A.P.State Civil Supplies Corporation Ltd.,, Hyderabad v. ITO, Hyderabad

ITA 1381/HYD/2008 | 2003-2004
Pronouncement Date: 28-07-2011 | Result: Dismissed

Appeal Details

RSA Number 138122514 RSA 2008
Assessee PAN AABCA7164R
Bench Hyderabad
Appeal Number ITA 1381/HYD/2008
Duration Of Justice 2 year(s) 11 month(s) 6 day(s)
Appellant A.P.State Civil Supplies Corporation Ltd.,, Hyderabad
Respondent ITO, Hyderabad
Appeal Type Income Tax Appeal
Pronouncement Date 28-07-2011
Appeal Filed By Assessee
Order Result Dismissed
Bench Allotted A
Tribunal Order Date 28-07-2011
Date Of Final Hearing 24-06-2011
Next Hearing Date 24-06-2011
Assessment Year 2003-2004
Appeal Filed On 22-08-2008
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A HYDERABAD BEFORE SHRI G.C. GUPTA VICE PRESIDENT AND SHRI CHANDRA POOJARI ACCOUNTANT MEMBER I TA NO. ASSESSMENT YEAR APPELLANT RESPONDENT 1381/HYD/2008 2003 - 04 A.P. STATE CIVIL SUPPLIES CORPORATION LTD. HYDERABAD (PANAABCA 7164R) ITO WARD - 1(1) HYDERABAD (PRESENTLY DY. DIRECTOR OF INCOME-TAX (EXEMPTION)-III HYDERABAD 1382/HYD/2008 2004 - 05 - DO - DY. DIRECTOR OF INCOME-TAX (EXEMPTION)-III HYDERABAD 711/ HYD/2009 2005 - 06 - DO - ASST. DIRECTOR OF INCOME-TAX (EXEMPTION)-III HYDERABAD 436/HYD/2010 2006 - 07 - DO - ASST. DIRECTOR OF INCOME-TAX (EXEMPTION)-III HYDERABAD APPELLANT BY : SHRI D.V.ANJANEYULU RESPONDENT BY : SHRI HARI LAL NAYAK O R D E R PER CHANDRA POOJARI A.M. : THESE FOUR APPEALS ARE FILED BY THE ASSESSEE. WH ILE APPEAL FOR THE ASSESSMENT YEAR 2003-04 IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX(APPEALS) II HYDERABAD DATED 7.3.2007 2003-04 THREE OTHER APPEALS ARE DIR ECTED AGAINST THE ORDERS OF THE COMMISSIONER OF INCOME-TAX(APPEAL S) IV HYDERABAD AND THEY ARE DATED 6.6.2008 FOR THE ASSES SMENT YEAR 2004-05; DATED 13.3.2009 FOR ASSESSMENT YEAR 2005-0 6; AND ITA NO.1381/H/2008 & THREE OTHERS A.P.STATE CIVIL SUPPLIES CORPORATION LTD. HY DERABAD 2 DATED 15.1.2010 FOR ASSESSMENT YEAR 2006-07. SINC E CERTAIN COMMON ISSUES ARE INVOLVED THESE APPEALS ARE BEING DISPOSED OFF WITH THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVEN IENCE. 