous application arises out of a consolidated order dated 26-06- 2019 (copy enclosed at Annexure 1) passed by the Hon'ble ITAT in the case of Deputy Commissioner of Income tax, Anand Circle, Anand vs. Kaira District Co- op.Milk Producers' Union Ltd. for AY 2011-12 in respect of appeal no. 3558/Ahd/2015 decided by Hon'ble Tribunal on 26-06-2019. 1.0. Before the Hon'ble ITAT the department had raised the following ground No. 1 to 7 in its Appeal No. 3558/Ahd/2015 for AY 2011-12: "1. Whether on the facts and circumstances of the case and in law, the Ld. C.I. T. (A) erred in deleting the addition ofRs. 1,85,04,494.1- on account of grant received under Sampoorna Gramin Swarojgar Yognafrom the Govt. without appreciating the fact that the assessee started its commercial activities much before the receipt of the aforesaid grant, hence the same ought to be treated as revenue receipt. 2. Whether on the facts and circumstances of the case and in law, the Ld. C.I. T. (A) erred in deleting the addition ofRs. 1,85,04,494.1- on account of grant received under Sampoorna Gramin Swarojgar Yognafrom the Govt. without considering the decision of Hon'ble Supreme Court in the case of Sahney Steel and Press Works Ltd. v/s. CIT 94 Taxman 368(SC) and (ii) Kesoram Industries and Cotton Mills Ltrd. V/s.CIT 191 ITR 518 (CalcJ relied upon by the A. O. in the assessment order. 3. Whether on the facts and circumstances of the case and in law the Ld. C.I. T. (A) erred in deleting addition on account of depreciation claimed on the portion of plant and machinery acquired through grant/subsidy received from NDDB under 70% loan and 30% grant scheme without appreciating that on plain reading of explanation 10 to Section 143(1) it is clear that the said explanation does not refer to assets acquired after 01-04- 1999 or grant subsidy received after 01-04-1999, which finds support from the decision of Hon'ble Karnatak High Court in the case of Shree Renuka Sugars Ltd. in I.T.A. No.5006/2011 c/w ITA No. 5007/2011, vide order dated 31-08-2012, and that the facts of the case of Shree Renuka Sugars Ltd.' (Supra) are identical to the facts of the present case. 4. Whether on the facts and circumstances of the case and in law, the Ld. C.I. T. (A) erred in deleting addition on account of depreciation claimed on the portion of plant and machinery acquired through grant/subsidy MA Nos. 362/Ahd/2019 & 45/Ahd/2020 [M/s. Kaira District Co.Op. Milk Producers Union Ltd.] AY 2011-12 - 3 - received from NDDB under 70% loan and 30% grant scheme by relying on the judgment of Kerala High Court in the case of C.I. T. vs. Sun Fiber Optics, ignoring the fact that the judgment of Hon'ble Supreme Court in the case of CITv. P.J. Chemicals Ltd. (1994 210 ITR 830, was rendered on 14- 09-2014, which was much prior to the date of introduction of explanation 10 to section 43(1) of the Act w.e.f. 01-04-1999. 5. Whether on the facts and circumstances of the case and in law, the learned CIT(A) erred in deleting addition on account of depreciation claimed on the portion of plant & machinery acquired through grant / subsidy received from NDDB under 70% loan and 30% grant scheme by relying on the judgement of Hon'ble Gujarat High Court in the case of Mehsana Co-operative Milk Producers Union Ltd. vs, C.I.T. without considering the aspect that the said decision of'Hon'ble Gujarat High Court is not applicable to the facts of the present case in as much in that case involved was 1978-79, when the explanation 10 to section 43(1) w.e.f. 1-04- 1999 was not in existence, whereas in the present case, the issue involved for A. Y. 2002-03 is squarely covered by the explanation to section 43(i) of the Act w.e.f. 01-04-1999. 6. Whether the facts and circumstances of the case and in law, the Ld. CIT(A) was justified in holding that deleting addition ofRs.1,88,18,927/- being disallowed u/s. 80P(2)(d) of the Act notwithstanding the fact that the interest paid by the assessee to various co-operative banks/ Societies/Bodies exceeded the income earned from the investment with Bank/Cooperative Societies nor the assessee could substantiate the claim that interest bearing funds have not been invested with Co-operative Bank. 7. Whether the facts and circumstances of the case and in law, the Ld. CIT(A) was justified in holding that deleting addition of Rs. 1,88,18,927 by relying on the decision