AZMER ZILA DUGDH UTPADAK SAHKARI SANGH LTD., Ajmer v. ACIT, Ajmer

ITA 820/JPR/2014 | misc
Pronouncement Date: 18-10-2016 | Result: Allowed

Appeal Details

RSA Number 82023114 RSA 2014
Assessee PAN AABAA0141Q
Bench Jaipur
Appeal Number ITA 820/JPR/2014
Duration Of Justice 1 year(s) 10 month(s) 16 day(s)
Appellant AZMER ZILA DUGDH UTPADAK SAHKARI SANGH LTD., Ajmer
Respondent ACIT, Ajmer
Appeal Type Income Tax Appeal
Pronouncement Date 18-10-2016
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted A
Tribunal Order Date 18-10-2016
Assessment Year misc
Appeal Filed On 02-12-2014
Judgment Text
VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL JAIPUR BENCHE S JAIPUR JH DQY HKKJR] U;KF;D LNL; OA JH FOE FLAG ;KNO] YS [KK LNL; DS LE{K BEFORE: SHRI KUL BHARAT JM & SHRI VIKRAM SINGH YAD AV AM VK;DJ VIHY LA-@ ITA NO. 820/JP/2014 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2008-09. AJMER ZILA DUGDH UTPADAK SAHKARI SANGH LTD. OPP. HMT BEAWAR ROAD AJMER. CUKE VS. ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE-2 AJMER. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN NO. AABAA 0141 Q VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI MAHENDRA GARGIEYA (ADVOCATE) JKTLO DH VKSJ LS@ REVENUE BY : SHRI O.P. BHATEJA (ADDL.CIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 27.09.2016. ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 18/10/2016. VKNS'K@ ORDER PER SHRI KUL BHARAT JM. THIS APPEAL BY THE ASSESSEE PERTAINING TO ASSESSME NT YEAR 2008-09 IS DIRECTED AGAINST THE ORDER OF LD. CIT (A) AJMER DA TED 23.09.2014. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL :- UNDER THE FACTS & CIRCUMSTANCES OF CASE THE LD. C IT (A) AJMER HAS ERRED IN CONFIRMING THE ISSUE OF :- (1) VALIDITY OF NOTICE ISSUED U/SEC. 148 AND INITIATING THE PROCEEDINGS OF INCOME TAX ACT 1961. (2) CHALLENGING THE ORDER TIME BARRED SINCE THE ASSES SMENT ORDER HAS BEEN DISPATCHED ON OR AFTER 31.03.2013. (3) RS. 1 95 12 835.00 FOR UNPAID INTEREST TO M/S. RCDF LTD. FURTHER NON GRANTING SET OFF OF RS. 94 61 083.73 (RS. 23 61 083.73 + RS.71 00 000.00) BEING UNPAID INTEREST WRITE OFF TO INCOME IN SUCCEEDING YEARS AS PER DETAILS. 2 ITA NO. 820/JP/2014 AJMER ZILA DUGDH UTPADAK SAHKARI SANGH LTD. 2. AT THE TIME OF HEARING THE LD. COUNSEL FOR THE ASSESSEE STATED THAT HE DOES NOT WISH TO PRESS GROUND NOS. 1 & 2. THE LD. D/R H AS NO OBJECTION. THEREFORE GROUND NOS. 1 & 2 ARE DISMISSED AS NOT PRESSED. 