2. THE MAIN COMMON ISSUE INVOLVED IN ALL THESE APPEALS RELATES TO REJECTION OF THE ASSESSEES CLAIM FOR EX EMPTION OF ITS INCOME UNDER S.11 OF THE INCOME-TAX ACT 1961. EFF ECTIVE GROUND OF THE ASSESSEE IN RELATION TO THIS ISSUE COMMON I N ALL THESE APPEALS AS TAKEN FROM ITS APPEAL ITA NO.1381/HYD/2 008 FOR THE ASSESSMENT YEAR 2003-04 IS AS FOLLOWS- WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE EQUITY PARTICIPATION MADE BY THE APPELLANT CORPORAT ION IN ITS JOINT VENTURE COMPANIES FOR THE ATTAINMENT OF I TS OBJECTIVES COULD BE TREATED AS AN INVESTMENT IN VIO LATION OF SEC.11(5) R.W.S. 13(1)(D) OF THE I.T. ACT LEADI NG TO THE DENIEL OF THE EXEMPTION GRANTED UNDER SEC.11 OF THE INCOM E TAX ACT 1961 AND TAXING ITS ENTIRE INCOME? 3. WE HAVE HEARD BOTH SIDES ON THIS ISSUE. LET US FIRST DEAL WITH THE MAIN ISSUE RELATING TO REJECTION OF T HE ASSESSEES CLAIM FOR EXEMPTION IN RESPECT OF ITS INCOME UNDER S.11 OF THE ACT. WE FIND THAT THIS COMMON ISSUE RELATING TO DENIAL O F EXEMPTION IS COVERED AGAINST THE ASSESSEE WITH THE DECISION OF T HE TRIBUNAL IN ASSESSEES OWN CASES DATED 31 ST OCTOBER 2007 IN ITA NO.1350/HYD/1997 AND FIVE OTHERS FOR ASSESSMENT YEA R 1994-95 TO 1997-98. AFTER DETAILED CONSIDERATION OF THE MA TTER IT HAS BEEN HELD BY THE TRIBUNAL THAT THE CAPITAL CONTRIBU TED BY THE ASSESSEE COMPANY FOR PROMOTING A JOINT VENTURE COMP ANY WOULD CERTAINLY AMOUNT TO AN INVESTMENT IN THE SHARES OF THE JOINT VENTURE COMPANY AND THEREFORE THERE IS NO SUBSTAN CE IN THE ITA NO.1381/H/2008 & THREE OTHERS A.P.STATE CIVIL SUPPLIES CORPORATION LTD. HY DERABAD 3 ARGUMENT OF THE LEARNED REPRESENTATIVE FOR THE ASSE SSEE THAT NO INVESTMENT WAS MADE IN SHARES. IT WAS ALSO HELD V IDE PARA 13 OF THAT ORDER THAT SO LONG AS THE ASSESSEE CONTINUED T O HOLD SHARES IN THE JOINT VENTURE COMPANY WHICH IS NEITHER A PU BLIC SECTOR UNDERTAKING NOR THE COMPANY WHICH IS ONE PROVIDED U NDER S.11(5) OF THE ACT ASSESSEE IS NOT ENTITLED FOR EX EMPTION AND AS SUCH PROVISIONS OF S.11(1)(D) OF THE ACT WOULD PREV AIL OVER THE PROVISIONS OF S.11. IT WAS THEREFORE CONCLUDED TH AT THE ASSESSEE CANNOT HOLD OR CONTINUE TO HOLD THE SHARES IN COMPA NIES OTHER THAN THOSE PROVIDED UNDER S.13(1)(D) (III) AFTER 30 .11.1983. THE TRIBUNAL FURTHER CONCLUDED VIDE PARA 14 OF THAT DEC ISION THAT MERE FACILITATION OF CARRYING ON THE CHARITABLE OBJECT CANNOT BE A GROUND TO CONTINUE TO HOLD THE SHARES IN THE JOINT VENTURE COMPANY AFTER 30.11.1983 AND CONSEQUENTLY THERE W AS A CLEAR VIOLATION OF THE PROVISIONS OF S.13(1)(D) OF THE IN COME-TAX ACT AND AS SUCH THE ASSESSEE WAS NOT ENTITLED FOR EXEMP TION UNDER S.11 OF THE ACT. IN THE ABSENCE OF ANY OTHER DECI SION TO THE CONTRARY BROUGHT TO OUR NOTICE BY THE LEARNED COUNS EL FOR THE ASSESSEE WE FIND NO INFIRMITY IN THE ORDERS OF THE CIT(A) ON THIS ISSUE. WE ACCORDINGLY UPHOLD THE ORDERS OF THE CIT( A) ON THIS ISSUE AND REJECT THE GROUNDS OF THE ASSESSEE ON THI S ISSUE IN THESE FOUR APPEALS. 