The Meham Cooperative Sugar Mills Ltd, Meham v. ACIT, Sonepat

ITA 1700/DEL/2009 | 2006-2007
Pronouncement Date: 20-07-2010 | Result: Allowed

Appeal Details

RSA Number 170020114 RSA 2009
Assessee PAN AAATJ1426P
Bench Delhi
Appeal Number ITA 1700/DEL/2009
Duration Of Justice 1 year(s) 2 month(s) 26 day(s)
Appellant The Meham Cooperative Sugar Mills Ltd, Meham
Respondent ACIT, Sonepat
Appeal Type Income Tax Appeal
Pronouncement Date 20-07-2010
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted I
Tribunal Order Date 20-07-2010
Date Of Final Hearing 20-07-2010
Next Hearing Date 20-07-2010
Assessment Year 2006-2007
Appeal Filed On 24-04-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH E NEW DELHI BEFORE SHRI R.P. TOLANI AND SHRI B.C. MEENA ITA NO. 1700/DEL/09 A.YR. 2006-07 THE MEHAM COOP. SUGAR MILLS LTD. VS. ACIT SONEPA T CIRCLE MEHAM MEHAM. PAN/ GIR NO. AAATJ1426P ( APPELLANT ) ( RESPONDENT ) APPELLANT BY : SHRI R.D. GUPTA RESPONDENT BY : SMT. MONA MOHANTHY DR O R D E R PER R.P. TOLANI J.M : THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST TH E ORDER OF CIT(A) DATED 16-3-2009 FOR A.Y. 2006-07. SOLE GROUND TAKEN IS AS UNDER: THAT THE LD. CIT(A) ERRED IN LAW AND IN FACT IN CO NFIRMING THE DISALLOWANCE AND ADDING BACK A SUM OF RS. 55 00 000 /- TO THE INCOME OF THE APPELLANT ON ACCOUNT OF PAYMENT OF TH E RETAINING ALLOWANCE PAID TO VARIOUS EMPLOYEES WITHOUT ASSIGNI NG ANY COGENT REASON FOR THE SAME. 2. LEARNED COUNSEL FOR THE ASSESSEE AT THE VERY OUT SET CONTENDS THAT THE ISSUE IN QUESTION IS SQUARELY COVERED IN FAVOUR OF THE AS SESSEE BY EARLIER ORDERS OF THE TRIBUNAL IN ASSESSEES OWN CASE. IN SUPPORT A COPY OF TRIBUNALS ORDER DATED 30- 10-2009 IN ITA NO. 1252/DEL/09 HAS BEEN PLACED ON R ECORD. 3. LEARNED DR WAS FAIR ENOUGH TO CONCEDE THE AFORES AID FACTUAL POSITION. HE HOWEVER SUBMITTED THAT THE REVENUE HAS NOT GIVEN UP ITS STAND. 4. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH THE ENTIRE MATERIAL AVAILABLE ON RECORD. WE FIND THAT THE ITAT IN ASSES SEES OWN CASE FOR A.Y. 2006- 07 (SUPRA) HAS DELETED THE ADDITION IN QUESTION B Y OBSERVING AS UNDER: ITA 1700/D/09 MEHAM CO.OP SUGAR MILLS LTD. 2 2. AT THE TIME OF HEARING IT WAS FAIRLY AGREED BY BOTH THE SIDES THAT THE ISSUE WAS SQUARELY COVERED BY THE DECISION OF COORDINATE BENCH OF THIS TRIBUNAL IN THE ASSESSEES OWN CASE F OR THE ASSESSMENT YEAR 2005-06 IN ITA NO. 3499/DEL/2008 DATED 11.05.2 009 WHEREIN THE TRIBUNAL HAD HELD AS FOLLOWS: 5. IT IS SEEN THAT THE