M/s Girdharilal Sugar & Allied Industries Ltd., Indore v. The ACIT, 1(2), Indore

ITA 518/IND/2010 | 2007-2008
Pronouncement Date: 21-02-2012 | Result: Dismissed

Appeal Details

RSA Number 51822714 RSA 2010
Assessee PAN AABCG5514H
Bench Indore
Appeal Number ITA 518/IND/2010
Duration Of Justice 1 year(s) 6 month(s) 23 day(s)
Appellant M/s Girdharilal Sugar & Allied Industries Ltd., Indore
Respondent The ACIT, 1(2), Indore
Appeal Type Income Tax Appeal
Pronouncement Date 21-02-2012
Appeal Filed By Assessee
Order Result Dismissed
Bench Allotted DB
Tribunal Order Date 21-02-2012
Date Of Final Hearing 24-10-2011
Next Hearing Date 24-10-2011
Assessment Year 2007-2008
Appeal Filed On 28-07-2010
Judgment Text
1 IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH INDORE BEFORE SHRI JOGINDER SINGH JUDICIAL MEMBER AND SHRI R.C. SHARMA ACCOUNTANT MEMBER ITA NO. 518 & 519/IND/2010 A.YS. 2007-08 & 2006-07 M/S GIRDHARILAL SUGAR & ALLIED INDUSTRIES LIMITED INDORE PAN AABCG 5514H .. APPELLANT VS ASSTT. COMMISSIONER OF INCOME TAX 1(2) INDORE .. RESPONDENT APPELLANT BY SHRI HITESH CHIMNANI RESPONDENT BY SHRI KESHAV SAXENA DATE OF HEARING 26.12.2011 DATE OF PRONOUNCEMENT 21 .02.2012 O R D E R PER SHRI R.C. SHARMA ACCOUNTANT MEMBER THESE APPEALS ARE PREFERRED BY THE ASSESSEE FOR TH E ASSESSMENT YEARS 2007-08 AND 2006-07 AGAINST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) DATED 4.6.2010 ON THE FOLLOWING COMMON GROUND :- 2 THAT ON THE CASES AND IN THE CIRCUMSTANCES OF THE CASE AND AS REQUIRED U/S 157 OF THE IT ACT THE LEARNED AO IS REQUIRED TO ASCERTAIN THE LOSS AND UAD TO BE CARRIED FORWARD FOR SET OFF IN SUBSEQUENT YEARS. THE LEARNED CIT(A) THEREFORE ERRED IN NOT DIRECTING THE A.O. TO COMPLY WITH THE PROVISIONS OF SECTION 157 TO ASCERTAIN THE POSITION OF UNABSORBED LOSSES AND UAD OF THE YEAR IN APPEAL AND THAT OF PAST YEARS TO BE CARRIED FORWARD FOR SET OFF WHEN THE A.O. HAS PASSED THE ASSESSMENT ORDER U/S 143(3) UNLIKE ORDERS PASSED U/S 143(1) IN PAST YEARS. 2. THE ONLY GRIEVANCE OF THE ASSESSEE RELATES TO DE NIAL OF SET OFF OF CARRY FORWARD LOSS ALLEGED TO BE PROV IDED IN THE RETURNS FOR THE ASSESSMENT YEARS 1998-99 TO 200 2- 03. 3. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORDS PERUSED. THE FACTS IN BRIEF ARE THAT THE ASSESSEE IS ENGAGED IN THE MANUFACTURE AND SALE OF SUGAR. IN T HE ASSESSMENT YEAR 1997-98 THE ASSESSEE WAS IN RECEIPT OF SUGAR SUBSIDY WHICH WAS TREATED BY THE ASSESSING OF FICER AS REVENUE RECEIPT. THE LEARNED COMMISSIONER OF IN COME TAX (APPEALS) HELD THE SUBSIDY AS CAPITAL IN NATURE 3 THEREFORE NOT LIABLE TO TAX AND ON APPEAL FILED BY THE REVENUE