ACIT, Shimoga v. M/s Shimoga District Milk Producers Societies Uniion Ltd.,, Shimoga

ITA 1059/BANG/2012 | 2008-2009
Pronouncement Date: 25-10-2013 | Result: Partly Allowed

Appeal Details

RSA Number 105921114 RSA 2012
Assessee PAN AAGFS7684G
Bench Bangalore
Appeal Number ITA 1059/BANG/2012
Duration Of Justice 1 year(s) 2 month(s) 3 day(s)
Appellant ACIT, Shimoga
Respondent M/s Shimoga District Milk Producers Societies Uniion Ltd.,, Shimoga
Appeal Type Income Tax Appeal
Pronouncement Date 25-10-2013
Appeal Filed By Department
Order Result Partly Allowed
Bench Allotted B
Tribunal Order Date 25-10-2013
Date Of Final Hearing 18-09-2013
Next Hearing Date 18-09-2013
Assessment Year 2008-2009
Appeal Filed On 21-08-2012
Judgment Text
ITA NO.1059 OF 2012 SHIMOGA DISTRICT MILK PRODUCERS SOCIETIES UNION LTD SHIMOGA PAGE 1 OF 10 IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BBENCH BANGALORE BEFORE SHRI GEORGE GEORGE K. JUDICIAL MEMBER & SHRI JASON P. BOAZ ACCOUNTANT MEMBER ITA NO.1059/BANG/2012 (ASSESSMENT YEAR: 2008-09) ASSTT. COMMISSIONER OF INCOME TAX CIRCLE-1 SHIMOGA VS. M/S. SHIMOGA DISTRICT MILK PRODUCERS SOCIETIES UNION LTD MACHENAHALLI NIDIGE POST SHIMOGA PAN: AAGFS 7684 G (APPELLANT) (RESPONDENT) DEPARTMENT BY: SHRI L.V.BHASKARA REDDY DR ASSESSEE BY: SHRI V. SRINIVASAN CA DATE OF HEARING: 22/10/2013 DATE OF PRONOUNCEMENT: 25/10/2013 O R D E R PER GEORGE GEORGE K. J.M. THIS APPEAL AT THE INSTANCE OF THE REVENUE IS DIRE CTED AGAINST THE CIT (A)S ORDER DATED 20.06.2012. THE R ELEVANT ASSESSMENT YEAR IS 2008-09. THE GROUNDS RAISED BY T HE REVENUE READ AS FOLLOWS: 1. THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) HUBLI IS BAD IN LAW. 2. THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) HUBLI IS OPPOSED TO LAW AND NOT ON THE FACTS AND CIRCUMSTANCES OF THE CASE. 3. THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) HUBLI ERRED IN DELETING ADDITION OF ITA NO.1059 OF 2012 SHIMOGA DISTRICT MILK PRODUCERS SOCIETIES UNION LTD SHIMOGA PAGE 2 OF 10 RS.1 59 80 975/- MADE BY THE ASSESSING OFFICER U/S 40(A)(IA). 4. THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) HUBLI HAS VIOLATED RULE 46A OF THE I.T. RULES AS HE HAS NOT PROVIDED THE ASSESSING OFFICER AN OPPORTUNITY TO EXAMINE THE ADDITIONAL EVIDENCE I N THE FORM OF REVISED TDS RETURN ADMITTED DURING THE COURSE OF APPELLANT PROCEEDINGS. 5. THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) HUBLI ERRED IN DELETING THE ADDITION OF RS.5 00 000 BEING GRANTS GIVEN TO MILK PRODUCERS OF COOP SOCIETY. 