of Hon'ble Supreme Court of India in the case of Munjal Sales Cor n vs. C,I.T., Ludhiana reported 168 Taxman 43(SC) and decision of Hon'ble High Court of Bombay in the case of C.I.T. vs. Reliance Utilities & Power Ltd. reported in 178 Taxman 135, without appreciating the facts of the present case is distinguishable from the facts of the said cases, in as much whereas in the instant case the issue pertained to disallowance u/s. 80P(2)(d) of the Act, whereas in the said cases referred to by Hon'ble Supreme Court and Hon'ble Bombay high Court the issue pertained to disallowance of deduction u/s. 36(1)(iii) of the Act. " 2.0. Kindly note that ground No. 1 and 2 are with respect to grant received under Sampoorna Gramin Swarojgar yojana amounting to Rs. 1,85,04,494 (correct amount is Rs. 1,8264,951) , Ground No. 3 &4 are regarding disallowance of depreciation of Rs. 34,48,679/- on plant and machinery acquired through grant received from NDDB and ground No. 5 to 7 are about disallowance of deduction of Rs. 1,88,18,927/- claimed u/s. 80(P)(2)(d) of the Act. 3.0. The above ground of department's appeal have been adjudicated by the Hon'ble Bench vide para 13 to 17 on page No. 6 to 8 of the order which are reproduced as under: MA Nos. 362/Ahd/2019 & 45/Ahd/2020 [M/s. Kaira District Co.Op. Milk Producers Union Ltd.] AY 2011-12 - 4 - "13. In this case, the appellant received a grant of Rs. 1,85,04,494/- on account of grant received under Sampoorna Gramin Swarojgar Yojana and being Cooperative Milk Society it deposited Rs. 1,88,18,927/- with the cooperative bank and earned interest income from the said deposit, the assessee claim was that its income is not taxable and will get the benefit of Section 80P(2)(d) of the Act. As society funds were deposited with cooperative bank and squarely covered by the order of coordinate bench in assessee's own case for AY 2008-09 wherein appeal of the revenue was dismissed with following observation. 8. Regarding the claim of deduction u/s. 80P(2)(d) of the act of Rs. 3640842/- the Ld. Counsel has submitted that the Hon'ble ITAT in assessee's own case for A.Y. 1986-87 while rejecting the appeal of department for denying the deduction of interest u/s 80P(2)(d) held that assessee cannot borrow the money for temporary investment. He has also submitted that even Gujarat High Court in assessee's own case while dealing with issue of re-opening u/s. 148 for disallowing the deduction of interest observed that AO is conscious about the claim made by the assessee and the position of interest earned on investment, vis-a-vis interest or commission paid by it, and has been treating the investment income having no relation to the interest paid in as much as it was consistent finding that no interest has been paid on borrowings for earning interest on investment. The same has been reported in 87 Taxman 144. In view of the above, in earlier years i.e. from A. Y. 1986-87 it is consistently accepted by the AO, CIT(A), ITAT and High Court in assessee's own case that assessee has never borrowed the money for making the investment as always assessee has interest free funds more than investment. In A.Y. 91-92, section 80AB has also been considered while allowing the deduction u/s. 80P(2)(d) of the Act. In view of these facts and findings, we are inclined with the findings of the Ld.CIT(A). Accordingly, both the grounds of appeal of the revenue on this issue stands dismissed. 14. In parity with the ITAT order in assessee's own case in ITA No. 3557/Ahd/2015 wherein similar circumstances, appeal of the revenue was dismissed. 15. Now we come to grant received by the assessee from the Government of India is concerned, lower authorities has held the grant by government of India is a revenue receipt. 16. On the other hand, assessee contention is that then a capital receipt and assessee will get only 10% of the total grant that to only after completion of the project and if because of some reason projects undertaken by the assessee under the Sampoorna Gramin Swarojgar yogna then the assessee will be liable to pay 5% of the penalty and in the assessment year under question, projects were under progress and same were not completed. Therefore the assessee has not earned any income from the said project. Since the assessee has not earned any income from the said project and grant by the Government of India for the projects which are to be completed MA Nos. 362/Ahd/2019 & 45/Ahd/2020 [M/s. Kaira District Co.Op. Milk Producers Union Ltd.] AY 2011-12 - 5 - by the State Government through the assessee. In our considered opinion, such receipts are capital receipts and cannot be called revenue receipts. Therefore, we allow this ground of appeal of Revenue. 