3. THE ONLY GROUND NO. 3 AS MENTIONED ABOVE REMAINS TO BE ADJUDICATED. 4. BRIEFLY STATED THE FACTS ARE THAT THE CASE OF TH E ASSESSEE WAS REOPENED AND ASSESSMENT UNDER SECTION 143(3) READ WITH SECTION 1 47 OF THE INCOME TAX ACT 1961 (HEREINAFTER REFERRED TO AS THE ACT) WAS FRAMED VID E ORDER DATED 25.03.2013 THEREBY THE AO MADE ADDITION OF RS. 1 95 12 835/- ON ACCOUN T OF UNPAID INTEREST. THE AO WHILE DISALLOWING THE UNPAID INTEREST OBSERVED THAT UNPAID INTEREST OF RS. 23 61 083/- AND RS. 1 71 51 752/- (UNPAID RCDF) WAS OUTSTANDING AND THE SAME WAS NOT PAID IN ACCORDANCE WITH THE PROVISIONS OF S ECTION 43B. BEING AGGRIEVED THE ASSESSEE PREFERRED AN APPEAL BEFORE LD. CIT (A) WH O AFTER CONSIDERING THE SUBMISSIONS DISMISSED THE APPEAL. 5. NOW THE ASSESSEE IS IN APPEAL BEFORE THIS TRIBUN AL. 6. THE LD. COUNSEL FOR THE ASSESSEE HAS REITERATED THE SUBMISSIONS AS MADE IN THE WRITTEN SUBMISSIONS. THE LD. COUNSEL SUBMITTED THAT THE AO HAS INVOKED THE PROVISIONS OF SECTION 43B. AS PER THIS SECTION THE AO WAS REQUIRED TO ESTABLISH THAT : (I) THE ASSESSEE HAS TAKEN A LOAN/ BORROWING; (II) FROM ANY PUBLIC FINANCIAL INSTITUTION ETC; (III) SOME INTEREST OF THE RELEVANT YEAR REMAINS PAYABLE; AND (IV) IN ACCORDANCE WITH TERMS AND CONDITIONS OF THE RELA TED AGREEMENT. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE AO HAS NOT AT ALL DISCUSSED AS TO ON WHICH AMOUNT THE SUBJECTED INTEREST WAS OUTSTAND ING. HE SUBMITTED THAT THE 3 ITA NO. 820/JP/2014 AJMER ZILA DUGDH UTPADAK SAHKARI SANGH LTD. BACKGROUND AND REASON BEHIND THE SUBJECTED LIABILIT Y WAS THAT ALL IN JULY 1979 THE MILK PLANT OWNED BY THE ASSESSEE WAS SEPARATED AND THE MILK PROCESSING PLANT BUILDING ASSETS & LIABILITIES INCLUDING THE SHARE CAPITAL RELATING TO ASSESSEE WERE TRANSFERRED TO RCDF. ACCORDINGLY THE SAID RCDF WAS TO RECEIVE AND PASS AND MAKE NECESSARY ACCOUNTING ENTRIES AT THEIR END. HE SUBMI TTED THAT IT WAS NOT A CASE OF PUBLIC FINANCIAL INSTITUTION ETC AS PRESCRIBED U/S 43B. THE ENTIRE AMOUNT INCLUDING THE INTEREST OF RS. 23 61 083/- WAS NOT INTEREST ON ANY LOAN AND ADVANCE AS CONTEMPLATED BY THE LAW. ALSO THERE WAS NO AGREEME NT AS SUCH GRANTING INTEREST BEARING LOAN TO THE ASSESSEE. HE SUBMITTED THAT IT IS PERTINENT TO NOTE THAT THE AMOUNT OF UNPAID INTEREST OF RS. 23 61 083/- HAS AL READY BEEN CREDITED BACK AND TRANSFERRED TO INCOME AS ON 31.03.2009 AS IS EVIDEN T FROM AUDITED ACCOUNTS. SIMILARLY RS. 71 00 000/- WAS ALSO TRANSFERRED TO THE INCOME FOR THE A.Y. 2010-11 WHICH