M/s Krishi Utpadan Mandi Samiti, Lakhimpur Kheri V. Income Tax Officer, Sitapur

SA 28/LKW/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 0249 (ITAT-LUCKNOW)
• Duration Of Justice: 11 month(s) 11 day(s)
• Appeal Type: Income Tax (Transfer Pricing) Appeal
• Pronouncement Date: 27-06-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2014-2015
• Appeal Filed On: 16-07-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: SHWETA MITTAL ACA
• Keywords: Opportunity of being heard; Principle of natural justice; Set aside
• Section: 143(3); 12AA; 143(1); 201; 143(2); 12; 10

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH A , LUCKNOW BEFORE SHRI. T.S. KAPOOR, ACCOUNTANT MEMBER AND SHRI PARTHA SARATHI CHAUDHURY, JUDICIAL MEMBER ITA NO. 688/LKW/2017 ASSESSMENT YEAR: 2014 - 15 M/S KRISHI UTPADAN MANDI SAMITI TIKONIA LAKHI MPUR KHERI V. ACIT (CPC) BANGALORE T AN /PAN : AAALK0721G (APP ELL ANT) (RESPONDENT) S.P. NO.28/LKW/2018 [IN ITA NO. 688/LKW/2017] ASSESSMENT YEAR: 2014 - 15 M/S KRISHI UTPADAN MANDI SAMITI TIKONIA LAKHIMPUR KHERI V. ACIT (CPC) BANGALORE T AN /PAN : AAALK0 721G (APP LIC ANT) (RESPONDENT) ASSESSEE BY: SMT. SHWETA MITTAL, ACA DEPARTMENT BY: SHRI AMIT NIGAM, D.R. DATE OF HEARING: 31 08 201 8 DATE OF PRONOUNCEMENT: 07 0 9 201 8 O R D E R PER P ARTHA SARATHI CHAUDHURY, J.M : THIS APPEAL IPREFERRED BY THE A SSESSEE EMANATES FROM T THE ORDER OF THE LD. CIT(A), BAREILLY DATED 19/7/2017. DURING THE PENDENCY OF APPEAL, ASSESSEE HAS ALSO FILED STAY PETITION WITH A REQUEST TO STAY THE DEMAND OF RS.1,35,20,010/ - . ITA NO.688/LKW/2017 & S.P. NO.28/LKW/2018 PAGE 2 OF 9 2 . THE LD. A.R. OF THE ASSESSEE AT THE TIME OF HEARING S UBMITTED THAT IF THE APPEAL OF THE ASSESSEE IS HEARD ON PRIORITY, THEN HE WILL NOT PRESS THE STAY PETITION. THE LD. D.R. CONCEDED TO THE REQUEST MADE BY THE LD. A.R. OF THE ASSESSEE. WE HAVE HEARD THE SUBMISSIONS OF BOTH THE PARTIES AND SINCE WE HAVE DEC IDED TO DISPOSE OF THE APPEAL ON PRIORITY, THE STAY PETITION FILED BY THE ASSESSEE IS DISMISSED AS NOT PRESSED. NOW WE WILL DEAL WITH THE APPEAL FILED BY THE ASSESSEE ON MERITS. THE GROUNDS OF APPEAL OF THE ASSESSEE ARE AS UNDER: - 1. THE LD. COMMISSIONER OF INCOME - TAX (APPEALS) HAS ERRED IN LAW AND ON FACTS IN PASSING THE ORDER WHICH IS ILLEGAL, IMPROPER AND AGAINST THE PRINCIPLES OF NATURAL JUSTICE. 2. THE LD. COMMISSIONER OF INCOME - TAX (APPEALS) HAS ERRED IN LAW AND ON FACTS IN PASSING THE ORDER WITHOUT GIVING ADEQUATE OPPORTUNITY OF BEING HEARD. 