Namdhari Seeds, Bangalore v. ACIT, Bangalore

ITA 385/BANG/2011 | 2008-2009
Pronouncement Date: 01-02-2012 | Result: Dismissed

Appeal Details

RSA Number 38521114 RSA 2011
Assessee PAN AABFN0971G
Bench Bangalore
Appeal Number ITA 385/BANG/2011
Duration Of Justice 9 month(s) 24 day(s)
Appellant Namdhari Seeds, Bangalore
Respondent ACIT, Bangalore
Appeal Type Income Tax Appeal
Pronouncement Date 01-02-2012
Appeal Filed By Assessee
Order Result Dismissed
Bench Allotted B
Tribunal Order Date 01-02-2012
Date Of Final Hearing 01-02-2012
Next Hearing Date 01-02-2012
Assessment Year 2008-2009
Appeal Filed On 07-04-2011
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCH B BEFORE SHRI N.K.SAINI ACCOUNTANT MEMBER AND SMT. P. MADHAVI DEVI JUDICIAL MEMBER I.T.A. NOS.382 383 & 385/BANG/2011 (ASSESSMENT YEARS : 2002-03 2007-08 & 2008-09) M/S. NAMDHARI SEEDS NO.119 9 TH MAIN ROAD IDEAL HOMES TOWNSHIP RAJARAJESHWARI NAGAR BANGALORE-560 098 . APPE LLANT. PAN AABFN 0971G VS. THE ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE 2(1) BANGALORE. .. RESPONDENT. APPELLANT BY : SHRI PADAM CHAND KHINCHA. RESPONDENT BY : SHRI FARAHAT HUSSAIN QURESHI. DATE OF HEARING :01.02.2012. DATE OF PRONOUNCEMENT : 01.02.2012. O R D E R PER SHRI N.K. SAINI A.M. : THESE THREE APPEALS BY THE ASSESSEE ARE DIRECTED AGAINST THE SEPARATE ORDERS EACH DATED 31.1.2011 OF LEARNED COMMISSIONER OF INC OME TAX (APPEALS)-I BANGALORE. 2. THESE APPEALS WERE HEARD TOGETHER. SINCE THE IS SUE INVOLVED IS COMMON SO THESE APPEALS ARE BEING DISPOSED OF BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. 3. FIRST WE WILL DEAL WITH ITA NO.382/BANG/201 1 FOR THE ASSESSMENT YEAR 2002-03. IN THIS APPEAL THE FOLLOWING GROUNDS HAVE BEEN RAISED : 2 ITA NO.382/BANG/11 1. THE LEARNED ASSESSING OFFICER HAD ERRED IN PAS SING THE ORDER IN THE MANNER PASSED BY HIM. THE ORDER PASSED IS BAD IN LAW AND IS LIABLE TO BE QUASHED. 2. THE ASSESSING OFFICER HAD ERRED IN TREATING THE ENTIRE AGRICULTURAL INCOME OF RS.3 15 57 627 WHICH WAS CLAIMED AS EXEMPT UNDER SECTION 10(1) OF THE I.T. ACT 1961 AS INCOME FROM BUSINESS. THE LEARNED CI T(A) HAS FOLLOWING THE EARLIER APPELLATE ORDER HELD THAT ONLY 10% OF AGRI CULTURAL INCOME IS TAXABLE. THE APPELLANT PRAYS THAT THE ENTIRE INCOME BE HELD AS AGRICULTURAL INCOME AND EVEN THE ADDITION OF 10% AS SUSTAINED BY CIT(A) BE DELETED. 3. THE LEARNED ASSESSING OFFICER HAD ERRED IN APPL YING THE PROVISION OF SECTION 40(A)(IA) OF I.T. ACT 1961 AND IN DISALLOWING A SU M OF RS.5 88 814 OUT OF ADVERTISEMENT (RS.1 39 165) AND PROFESSIONAL CHARGE S (RS.4 49 649) AND A SUM OF RS.22 08 159 OUT OF SALARY PAID. THE APPELLANT WAS NOT REQUIRED TO DEDUCT TDS ON ADVERTISEMENT PAYMENT OF RS.1 39 165. AS RE GARDING THE PROFESSIONAL CHARGES TDS HAS BEEN DEDUCTED BY THE APPELLANT. TH E APPELLANT WAS ALSO NOT REQUIRED TO DEDUCT TDS ON SALARY PAID OF RS.22 08 1 59. HENCE THE PROVISIONS OF SECTION 40(A)(IA) WOULD NOT BE APPLICABLE TO THE FACTS OF THE CASES. THE DISALLOWANCES HAVING BEEN MADE ON ERRONEOUS APPLICA TION OF LAW AND AN INCORRECT OF FACTS REQUIRE TO BE DELETED. 