6. FOR THESE AND OTHER GROUNDS THAT MAY BE URGED UPON AT THE TIME OF HEARING IT IS HUMBLY PRAYED TH AT THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) HUBLI MAY PLEASE BE REVERSED AND THAT OF THE ASSESSING OFFICER BE RESTORED. 7. THE APPELLANT CRAVES LEAVE TO ADD ALTER AMEND OR DELETE ANY OTHER GROUNDS ON OR BEFORE THE HEARING O F APPEALS. 2. BRIEF FACTS OF THE CASE ARE AS UNDER. THE ASSESSEE IS A COOPERATIVE SOCIETY ENGAGED IN THE BUSINESS OF DAIRY DEVELOPMENT PASTEURIZATION OF MI LK MANUFACTURING AND MARKETING OF MILK PRODUCTS. THE A SSESSEE FILED ITS RETURN OF INCOME ON 30.09.2009 FOR ASSESS MENT YEAR 2008-09 DECLARING INCOME OF RS.77 32 090. THE ASSES SMENT WAS TAKEN UP FOR SCRUTINY AND ASSESSMENT U/S 143(3) OF THE ACT WAS COMPLETED VIDE ORDER DATED 28.10.2010. THE ASSESSIN G OFFICER AMONG OTHER ADDITIONS MADE THE FOLLOWING TWO DISALLOWANCES/ADDITIONS TO THE RETURNED INCOME: I) DISALLOWANCE U/S 40(A)(IA) RS.1 59 80 975 ITA NO.1059 OF 2012 SHIMOGA DISTRICT MILK PRODUCERS SOCIETIES UNION LTD SHIMOGA PAGE 3 OF 10 II) BUILDING GRANTS GIVEN TO MILK PRODUCERS SOCIETY- RS.5 00 000. 3. DISALLOWANCE U/S 40(A)(IA) : THE ASSESSEE DURING THE YEAR UNDER APPEAL HAD INCU RRED EXPENDITURES WHICH WERE COVERED UNDER THE PROVISIO N OF CHAPTER XVII-B OF THE I.T. ACT. TO ASCERTAIN THE COMPLIANCE WITH THE PROVISIONS OF CHAPTER XVII-B OF THE I.T. ACT BY THE ASSESSEE THE ASSESSING OFFICER DIRECTED THE ASSESSEE TO FILE THE COPIES OF THE STATEMENT SHOWING THE DETAILS OF TDS AFFECTED. ACCO RDINGLY THE ASSESSEE FILED A STATEMENT SHOWING THE EXPENDITURES UNDER VARIOUS HEADS TOGETHER WITH THE TDS MADE THEREON. T HE DETAILS AS PER THE STATEMENT (TDS QUARTERLY RETURNS) ARE AS UNDER: S.NO NATURE OF PAYMENT AMOUNT TDS 1 TRUCK HIRE PTC/DTC 4 14 89 034 9 29 842 2 CAR HIRE CHARGES 15 89 645 33 058 3 TANKER HIRE CHARGES 97 01 794 2 19 843 4 LN2 HIRE CHARGES 3 31 478 7 512 5 CATTLE FEED TRANSPORTATION CHARGES 78 70 281 1 78 341 6 CONTRACT & SECURITY SERVICE CHARGES 86 16 726 1 95 256 7 OTHERS 1 36 80 646 7 53 452 TOTAL 8 32 79 604 23 17 304 3.1 SINCE THE EXPENDITURES MENTIONED IN THE SL.NO.1 TO 5 TOTALING TO RS.6 09 82 232 TALLIES WITH THE CORRESP ONDING EXPENDITURES MENTIONED IN THE PROFIT AND LOSS AMOUN T THE ITA NO.1059 OF 2012 SHIMOGA DISTRICT MILK PRODUCERS SOCIETIES UNION LTD SHIMOGA PAGE 4 OF 10 ASSESSING OFFICER WAS OF THE OPINION THAT THE ASSES SEE HAS COMPLIED WITH THE PROVISIONS OF CHAPTER XCII-B OF T HE I.T. ACT SO FAR AS IT RELATES TO RS.6 09 82 232. HOWEVER EXPEN DITURE MENTIONED IN SL.NO.6 AND 7 I.E. CONTRACT AND SCRUTI NY SERVICE CHARGES AND OTHERS AMOUNTING TO RS.2 22 97 372 DID NOT TALLY DIRECTLY WITH VARIOUS OTHER EXPENDITURES DEBITED IN THE PROFIT AND LOSS AMOUNT. 