3 . THE LD. COMMISSIONER OF INCOME - TAX (APPEALS) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE ADDITION OF RS. 3,11,48,350 / - MADE BY THE LD. ASSESSING OFFICER. 4 . THE ID. COMMISSIONER OF INCOME - TAX (APPEALS) H AS ERRED IN LAW ON FACTS IN CONFIRMING THE TAX LIABILITY OF 1,35,20,010 / - IMPOSED BY THE LD. ASSESSING OFFICER. 5 . THE LD. COMMISSIONER OF INCOME - TAX (APPEALS) HAS ERRED IN LAW AND ON FACTS IS NOT GRANTING EXEMPTION U/S 11, 12 AND 13 OF THE INCOME TAX ACT, 1961 AS CLAIMED IN THE RETURN BY VIRTUE UNDER SECTION 12AA GRANTED TO THE APPELLANT BY THE COMMISSIONER OF INCOME - TAX. 6. THE LD. COMMISSIONER OF INCOME - TAX (APPEALS) HAS ERRED IN LAW AND ON FACTS IS NOT GRANTING EXEMPTION U/S 10 (26AAB) OF THE INCOME TAX ACT, 1961 ITA NO.688/LKW/2017 & S.P. NO.28/LKW/2018 PAGE 3 OF 9 7. THE LD. COMMISSIONER OF INCOME - TAX (APPEALS) HAS ERRED IN LAW AND ON FACTS IN NOT GRANTING RELIEF SOUGHT BY THE APPELLANT IN APPEAL. 8. THE APPELLANT CRAVES LEAVE TO ADD, AMEND, ALTER OR - WITHDRAW ANY GROUND OF APPEAL OR RAISE ANY NEW GROUND OF APPEAL DURING THE PENDENCY OF APPEAL. 3 . THOUGH THE ASSESSEE HAS TAKEN MULTIPLE GROUNDS OF APPEAL, THE GRIEVANCE IS THAT THE ASSESSING OFFICER HAS WRONGLY COMPUTED THE TOTAL INCOME AT RS.3,11,48,350/ - AND THEREBY ARRIVING AT TAX LIABILITY OF RS.1,35,20,007 / - AND THIS WAS CONFIRMED BY THE LD. CIT(A). 4 . THE FACTS ON RECORD IN THIS CASE IS WELL ENSHRINED WITHIN THE SUBMISSIONS OF THE ASSESSEE BEFORE THE LD. CIT(A), WHICH ARE AS FOLLOWS: - 2.1 AT STATED IN PARA 1 OF THE STATEMENT OF FACTS, THE ASSESSEE/APPELLANT IS AN AGRICULTURAL PRODUCE MARKET COMMITTEE (KRISHI UTPADAN MANDI SAMITI). IT CAME INTO BEING ON 14.12.1971 VIDE NOTIFICATION NO. H - 1969/13B - 1200(95) - 69 DATED 14.12.1971, ISSUED BY GOVERNMENT OF U.P. IN TERMS OF SECTION 8 OF UTTAR PRADESH KRISHI UTPADAN MA NDI ADHINIYAM, 1964[U.P. ACT NO. XXV OF 1964 (IN SHORT UPKUMA)]. A COPY OF THE SAID NOTIFICATION IS ENCLOSED AS ANNEXURE - 2. 2.2 THE SAID LEGISLATION HAS BEEN BROUGHT ON THE STATUTE BOOK TO PROVIDE FOR THE REGULATION OF SALE AND PURCHASE OF AGRICULTURAL P RODUCE AND FOR THE ESTABLISHMENT, SUPERINTENDENCE AND CONTROL OF MARKETS THEREOF IN UTTAR PRADESH. THIS IS EVIDENT FROM THE PREAMBLE OF THE SAID LEGISLATION, WHICH READS AS UNDER: - AN ACT PROVIDE FOR THE REGULATION OF SALE AND PURCHASE OF AGRICULTURAL PRO DUCE AND FOR THE ESTABLISHMENT, SUPERINTENDED AND CONTROL OF MARKETS THEREFOR IN UTTAR PRADESH. RELEVANT EXTRACT OF THE SAID ADHINIYAM CONTAINING THE PREAMBLE AND SECTION 1 OF THE SAID ADHINIYAM EXTRACTED FROM THE ITA NO.688/LKW/2017 & S.P. NO.28/LKW/2018 PAGE 4 OF 9 BOOK PUBLISHED BY HIND PUBLISHING HOUSE - 2006 EDITION, IS ENCLOSED, MARKED AS ANNEXURE - 3. 