IS ALSO EVIDENT FROM THE AUDITED ACCOUNTS. SU CH AMOUNTS HAVE BEEN CREDITED BACK AND SHOWN UNDER THE HEAD MISC RECEIPTS WHICH A RE SUPPORTED BY THE DETAILED LEDGER ACCOUNT. THUS OUT OF TOTAL RS. 1 95 12 835/ - THE AMOUNT TO THE EXTENT OF RS. 95 25 656/- (RS. 24 25 656 + RS. 71 00 000) HAS ALR EADY BEEN TRANSFERRED BY ASSESSEE IN LATER YEARS AND AT LEAST COULD NOT HAVE BEEN TAXED IN THIS YEAR. 6.1. ON THE CONTRARY THE LD. D/R HAS SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 6.2. WE HAVE HEARD RIVAL CONTENTIONS PERUSED THE M ATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELO W. THE AO MADE THE DISALLOWANCE BY OBSERVING AS UNDER :- 4 ITA NO. 820/JP/2014 AJMER ZILA DUGDH UTPADAK SAHKARI SANGH LTD. THE SUBMISSIONS OF THE ASSESSEE IS PERUSED AND THE SAME IS NOT ACCEPTABLE FOR THE REASONS THAT IT HAS FAILED TO MA KE PAYMENT O RS. 1 95 12 835/- (23 61 083 + 1 71 51 752). THE ASSESS EE HAS NOT FURNISHED ANY EVIDENCE IN SUPPORT OF DISPUTE BETWEE N BOTH THE PARTIES AND ALSO FAILED TO SUBMIT A COPY OF PROFIT & LOSS A CCOUNT PROVING THAT INCOME OF RS. 23 61 083/- WAS OFFERED IN THE A.Y. 2 009-10. FURTHER NO DOCUMENT IN RESPECT OF UNPAID INTEREST OF RS. 1 71 51 752/- WAS FURNISHED REGARDING SETTLEMENT OF INTEREST. THEREFO RE UNPAID INTEREST OF RS. 1 95 12 835/- IS DISALLOWED AND ADDED TO THE TO TAL INCOME. THE LD. CIT (A) CONFIRMED THE ABOVE FINDING IN PARA 6.3 OF HIS ORDER AS UNDER :- 6.3. I HAVE CONSIDERED THE CONTENTIONS OF THE APPE LLANT AS WELL AS ASSESSMENT ORDER. IT IS SEEN THAT THE ASSESSEE HAS GIVEN BRIEF DETAILS REGARDING THE DISPUTE BETWEEN AJMER ZILA DUGDH UTPA DAK SAHKARI SANGH LTD. (AZDUSS LTD.) AND RAJASTHAN COOPERATIVE DAIRY FEDERATION (RCDF). THE ASSESSEE MENTIONED THAT THE MILK PLANT WAS SEPARATED FROM THE ASSESSEE CONCERN AND TRANSFERRED TO RCDF I N 1979 AND IT WAS AGAIN MERGED WITH THE ASSESSEE CONCERN ON 01.09.199 1. THE DIFFERENCE IN ASSETS AND LIABILITIES COULD NOT BE SETTLED IN T IME AND ASSESSEE HAD NO CHOICE OR RIGHT TO TRANSFER OR ADJUST ANY AMOUNT WITHOUT APPROVAL FROM THE STATE GOVERNMENT. THE FUNDS WERE INITIALLY RECEIVED AT RCDF FROM NBDB. FURTHER THE ASSESSEE ALSO CLAIMED THAT THE AMOUNT OF CREDIT LYING IN THE NAME OF RCDF DUES IS A SHARE CA PITAL AMOUNT. THE ASSESSEE HIMSELF HAS ALSO MENTIONED THAT AFTER OBTAINING THE APPROVAL FROM THE STATE GOVERNMENT THE AMOUNT OF R S. 23 61 083/- HAS BEEN CREDITED AS INCOME IN FY 2008-09 AND FURTH ER SUM OF RS. 71 00 000/- HAS BEEN CREDITED