4. AT THIS JUNCTURE WE MAY NOTE THAT THE ASSESSE E HAS RAISED CERTAIN ADDITIONAL GROUNDS IN THE CONTEXT O F DISALLOWANCE OF PRIOR PERIOD EXPENSES FOR THE ASSESSMENT YEAR 2003- 04; AND DISALLOWANCE OF CERTAIN ITEMS OF EXPENSES IN TERMS OF S.43B FOR THE ASSESSMENT YEARS 2004-05 AND 2005-06. ON CAREF UL ITA NO.1381/H/2008 & THREE OTHERS A.P.STATE CIVIL SUPPLIES CORPORATION LTD. HY DERABAD 4 CONSIDERATION OF THE RIVAL SUBMISSIONS ON THE ADMIS SIBILITY OF THESE ADDITIONAL GROUNDS WE ARE INCLINED TO ADMIT THE SA ME. WE ACCORDINGLY ADMIT THE SAME AND PROCEED TO DISPOSE O FF THE SAME. 5. WITH REGARD TO DISALLOWANCE OF PRIOR PERIOD E XPENSES FOR THE ASSESSMENT YEAR 2003-04 WE HAVE HEARD BOTH SIDES AND PERUSED THE MATERIAL ON RECORD IN THE LIGHT OF THE IMPUGNED ORDERS OF THE LOWER AUTHORITIES ON THIS ISSUE. ON A CAREFUL CONSIDERATION WE FIND THAT THE CIT(A) HAS CONFIRME D THE DISALLOWANCE MADE BY THE ASSESSING OFFICER ON THE G ROUND THAT REQUISITE DETAILS WERE NOT FURNISHED. HE NOTED THA T EVEN THE DETAILS CALLED FOR BY THE ASSESSING OFFICER DURING THE ASSESSMENT PROCEEDINGS HAVE NOT BEEN FURNISHED TO SUBSTANTIATE THE CLAIM OF THE ASSESSEE. THE ASSESSEE RELIED ON THE FOLLOWING JUDGMENTS: 1. CIT VS. NAGA MILLS CO. LTD. (33 ITR 681 ) (MUM.) 2. DECCAN CEMENTS LTD. IN ITA NO.203/HYD/97 AY 1993-94 (ITAT HYD.) 3. TOYA ENGG. LTD. VS. JT. CIT IN 100 TTJ 373-381 (MUM ) THE JUDGMENTS RELIED BY THE ASSESSEE ARE DELIVERED ON DIFFERENT FACTS AND THE RATIO LAID DOWN ON THE ABOVE JUDGMENT S CANNOT BE APPLIED TO THE FACTS OF THE PRESENT CASE. 6. IN THIS VIEW OF THE MATTER WE FIND NO INFIRMIT Y IN THE ACTION OF THE CIT(A) IN UPHOLDING THE DISALLOWANCE MADE BY THE ASSESSING OFFICER WITH REGARD TO PRIOR PERIOD EXPENSES. WE A CCORDINGLY UPHOLD THE ORDER OF THE CIT(A) AND REJECT THE GROUN DS OF THE ASSESSEE IN THIS BEHALF. ITA NO.1381/HYD/2008 IS DI SMISSED. ITA NO.1381/H/2008 & THREE OTHERS A.P.STATE CIVIL SUPPLIES CORPORATION LTD. HY DERABAD 5 7. IN THE APPEAL FOR THE ASSESSMENT YEAR 2004-05 AND 2005-06 THE ASSESSEE RAISED THE GROUND WITH REGARD TO DISALLOWANCE IN TERMS OF SECTION 43B OF THE INCOME TAX ACT 1961 WHICH ARE AS FOLLOWS: SL.NO. HEAD ASST. YEAR 2004-05 ASST. YEAR 2005-06 1 STATE ADMINISTRATIVE