3.2 THE ASSESSING OFFICER TOOK OUT THE FOLLOWING IT EMS OF EXPENDITURES WHICH ACCORDING TO HIM WERE LIABLE FO R TDS FROM THE PROFIT AND LOSS AMOUNT: SL.NO PARTICULARS RS. 1 CONVERSION AND PROCESSING CHARGES 2 48 13 616 2 FREIGHT CHARGES 6 73 864 3 WATER TRANSPORT CHARGES 2 34 448 4 SECURITY SERVICE CHARGES 22 82 870 5 MVR HIRE CHARGES 19 23 525 6 CONTRACT LABOUR 55 00 046 7 PACKING CHARGES 13 89 624 8 TECHNICAL FEE TO VO&TECH OFFICERS 14 60 354 TOTAL 3 82 78 347 3.3 ACCORDING TO THE ASSESSING OFFICER THE ASSESSEE INSTEAD OF AFFECTING THE TDS ON RS.3 82 78.347 HAD DEDUCTED TH E TAX ONLY ON RS.2 22 97 372. THUS ASSESSING OFFICER HAD CONCL UDED THAT THE ASSESSEE HAS NOT AFFECTED THE TDS ON RS.1 59 80 975 AND DISALLOWED THE ENTIRE EXPENDITURE U/S 40(A)(IA) OF THE I.T. ACT. ITA NO.1059 OF 2012 SHIMOGA DISTRICT MILK PRODUCERS SOCIETIES UNION LTD SHIMOGA PAGE 5 OF 10 3.4 AGGRIEVED THE ASSESSEE PREFERRED AN APPEAL BEF ORE THE FIRST APPELLATE AUTHORITY. IT WAS SUBMITTED BEFORE THE CI T (A) THAT DUE TO PAUCITY OF TIME THE ASSESSEE COULD NOT RECONCIL E THE AMOUNT AS PER THE TDS QUARTERLY RETURNS AND THE AMOUNTS ME NTIONED IN THE P&L A/C. IT WAS SUBMITTED THAT THIS WAS DUE TO THE FACT THAT VARIOUS EXPENDITURES DEBITED IN THE P&L ASSESSEE CO MPANY REGROUPED AND RE-ARRANGED FOR CONVENIENCE FOR THE PURPOSE OF FILING QUARTERLY RETURN. FURTHER IT WAS SUBMITTED T HAT THE SAME EXPENDITURE DEBITED IN THE P&L EXPENDITURE WHEN SP LIT INTO PARTY-WISE PAYMENTS WERE FOUND TO BE NOT LIABLE FO R TDS AS THEY FELL BELOW THE MAXIMUM AMOUNT NOT LIABLE FOR TDS. I T WAS CONTENDED THAT AFTER FILING OF APPEAL THE ASSESSEE DID RECONCILED THE FIGURES IN QUARTERLY RETURNS WITH THE EXPENDITU RE DEBITED IN THE P&L A/C. IT WAS SUBMITTED IN THE LAST QUARTERLY RETURN FOR 1.1.08 TO 31.03.08 THE TDS EFFECT IN THE NAME OF DHARWAD MILK UNION LTD WAS WRONGLY ENTERED IN THE GROSS VALUE A T RS.3 22 536 INSTEAD A FIGURE OF RS.1 56 57 082 AND SAME WAS RECTIFIED BY FILING A REVISED TDS RETURN DATED 28.0 1.2011. 