SAME ORDER OF THE LD. CIT(A ) IN THE CASE OF SONEPAT CO-OPERATIVE SUGAR MILLS LTD. F OR ASSESSMENT YEAR 2005-06 ON GROUND NO. 1 HAS BEEN REVERSED BY THE TRIBUNAL. THE RELEVANT OBSERVATIONS OF THE TRIBUNAL AS CONTAINED IN PARA 5 TO 7 ARE REPROD UCED BELOW:- 5. LD. COUNSEL FOR THE ASSESSEE WHILE IMPUGNING THE ORDER OF LD. CIT(A) SUBMITTED THAT RETENTION MONEY WAS PAID IN THE PAST ALSO NOT ONLY BY THE ASSESSEE BUT BY ALL THE SUGAR MILLS SITUATED IN HARYANA. SUCH TYPE OF WAGES WERE PAID BY THE SUGAR MILLS TO THE UNSKILLED AND SEMI SKILLED SEASONAL WORKER ON ACCOUNT OF A SETTLEMENT BETWEEN THE HARYANA SUGAR MILLS WORKERS FEDERATION AND SUGAR FEDERATION. THE EARLIER AGREEMENT EXECUTED BETWEEN BOTH THE INSTITUTIONS WAS EXPIRED ON 30 TH JUNE 2004. THE GOVT. OF HARYANA HAS CONSTITUTED A COMMITTEE UNDER THE CHAIRMANSHIP OF CH. DHIR PAL SINGH TOWN AND COUNTRY PLANNING MINISTER HARYANA FOR DETERMINING THE PAY REVISION AND DIFFERENT OTHER ISSUES. THE COMMITTEE HELD NEGOTIATIONS WITH THE WORKERS REPRESENTATIVE AND THEREAFTER FORWARDED ITS RECOMMENDATION. HE PLACED ON RECORD COPY OF THE AGREEMENT BETWEEN THE HARYANA SUGAR MILLS WORKERS FEDERATION AND SUGAR FEDERATION ALONG WITH THE RECOMMENDATION OF THE COMMITTEE WHICH HAVE A CONCURRENCE WITH THE FINANCE DEPARTMENT OF THE GOVT. OF HARYANA. HE POINTED OUT THAT RETENTION MONEY WAS PAID BECAUSE OF BUSINESS EXIGENCY. EARLIER IT WAS PAID @ 20% TO UNSKILLED SEASONAL EMPLOYEES IT WAS INCREASED TO 25%. SIMILARLY FOR SEMI-SKILLED CATEGORY IT WAS INCREASED FROM 30% TO 35%. ON THE STRENGTH OF THESE AGREEMENTS LD. COUNSEL FOR THE ASSESSEE CONTENDED THAT DEDUCTION OF SUCH ITA 1700/D/09 MEHAM CO.OP SUGAR MILLS LTD. 3 WAGES ARE TO BE ALLOWED TO THE ASSESSEE. ON THE OTHER HAND LD. DR RELIED UPON THE ORDER OF AO. 6. WE HAVE DULY CONSIDERED THE RIVAL CONTENTION AND GONE THROUGH THE RECORD CAREFULLY. THE WAGES OF SUGAR MILLS EMPLOYEES WERE FIXED NORMALLY AS PER THE SUGAR WAGE BOARDS RECOMMENDATION. ON DUE CONSIDERATION OF THE RECOMMENDATIONS OF THE COMMITTEE UNDER THE CHAIRMANSHIP OF SHRI CH. DHIR PAL SINGH TOWN AND COUNTRY PLANNING MINISTER HARYANA AS WELL AS THE AGREEMENT BETWEEN SUGAR MILLS WORKERS FEDERATION AND SUGAR FEDERATION 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 FOR THE ASSESSEE. THE AO DID NOT CALL FOR ANY EXPLANATION OF THE ASSESSEE. HE SIMPLY MADE THE ADDITION IN A SWEEPING WAY. NO REASONS ARE ASSIGNED FOR MAKING THE DISALLOWANCE. SIMILARLY LD. CIT(A) CONFIRMED THE ADDITION ON THE GROUND THAT