4. THE APPELLANT ALSO DENIES THE LIABILITY TO P AY INTEREST UNDER SECTION 234B AND INTEREST UNDER SECTION 234C OF THE I.T. ACT 19 61. THE INTEREST HAVING BEEN LEVIED WRONGLY ARE TO BE DELETED. 5. IN VIEW OF THE ABOVE AND ON OTHER GROUNDS TO BE ADDUCED AT THE TIME OF HEARING IT IS REQUESTED THAT THE ORDER PASSED BE Q UASHED OR ATLEAST FULL EXEMPTION FOR AGRICULTURAL INCOME AS CLAIMED BE ALL OWED AND DISALLOWANCE UNDER SECTION 40(A)(IA) BE DELETED AND INTEREST LEVIED AL SO BE DELETED. 4. GROUND NO.1 IS GENERAL IN NATURE WHILE THE GR OUND NOS.3 & 5 WERE NOT PRESSED AS SUCH THESE GROUNDS DO NOT REQUIRE ANY ADJUDICATION ON OU R PART. 5. AS REGARDS GROUND NO.4 IT WAS THE COMMON CON TENTION OF BOTH THE PARTIES THAT IT IS CONSEQUENTIAL IN NATURE. W E ORDER ACCORDINGLY. 6. NOW THE ONLY GROUND TO BE ADJUDICATED IS THE GROUND NO.2 WHICH RELATES TO THE ACTION OF THE LEARNED CIT(A) IN CONFIRMING THE VIEW EXPRES SED BY THE ASSESSING OFFICER IN TREATING THE INCOME CLAIMED TO BE AGRICULTURAL INCO ME AS BUSINESS INCOME. 3 ITA NO.382/BANG/11 7. THE FACTS OF THE CASE IN BRIEF ARE THAT THE ASSESSEE FILED ITS RETURN OF INCOME ON 30.9.2002 DECLARING AN INCOME OF RS.21 12 450. THE SAID RETURN WAS PROCESSED UNDER SECTION 143(1) OF THE INCOME TAX ACT 1961 (HEREIN AFTER REFERRED AS THE ACT). LATER ON THE CASE WAS SELECTED FOR SCRUTINY AND ASSESSMENT W AS COMPLETED UNDER SECTION 143(3) OF THE ACT. THEREAFTER THE CASE WAS REOPENED BY ISSU ING NOTICE UNDER SECTION 148 OF THE ACT. THE ASSESSING OFFICER MADE THE ADDITION OF RS .27 96 973 ON ACCOUNT OF PAYMENT TOWARDS ADVERTISEMENT RS. 5 88 814 FOR PROFESSION AL CHARGES AND SALARY OF RS.22 08 159 PAID OUTSIDE INDIA. THE SAID ADDITION WAS MADE IN THE INCOME ALREADY ASSESSED ON 10.03.2006 UNDER SECTION 143(3) OF THE ACT AT RS.3 43 99 060. 8. THE ASSESSEE CARRIED THE MATTER TO THE LE ARNED CIT(A) WHO UPHELD THE ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER. 9. DURING THE COURSE OF HEARING THE LEARNED C OUNSEL FOR THE ASSESSEE WAS FAIR ENOUGH TO CONCEDE THAT THE ISSUE HAS NOW BEEN DECIDED AGAI NST THE ASSESSEE BY THE HON'BLE JURISDICTIONAL HIGH COURT VIDE SEPARATE JUDGMENTS E ACH DATED 24.10.2011 IN ITA NO.75/2007 AND OTHERS ITA NO.1282-1284/2006 AND IT A NOS.75 71 & 76/2008. COPIES OF THE SAID ORDERS WERE FURNISHED. 10. THE LEARNED DEPARTMENTAL REPRESENTATIVE ALSO ENDORSED THE ABOVE CONTENTION AND SUBMITTED THAT THE ISSUE IS NOW SETTLED AGAINST THE ASSESSEE BY THE HON'BLE JURISDICTIONAL HIGH COURT VIDE JUDGMENT DATED 24.10.2011. 4 ITA NO.382/BANG/11 11. AFTER CONSIDERING THE SUBMISSIONS OF BOTH T HE PARTIES AND MATERIAL AVAILABLE ON RECORD IT APPEARS THAT THE MAIN ISSUE IS RELATED T O THE NATURE OF INCOME WHICH WAS CLAIMED BY THE ASSESSEE AS AGRICULTURAL INCOME AND CONSIDER ED BY THE ASSESSING OFFICER AS BUSINESS INCOME. THIS CONTROVERSY HAS NOW BEEN SET TLED BY THE HON'BLE JURISDICTIONAL HIGH COURT VIDE JUDGMENT DATED 24.10.2011 IN ITA NOS.128 2-1284/2006 AND ITA NOS.75 71 & 76/2008 (SUPRA) WHEREIN THE RELEVANT FINDINGS HAVE BEEN GIVEN IN PARA 17 OF THE SAID ORDER WHICH READ AS UNDER : THERE WAS NO DISCUSSION AS TO HOW THE SAID CONCLU SION WAS ARRIVED AT EXCEPT EXTRACTING THE CONTENTIONS OF THE ASSESSEE. THERE WAS NO CONSIDERATION