2.3 AS PER CLAUSE (26AAB) INSERTED IN SECTION 10 OF THE INCOME - TAX ACT, 1961, WITH EFFECT FROM 01.04.2009, ANY INCOME OF AN AGRICULTURAL PRODUCE MARKET COMMITTEE CONSTITUTED UNDER ANY LAW FOR THE TIME BE ING IN FORCE FOR PURPOSE OF REGULATING THE MARKETING OF AGRICULTURAL PRODUCE IS EXEMPT FROM TAXATION UNDER THE ACT WITH EFFECT FROM ASSESSMENT YEAR 2009 - 10. SINCE THE APPELLANT MANDI SAMITI HAS BEEN ESTABLISHED UNDER UPKUMA FOR THE PURPOSE OF REGULATIN G THE AGRICULTURAL OF MARKETING PRODUCED IN THE STATE OF UTTAR PRADESH, IT IS COVERED WITHIN THE MEANING OF AGRICULTURAL PRODUCED MARKET COMMITTEE REFERRED IN SECTION 10 (26AAB) OF THE ACT. AS SUCH, ANY INCOME OF APPELLANT MANDI SAMITI IS ELIGIBLE FOR BLANKET EXEMPTION FROM INCOME TAX UNDER THE SAID PROVISION OF THE ACT. IN VIEW OF SUCH LEGAL POSITION, INCOME OF THE APPELLANT SAMITI FOR THE A.Y. 2014 - 15,(I.E., THE YEAR UNDER APPEAL) IS LIABLE TO BE ASSESSED AT NIL AND ACCORDINGLY NO TAX COULD HAVE BEEN LEVIED ON IT UNDER THE ACT. 2.4 KEEPING IN VIEW THE PROVISIONS OF SECTION 10 (26AAB) OF THE ACT EXEMPTING THE INCOME OF APPELLANT FORM TAXATION, THE APPELLANT FILED ITS RETURN OF INCOME SHOWING NIL INCOME ON 27.09.2014, VIDE E - FILLING ACKNOWLEDG EMENT NO. 370751160270914 WHEREIN EXEMPTION OF ENTIRE RECEIPT OF RS.3,11,48,352/ - WAS CLAIMED. A COPY OF ACKNOWLEDGEMENT OF RETURN ALONG WITH COMPUTATION IS ENCLOSED AS ANNEXURE - 4. 2.5 IT IS ALSO VERY RELEVANT TO SUBMIT FOR YOUR KIND CONSIDERATION THAT ID ENTICAL ISSUE WAS ALSO INVOLVED IN THE CASE OF KRISHI UTPADAN MANDI SAMITI, MEHMOODABAD, SITAPUR OF A.Y. 2013 - 14. HOWEVER, ON APPEAL BY THE SAID MANDI SAMITI THE DISALLOWANCE U/S 10(26AAB) MADE BY THE ASSESSING OFFICER THROUGH THE INTIMATION U/S 143(1) HAS BEEN DELETED BY THE LD. CIT (A) BAREILLY. A COPY OF THE APPELLATE ORDER IN THE CASE OF KRISHI UTPADAN MANDI SAMITI, ITA NO.688/LKW/2017 & S.P. NO.28/LKW/2018 PAGE 5 OF 9 MEHMOODABAD DATED 30.06.2016 (APPEAL NO. 119/ITO/SITAPUR/15 - 16) IS ENCLOSED, MARKED AS ANNEXURE - 6. 