ACIT, New Delhi v. M/s. KRIBHCO, New Delhi

ITA 4827/DEL/2009 | 2006-2007
Pronouncement Date: 08-04-2010 | Result: Dismissed

Appeal Details

RSA Number 482720114 RSA 2009
Assessee PAN AAAAK0203G
Bench Delhi
Appeal Number ITA 4827/DEL/2009
Duration Of Justice 3 month(s) 17 day(s)
Appellant ACIT, New Delhi
Respondent M/s. KRIBHCO, New Delhi
Appeal Type Income Tax Appeal
Pronouncement Date 08-04-2010
Appeal Filed By Department
Order Result Dismissed
Bench Allotted D
Tribunal Order Date 08-04-2010
Date Of Final Hearing 08-04-2010
Next Hearing Date 08-04-2010
Assessment Year 2006-2007
Appeal Filed On 22-12-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH D : NEW DELHI BEFORE SHRI R.P.TOLANI JM AND SHRI K.D. RANJAN AM I.T.A.NO.4827/DEL/2009 ASSESSMENT YEAR 2006-07 ASSTT.COMMISSIONER OF INCOME TAX CIRCLE-24(1) NEW DELHI. VS. M/S KRIBHCO RED ROSE HOUSE 49-50 NEHRU PLACE NEW DELHJI. PAN AAAAK0203G (APPELLANT) (RESPONDENT) APPELLANT BY : SMT. KAVITA BHATNAGAR CIT-DR. RESPONDENT BY : SHRI K.S.V.S. MANIAN & SHRI K.V.S.R . KRISHNA CAS. ORDER PER R.P. TOLANI JM : THIS IS REVENUES APPEAL FILED AGAINST THE ORDER OF THE CIT(A) XXIII NEW DELHI DATED 12.10.2008 FOR THE ASSESSMENT YEAR 2006-07. 2. FOLLOWING EFFECTIVE GROUNDS ARE RAISED:- 1. ON THE FACTS AND ON THE CIRCUMSTANCES OF THE CAS E THE LD. CIT(A) HAS ERRED IN LAW AND ON THE FACTS IN DEL ETING THE ADDITION OF RS.2 40 30 424/- MADE BY THE A.O. B Y INVOKING RULE 8D READ WITH SECTION 14A OF THE I.T.A CT. 2. ON THE FACTS AND ON THE CIRCUMSTANCES OF THE CAS E THE LD. CIT(A) HAS ERRED IN LAW AND ON THE FACTS IN DIR ECTING THE A.O. TO ALLOW THE INSURANCE PREMIUM AMOUNTING T O RS.2 40 92 736/- UNDER THE HEAD SANKAT HARAN BIMA YOJANA CREATED FOR THE WELFARE OF FARMERS WHICH IS NOT DIRECTLY RELATED TO THE SALE OR CONSUMPTION OF FERT ILIZERS. FURTHER THE INSURED ARE NOT THE MEMBERS OF THE ASSESSEE. 3. THE LD. D.R. RELIED ON THE ORDER OF THE ASSESS ING OFFICER. ITA NO.4827/DEL/09 2 4. LD. COUNSEL FOR THE ASSESSEE ON THE OTHER HAND CONTENDS IN RESPECT OF GROUND NO.1 THAT THE AMOUNT OF RS.2 40 3 0 424 DISALLOWED U/S 14A OF THE INCOME-TAX ACT WAS WITHOUT ANY BASIS. AS SESSEE HAS EARNED FOLLOWING INCOME:- I) DIVIDEND OF RS.2 00 006/- FROM NAFED AND KARNATA KA STATE COOPERATIVE APEX BANK LTD. AND II) INTEREST OF RS.10 20 75 013/- ON DEPOSITS WITH OTHER COOPERATIVE BANKS. THE DIVIDEND MENTIONED ABOVE IS NOT FROM DIVIDEND O F A COMPANY AS STIPULATED BY SECTION 10(34) R/W SECTION 115 (O) OF THE INCOME-TAX ACT. THE SAME IS RECEIPT FROM COOPERATIVE BANKS AND IS TAXAB LE RECEIPT. THE DEDUCTION HAS BEEN CLAIMED BY THE ASSESSEE U/S 80P UNDER CHAPTER VIA AND NOT U/S 10 WHICH DEALS WITH EXEMPT INCOME. ASSE SSING OFFICER ERRONEOUSLY HELD THAT IT DOES NOT MAKE A DIFFERENCE WHETHER THE INCOME IS EXEMPT OR DEDUCTIBLE. THE SAME BEING NON-TAXABLE S ECTION 14A WAS NOT APPLICABLE. THE CIT(A) RIGHTLY CONSIDERED THE ISSU E AND DELETED THE SAME. RELIANCE WAS PLACED ON THE DECISION OF HYDERABAD BE NCH OF THE ITAT IN THE CASE OF V.C. NANNAPANENI VS. ACIT 94 ITD 309 FOR THIS PROPOSITION. LD. COUNSEL FOR THE ASSESSEE CONTENDS THAT THE ISSU E IS COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF ITAT DELHI BENC H-A IN ASSESSEE'S OWN CASE IN