ASSESSEE HAS BEEN SUFFERING LOSSES. THE REVENUE AUTHORITIES HAVE NOT GONE THROUGH THE DETAILS WHETHER NECESSITY OF SUCH EMPLOYEES WAS THERE IN THE BUSINESS OF THE ASSESSEE OR NOT. THEY FORMED THE OPINION THAT IF LOSSES ARE SUFFERED BY AN ORGANIZATION THEN DEDUCTION OF EXPENSES INCURRED FOR THE PURPOSE OF BUSINESS MAY BE DISALLOWED. BUT WE DO NOT SEE ANY LOGIC IN SUCH A STEP BECAUSE IT IS NOT NECESSARY THAT BY INCURRENCE OF EXPENSES PROFIT ALONE SHOULD RESULT EVEN IF THERE IS A LOSS EXPENSES ARE TO BE ALLOWED IF THEY INCURRED WHOLLY FOR THE PURPOSE OF BUSINESS. IF THE EXPENSES WERE NON GENUINE AND NOT ESSENTIAL FOR THE BUSINESS PURPOSE THEN ONE CAN CONSIDER THE STAND OF THE AO BUT LD. AO DID NOT VENTURE IN THIS FIELD. WE HAVE ALSO EXTRACTED THE FINDING OF AO IN THE FOREGOING PARAGRAPH AND FROM THAT FINDING NOTHING IS DISCERNIBLE FOR MAKING THE DISALLOWANCE. THEREFORE WE ALLOW THE GROUND OF APPEAL RAISED ITA 1700/D/09 MEHAM CO.OP SUGAR MILLS LTD. 4 BY THE ASSESSEE AND DELETE BOTH THE DISALLOWANCES. 7. IN THE RESULT APPEAL OF THE ASSESSEE IS ALLOWED. 6. IN THIS VIEW OF THE SITUATION AS THE DISALLOWANC E HAS BEEN UPHELD BY THE LD. CIT(A) ONLY ON THE BASIS OF HIS ORDER IN THE CASE OF SONEPAT CO-OPERATIVE SUGAR MILLS LTD. FOR ASSESSMENT YEAR 2005-06 WHICH ORDER HAS ALREADY BEEN REVERSED ON THIS ISSUE WE ALLOW T HE CLAIM OF THE ASSESSEE WITH RESPECT TO GROUND NO. 1 AND THE SAID GROUND IS ALLOWED. 3. IN THESE CIRCUMSTANCES RESPECTFULLY FOLLOWING T HE DECISION OF COORDINATE BENCH OF THIS TRIBUNAL IN THE ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2005-06 REFERRED TO SUPRA THE FIND INGS OF LD. CIT(A) ON THIS ISSUE IS REVERSED AND THE AO IS DIRE CTED TO GRANT THE ASSESSEE THE BENEFIT OF CLAIM OF RETAINING ALLOWANC E PAID TO THE EMPLOYEES AS CLAIMED. 4.1. NO CHANGE IN FACTS AND CIRCUMSTANCES FOR THE A SSESSMENT YEAR IN QUESTION HAS BEEN POINTED OUT BY EITHER OF THE PARTIES. THER EFORE RESPECTFULLY FOLLOWING EARLIER ORDERS OF THE TRIBUNAL FINDING OF THE CIT( A) ON THE ISSUE IS REVERSED AND THE AO IS DIRECTED TO GRANT THE ASSESSEE THE BENEFI T OF CLAIM OF RETAINING ALLOWANCE PAID TO THE EMPLOYEES AS CLAIMED. 5. IN THE RESULT ASSESSEES APPEAL IS ALLOWED. O RDER PRONOUNCED IN OPEN COURT ON 20-7-2010. SD/- SD/- (B.C. MEENA ) ( R.P. TOLAN I ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 20-7- 2010. MP COPY TO : 1. ASSESSEE 2. AO 3. CIT 4. CIT(A) 5. DR ITA 1700/D/09 MEHAM CO.OP SUGAR MILLS LTD. 5 ITA 1700/D/09 MEHAM CO.OP SUGAR MILLS LTD. 6