THE TRIBUNAL VIDE ITS ORDER DATED 11.4.200 8 CONFIRMED THE ORDER OF LEARNED COMMISSIONER OF INCO ME TAX (APPEALS). HOWEVER THE SUBSIDY SO RECEIVED FR OM THE ASSESSMENT YEAR 1999-00 TO 2002-03 WAS OFFERED BY T HE ASSESSEE IN THE RETURN OF INCOME AS REVENUE RECEIPT . HOWEVER AS AN ABANDON CAUTION A NOTE WAS APPENDED TO THE COMPUTATION OF INCOME TO THE EFFECT THAT SUC H SUBSIDY RECEIPT WAS CAPITAL IN NATURE THEREFORE N OT LIABLE TO TAX. SINCE THE SUBSIDY WAS OFFERED TO TA X IN THE RETURN OF INCOME IT WAS ACCEPTED BY THE ASSESSING OFFICER U/S 143(1). HOWEVER NO SCRUTINY ASSESSMEN T WAS FRAMED IN THESE YEARS. THUS WHATEVER INCOME WA S OFFERED BY THE ASSESSEE IN THE RETURN WAS ACCEPTED BY THE ASSESSING OFFICER. NEITHER ANY APPLICATION WAS FIL ED U/S 154 TO RECTIFY THE MISTAKE IN THE ORDER PASSED U/S 143(1) NOR ANY REVISED RETURN WAS FILED BY THE ASSESSEE DU RING THE STATUTORY PERIOD. HOWEVER DURING THE RELEVANT ASSESSMENT YEARS UNDER CONSIDERATION THE ASSESSEE HAS 4 CLAIMED SET OFF OF BUSINESS LOSS TO BE ARRIVED AT A FTER EXCLUDING SUBSIDY FROM THE INCOME OF THE ASSESSEE. THE ASSESSING OFFICER DID NOT ACCEPT THE ASSESSEES CLA IM AS NO CARRY FORWARD LOSS WAS COMPUTED BY THE ASSESSEE IN ANY OF THE EARLIER YEARS RETURNS OF INCOME FOR THE ASSESSMENT YEARS 1998-99 TO 2002-03. THE CONTENTIO N OF THE LD. COUNSEL FOR THE ASSESSEE WAS THAT ONLY A S A PRECAUTIONARY MEASURE AND TO AVOID PENALTY PROCEEDI NGS AND ADDITIONAL TAX U/S 143(1A) WHICH WAS PENAL IN NATURE THE ASSESSEE HAS OFFERED THE SUBSIDY AS REV ENUE RECEIPT WHILE COMPUTING THE TOTAL INCOME. AS PER T HE LD. COUNSEL FOR THE ASSESSEE THE SAID SUBSIDY WAS EXPL ICITLY CLAIMED TO BE EXEMPT IN THE NOTE ANNEXED WITH THE RETURNS OF ALL THE ASSESSMENT YEARS AND SINCE THE DEPARTMENT DID NOT SELECT THE RETURN OF THE SAID ASSESSMENT YEARS FOR SCRUTINY AND MERELY PASSED INTIMATION U/S 143(1)(A) OF THE ACT FOR ALL THESE ASSESSMENT YEARS THE ASSESSEE CANNOT BE DENIED THE BENEFIT OF TREATING THE SUBSIDY AS CAPITAL RECEIPT. THE LD. 5 COUNSEL FOR THE ASSESSEE ALSO PLACED ON RECORD THE ORDER OF THE TRIBUNAL IN THE ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 1997-98 WHEREIN THE TRIBUNAL VIDE ORDER DATED 11.4.2008 HELD THAT SUBSIDY WAS CAPITAL IN NATURE. WHILE THE RETURN FOR THE ASSESSMENT YEARS 2006- 07 AND 2007-08 WERE UNDER SCRUTINY PROCEEDINGS IT WAS AVERTED BEFORE THE ASSESSING OFFICER THAT THE ASSES SEE WAS ENTITLED TO CLAIM THE INCREASED BROUGHT FORWARD LOSSES TO THE TUNE OF RS. 5.4 CRORES PERTAINING TO THE ASSESSMENT YEARS 1998-99 TO 2002-03. HOWEVER THE ASSESSING OFFICER DID NOT ACCEPT THE ASSESSEES CLA IM FOR SET OFF ON THE PLEA