3.5 THE CIT (A) TAKING NOTE OF COPIES OF THE ORIGIN AL AND THE REVISED TDS (26 QF FORM) ALLOWED THE APPEAL OF THE ASSESSEE AND DELETED THE ADDITIONS MADE U/S 40(A)(IA) AMOUNTING TO RS.1 59 80 972. THE RELEVANT FINDINGS OF THE CIT (A ) READ AS FOLLOWS: I HAVE GONE THROUGH THE FACTS CASE CONTENTS IN TH E ASSESSMENT ORDER AND THE ASSESSEES WRITTEN SUBMISSIONS. AS SUBMITTED BY THE ASSESSEE THERE AR E SOME ENTRIES WAS WRONGLY MADE AND THE SAME WAS RECTIFIED BY FILING THE REVISED RETURN OF FORM 26Q4 CONSIDERING THE SAME AS HUMAN ERROR THE DISALLOWANC E ITA NO.1059 OF 2012 SHIMOGA DISTRICT MILK PRODUCERS SOCIETIES UNION LTD SHIMOGA PAGE 6 OF 10 MADE BY THE ASSESSING OFFICER IS CANCELLED AND THE ASSESSEE APPEAL IS ALLOWED. 3.6 THE REVENUE BEING AGGRIEVED IS IN APPEAL BEFORE US. THE LEARNED DR SUBMITTED THAT THE CIT (A) HAS VIOLATED RULE 46A OF THE I.T. RULES. IT WAS SUBMITTED THAT THE CIT (A) H AS NOT PROVIDED THE ASSESSING OFFICER AN OPPORTUNITY TO EXAMINE THE ADDITIONAL EVIDENCES FILED IN THE COURSE OF THE APPELLATE PROC EEDINGS IN THE FORM OF REVISED TDS RETURN. THEREFORE IT WAS SUBMI TTED THAT THE ISSUE SHOULD BE RESTORED TO THE ASSESSING OFFICER F OR DE NOVA CONSIDERATION MORE SO WHEN THE REVISED TDS RETURN WAS FILED ONLY ON 28.01.2011 I.E. SUBSEQUENT TO THE ASSESSME NT ORDER DATED 28.10.2010. 3.7 THE LEARNED AR ON THE OTHER HAND SUBMITTED THAT THE COMPUTATION MISTAKE IN ORIGINAL THE TDS RETURN WAS NOTICED AND THE SAME WAS RECTIFIED BY FILING A REVISED TDS RETU RN UNDER FORM NO.26QF. THE CIT (A) TAKING NOTE OF THE RECONCILIAT ION STATEMENT HAS CORRECTLY DELETED THE DISALLOWANCE OF EXPENDITU RE MADE BY THE ASSESSING OFFICER BY INVOKING THE PROVISIONS OF SECTION 40(A)(IA). 3.8 WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. THE PRESCRIPTION OF RU LE 46A IS APPARENT THAT THE ASSESSEE IS ORDINARILY NOT ENTITL ED TO PRODUCE ADDITIONAL EVIDENCE BEFORE THE CIT (A) OTHER THAN T HAT FURNISHED TO THE ASSESSING OFFICER EXCEPT IN THE FOUR CIRCUMS TANCES ENUMERATED IN CLAUSE (A) TO (D) OF SUB-RULE (1). SU B-RULE (2) ITA NO.1059 OF 2012 SHIMOGA DISTRICT MILK PRODUCERS SOCIETIES UNION LTD SHIMOGA PAGE 7 OF 10 HOWEVER PROVIDES THAT NO EVIDENCE SHALL BE ADMITTED UNDER SUB- RULE (1) UNLESS THE CIT (A) RECORDS IN WRITING THE REASONS FOR ITS ADMISSION. SUB-RULE (3) FURTHER STIPULATES THAT THE CIT (A) SHALL NOT TAKE INTO ACCOUNT ANY EVIDENCE PRODUCED UNDER S UB-RULE (1) UNLESS THE ASSESSING OFFICER HAS BEEN ALLOWED A REA SONABLE OPPORTUNITY TO EXAMINE THE EVIDENCE OR DOCUMENT OR TO CROSS EXAMINE THE WITNESS PRODUCED BY THE ASSESSEE OR TO PRODUCE ANY EVIDENCE OR DOCUMENT OR ANY WITNESS IN REBUTTAL OF THE ADDITIONAL EVIDENCE PRODUCED BY THE ASSESSEE. 