The Deputy Commissioner of Income-tax,, Phagwara v. M/s. The Nakodar Hindu Urban Co-operative, Distt. Kapurthala

ITA 287/ASR/2013 | 2007-2008
Pronouncement Date: 31-10-2013 | Result: Dismissed

Appeal Details

RSA Number 28720914 RSA 2013
Assessee PAN AAAAT8077T
Bench Amritsar
Appeal Number ITA 287/ASR/2013
Duration Of Justice 5 month(s) 29 day(s)
Appellant The Deputy Commissioner of Income-tax,, Phagwara
Respondent M/s. The Nakodar Hindu Urban Co-operative, Distt. Kapurthala
Appeal Type Income Tax Appeal
Pronouncement Date 31-10-2013
Appeal Filed By Department
Order Result Dismissed
Bench Allotted DB
Tribunal Order Date 31-10-2013
Date Of Final Hearing 29-10-2013
Next Hearing Date 29-10-2013
Assessment Year 2007-2008
Appeal Filed On 02-05-2013
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR. BEFORE SH. H.S. SIDHU JUDICIAL MEMBER AND SH. B.P. JAIN ACCOUNTANT MEMBER I.T.A. NO. 287 (ASR)/2013 ASSESSMENT YEAR: 2007-08 PAN: AAAAT8077T DEPUTY COMMISSIONER VS. M/S THE NAKODAR HIN DU OF INCOME TAX PHAGWARA URBAN CO-OPERATIVE B ANK CIRCLE PHAGWARA LTD. SABZI MANDI NAKODAR TEHSIL PHAGWARA KAPURTHALA (APPELLANT) (RESPONDENT) APPELLANT BY: SH. AMRIK CHAND DR RESPONDENT BY: SH. RAKESH JOSHI ADVOCATE DATE OF HEARING: 29.10.2013 DATE OF PRONOUNCEMENT: 31.10.2013 ORDER PER BENCH 1. THE REVENUE HAS FILED THE PRESENT APPEAL AGAINST THE IMPUGNED ORDER DATED 25.02.2013 PASSED BY LEARNED CIT(A) JA LANDHAR FOR THE ASSESSMENT YEAR 2007-08 ON THE FOLLOWING GROUNDS: I. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN D ELETING ADDITION OF RS. 24 80 446/- MADE BY THE A.O. ON ACC OUNT OF UNCLAIMED AND UNPAID DIVIDEND WITHOUT APPRECIATING THE FACT THAT THESE DIVIDEND WAS STILL WITH THE ASSESSEE EVEN AFT ER MORE THAN 3 YEARS AND THE ADDITION WAS RIGHTLY MADE. 2 I.T.A. NO. 287 (ASR)/2013 ASSESSMENT YEAR: 2007-08 II. IT IS PRAYED THAT THE ORDER OF THE LEARNED COMMISSI ONER OF INCOME TAX(APPEALS) BE SET-ASIDE AND THAT OF THE ASSESSING OFFICER BE RESTORED. III. THE APPELLANT REQUESTS FOR LEAVE TO ADD OR AMEND OR ALTER THE GROUNDS OF APPEAL BEFORE THE APPEAL IS HEARD AND DI SPOSED OF. 2. FACTS RELATING TO THE ISSUE IN DISPUTE ARE THAT THE ASSESSEE FILED ITS RETURN OF INCOME ON 31.10.2007 DECLARING AN INC OME OF RS. 74 53 781/- WHICH WAS PROCESSED UNDER SECTION 143(1 ) OF THE INCOME TAX ACT 1961 (IN SHORT THE ACT) ON 30.03.2008. NOTICE UNDER SECTION 143(2) OF THE ACT WAS ISSUED TO THE ASSESSEE AND TH E CASE WAS TAKEN UP FOR SCRUTINY. THEREAFTER THE ASSESSING OFFICER ISS UED NOTICES UNDER SECTIONS 142(1) AND 143(2) OF THE ACT ALONG WITH A QUESTIONNAIRE TO THE ASSESSEE AND IN RESPONSE THERETO THE AUTHORIZED RE PRESENTATIVE OF THE ASSESSEE ATTENDED THE PROCEEDINGS FROM TIME TO TIME AND FURNISHED INFORMATION AS WELL AS BOOKS OF ACCOUNT WHICH WERE ALSO CHECKED. 