AS INCOME IN FY 2010- 11 AND ASSESSEE HAS SUBMITTED THE COPY OF BALANCE SHEET/PROFIT AND LOSS ACCOUNT IN RESPECT OF ABOVE AMOUNTS IN SUPPORT OF THIS CLAIM. FROM THE ABOVE DESCRIPTION IT IS APPARENT THAT ASS ESSEE HAS NOT BEEN ABLE TO JUSTIFY THE CREATION OF THE LIABILITY WHICH HAS BEEN SHOWN BY THE ASSESSEE AS UNPAID INTEREST NOTED BY THE AO IN THE ASSESSMENT ORDER OF RS. 23 61 083/- AND RS. 1 71 51 752/-. FURTHER ASSESSEE HIMSELF HAS OFFERED A SUM OF RS. 23 61 083/- AND RS. 71 00 000/- OUT OF ABOVE AMOUNT AS INCOME IN THE PROFIT AND LOSS ACCOUNT IN THE LATER YEARS. THIS ITSELF SHOWS THAT ASSESSEE HAS NOT BEEN ABLE TO JUS TIFY THE EXACT NATURE OF DISPUTE BETWEEN THE RCDF AND ASSESSEE COMPANY HA S POINTED BY THE AO. SO THE EXISTENCE OF THE LIABILITY ITSELF HA S NOT BEEN PROVED BY THE ASSESSEE BY ANY CONFIRMATION FROM THE CORRESPON DING PARTY AND ASSESSEE HAS MERELY POINTED OUT TO THE DISPUTE BETW EEN RCDF AND ASSESSEE CONCERN. 5 ITA NO. 820/JP/2014 AJMER ZILA DUGDH UTPADAK SAHKARI SANGH LTD. FURTHER THE ASSESSEES CLAIM THAT RCDF DUES ARE FOR SHARE CAPITAL AMOUNT HAS NOT BEEN CONFIRMED BY ANY SHARES ISSUED BY THE ASSESSEE AGAINST IT OR SPECIFIC AMOUNT GIVEN TO IT BY RCDF. SO THIS CLAIM IS ALSO UNSUBSTANTIATED. THE ASSESSEE HAS SHOWN THE ABOVE AMOUNT AS UNPAID I NTEREST OF RS. 23 61 083/- AND RS. 1 71 51 752/- TOWARDS RCDF. THE RCDF IS A UNDERTAKING CONTROLLED BY GOVERNMENT O RAJASTHAN AS MENTIONED BY THE ASSESSEE. IT HAS NOT BEEN SHOWN THAT THE ABOVE INTEREST LIABILITY IS NOT COVERED BY THE PROVISIONS OF SEC. 43B(D) AND (E ) OF THE I.T. ACT. THE AO HAS POINTED OUT THAT THE ABOVE INTEREST LIAB ILITY REMAINS UNPAID LIABILITY OF THE ASSESSEE ABOUT WHICH ASSESSEE HAS MERELY CLAIMED THAT THIS AMOUNT REPRESENTS THE CONTRIBUTION TOWARDS SHA RE CAPITAL WHICH IS NOT SUPPORTED BY EVIDENCE. IN VIEW OF THE ABOVE DISCUSSION AND FINDINGS OF THE AO ADDITION MADE BY THE AO IS CONFIRMED AND THIS GROUND OF APPEAL IS DISMISSED. THE LD. COUNSEL FOR THE ASSESSEE HAS DRAWN OUR ATTE NTION TO LETTER DATED 25.08.2003 TO DEMONSTRATE THAT THE AMOUNT OF RS. 87 LACS WAS D UE TO AJMER ZILA DUGDH UTPADAK SAHKARI SANGH LTD. AJMER. THE CONTENTION OF THE A SSESSEE IS THAT THE PROVISIONS OF SECTION 43B HAS BEEN WRONGLY APPLIED BY THE AUTHORI TIES BELOW AS THESE PROVISIONS WOULD BE APPLICABLE ONLY WHEN THE AO ESTABLISHES TH AT THE ASSESSEE HAS TAKEN A LOAN/BORROWING FROM ANY PUBLIC FINANCIAL INSTITUTIO N ETC SOME INTEREST OF THE RELEVANT YEAR IS