3.8.1 IN THE INSTANT CASE THE CIT (A) HAS DELETED THE ADDITIONS MADE BY THE AO BY ADMITTING FRESH EVIDENCE NAMELY T HE REVISED TDS RETURN WHEREIN THE FIGURES HAVE BEEN RECONCILED WITH THE EXPENDITURE DEBITED IN THE P&L A/C. THE REVISED TDS RETURN IN FORM 26QF WAS FILED MUCH SUBSEQUENT TO THE COMPLETI ON OF THE ASSESSMENT ORDER THEREFORE THE ASSESSING OFFICER DID NOT HAVE AN OPPORTUNITY/OCCASION TO EXAMINE THE SAME. IN THE INTEREST OF JUSTICE AND EQUITY WE ARE OF THE VIEW THAT OPPORTU NITY SHOULD BE GRANTED TO THE ASSESSING OFFICER TO EXAMINE THE EVI DENCE FILED BY THE ASSESSEE IN THE COURSE OF APPELLATE PROCEEDINGS . THEREFORE THE ISSUE OF DISALLOWANCE OF EXPENDITURE U/S 40(A)( IA) IS RESTORED TO THE ASSESSING OFFICER. HE SHALL DISPOSE OF THE M ATTER IN ACCORDANCE WITH THE LAW AS EXPEDITIOUSLY AS POSSIBL E AFTER ALLOWING REASONABLE OPPORTUNITY OF BEING HEARD TO T HE ASSESSEE. IT IS ORDERED ACCORDINGLY. 3.8.2. IN THE RESULT GROUND NOS. 3 AND 4 IS ALLOWED FOR STATISTICAL PURPOSES. ITA NO.1059 OF 2012 SHIMOGA DISTRICT MILK PRODUCERS SOCIETIES UNION LTD SHIMOGA PAGE 8 OF 10 4. DISALLOWANCE OF RS.5 00 000 BEING BUILDING GRANT S GIVEN TO THE MILK PRODUCERS SOCIETY. 4.1 DURING THE YEAR UNDER APPEAL THE ASSESSEE HAD GIVEN GRANT OF RS.10 000 EACH TO FIFTY MILK PRODUCERS COO PERATIVE SOCIETIES TO CONSTRUCT THEIR OWN BUILDING FOR THE P URPOSE OF COLLECTING AND TESTING OF MILK. THE ASSESSING OFFIC ER WAS OF THE OPINION THAT THE EXPENDITURE OF RS.5.00 LAKHS IS CA PITAL IN NATURE AND DISALLOWED THE SAME. 4.2 THE ASSESSEE BEING AGGRIEVED FILED APPEAL BEFOR E THE CIT (A). BEFORE THE CIT (A) IT WAS SUBMITTED THAT THE GRANTS GIVEN TO THE MILK PRODUCERS SOCIETY WAS FOR THE FURTHERANCE OF THE BUSINESS OBJECT OF THE ASSESSEE AND HENCE IT PARTAKES THE CH ARACTER OF THE REVENUE IN NATURE. IT WAS SUBMITTED THAT THE PAYMEN TS WAS PERMITTED AS PER THE BYELAWS OF THE ASSESSEE SOCIET Y AND WAS APPROVED BY THE BOARD OF DIRECTORS IN THE MEETING H ELD ON 25.01.2007 AND WAS DULY RATIFIED BY THE JT. REGISTR AR OF THE SOCIETY GOVT. OF KARNATAKA. THE PAYMENTS WERE RELE ASED TO MILK PRODUCERS COOPERATIVE SOCIETY AFTER DUE INSPECTION AND CERTIFICATION OF CONSTRUCTION. IT WAS SUBMITTED THA T NO CAPITAL ASSET IS CREATED IN THE HANDS OF THE ASSESSEE AND THE SAID SUM OF RS.5.00 LAKHS IS TO BE ALLOWED AS REVENUE EXPEND ITURE. 