OF THE FACTS AS PLEADED BY THE ASSESSEE ITSELF FOR THE PRE VIOUS ASSESSMENT YEARS OR THE ASSESSMENT YEARS IN QUESTION. THUS THERE WAS AN INCORRECT ASSUMPTION OF FACTS OR INCORRECT APPLICATION OF LAW WHICH WOULD S ATISFY THE REQUIREMENT OF ORDER BEING ERRONEOUS. A PERUSAL OF THE ORDER OF T HE ASSESSING OFFICER WOULD NOT DEPICT THAT HE HAS CHOSEN ONE FROM OUT OF THE T WO COURSES AVAILABLE OR PERMISSIBLE. THUS ON FACTS THE ASSESSEE HIMSELF H AVING TREATED THE INCOME AS BUSINESS INCOME HAD SUDDENLY CHANGED TO THE HEADI NG AGRICULTURAL INCOME AND HENCE THERE WERE NO TWO VIEW AVAILABLE TO THE ASSESSING OFFICER EVEN IF SO IT IS NOT STATED IN THE ORDER AS TO WHAT ARE TH OSE TWO VIEWS AND AS TO HOW HE INTENDS TO ADOPT ONE OUT OF THESE TWO VIEWS. IN VIE W OF THE SAME WE ARE OF THE CONSIDERED VIEW THE JUDGMENTS RELIED UPON BY THE L EARNED COUNSEL APPEARING FOR THE ASSESSEE ARE INAPPLICABLE AND THE SUBSTANTI AL QUESTIONS OF LAW REQUIRES TO BE ANSWERED IN THE NEGATIVE AND THE ORDER PASSED BY THE TRIBUNAL REQUIRES TO BE SET ASIDE AND THE ORDER PASSED BY THE COMMISS IONER FOR INCOME TAX IS TO BE RESTORED. 12. AS REGARDS TO THE NATURE OF INCOME EARNED B Y THE ASSESSEE THE HON'BLE JURISDICTIONAL HIGH COURT IN PARA 58 OF ORDER DATED 24.10.2011 IN ITA NO.75/2007 AND OTHERS IN ASSESSEES OWN CASE OBSERVED AS UNDER : THEREFORE THE VIEW OF THE FIRST APPELLATE AUTHORI TY THAT 100% OF THE OPERATIONS UPTO CONVERSION OF THE FOUNDATION SEEDS AS AGRICULTURAL ACTIVITY CONDUCTED BY THE ASSESSEE COMPANY AND THEREFORE INC OME DESERVES TO BE EXEMPTED FROM TAX UNDER SECTION 10(1) OF THE ACT IS ERRONEOUS. SIMILARLY 5 ITA NO.382/BANG/11 EXEMPTION GIVEN BY THE TRIBUNAL FOR 90% OF THE INCO ME IS ALSO ERRONEOUS. WE OPINE THAT THE TRIBUNAL WAS JUSTIFIED IN TREATING 1 0% OF THE INCOME AS BUSINESS INCOME WHICH INVOLVED PROCESSING OF FOUNDATION SEED S TO CERTIFIED SEEDS. IN THAT VIEW OF THE MATTER WE HOLD THAT THE ENTIRE IN COME AMOUNTS TO BUSINESS INCOME OF THE ASSESSES AND ASSESSING OFFICER WAS JU STIFIED IN TREATING THE TOTAL INCOME AS BUSINESS INCOME. 13. THEREFORE CONSIDERING THE TOTALITY OF T HE FACTS AS DISCUSSED HEREIN ABOVE WE DO NOT SEE ANY MERIT IN THE APPEAL OF THE ASSESSEE. 14. IN ITA NOS.383 & 385/BANG/2011 FOR THE ASS ESSMENT YEARS 2007-08 & 2008-09 RESPECTIVELY SIMILAR ISSUE IS INVOLVED. THE ONLY DIFFERENCE IS IN THE AMOUNT OF AGRICULTURAL INCOME WHICH WAS CONSIDERED BY THE ASSESSING OFFICE R AS BUSINESS INCOME. OTHERWISE THE FACTS ARE SIMILAR AS WERE INVOLVED IN ITA NO.382/BA NG/2011 FOR THE ASSESSMENT YEAR 2002-03. THEREFORE OUR FINDINGS GIVEN IN RESPECT OF THE ITA NO.382/BANG/2011 IN THE FORMER PART OF THIS ORDER SHALL APPLY MUTATIS MUTAN DIS FOR THE ASSESSMENT YEARS 2007-08 & 2008-09 IN ITA NOS.383 & 385/BANG/2011. 15. IN THE RESULT THE APPEALS OF THE ASSESSEE ARE DISMISSED. (ORDER PRONOUNCED IN THE OPEN COURT ON 1 ST FEB. 2012.) SD/- SD/- (P. MADHAVI DEVI) (N.K. SAINI) JUDICIAL MEMBER ACCOUNTANT MEM BER BANGALORE DATED: 01.02.2012. *REDDY GP 6 ITA NO.382/BANG/11 COPY TO : 1. APPELLANT 2. RESPONDENT 3. C.I.T. 4. CIT(A) 5. DR - B BENCH. 6. GUARD FILE. (TRUE COPY ) BY ORDER ASSTT. REGISTRAR ITAT BANGALORE