THAT WHATEVER INCOME WAS RETURN ED BY THE ASSESSEE HAS BEEN ACCEPTED BY THE DEPARTMENT AN D THERE WAS NO CLAIM OF SUBSIDY BEING NOT LIABLE TO T AX IN THE RETURN OF INCOME. AS PER THE ASSESSING OFFICER MAKING A NOTE IN THE COMPUTATION OF INCOME WILL NOT ENTITLE THE ASSESSEE TO CLAIM BENEFIT OF EXEMPTION OF SUCH RECEIPT UNLESS THE SAME IS INCORPORATED IN THE COMPUTATION OF INCOME WHILE ARRIVING AT TAXABLE INC OME 6 OFFERED TO THE DEPARTMENT. BY THE IMPUGNED ORDER THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) CONFIR MED THE ACTION OF THE ASSESSING OFFICER AGAINST WHICH T HE ASSESSEE IS IN FURTHER APPEAL BEFORE US. FOLLOWING WAS THE PRECISE OBSERVATION OF LEARNED COMMISSIONER OF INCO ME TAX (APPEALS) :- 5.5 THE ISSUE IS EXAMINED. AS ADMITTED BY THE APPELLANT THE INCOME/LOSS DECLARED IN THE RETURN O F INCOME FILED FOR THE A.Y. 1998-99 TO 2002-03 WAS ACCEPTED U/S 143(1) OF THE ACT. AS PER THE PROVISI ONS OF THE ACT NO SUCH ADJUSTMENTS AS CLAIMED BY THE APPELLANT COULD BE CARRIED OUT IN A RETURN OF INCOM E ACCEPTED U/S 143(1) OF THE ACT. SECTION 157 ALSO SPEAKS OF THE ASSESSMENTS. THE PLEA OF THE APPELLANT IS THEREFORE NOT TENABLE. THE RELIANCE PLACED BY THE APPELLANT ON THE DECISION OF THE I.T.A.T. IN ITS CASE FOR THE A.Y. 1997-98 IS OF NO HELP SINCE ASSESSMENT OF THAT YEAR WAS MADE U/S 143(3) OF THE ACT. THE APPELLANT FURTHER PLACED RELIANCE O N THE DECISION OF THE SUPREME COURT IN THE CASE OF PONNI SUGARS & CHEMICALS LTD.; 306 ITR 392 (S.C.) WHICH IS MISPLACED BEING DISTINGUISHABLE ON FACTS A S MAY BE NOTED FROM THE HEAD NOTE ITSELF WHICH IS REPRODUCED BELOW : INCOME OR CAPITAL CO-OPERATIVE SOCIETIES RTUNNING SUGAR MILLS TIME WHEN NEW SUGAR NFACTORIES WERE NOT VIABLE AND FINANCIAL INSTITUTIONS DID NOT GIVE LOANS SCHEME SUBSIDY 7 GIVEN BY GOVERNMENT TO BE UTILISED ONLY FOR REPAYING LOANS NATURE OF TO BE DETERMINED BY THE PRUPSOE TEST IS CAPITAL IN NATURE. CO-OPERATIVE SOCIETY SPECIAL DEDUCTION INTEREST RECEIVED FROM MEMBERS OF SOCIETY WHETHER EXEMPTED SUPREME COURT MATTER REMANDED TO APPELATE TRIBUNAL FOR CONSIDERATION INCOME TAX ACT M 1961 S. 80P(2)(A)(I). 5.6 SIMILAR IS THE POSITION IN THE CASE OF CIT VS. MANMOHAN DAS 591 ITR 699 (S.C.) I.E. FACTS ARE ENTIRELY DIFFERENT WITH THE CASE OF THE APPELLANT. 5.7 IN VIEW OF THE FACTUAL AND LEGAL POSITION DISCUSSED ABOVE THE CLAIM MADE BY THE APPELLANT VIDE GROUND NO. 2 & 3 OF APPEAL IS NOT ALLOWABLE AND HENCE IS REJECTED. GROUND NO. 2 & 3 ARE AS SUCH REJECTED. 