17. In the result, appeal filed by the Revenue is dismissed. 4.0. From the above paras, it is noticed that the Hon'ble Bench has not described correct facts inter alia with respect to ground of SGSY scheme ( ground No. 1 & 2) and deduction u/s. 80P(2)(d) of the Act (Ground No. 5 to 7) while ground No. 3 & 4 with regard to deprecation on plant and machinery acquired through grant received from NDDB are not adjudicated by the bench.. 5.0. With respect to above, the mistakes and corresponding correct facts as mentioned in the order of lower authorities and which were reproduced in the chart filed with Hon'ble Tribunal are as under: 5.1 Para 13 of the order in respect of grounds no. 1 & 2 of department's appeal: In this para it is stated that" Appellant received the grant of Rs.1,85,04,494/- ....". In this regard kindly note that grant amount is Rs. 1,82,64,951 and interest amount is Rs.2,40,043/-. It is further stated "amount of grant received under Sampoorna Gramin Swarojgar Yogjana and being a Co-operative Milk Society it deposited Rs. 1,88,18,927 with Co-operative bank and earned interest income from the said deposit, the assesse claim was that its income is not taxable and will get the benefit of section 80P(2)(d) of the Act". It is to be clarified that both the issues (1) Grant received under SGSY Scheme and (2) deposit with co-operative bank do not have any inter connection. It is not correct to state that amount received from SGSY scheme is deposited in to Co-operative Bank. Amount of Rs. 1,88,18,927 does not reflect the amount of deposit but amount of interest earned from Co-operative bank and claimed as deduction u/s. 80P(2)(d) of the Act. The correct facts regarding this issue are already given in Annexure 3 with the chart filed and the same should be reproduced in the order to bring correct facts on record. This mistake being apparent on record needs to be rectified. 5.2 Para 16 of the order in respect of grounds no. 1 & 2 of departmental appeal: It is stated "On the other hand, assessee's contention is that then a capital receipt and assessee will get only 10% of the total grant that to only under completion of the project....." It is to be clarified that assesse will get only 2% of project cost and not 10% as mentioned above. Further, the Hon'ble Bench has erred in not mentioning that the issue is covered in favour of the assesse by its own case in ITA No. 2953/Ahd/2013 MA Nos. 362/Ahd/2019 & 45/Ahd/2020 [M/s. Kaira District Co.Op. Milk Producers Union Ltd.] AY 2011-12 - 6 - for AY 2006-07 which is already placed on record at Page Nos. 231-242 at paper book No. II. The applicant, therefore, requests Your Hon'ble Bench that the above mistakes are mistakes apparent from the records and are required to be rectified. 6.0. Ground No. 3, 4 and 5: Disallowance of depreciation on assets acquired out of grant received from NDDB on or before 01-04-1999 which are left out to be adjudicated: These grounds of appeal raised by the department are not adjudicated by the Hon'ble bench. The Hon'ble Bench may kindly note that the issue is squarely covered in the assessee's own case vide order dated 05-06-2015 in ITA Nos. 563 to 567/A/2011 for the AY 2002-03, 2004-05, 2005-06, 2006-07 & 2007-08 wherein the Hon'ble 1TAT deleted the addition relying on the decision of Kerala High Court in in the case of Sun Fibre Optics (2012) 20 taxmann.com 143. Copy of the said decision is available at pages Nos. 110- 151 of Paper-book No. I. Further, the said issue is also squarely covered in the applicant's own case by the Hon'ble ITAT order dated 31-05-2016 in ITA No. 1337 /A/2013 for AY 2009-10 and order dated 29-09-2016 in ITA No. 3031/A/2013 for the AY 2010-11. Copy of decisions are available at Page Nos.152-164 & 165-170 of Paper-book No. I. Relevant facts for this ground are available in Annexure 4 appended with the chart filed. The above being mistake apparent may please be rectified. 