I.T.A.NO.1767/DEL/2009 FOR THE ASSESSMENT Y EAR 2004-05. RELEVANT OBSERVATIONS OF THE BENCH IS REPRODUCED HE REUNDER:- 8. WE HAVE DULY CONSIDERED THE CONTENTION AND GONE THROUGH THE RECORD CAREFULLY. THE MAIN REASON ASSIGNED BY THE AO WHILE ITA NO.4827/DEL/09 3 DISALLOWING THE CLAIM OF ASSESSEE IS THAT PURCHASER S OF THE UREA ARE NEITHER PRIMARY MEMBER OF THE ASSESSEE NOR THE INSU RANCE COVER PROMOTES SALES OF UREA. THUS IT CANNOT BE SAID EXP ENSES WERE INCURRED FOR PROMOTING THE SALES. IN HIS OPINION A SSESSEE HAS JUST FORMULATED A PLAN BY WHICH IT HAS EXTENDED UNDUE BE NEFIT TO THE SISTER CONCERN IN WHOM IT IS HOLDING EQUITY AT 20% VOTING RIGHTS. ON PERUSAL OF THE CITS ORDER WE FIND THAT LD. FIRST APPELLATE AUTHORITY HAS GONE THROUGH THE SAMPLE COPY OF THE AGREEMENT A ND RECORDED A FINDING THAT THE TRUSTEE IS IFFCO-TOKYO GENERAL INS URANCE CO. THE PERSONS INSURED HAVE BEEN DEFINED AS ALL FARMERS OR PERSONS WHO PURCHASED BRAND OF KRIBHCO FERTILIZERS. POINT NO.5 OF THE AGREEMENT MANIFEST THAT INSURANCE COVER IS PROVIDED TO THE EXTENT OF RS.4 000/- FOR EACH AND EVERY PURCHASE OF KRIBHCO F ERTILIZER BAG OF 50 KG BY ANY FARMER. POINT NO.6 PROVIDES THAT CASH RECEIPT OR THE DEBIT NOTE ISSUED BY FARMERS SERVICE CENTERS OF KRI BHCO OR COOPERATIVE SOCIETIES SHALL BE THE SOLE EVIDENCE OF INSURANCE. IT IS A PERSONAL ACCIDENT INSURANCE SCHEME FOR THE WELFARE OF THE FARMERS ON PURCHASE OF KRIBHCO BAG SEWA KENDRAS. ON THE BA SIS OF THE EVIDENCE LD. CIT(A) HAS HELD THAT THE QUALIFYING GR OUND FOR AVAILING OF INSURANCE COVER IS THAT FARMER SHOULD HAVE PURCHASE D KRIBHCO FERTILIZER. THUS THERE IS A DIRECT NEXUS BETWEEN T HE PREMIUM PAID AND THE SALES OF THE ASSESSEE SOCIETY. 5. WE HAVE HEARD THE RIVAL CONTENTIONS. APROPOS GR OUND NO.1 IT HAS NOT BEEN DISPUTED THAT INCOME WAS DERIVED BY THE AS SESSEE FROM COOPERATIVE BANKS AND INTEREST ON DEPOSITS WITH THE COOPERATIVE BANK AND THE SAME ARE NOT EXEMPT U/S 10 AND ARE INCLUDIBLE I N ITS INCOME. DEDUCTION IF ANY IS GIVEN BY THE STATUTE U/S 80P WHICH PERTAINS TO ITA NO.4827/DEL/09 4 DEDUCTION OF INCOME. THE TERMS EXEMPT INCOME AND DE DUCTION FROM INCOME ARE TWO DIFFERENT PROPOSITIONS AND A DEDUCTI ON FROM INCOME WILL NOT AMOUNT AN EXEMPTION FROM INCOME. SINCE BOTH THE AB OVE RECEIPTS OF THE ASSESSEE WERE NOT EXEMPT AND INCLUDIBLE IN INCOME M ERELY BECAUSE DEDUCTION U/S 80P IS PROVIDED IT CANNOT BE ASSUMED TO BE HIT BY SECTION 14A. IN VIEW THEREOF WE UPHOLD THE ORDER OF THE C IT(A) ON THE ISSUE AND THIS GROUND OF REVENUES APPEAL IS DISMISSED. 6. APROPOS GROUND NO.2 WE FIND THAT SIMILAR CLAIM OF THE ASSESSEE IN RESPECT OF SANKAT HARAN BIMA YOJANA IS COVERED BY ITAT DECISION DATED 24/7.2009 IN ASSESSEE'S OWN CASE FOR THE ASSESSMENT YEAR 2004-05 MENTIONED SUPRA. RESPECTFULLY FOLLOWING THE SAME THE CIT(A)'S ORDER ON THIS ISSUE IS CONFIRMED. THIS GROUND OF APPEAL OF REVENUE IS ALSO DISMISSED. 7. IN THE RESULT APPEAL OF THE REVENUE IS DISMISSE D. ORDER PRONOUNCED IN THE OPEN COURT ON 08.04.2010. SD/- SD/- (K.D. RANJAN) (R.P.TOLANI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 08.04.2010. VSK. COPY FORWARDED TO: - 1. APPELLANT-REVENUE 2. RESPONDENT-ASSESSEE 3. CIT 4. CIT(A) 5. DR ITAT NEW DELHI DEPUTY REGISTRAR ITA NO.4827/DEL/09 5