3. THE ASSESSEE CO-OPERATIVE BANK DERIVES INCOME FR OM BANKING ACTIVITIES AND DURING THE YEAR IT HAS SHOWN GROSS RECEIPTS OF RS. 2 92 52 350/- AS AGAINST GROSS RECEIPTS OF RS. 2 75 45 167/- SHOWN LAST YEAR AND THE COMMISSIONS RECEIVED IS SHOWN AT RS. 6 5 289/- VIS--VIS RS. 65 429/- SHOWN LAST YEAR. THE ASSESSEE HAS ALSO RE CEIVED INTEREST DURING THE YEAR AT RS. 2 89 83 823/- AS AGAINST LAST YEAR RECEIPT OF INTEREST OF RS. 2 74 79 738/-. INTEREST PAID DURING THE YEAR IS RS. 1 66 50 841/- QUA RS. 3 I.T.A. NO. 287 (ASR)/2013 ASSESSMENT YEAR: 2007-08 1 56 59 858/- OF THE LAST YEAR. THE ASSESSING OFFIC ER WHILE SCRUTINIZING THE CASE OF THE ASSESSEE NOTED THAT THE ASSESSEE BA NK HAS SHOWN UNCLAIMED DIVIDENDS OF RS. 24 80 446/- DURING THE Y EAR UNDER CONSIDERATION WHICH HAVE NOT BEEN DISTRIBUTED EVEN AFTER A GAP OF THREE YEARS FROM THE DATE OF DECLARATION. THUS THE ASSES SING OFFICER VIDE LETTER DATED 09.11.2009 POINTED OUT TO THE ASSESSEE THAT T HE SAID UNCLAIMED AND UNPAID DIVIDEND EVEN AFTER A GAP OF THREE YEARS H AVE BECOME ITS OWN INCOME AND THE SAME WAS PROPOSED TO BE ADDED IN ITS INCOME. THE ASSESSING OFFICER AFTER CAREFULLY CONSIDERING THE R EPLY FURNISHED BY THE LEARNED COUNSEL FOR THE ASSESSEE AND THE MATERIALS AS WELL AS THE EVIDENCE ON RECORDS HELD THAT IT IS A FACT NOT DENIED BY TH E LEARNED COUNSEL THAT EVEN AS ON DATE THESE UNCLAIMED DIVIDENDS HAVE NOT BEEN PAID TO THE BONA FIDE CLAIMANTS/SHAREHOLDERS AND THE ASSESSEE HAS EV EN FAILED TO BRING ON RECORD ANY DOCUMENTARY EVIDENCE TO SHOW THAT IT HAS MADE ANY ATTEMPT TO DISBURSE THE UNCLAIMED DIVIDENDS TO THE SHARE HOLDE RS. HE FURTHER HELD THAT ANY UNCLAIMED AND/OR UNPAID DIVIDEND HAS GOT T O BE DEPOSITED WITH SEBI(SECURITIES EXCHANGE BOARD OF INDIA) AFTER A YE AR IN ITS RESERVE ACCOUNT AND NO COMPANY CAN KEEP THE UNPAID DIVIDEND WITH IT FOR ITS OWN USE AND IF IT DOES SO IT IS ITS INCOME AND LIAB LE TO TAX. AS ON DATE MORE THAN THREE YEARS HAVE PASSED AND THE AMOUNT OF UNCLAIMED DIVIDEND 4 I.T.A. NO. 287 (ASR)/2013 ASSESSMENT YEAR: 2007-08 IS STILL WITH THE ASSESSEE COMPANY AND IT IS DERIVI NG INTEREST INCOME FROM THE HUGE AMOUNT OF UNCLAIMED DIVIDENDS. THE CENTRAL GOVERNMENT HAS A RIGHT TO COLLECT ITS LEGITIMATE TAX DEMANDS FROM TH E TAXPAYERS. CONSEQUENTLY THE ASSESSING OFFICER VIDE ORDER DATE D 03.12.2009 MADE THE ADDITION OF RS. 24 80 446/- TO THE INCOME OF TH E ASSESSEE TREATING IT TO BE UNCLAIMED DIVIDEND AND/OR REVENUE RECEIPTS FOR T HE ASSESSMENT YEAR IN DISPUTE. 4. BEING AGGRIEVED WITH THE ASSESSMENT ORDER THE A SSESSEE FILED AN APPEAL BEFORE LEARNED CIT(A) JALANDHAR WHO VID E IMPUGNED ORDER DATED 25.02.2013 ALLOWED THE APPEAL OF THE ASSESSE E BY DELETING THE ADDITION OF RS. 24 80 446/- MADE BY THE ASSESSING O FFICER. NOW BEING AGGRIEVED WITH THE IMPUGNED ORDER THE REVENUE FILE D THE PRESENT APPEAL. 