The Sonepat Coop Sugar Mills, Sonepat v. ACIT, Sonepat

ITA 1301/DEL/2009 | 2006-2007
Pronouncement Date: 28-10-2010 | Result: Allowed

Appeal Details

RSA Number 130120114 RSA 2009
Bench Delhi
Appeal Number ITA 1301/DEL/2009
Duration Of Justice 1 year(s) 6 month(s) 22 day(s)
Appellant The Sonepat Coop Sugar Mills, Sonepat
Respondent ACIT, Sonepat
Appeal Type Income Tax Appeal
Pronouncement Date 28-10-2010
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted G
Tribunal Order Date 28-10-2010
Date Of Final Hearing 28-10-2010
Next Hearing Date 28-10-2010
Assessment Year 2006-2007
Appeal Filed On 06-04-2009
Judgment Text
I.T.A. NO.1301 /DEL/09 1/5 IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH G NEW DELHI) BEFORE SHRI C.L. SETHI JUDICIAL MEMBER AND SHRI A.K. GARODIA ACCOUNTANT MEMBER I.T.A. NO. 1301/DEL/2009 ASSESSMENT YEAR : 2006-07 THE SONEPAT COOP. SUGAR ACIT MILLS LTD. SONEPAT. V. SONEPAT CIRCLE SONEPAT. (APPELLANT) (RESPONDENT) PAN /GIR/NO. APPELLANT BY : SHRI RESPONDENT BY : SHRI ORDER PER A.K. GARODIA AM: THIS IS AN ASSESSEE'S APPEAL FILED AGAINST THE ORDER OF LD CIT(A) ROHTAK DATED 15.3.2009 FOR ASSESSMENT YEAR 2006-07. 2. THE GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER:- 1. THAT THE LD CIT(A) ERRED IN LAW AND IN FACT IN CONF IRMING THE DISALLOWANCE AND ADDING BACK A SUM OF `.55 00 000/- T O THE INCOME ON ACCOUNT OF PAYMENT OF THE RETAINING ALLOW ANCE PAID TO VARIOUS EMPLOYEES WITHOUT ASSIGNING ANY COGENT REASON FO R THE SAME. 2. THAT THE LD CIT(A) ERRED IN LAW AND IN FACT IN CONF IRMING THE DISALLOWANCE AND ADDING BACK A SUM OF `.3 87 346/- TO THE . I.T.A. NO.310308/DEL/ 2/5 INCOME OF THE APPELLANT ON ACCOUNT OF PAYMENT OF TH E RETAINING ALLOWANCE PAID TO VARIOUS EMPLOYEES WITHOUT ASSIGNING A NY COGENT REASONS FOR THE SAME. 3. AT THE VERY OUTSET IT WAS SUBMITTED BY THE LD AR O F THE ASSESSEE THAT THE ISSUE INVOLVED IN THIS APPEAL ARE COVERED IN FAVOUR OF THE ASSESSEE BY THE TRIBUNAL DECISION IN THE ASSESSEES OWN CASE F OR ASSESSMENT YEAR 2005-06 IN I.T.A. NO.2906/DEL/08 DATED 24.7.2009. HE SUBMITTED A COPY OF THIS TRIBUNAL DECISION. AS AGAIN ST THIS LD DR OF THE REVENUE SUPPORTED THE ORDERS OF THE AUTHORITIES BE LOW. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE GONE TH ROUGH THE MATERIAL AVAILABLE ON RECORD AND THE TRIBUNAL DECISI ON CITED BY THE LD AR OF THE ASSESSEE. WE FIND THAT THE DISPUTE IN THE PRE SENT CASE IS REGARDING DISALLOWANCES MADE BY THE ASSESSING OFFICER OF `.55 38 347/- . THE FIRST DISALLOWANCE OF `.55 LAKHS WAS MADE BY THE ASSESSING OFFICER ON THIS BASIS THAT THE ASSESSEE HAS MADE PAYMENT OF RETAINI NG ALLOWANCE OF `.98 23 400/- TO THE SEASONAL EMPLOYEES DURING THIS YEAR WHEREAS IN THE SUCH PAYMENT WAS ONLY OF `.75 12 197/- AND THEREFORE THE PAYMENT IN THE PRESENT YEAR IS HIGHER BY MORE THA N 31% IN COMPARISON TO THE PAYMENT IN THE PRECEDING YEAR. TH E ASSESSING OFFICER HAS OBSERVED THAT SINCE THE SUGAR MILLS ARE RUNN ING ON HEAVY LOSSES YEAR TO YEAR THERE WAS NO JUSTIFICATION TO PAY R ETENTION MONEY TO THE LARGE NUMBER OF SEASONAL WORKERS DURING THE NON OPERATIVE PERIOD. IT IS ALSO ALLEGED BY THE ASSESSING OFFICER THAT THE ASSESSEE HAS FAILED TO SUBSTANTIATE ITS ACTUAL REQUIREMENT AND AFTE R MAKING THESE OBSERVATIONS THE ASSESSING OFFICER MADE DISALLOWANCE OF ` .55 LAKHS OUT OF PAYMENT OF RETAINING ALLOWANCE OF `.98.23 LA KHS. THE SECOND DISALLOWANCE HAS BEEN MADE BY THE ASSESSING OFFICER BY MA KING THIS OBSERVATION IN PARA NO.7 OF THE ASSESSMENT ORDER THAT T HIS MUCH RETAINING ALLOWANCE WAS