SURCHARGE RS.1 20 30 578 RS. 2 54 66 498 2 MARKET FEE RS.46 99 199 NIL 3 RURAL DEVELOPMENT FEE RS.2 51 42 186 RS.93 85 781 7.1 WE HAVE HEARD BOTH THE PARTIES AND PERUSED TH E MATERIALS AVAILABLE ON RECORD. ON CAREFUL CONSIDER ATION WE FIND THAT THE DISALLOWANCE OF STATE ADMINISTRATIVE SURCH ARGE HAS TO BE EXAMINED BY THE LOWER AUTHORITIES IN THE LIGHT OF T HE ORDER OF THIS TRIBUNAL IN ASSESSEES OWN CASE REPORTED IN 37 ITD 1(3 RD MEMBER). ACCORDINGLY WE SET ASIDE THIS ISSUE IN BOTH THE YE ARS TO THE FILE OF ASSESSING OFFICER FOR FRESH CONSIDERATION. 7.2. NOW COMING TO THE ISSUE RELATING TO DISALLOW ANCE OF MARKET FEE IN THE ASSESSMENT YEAR 2004-05 AND RURAL DEVELOPMENT FEE IN THE ASSESSMENT YEARS 2004-05 20 05-06 WE SET ASIDE THE SAME TO THE FILE OF ASSESSING OFFICER TO EXAMINE THE SAME IN THE LIGHT OF THE JUDGMENT SRIKAKOLLU SUBBA RAO & CO. V/S. UOI (173 ITR 708) AND DECIDE THE SAME ACCORDINGLY. ITA NO.1381/H/2008 & THREE OTHERS A.P.STATE CIVIL SUPPLIES CORPORATION LTD. HY DERABAD 6 7.3. NOW COMING TO THE DISALLOWANCE OF PRICE EQU ALIZATION FUND ON PALM OIL FOR THE ASSESSMENT YEAR 2005-06 W E SET ASIDE THIS ISSUE TO THE FILE OF ASSESSING OFFICER TO EXAM INE THE SAME IN THE LIGHT OF THE ORDER OF THE TRIBUNAL IN ASSESSEE S OWN CASE REPORTED IN 37 ITD 1 (3 RD MEMBER). 7.4. FURTHER NO OTHER GROUNDS WERE PRESSED BEFORE US THOUGH THE ASSESSEE HAS RAISED IN THE GROUNDS OF AP PEALS AND ARE DISMISSED THESE GROUNDS AS NOT PRESSED. 8. IN THE RESULT ITA NO.1382/HYD/2008 AND 711/HYD/2009 ARE PARTLY ALLOWED FOR STATISTICAL PUR POSES ITA NO.1381/HYD/2008 AND ITA NO.436/HYD/2010 ARE DISMIS SED. ORDER PRONOUNCED IN THE COURT ON 28.7.2011 SD/- SD/- (G.C. GUPTA) (CHANDRA POOJARI) V ICE PRESIDENT A CCOUNTANT MEMBER DATED THE 28 TH JULY 2011 ITA NO.1381/H/2008 & THREE OTHERS A.P.STATE CIVIL SUPPLIES CORPORATION LTD. HY DERABAD 7 COPY FORWARDED TO: 1. A.P.STATE CIVIL SUPPLIES CORPORATION LTD. C /O. M/S. ANJANEYULU & CO. CHARTERED ACCOUNTANTS 30 L BHAGYALAKSHMI NAGA R GANDHI NAGAR HYDERABAD 500 080 2. ITO WARD - 1(1) HYDERABAD (PRESENTLY DY. DIRECTOR OF INCOME - TAX (EXEMPTION)-III HYDERABAD 3. ASST . DIRECTOR OF INCOME - TAX (EXEMPTION) - III HYDERABAD 4. COMMISSIONER OF INCOME-TAX(APPEALS) II HYDERABA D 5. COMMISSIONER OF INCOME - TAX(APPEALS) IV HYDERABAD 6 COMMISSIONER OF INCOME - TAX I HYDERABAD 7. COMMISSIONER OF INCOME - TAX III HYDERABAD 8. DEPARTMENTAL REPRESENTATIVE ITAT HYDERABAD B.V.S