4. THE CONTENTION THE LD. COUNSEL FOR THE ASSESSEE WAS THAT THE RETURN IS TO BE FILLED IN THE PRESCRIBED F ORM AND IS TO BE ACCOMPANIED WITH VARIOUS DOCUMENTS VIZ. COMPUTATION STATEMENT AUDITED ACCOUNTS TAX AUDIT REPORT ETC. AS PER THE LD. COUNSEL FOR THE ASSESSE E THE RETURN NOT ACCOMPANIED BY THE COMPUTATION STATEMENT IS DEEMED TO BE DEFECTIVE RETURN AS PER THE PROVISIONS OF 8 EXPLANATION B TO SECTION 139(9) AND THE ASSESSING OFFICER IS REQUIRED TO ISSUE NOTICE TO THE ASSESSEE TO CURE THE DEFECT WITHIN THE SPECIFIED TIME. AS PER THE LD . COUNSEL FOR THE ASSESSEE THE COMPUTATION STATEMENT AND NOTES ARE INTEGRAL PART OF THE RETURN THEREFORE W HILE PROCESSING THE RETURN THE ASSESSING OFFICER CANNOT IGNORE THE SAME. 5. ON THE OTHER HAND CONTENTION OF THE LEARNED CIT DR WAS THAT THE ASSESSEE HAD NOT CLAIMED THE RECEIPT O F SUBSIDY AS CAPITAL RECEIPT BUT RATHER INCLUDED THE SAME IN THE INCOME WHILE COMPUTING THE TAXABLE INCOME FO R THE RELEVANT ASSESSMENT YEARS WHICH WERE DULY ACCEPTED BY THE DEPARTMENT. THE ASSESSEE ALSO DID NOT COMPUTE THE CARRY-FORWARD LOSSES IN ANY OF THE RELEVANT ASSESSM ENT YEARS 1998-99 TO 2002-03 NOR IN THE SUBSEQUENT YEA RS. THUS THE LOWER AUTHORITIES WERE PERFECTLY JUSTIFIE D IN DECLINING THE CLAIM OF SET OFF OF ALLEGED BROUGHT FORWARD LOSSES. 9 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS OF THE PARTIES GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AND FIND FROM RECORD THAT SUGAR SUBSIDY RECEIVED BY THE ASSESSEE WAS DULY CREDITED BY THE ASSESSEE IN ITS P ROFIT AND LOSS ACCOUNT FOR THE ASSESSMENT YEARS 1998-99 T O 2002-03. IT WAS OFFERED TO TAX IN THE RETURN FILED WHICH HAS ALSO BEEN ACCEPTED BY THE ASSESSING OFFICER U/S 143(1)(A) OF THE ACT. ONLY AS A PRECAUTIONARY MEAS URE THE ASSESSEE HAS MADE A NOTE TO THE EFFECT THAT THE SAID SUBSIDY WAS EXEMPT FROM THE INCOME. AS PER OUR CONSIDERED VIEW MERELY MAKING A NOTE AS A PRECAUTIONARY MEASURE IN THE COMPUTATION OF INCOME WILL NOT ENTITLE THE ASSESSEE TO TAKE BENEFIT OF EXCLUSI ON OF SUCH INCOME WHICH WAS NOT ONLY OFFERED IN THE RETUR N OF INCOME BUT WHICH WAS ALSO ACCEPTED BY THE DEPARTMEN T AFTER THE LAPSE OF STATUTORY TIME PERIOD. WHATEVER RETURN OF INCOME WAS FILED BY THE ASSESSEE BY INCORPORATIN G THE 10 SUGAR SUBSIDY AS REVENUE RECEIPT BY CREDITING IN TH E PROFIT AND LOSS ACCOUNT WAS DULY ACCEPTED BY THE ASSESSING OFFICER U/S 143(1)(A) OF THE ACT AND AT N ONE OF THE OCCASIONS THE ASSESSEE HAD DISPUTED SUCH PROCESSING OF RETURN WITHIN THE STIPULATED TIME PRO VIDED UNDER THE LAW. IT IS ALSO NOT THE CASE OF THE ASSES SEE THAT HE HAS FILLED ANY REVISED RETURN SO AS TO EXCLUDE T HE SUGAR SUBSIDY WHICH WAS SHOWN IN THE RETURN OF INCO ME AS REVENUE RECEIPT AND OFFERED THE SAME FOR TAXATIO N PURPOSES. IT IS NOT OPEN TO THE ASSESSEE TO REVISE THE RETURN