PAID BY THE ASSESSEE DURING THIS YEAR AS PER . I.T.A. NO.310308/DEL/ 3/5 ANNEXURE I OF THE P&L A/C AND NO SATISFACTORY JUSTI FICATION IS GIVEN BY THE ASSESSEE FOR THE SAME. HE DISALLOWED THE ENTIRE AMOUN T OF THIS RETAINING DISALLOWANCE OF `.3 87 346/-. IN ASSESSMENT YE AR 2005-06 THE FACTS ARE SIMILAR. IN THAT YEAR ALSO TWO DISALLOWANCES WERE MADE BY THE ASSESSING OFFICER OF `.75 12 197/- AND `.2 90 844/- WHICH WERE CLAIMED BY THE ASSESSEE ON ACCOUNT OF RETENTION MONEY PAID TO THE SEASONAL EMPLOYEES. IN THAT YEAR ALSO THE ALLEGATION OF THE ASSESSING OFFICER WAS THAT NO SATISFACTORY EXPLANATION IS GIVEN B Y THE ASS REGARDING THESE PAYMENTS. IN THAT YEAR BOTH THESE ISSU ES WERE DECIDED BY THE TRIBUNAL IN FAVOUR OF THE ASSESSEE BY MA KING FOLLOWING OBSERVATIONS IN PARA NO.6 OF THE TRIBUNAL ORDER WHIC H IS REPRODUCED BELOW:- WE HAVE DULY CONSIDERED THE RIVAL CONTENTION AND GO NE THROUGH THE RECORD CAREFULLY. THE WAGES OF SUGAR MILLS EMPLOY EES WERE FIXED NORMALLY AS PER THE SUGAR WAGE BOARDS RECOMMEND ATION. ON DUE CONSIDERATION OF THE RECOMMENDATIONS OF THE CO MMITTEE UNDER THE CHAIRMANSHIP OF SHRI CH. DHIR PAL SINGH T OWN & COUNTRY PLANNING MINISTER OF HARYANA AS WELL AS THE AG REEMENT BETWEEN SUGAR MILLS WORKERS FEDERATION AND SUGAR FEDERA TION WE FIND THAT SUCH PAYMENTS WERE MADE IN ACCORDANCE WITH THE TERMS OF EMPLOYMENT OF THE SEASONAL WORKERS. THERE WAS NO DISALLOWANCE IN THE PAST. SIMILAR PAYMENTS WERE MADE BY THE OTHER SUGAR MILLS ALSO AS CONTENDED BY THE LD COUNSEL FO R THE ASSESSEE. THE ASSESSING OFFICER DID NOT CALL FOR ANY EXPLAN ATION OF THE ASSESSEE. HE SIMPLY MADE THE ADDITION IN A SWEEPIN G WAY. NO REASONS ARE ASSIGNED FOR MAKING THE DISALLOWANCE. SI MILARLY LD CIT(A) CONFIRMED THE ADDITION ON THE GROUND THA T ASSESSEE HAS BEEN SUFFERING LOSSES. THE REVENUE AUTHORITIES HAVE N OT GONE THROUGH THE DETAILS WHETHER NECESSITY OF SUCH EMPLOYE ES WAS THERE IN THE BUSINESS OF THE ASSESSEE OR NOT. THEY FORMED THE . I.T.A. NO.310308/DEL/ 4/5 OPINION THAT IF LOSSES ARE SUFFERED BY AN ORGANIZATION THEN DEDUCTION OF EXPENSES INCURRED FOR THE PURPOSE OF BUSIN ESS MAY BE DISALLOWED. BUT WE DO NOT SEE ANY LOGIC IN SUCH A STEP BECAUSE IT IS NOT NECESSARY THAT BY INCURRENCE OF EXPEN SES PROFIT ALONE SHOULD RESULT EVEN IF THERE IS A LOSS EXPENSES AR E TO BE ALLOWED IF THEY INCURRED WHOLLY FOR THE PURPOSE OF B USINESS. IF THE EXPENSES WERE NON GENUINE AND NOT ESSENTIAL FOR THE BUS INESS PURPOSE THEN ONE CAN CONSIDER THE STAND OF THE ASSESSING O FFICER BUT LD ASSESSING OFFICER DID NOT VENTURE IN THIS FIELD. WE HAVE ALSO EXTRACTED THE FINDING OF THE ASSESSING OFFICER IN T HE FOREGOING PARAGRAPH AND FROM THAT FINDING NOTHING I S DISCERNABLE FOR MAKING THE DISALLOWANCE. THEREFORE WE ALLOW THE GROUND OF APPEAL RAISED BY THE ASSESSEE AND DELETE BOTH THE DISALLOWANCES. 5. SINCE THE FACTS IN THE PRESENT YEAR ARE SIMILAR W E DO NOT FIND ANY REASON TO TAKE A CONTRARY VIEW IN THE PRESENT YEAR AN D HENCE BY RESPECTFULLY FOLLOWING THIS TRIBUNAL DECISION IN ASSESSEE S OWN CASE IN THE PRECEDING YEAR WE DELETE BOTH THESE DISALLOWANCE S. 6. IN THE RESULT THE APPEAL FILED BY THE ASSESSEE IS ALL OWED. 7. ORDER PRONOUNCED IN THE OPEN COURT ON THE DATE O F HEARING I.E. 28 TH OCTOBER 2010. (C.L. SETHI) (A.K. GARODIA ) JUDICIAL MEMBER ACCOUNTANT MEMBER DT. .10.2010. HMS . I.T.A. NO.310308/DEL/ 5/5 COPY FORWARDED TO:- 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT (A)- NEW DELHI. 5. THE DR ITAT LOKNAYAK BHAWAN KHAN MARKET NEW DEL HI. TRUE COPY. BY ORDER (ITAT NEW DELHI).