2.6 IN TERMS OF GROUND NO. A SPECIFIC PL EA HAS BEEN TAKEN THAT EVEN IF COMPLETE PARTICULARS OF EXEMPTION WERE NOT MENTIONED IN THE INCOME TAX RETURN BUT DUE TO UNDISPUTED FOUNDATIONAL FACT THAT THE APPELLANT/ASSESSEE IS AN AGRICULTURAL PRODUCE MARKET COMMITTEE CONSTITUTED UNDER UPKUMA IT IS EN TITLED FOR BLANKET EXEMPTION AVAILABLE UNDER SECTION 10 (26AAB) OF THE ACT AND CONSEQUENTLY INCOME OF THE APPELLANT IS LIABLE TO BE ASSESSED AT NIL. 2.7 IN VIEW OF SUBMISSION MADE HEREIN FORE, YOUR HONOUR BE PLEASED TO ALLOW GROUND NOS. 1,2& 3 AND BE F URTHER PLEASED TO DIRECT THE ASSESSING OFFICER TO COMPUTE THE INCOME OF THE ASSESSEE AT RS. NILL BY GRANTING DUE EXEMPTION UNDER SECTION 10(26AAB) OF THE ACT. GROUND NO.4: IN THIS GROUND, APPELLANTS CONTENTION IS THAT UNDER THE SCHEME OF TAXATION IN THE INCOME - TAX ACT, TAX CAN BE LEVIED ONLY IN ACCORDANCE WITH PROVISIONS CONTAINED THEREIN. 3.1 IT IS SUBMITTED THAT THE LEGISLATURE HAD INTRODUCED CLAUSE (26AAB) IN SECTION 10 OF THE INCOME TAX ACT, 1961 BY THE FINANCE ACT, 2008, APPLICABLE WITH EFFECT FROM A.Y. 2009 - 10 BY WHICH ANY INCOME OF AN AGRICULTURAL PRODUCE MARKET COMMITTEE CONSTITUTED UNDER ANY LAW FOR THE TIME BEING IN FORCE FOR THE PURPOSE OF REGULATING THE MARKETING OF AGRICULTURAL PRODUCE IS EXEMPTED FROM TAXATION UNDER THE INCOME TAX ACT. IN VI EW OF SUCH EXEMPTION PROVIDED IN THE STATUE ITSELF, IT WAS NOT CORRECT ON THE PART OF ASSESSING OFFICER TO LEVY THE TAX BY DENYING THE SAID EXEMPTION. GROUND NO. 5: WITHOUT PREJUDICE TO THE AFORESAID GROUNDS, APPELLANTS CONTENTION BY WAY OF THIS GROUND IS THAT THE REJECTION/ DISALLOWANCE OF ASSESSEES CLAIM OF EXEMPTION UNDER SECTION 10 (26AAB)/11() (A) OF THE ACT IN THE IMPUGNED INTIMATION IS BEYOND THE SCOPE OF PERMISSIBLE ADJUSTMENTS UNDER SECTION 143 ITA NO.688/LKW/2017 & S.P. NO.28/LKW/2018 PAGE 6 OF 9 (1) OF THE ACT. SECTION 143(1) OF THE ACT ALLOWS THE ASSESSING OFFICER VERY LIMITED SCOPE OF ADJUSTMENTS. SUCH PERMISSIBLE ADJUSTMENTS ARE SPECIFIED IN SUB CLAUSE (I) AND (II) OF CLAUSE (A) OF SUB SECTION (1) OF SECTION 143, WHICH ARE REPRODUCED HEREIN BELOW: - (A) THE TOTAL INCOME OR LOSS SHALL BE COMPU TED AFTER MAKING THE FOLLOWING ADJUSTMENTS NAMELY: - (I) ANY ARITHMETICAL ERROR IN THE RETURN OR (II) AN INCORRECT CLAIM, IF SUCH INCORRECT CLAIM IS APPARENT FROM ANY INFORMATION IN THE RETURN; IN THE PRESENT CASE, IT WILL BE SEEN THAT NONE OF THE AFORESA ID CONDITIONS ARE STATED TO HAVE EXISTED. THE ASSESSING OFFICER HAS NOT BROUGHT OUT OR POINTED OUT ANY ARITHMETICAL ERROR OR INCORRECT CLAIM FORM ANY INFORMATION IN THE RETURN. HE HAS SIMPLY