7.0. Grounds no. 6 &7 regarding deductions u/s 80P(2)(d) for Rs. 1,88,18,927: Whereas the reliance of the Hon'ble Bench on the order of Hon'ble ITAT in applicant's own case for AY 2008-09 is justified, the facts mentioned in earlier part of Para 13 are mixed up with the facts of grounds no. 1 & 2 of the departmental appeal in the ITA No. 3558/Ahd/2015. The correct facts are mentioned in Annexure 5 with the chart which should have been reproduced by the Hon'ble Bench. This mistake being apparent needs to be rectified. Further, in Para 14 of the order, appeal no. mentioned is ITA No. 3557/Ahd/2015 which should be corrected as 3558/Ahd/2015 and the conclusion should be as follows: " In parity with the ITAT order in assessee 's own case departmental appeal on this ground in ITA No. 3558/Ahd/2015 under similar facts is dismissed. " The applicant, therefore requests the Hon'ble Bench to rectify the above mistakes and for this act of kindness, the applicant shall forever be grateful.” MA Nos. 362/Ahd/2019 & 45/Ahd/2020 [M/s. Kaira District Co.Op. Milk Producers Union Ltd.] AY 2011-12 - 7 - 3. Learned DR by this Miscellaneous Application held as under: “In this case of M/s Kaira District Co-operative Milk Producres Union Limited, Anand for AY 2011-12, an appeal was filed by the department under appeal in ITA No. 3558/Ahd/2015 before the Hon'ble Tribunal against the order of CIT(A)-IV, Baroda dt. 14/08/2015 in appeal No. CAB/4-304/2014-15. The Hon'ble ITAT, while finalizing 1(i) On the grtound of addition o Rs.1,85,04,494/- on account of grant received under Sampoorna Gramin Swarojgar Yojana from government, the Hon'ble ITAT ('C' Bench), Ahmedabad held that the assessee has not earned any income from the said project and grant by the Government of India for the projects which are to be completed by the State Government through the assessee and held that "such receipt are capital receipts and cannot be called revenue receipts. Therefore, we allow this ground of appeal of the Revenue". At the same time, in Para No. 17 of the order, it is held that "In the result, appeal filed by the Revenue is dismissed." Thus, there is a contradiction in the finding of the ITAT. 1(ii) The Hon'ble ITAT "C" Bench has not adjudicated the ground No.3 to 5 relating to disallowance of depreciation of assets acquired from NDDB. 1(iii) The Hon'ble ITAT "C Bench has allowed the CO of the assessee since, appeal of the revenue is dismissed. 2. The appellant craves leave to add, modify, amend or alter any grounds of Misc. application at the time of, or before, the hearing of appeal. Relief claimed in app. It is therefore prayed that the Hon'ble ITAT, "C" Bench, Ahmedabad may recall its order dated 26/06/2019 in No.3558Ahd/2015 in the above referred case for AY 2011-12 wherein decision on the ground of addition of Rs.1,85,04,494/- on account of grant received under Sampoorna Gramin Swarojgar Yojana from government, is contradictory in last line of para 16 and content of para 17 of the said order. It is also prayed that the Hon'ble ITAT, "C" Bench, Ahmedabad may recall its order dated 26/06/2019 and decide the ground No.3 to 5 which were raised by the revenue and were not left to be adjudicated by the Hon'ble ITAT. It is further prayed that the Hon'ble ITAT "C" Bench, Ahmedabad may recall its order dated 26/06/2019 in CO No.19/Ahd/2016 and decide in light of the fresh adjudication of above grounds.” 4. We have heard both the sides and gone through the miscellaneous applicationS. It appears from the ITAT order dated 26.06.2019 that there are several inadvertent error in the order passed in ITA No. 3558/Ahd/2015 & CO No. 19/Ahd/2016. Therefore, in the interest of justice, we recall MA Nos. 362/Ahd/2019 & 45/Ahd/2020 [M/s. Kaira District Co.Op. Milk Producers Union Ltd.] AY 2011-12 - 8 - order dated 26.06.2019 and direct the Registry to refix these matters for fresh hearing on 29 th August, 2022 under intimation to both the sides. 5. In the result, the miscellaneous applications filed by the assessee & Revenue are allowed. Sd/- Sd/- ( WASEEM AHMED) (MAHAVIR PRASAD) ACC OUNTANT MEMB ER JUDICIAL MEMBER Ahmedabad: Dated 13/07/2022 True Copy S.K.SINHA ेश ! " #े" / Copy of Order Forwarded to:- $ / Revenue 2 द / Assessee ' ( )* + / Concerned CIT 4 + - / CIT (A) . / 0 1 2 2 )*3 )* #3 45द ( द / DR, ITAT, Ahmedabad 6 1 78 9 / Guard file. By order/ द श 3 उ / 4 )* #3 45द ( द । This Order pronounced in Open Court on 13/07/2022