PAYABLE AND IN ACCORDANCE WITH THE TERMS AN D CONDITIONS OF THE RELATED AGREEMENT. AS PER SECTION 43B(D) THE FIRST REQUIR EMENT IS THAT ANY SUM IS PAYABLE BY THE ASSESSEE AS INTEREST ON ANY LOAN OR BORROWIN G FROM ANY PUBLIC FINANCIAL INSTITUTION OR STATE FINANCIAL CORPORATION OR STATE INDUSTRIAL INVESTMENT CORPORATION IN ACCORDANCE WITH THE TERMS AND CONDITIONS OF THE AGR EEMENT GOVERNING SUCH LOAN OR BORROWING. IN THE PRESENT CASE THE AO WAS REQUIRE D TO DEMONSTRATE THAT THE ASSESSEE HAS OBTAINED ANY LOAN OR MADE ANY BORROWIN G FROM ANY PUBLIC FINANCIAL INSTITUTION AS DEFINED IN EXPLANATION-4 TO SECTION 43B. AS PER THIS EXPLANATION THE 6 ITA NO. 820/JP/2014 AJMER ZILA DUGDH UTPADAK SAHKARI SANGH LTD. PUBLIC FINANCIAL INSTITUTION SHALL HAVE THE MEANING ASSIGNED TO IT IN SECTION 4A OF THE COMPANIES ACT 1956. IN OUR CONSIDERED VIEW RCDF DO ES NOT FALL WITHIN THE DEFINITION OF PUBLIC FINANCIAL INSTITUTION. THEREFORE WE FIND FORCE IN THE CONTENTION OF THE LD. COUNSEL THAT THE AO WAS NOT JUSTIFIED IN INVOKING T HE PROVISIONS OF SECTION 43B OF THE ACT. THE TOUCH STONE FOR INVOKING THE PROVISIONS O F SECTION 43B IS THAT ANY SUM IS PAYABLE BY THE ASSESSEE AS INTEREST ON ANY LOAN OR BORROWING FROM ANY PUBLIC FINANCIAL INSTITUTION OR A STATE FINANCIAL CORPORAT ION OR A STATE INDUSTRIAL INVESTMENT CORPORATION. NOW THE FIRST QUESTION WOULD ARISE IS WHETHER THE RCDF IS A PUBLIC FINANCIAL INSTITUTION WITHIN THE DEFINITION OF EXPL ANATION-4 TO SECTION 43B. THE SAID EXPLANATION HAS ADOPTED THE SAME DEFINITION AS GIVE N IN SECTION 4A OF THE COMPANIES ACT 1956. SECTION 4A OF THE COMPANIES ACT 1956 DO ES NOT INCLUDE RCDF IN THE CATEGORY OF PUBLIC FINANCIAL INSTITUTION. THEREFOR E IN OUR CONSIDERED VIEW THE AO AS WELL AS THE LD. CIT (A) WERE NOT JUSTIFIED IN MAKIN G THE ADDITION. THUS WE DIRECT THE AO TO DELETE THE ADDITION. 7. IN THE RESULT APPEAL OF THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON 18/10/2016 . SD/- SD/- FOE FLAG ;KNO ( DQY HKKJR ) (VIKRAM SINGH YADAV) ( KUL BHARAT ) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER JAIPUR DATED:- 18/10/2016. DAS/ 7 ITA NO. 820/JP/2014 AJMER ZILA DUGDH UTPADAK SAHKARI SANGH LTD. VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT- AJMER ZILA DUGDH UTPADAK SAHKARI SANGH LTD. AJMER. 2. THE RESPONDENT- THE ACIT CIRCLE-2 AJMER. 3. THE CIT(A). 4. THE CIT 5. THE DR ITAT JAIPUR 6. GUARD FILE (ITA NO. 820/JP/2014) VKNS'KKUQLKJ@ BY ORDER LGK;D IATHDKJ@ ASSISTANT. REGISTRAR