AFTER THE LAPSE OF STATUTORY PERIOD. SINCE IN THE RETURN OF INCOME FOR THE ASSESSMENT YEARS 1998-99 T O 2002-03 THE ASSESSEE HAS NOT SHOWN THE SUGAR SUBSI DY AS CAPITAL RECEIPT BUT OFFERED AS REVENUE RECEIPT THE INCOME OF THE ASSESSEE WAS ACCORDINGLY ASSESSED BY THE DEPARTMENT BY TREATING THE SUBSIDY AS REVENUE RECEI PT IT WAS NOT OPEN TO THE ASSESSEE AT THE TIME OF SCRU TINY 11 ASSESSMENT FOR THE RELEVANT ASSESSMENT YEARS UNDER CONSIDERATION I.E. ASSESSMENT YEARS 2006-07 AND 20 07- 08 TO CLAIM REDUCTION IN INCOME BY AMOUNT OF SUCH S UGAR SUBSIDY RECEIVED IN THE ASSESSMENT YEARS 1998-99 TO 2002-03 RESULTING INTO INCREASE IN BROUGHT FORWARD LOSSES. WE THEREFORE DO NOT FIND ANY INFIRMITY I N THE ORDERS OF THE LOWER AUTHORITIES FOR NOT ALLOWING TH E ASSESSEE TO ENHANCE ITS CARRY FORWARD LOSS BY TREAT ING THE SUGAR SUBSIDY AS CAPITAL RECEIPT. THE DECISION OF T HE TRIBUNAL DATED 11.4.2008 WAS PERTAINING TO THE ASSESSMENT YEAR 1997-98 WHEREIN SCRUTINY ASSESSMEN T WAS FRAMED AND THE ASSESSEE HAS CHALLENGED THE TREATMENT OF SUBSIDY AS REVENUE RECEIPT. SINCE THE ASSESSING OFFICER DID NOT ACCEPT THE ASSESSEES CLA IM AN APPEAL WAS FILED BEFORE THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) WHO HAS ACCEPTED THE ASSESSEE S CLAIM AND THE VIEW OF THE LEARNED COMMISSIONER OF 12 INCOME TAX (APPEALS) WAS CONFIRMED BY THE TRIBUNAL. SINCE IN THE ASSESSMENT YEARS 1998-99 TO 2002-03 TH E ASSESSEE HAS NOT CLAIMED SUGAR SUBSIDY AS CAPITAL R ECEIPT IN ITS RETURN OF INCOME THE DECISION OF THE TRIBUN AL DATED 11.4.2008 FOR THE ASSESSMENT YEAR 1997-98 WILL NOT GIVE ANY RIGHT TO THE ASSESSEE IN THE YEAR 2008-09 TO PL EAD DURING THE ASSESSMENT PROCEEDINGS FOR THE ASSESSMEN T YEARS UNDER CONSIDERATION THAT THE SUBSIDY SO REC EIVED IN THE ASSESSMENT YEARS 1998-99 TO 2002-03 WAS CAPI TAL IN NATURE AND THE LOSSES OF THE ASSESSEE FOR THESE YEARS SHOULD BE ALLOWED TO BE ENHANCED. ALL THE STATUTOR Y TIME PERIOD AVAILABLE TO THE ASSESSEE FOR REVISING THE R ETURNS FOR THE ASSESSMENT YEARS 1998-99 TO 2002-03 HAD ALREADY EXPIRED SINCE LONG BACK. FURTHERMORE AS PE R PROVISIONS OF SECTION 80 NO LOSS WHICH HAS NOT BEE N DETERMINED IN PURSUANCE WITH A RETURN FILED IN ACCORDANCE WITH THE PROVISIONS OF SECTION 139(3) SH ALL BE CARRIED FORWARD AND SET OFF UNDER SECTION 72(1) OR SECTION 73(2) OR SECTION 74(3) OR SECTION 74A(3) OF THE ACT . 13 6. IN THE RESULT BOTH THE APPEALS OF THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 21 ST FEBRUARY 2012 SD SD (JOGINDER SINGH) (R.C. SHARMA) JUDICIAL MEMBER ACCOUNTANT MEMBER FEBRUARY 21 ST 2012 COPY TO : APPELLANT RESPONDENT CIT CIT(A) CIT D R/SR. DR DN/- 2223