5. AT THE TIME OF HEARING LEARNED DR STATED THAT L EARNED COMMISSIONER OF INCOME TAX(APPEALS) HAS WRONGLY DEL ETED THE ADDITION OF RS. 24 80 446/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF UNCLAIMED AND UNPAID DIVIDEND WITHOUT APPRECIATING THE FACTS THAT THESE DIVIDENDS WERE STILL WITH THE ASSESSEE EVEN AFTER M ORE THAN 3 YEARS. HE FURTHER STATED THAT THE ASSESSING OFFICER HAS RIGHT LY MADE THE ADDITION IN DISPUTE AS SUCH THE ORDER OR THE ASSESSING OFFICER MAY BE UPHELD AND THE 5 I.T.A. NO. 287 (ASR)/2013 ASSESSMENT YEAR: 2007-08 ORDER OF LEARNED FIRST APPELLATE AUTHORITY MAY BE S ET ASIDE BY ALLOWING THE PRESENT APPEAL. 6. LEARNED COUNSEL FOR THE ASSESSEE RELIED UPON THE ORDER OF LEARNED FIRST APPELLATE AUTHORITY AND STATED THAT T HE ASSESSEE IS A CO- OPERATIVE SOCIETY AND IT IS GOVERNED BY THE PUNJAB CO-OPERATIVE SOCIETIES ACT 1961 AS WELL AS THE PUNJAB CO-OPERATIVE SOCIE TIES RULES 1963 AS SUCH THE PROVISIONS OF SEBI ARE NOT APPLICABLE ON THE ASSESSEE AS IT IS NOT REGISTERED UNDER THE INDIAN COMPANIES ACT. THE DIVI DEND IS BEING PAID AS PER THE PROVISIONS OF SECTION 41 OF THE PUNJAB CO-O PERATIVE SOCIETIES ACT AND RULE 35 OF THE SAID PUNJAB COOPERATIVE SOCIETIE S RULES 1963. HE FURTHER STATED THAT THE SAID UNCLAIMED DIVIDEND IS A LIABILITY OF THE ASSESSEE AND HAD BEEN REFLECTED AS SUCH IN THE BALA NCE SHEET OF THE ASSESSEE BANK. HE MAINLY RELIED UPON THE DECISION O F HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF COMMISSIONER OF I NCOME TAX VS. LAL TEXTILE FINISHING MILLS (P.). LTD. REPORTED IN 180- ITR-45 (PUNJAB) IN WHICH CERTAIN UNCLAIMED LIABILITIES WERE WRITTEN BA CK YET IT WAS HELD THAT THERE WAS NO FINDING OR MATERIAL TO SHOW THAT SUCH SUM WAS EVEN ALLOWED AS DEDUCTION IN ANY EARLIER YEAR THE SAME COULDNT BE BROUGHT TO TAX UNDER SECTION 41(1) OF THE INCOME TAX ACT. AT LAST HE REQUESTED THAT THE 6 I.T.A. NO. 287 (ASR)/2013 ASSESSMENT YEAR: 2007-08 APPEAL OF THE REVENUE MAY BE DISMISSED AND THE IMPU GNED ORDER MAY BE UPHELD. 7. WE HAVE HEARD BOTH THE PARITIES AND PERUSED THE RELEVANT MATERIALS AVAILABLE WITH US ESPECIALLY THE ORDERS PASSED BY THE REVENUE AUTHORITIES AND FOR THE SAKE OF CONVENIENCE RELEVA NT PORTIONS OF THE IMPUGNED ORDER I.E. PARAS 5 TO 7 (PAGES 5-6) ARE RE PRODUCED AS UNDER: 5. I HAVE CAREFULLY CONSIDERED THE ISSUE AT HAND THE ASSESSMENT ORDER AND THE SUBMISSIONS OF THE ASSESSEE. I ALSO F IND THAT THE ISSUE IS IDENTICAL TO THE CASE OF M/S PHILLAUR PRIMARY COOP ERATION AGRICULTURAL DEVELOPMENT BANK WHERE IDENTICAL ADDITION WAS MADE. THAT APPEAL WAS DECIDED BY ME IN APPEAL NO. 285/11-12/CIT(A)/JA L. DATED 19.11.2012 WHEREIN IT WAS HELD AS UNDER: I. I HAVE CAREFULLY CONSIDERED THE ISSUE OF ADDITION M ADE UNDER SECTION 41(1) OF THE I.T. ACT AND FIND THAT THIS AM OUNT OF UNPAID DIVIDENDS CANT BE ADDED U/S 41(1) OF I.T. ACT FOR THE REASONS AS UNDER:- II. DIVIDEND ITSELF IS INCLUDIBLE IN TOTAL INCOME. IN O THER WORDS THE DIVIDENDS ARE TAKEN FOR COMPUTING TOTAL INCOME AND ARE ALREADY TAXED OR EXEMPT AS THE CASE MAY BE. III. IT IS AN ITEM OF PROFIT AND LOSS APPROPRIATE ACCOUN T AND NOT OF PROFIT AND LOSS ACCOUNT HENCE CANT STAND ALLOWED A S A DEDUCTION IN ANY PREVIOUS YEAR AS EXPENDITURE OR A TRADING LIABILITY. IV. IN CASE OF ASSESSEE THERE