4.3. THE CIT (A) ALLOWED THE APPEAL OF THE ASSESSEE . THE RELEVANT FINDINGS OF THE CIT (A) READ AS FOLLOWS: I HAVE GONE THROUGH THE FACTS CASE CONTENTS IN TH E ASSESSMENT ORDER AND THE ASSESSEES WRITTEN ITA NO.1059 OF 2012 SHIMOGA DISTRICT MILK PRODUCERS SOCIETIES UNION LTD SHIMOGA PAGE 9 OF 10 SUBMISSIONS THAT THE AMOUNT OF RS.5.00 LAKHS GIVEN BY THE SOCIETY TO MILK PRODUCERS FOR CONSTRUCTION O F PUKKA BUILDING AND BALANCE AMOUNT HAS TO BE ORGANIZED BY THE MILK PRODUCERS. THE CONTRIBUTION I S PART OF BY-LAWS AND APPROVED BY THE BOARD OF DIRECTORS IN MEETING. MOREOVER THE ASSESSEE NOT ACQUIRED ANY CAPITAL ASSET. HENCE THE SAME MAY BE ALLOWED. AS THE RESULT THE ASSESSEES GROUND OF APP EAL IS ALLOWED. 4.4. THE REVENUE BEING AGGRIEVED IS IN APPEAL BEFOR E US. THE LEARNED DR SUPPORTED THE ORDER OF THE ASSESSING OFF ICER. THE LEARNED AR ON THE OTHER HAND RELIED ON THE REASONIN G OF THE CIT (A). 4.5 WE HAVE HEARD THE RIVAL SUBMISSION AND PERUSED THE MATERIAL ON RECORD. THE GRANT OF RS.10 000 TO EACH OF THE 50 MILK PRODUCING COOPERATIVE SOCIETIES WAS GIVEN BY THE AS SESSEE SOCIETY FOR THE PURPOSE OF CONSTRUCTING THEIR OWN BUILDING FOR MILK COLLECTION AND TESTING. THE PAYMENT WAS PERMITTED A S PER THE BYELAWS OF THE SOCIETY AND WAS APPROVED BY THE BOAR D OF DIRECTORS AND RATIFIED BY THE JT. REGISTRAR OF THE COOPERATIVE SOCIETIES GOVT. OF KARNATAKA. THE EXPENDITURE INCU RRED DID NOT BRING INTO EXISTENCE ANY CAPITAL ASSET TO THE ASSES SEE. WE FIND THAT THE SAID GRANT HAS BEEN GIVEN BY THE ASSESSEE TO MILK PRODUCERS COOPERATIVE SOCIETIES IN ORDER TO PUT UP A BUILDING TO FACILITATE THE COLLECTION OF MILK AND TESTING IT. T HE MILK SO COLLECTED IS HANDED OVER TO THE ASSESSEE SOCIETY. I N THIS CONTEXT IT HELPS THE ASSESSEE TO CARRY OUT ITS BUSINESS OBJECT S MORE EFFECTIVELY AND HENCE THE CIT (A) HAS RIGHTLY HELD THAT THE EXPENDITURE OF RS.5.00 LAKHS IS DEDUCTIBLE AS REVEN UE ITA NO.1059 OF 2012 SHIMOGA DISTRICT MILK PRODUCERS SOCIETIES UNION LTD SHIMOGA PAGE 10 OF 10 EXPENDITURE. THEREFORE WE UPHOLD THE CIT (A) ORDER . IN THE RESULT GROUND NO.5 RAISED BY THE REVENUE IS DISMIS SED. 5. GROUND NOS. 1 2 6 & 7 ARE GENERAL IN NATURE AND NO SPECIFIC ADJUDICATION IS CALLED FOR. HENCE THE SAME ARE DISMISSED. 6. IN THE RESULT THE REVENUE APPEAL IS PARTLY ALLOW ED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 25 TH OCTOBER 2013. SD/- SD/- (JASON P. BOAZ) (GEORGE GEORGE K) ACCOUNTANT MEMBER JUDICIAL MEMBER BANGALORE DATED 25 TH OCTOBER 2013. VNODAN/SPS COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CONCERNED CIT(A) 4. THE CONCERNED CIT 5. THE DR ITAT BANGALORE 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCHES BANGALORE