DISALLOWED THE CLAIM OF EXEMPTION UNDER SECTION 10(26AAB) WITHOUT BRINGING OUT OF ANY ARITHMETICAL ERROR OR INCORRECTNESS APPARENT FORM THE INFORMATION AVAILABLE IN THE RETURN. THUS, ANY ADJUSTMENT TO THE INCOME DECLARED BY THE ASSESSEE COULD BE MADE ONLY BEY RESORTING TO THE PROVISIONS OF SECTION 143(3) BY ISSUING NOTI CE UNDER SECTION 143(2) OF THE ACT WITHIN THE TIME LIMIT PRESCRIBED IN THE PROVISO TO SUB SECTION (2) OF SECTION143 OF THE ACT. SINCE NO NOTICE UNDER SECTION 143(2) HAS BEEN ISSUED WITHIN TIME LIMIT SPECIFIED IN THE PROVISO TO SECTION 143(2), NO VARIATIO N IN THE RETURNED INCOME COULD HAVE BEEN MADE BY THE ASSESSING OFFICER. CONSEQUENTLY, THE ADDITION OF RS.3,11,48,352/ - MADE IN THE IMPUGNED INTIMATION DESERVES TO BE DELETED. 5 . THE LD. CIT(A) AFTER CONSIDERING THE FACTS OF THE CASE, ASSESSMENT ORDER AND THE SUBMISSIONS OF THE ASSESSEE HELD THAT IN THE RETURN OF INCOME FILED BY THE ASSESSEE , NO DEDUCTION HAS BEEN CLAIMED UNDER SECTION 10(26AAB) OF THE ACT. W HEN CLAIM WAS NOT MADE UNDER THE SAID SECTION, ASSESSING OFFICER (CPC) COULD NOT HAVE ALLOWED IT, ITA NO.688/LKW/2017 & S.P. NO.28/LKW/2018 PAGE 7 OF 9 THER EFORE, THE LD. CIT(A) CONFIRMED THE ADDITIONS MADE BY THE ASSESSING OFFICER. 6 . THE LD. A.R. OF THE ASSESSEE AT THE TIME OF HEARING VEHEMENTLY ARGUED THAT AS PER CLAUSE 26AAB INSERTED IN SECTION 10 W.E.F. 1/4/2009, ANY INCOME OF AN A GRICULTURAL P RODUCE M ARKET C OMMITTEE OR B OARD CONSTITUTED UNDER ANY LAW FOR THE TIME BEING IN FORCE FOR THE PURPOSE OF REGULATING THE MARKETING OF AGRICULTURAL PRODUCE , IS EXEMPT FROM TAX W.E.F. ASSESSMENT YEAR 2009 - 10. SINCE THE ASSESSEE MANDI SAMITI HAS BEEN ESTABLISHED UNDER UT TAR PRADESH KRISHI UTPADAN MANDI ADHINIYAM, 1964 ( U.P. ACT NO.XXV OF 1964) FOR THE PURPOSE OF REGULATING AGRICULTURE MARKETING PRODUCE IN THE STATE OF UTTAR PRADESH , A SSESSEE IS COVERED WITHIN THE MEANING OF AGRICULTURE PRODUCE MARKET COMMITTEE REFERRED IN SECTION 10 (26AAB) AND SUCH INCOME OF ASSESSEE MANDI SAMITI IS ELIGIBLE FOR BLANKET EXEMPTION FROM INCOME TAX UNDER THE SAID PROVISIONS OF THE ACT. THE LD. A.R. OF THE ASSESSEE FURTHER SUBMITTED THAT IDENTICAL ISSUE WAS INVOLVED IN THE CASE OF KRISHI UTP ADAN MANDI SAMITI, MAHMOODABAD, SITAPUR FOR ASSESSMENT YEAR 2013 - 14. IN THAT CASE, LD. CIT(A) HAS DELETED THE DISALLOWANCE MADE BY THE ASSESSING OFFICER UNDER SECTION 10(26AAB). COPY OF THE SAID APPELLATE ORDER WAS ANNEXED AND HAS BEEN FILED BEFORE THE L