IS NO WRITING BACK AS YET AND THEY ARE SHOWN AS PAYABLE. V. SINCE THIS ITEM DOESNT REPRESENT ANY LOSS EXPENDI TURE OR TRADING LIABILITY AND IS NOT ALLOWABLE AS DEDUCTION THE SAME CANT BE ADDED U/S 41(1) OF I.T. ACT WHEN IT IS SHO WN AS PAYABLE. VI. IN CASE OF LAL TEXTILE MILLS (P) LTD. 180-ITR-45 (P UNJAB) CERTAIN UNCLAIMED LIABILITIES WERE WRITTEN BACK YET IT WAS HELD THAT THERE WAS NO FINDING OR MATERIAL TO SHOW THAT SUCH SUM WAS 7 I.T.A. NO. 287 (ASR)/2013 ASSESSMENT YEAR: 2007-08 EVEN ALLOWED AS DEDUCTION IN ANY EARLIER YEAR THE S AME COULDNT BE BROUGHT TO TAX U/S 41(1) OF I.T. ACT IN VIEW OF THIS THE ADDITION OF RS. 4 24 178 IS DE LETED. 6. SINCE THE FACTS AND THE NATURE OF ADDITIONS MADE AR E IDENTICAL IN THE CASE OF ASSESSEE ALSO FOLLOWING MY OWN ORDER A S ABOVE. I HEREBY DELETE THE ADDITION OF RS. 24 80 446/- 7. IN THE RESULT THE APPEAL IS ALLOWED. 8. AFTER THOROUGHLY GOING THROUGH THE IMPUGNED ORDE R WE FOUND THAT THE LEARNED FIRST APPELLATE AUTHORITY RIGHTLY ALLOWED THE PRESENT APPEAL BY FOLLOWING HIS OWN ORDER WHICH HE HAS PAS SED IN THE CASE OF M/S PHILLAUR PRIMARY COOPERATION AGRICULTURAL DEVEL OPMENT BANK IN APPEAL NO. 285/11-12/CIT(A)/ JAL. DATED 19.11.2012. IN THIS CASE HE HAS DELETED THE ADDITION MADE BY THE ASSESSING OFFICER BY RESPECTFULLY FOLLOWING THE DECISION OF HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF COMMISSIONER OF INCOME TAX VS. LAL TEXTILE FINISHING MILLS (P.). LTD. REPORTED IN 180-ITR-45 (PUNJAB). SIMILARLY IN THE PRESENT CASE HE HAS DELETED THE ADDITION IN DISPUTE AS THE FACTS AN D NATURE OF ADDITIONS MADE IN THE PRESENT CASE ARE IDENTICAL WITH THE AFO RESAID APPEAL I.E. 285/11-12/CIT(A)/ JAL. WHICH HE HAS DECIDED ON 19. 11.2012 IN THE LIGHT OF THE DECISION OF HON'BLE PUNJAB & HARYANA HIGH CO URT (SUPRA). 8 I.T.A. NO. 287 (ASR)/2013 ASSESSMENT YEAR: 2007-08 9. KEEPING IN VIEW THE AFORESAID DISCUSSION AS WE A S THE DECISION OF HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF COMMISSIONER OF INCOME TAX VS. LAL TEXTILE FINISHING MILLS (P.). LT D. (SUPRA) WE ARE OF THE CONSIDERED VIEW THAT THE LEARNED FIRST APPELLAT E AUTHORITY HAS PASSED A WELL REASONED ORDER THEREFORE NO INTERFERENCE IS CALLED FOR. ACCORDINGLY WE DISMISS THE APPEAL FILED BY THE REV ENUE AND UPHOLD THE IMPUGNED ORDER DATED 25.02.2013 PASSED BY LEARNED C IT(A) JALANDHAR. 10. IN THE RESULT THE APPEAL FILED BY THE REVENUE I S DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 31 ST OCTOBER 2013 SD/./- SD/./- (B.P. JAIN) (H.S. SIDHU) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 31 ST OCTOBER 2013 /RK/ COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEE: M/S THE NAKODAR HINDU URBAN CO-OPERAT IVE BANK LTD. SABZI MANDI NAKODAR TEHSIL PHAGWARA KAPURTHALA 2. DEPUTY COMMISSIONER OF INCOME TAX PHAGWARA CIRCLE PHAGWARA 3. THE CIT(A) JALANDHAR 4. THE CIT JALANDHAR 5. THE SR DR I.T.A.T. ASR TRUE COPY BY ORDER (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH: AMRITSAR.