D. CIT(A). EVEN BEFORE US IN THE PAPER BOOK FROM PAGES 117 TO 141 PHOTOCOPIES OF VARIOUS ASSESSMENT ORDERS AND ORDERS OF THE LD. CIT(A) ON SIMILAR ISSUES HAVE BEEN FILED WHEREIN RELIEF HAS BEEN PROVIDED UNDER SECTION 10(26AAB). THE LD. CIT(A) FURTHER SUB MITTED THAT NEITHER THE ASSESSING OFFICER NOR THE LD. CIT(A) HAS BROUGHT OUT OR POINTED OUT ANY ARITHMETICAL ERROR OR INCORRECT CLAIM OR ANY INFORMATION IN THE RETURN. 7 . THE LD. D.R., ON THE OTHER HAND, PLACED RELIANCE ON THE FINDINGS OF THE SUBORDINATE AUTH ORITIES AND SUBMITTED THAT IN ORDER TO GET CLAIM OF DEDUCTION , THAT SHOULD HAVE BEEN CLAIMED IN THE RETURN OF INCOME AND IN ITA NO.688/LKW/2017 & S.P. NO.28/LKW/2018 PAGE 8 OF 9 THE CASE OF THE ASSESSEE NO DEDUCTI O N WAS CLAIMED UNDER SECTION 10(26AAB) AND IN THE ABSENCE OF CLAIMING ANY DEDUCTION, ASSESSING OF FICER COULD NOT HAVE ALLOWED IT. 8 . WE HAVE PERUSED THE CASE RECORD, HEARD THE RIVAL CONTENTIONS AND ANALYSED THE FACTS OF THE CASE. SO FAR AS THE LEGAL PRINCIPLES OF PROVISIONS OF SECTION 10(26AAB) VIS - - VIS THE FACTS OF THE CASE ARE CONCERNED, WE FIND THAT IT NEEDS A DETAILED FACTUAL VERIFICATION. IF THE CLAIM HAS BEEN MADE BY THE ASSESSEE UNDER SECTION 10(26AAB) IN THE RETURN OF INCOME AND IF THE FACTS AND CIRCUMSTANCES QUALIFY FOR SUCH DEDUCTION, THEN THAT SHALL BE ALLOWED TO THE ASSESSEE. WE HAVE PERUS ED VARIOUS ORDERS OF THE LD. CIT(A) PASSED IN THE CASES OF UTPADAN MANDI SAMITIES ON SIMILAR ISSUE AND WE ARE OF THE VIEW THAT IN THE INTEREST OF JUSTICE THE CASE OF THE ASSESSEE NEEDS TO BE ENQUIRED AND EXAMINED AT THE STAGE OF THE ASSESSING OFFICER TO BR ING OUT THE FACTUAL MATRIX ON THE MATTER. WE ARE, THEREFORE, OF THE CONSIDERED VIEW THAT THE MATTER SHOULD BE RESTORED BACK TO THE FILE OF THE ASSESSING OFFICER. WE ACCORDINGLY SET ASIDE THE ORDER OF THE LD. CIT(A) AND RESTORE THE MATTER BACK TO THE FILE OF THE ASSESSING OFFICER FOR FACTUAL VERIFICATION AND FRESH ADJUDICATION IN THE MATTER AS INDICATED HEREINABOVE AFTER PROVIDING REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE. 9 . IN THE RESULT, STAY PETITION OF THE ASSESSEE IS DISMISSED AND APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 07 / 0 9 / 201 8 . SD/ - SD/ - [ T.S. KAPOOR ] [PARTHA SARATHI CHAUDHURY ] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 7 TH SEPTEMBER , 201 8 JJ: ITA NO.688/LKW/2017 & S.P. NO.28/LKW/2018 PAGE 9 OF 9 COPY FORWARDED TO: 1 . APPELLANT 2 . RESP ONDENT 3 . CIT(A) 4 . CIT 5 . DR