ACIT.,Cir-16(2), Hyd, Hyderabad v. M/s Margadarsi Chit Fund Private Limited,, Hyderabad

ITA 973/HYD/2011 | 2008-2009
Pronouncement Date: 24-02-2012 | Result: Dismissed

Appeal Details

RSA Number 97322514 RSA 2011
Assessee PAN AABCM4751G
Bench Hyderabad
Appeal Number ITA 973/HYD/2011
Duration Of Justice 9 month(s) 5 day(s)
Appellant ACIT.,Cir-16(2), Hyd, Hyderabad
Respondent M/s Margadarsi Chit Fund Private Limited,, Hyderabad
Appeal Type Income Tax Appeal
Pronouncement Date 24-02-2012
Appeal Filed By Department
Order Result Dismissed
Bench Allotted B
Tribunal Order Date 24-02-2012
Assessment Year 2008-2009
Appeal Filed On 19-05-2011
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B HYDERABAD BEFORE SHRI CHANDRA POOJARI ACCOUNTANT MEMBER AND SMT. ASHA VIJAYARAGHAVAN JUDICIAL MEMBE R. ITA NO.973/HYD/2011 (ASSESSMENT YEAR 2008-09) AND CROSS OBJECTION NO.1/HYD/2012 THEREI N ASST. COMMISSIONER OF INCOME- TAX CIRCLE 16(2) HYDERABAD V/S M/S. MARGADARSI CHIT FUND (P)LTD. HYDERABAD (PAN - AABCM 4751 G ) (APPELLANT) (RESPONDENT) APPELLANT BY : SMT. K.MYTHLI RANI RESPONDENT BY : SHRI V. SIVAKUMAR DATE OF HEARING 4.1.2012 DATE OF PRONOUNCEMENT 24.2.2012 O R D E R PER ASHA VIJAYARAGHAVAN JUDICIAL MEMBER THIS APPEAL BY THE REVENUE AND CROSS-OBJECTION BY THE ASSESSEE FOR THE ASSESSMENT YEAR 2008-09 ARE DIREC TED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX(APPEALS)-V HYDERABAD DATED 21.3.2011. 2. LET US FIRST TAKE UP FOR CONSIDERATION THE A PPEAL OF THE REVENUE WHEREIN THE ONLY ISSUE INVOLVED IS WITH R EGARD TO DISALLOWANCE UDNERS.40(A)(IA) OF THE ACT FOR NON-DE DUCTION OF TAX AT SOURCE ON DIVIDEND/INTEREST PAID TO THE CHIT SUBSCR IBERS OF RS.308 89 44 084. EFFECTIVE GROUNDS OF THE REVENUE IN THIS APPEAL READ AS FOLLOWS- 1. .. 2. THE LEARNED CIT(A) SHOULD HAVE NOTICED FROM THE CASE-LAWS RELIED ON BY HIM THAT NOWHERE IN THE JUDGMENTS THE COURTS HAVE DISPUTED THAT THERE IS NO BENEFIT/ADVANTAGE/PROFIT TO THE NON- BIDDERS/CHIT SUB- SCRIBERS. TITA NO.973/HYD/2011 & CO NO.1/HYD/2012 M/S. MARGADARSI CHIT FUND (P)LTD. HYDERABAD 2 3. THE LEARNED CIT(A) FAILED TO NOTICE THAT IN THE CASE OF BILAHARI INVESTMENTS (P) LIMITED V/S. CIT THE CASE LAW RELIED ON BY HIM THE HONBLE MADRAS HIGH COURT ITSELF RECOGNIZ ED THAT THE CHIT FUND SCHEME IS A KIND OF SAVING SCHEME. THUS THE DISCOUNT /DIVIDEND CREDITED TO THE ACCOUNT OF THE N ON-BIDDERS IS AN ADVANTAGE/PROFIT OF A FINANCIAL NATURE. ACCORDINGLY THE CHIT DISCOUNT/DIVIDEND FITS IN THE DEFINITION OF INTERE ST DEFINED IN BLACK S. LAW DICTIONARY AND SQUARELY FALLS WITHIN THE FOU R CORNERS OF SECTION 2(28A) OF THE ACT. RELIANCE IS PLACED ON T HE FOLLOWING JUDICIAL PRONOUNCEMENTS WHICH ARE IN FAVOUR OF REV ENUE. A) VISWAPRIYA FINANCIAL SERVICES LTD. VS. CIT( 258 ITR 496)-MAD B) BHAGAVATHI AMMAL LAKSHMI AMMAL VS. M.VENKATASUBB A IYER (HONBLE HIGH COURT OF TRAVANCORE )***** C) JANATA AGENCIES (P)LTD VS. ITO (1 ITD 321)-BOM . 4. (***** CITATION NOT GIVEN) 3. WE HAVE HEARD BOTH THE PARTIES ON THIS ISSUE. AS IS EVIDENT FROM THE ABOVE GROUNDS OF APPEAL THE ONLY ISSUE THAT ARISES FOR CONSIDERATION IN THIS APPEAL RELATES TO THE NAT URE OF DIVIDEND DISTRIBUTED BY THE ASSESSEE COMPANY TO THE SUBSCRIB ERS OF ITS CHIT FUND SCHEMES EVERY MONTH AND ASSESSEES LIABILITY TO DE DUCT TAX AT SOURCE WHILE DISTRIBUTING SUCH DIVIDEND SO AS TO WARRANT DISALLOWANCE IN TERMS OF THE PROVISIONS OF S.40(A)(IA) OF THE ACT. WE FI ND THAT VARIOUS COORDINATE BENCHES OF THIS TRIBUNAL INCLUDING THE ONES AT HYDERABAD HAVE TAKEN A CONSISTENT VIEW ON THE POINT AT ISSUE IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. WE MAY REFER TO A FEW OF THEM HEREIN FOR READY REFERENCE. 4. EXAMINING THE NATURE OF THE DIVIDEND DISTRIBU TED BY A CHIT FUND COMPANY AMONG ITS CHIT SUBSCRIBERS AND CONSEQU ENT LIABILITY OF THE ASSESSEE TO DEDUCT TAX IN RELATION THERETO IN THE CONTEXT OF PROCEEDINGS INITIATED BY THE ASSESSING OFFICER UND ER S.201 AND 201(1A) OF THE ACT DEALING WITH THE CROSS-APPEALS IN THE CASE OF VIPANCHI CHIT FUNDS LTD. (ITA NO.804-805/HYD/2011 ) THE TRIBUNAL TITA NO.973/HYD/2011 & CO NO.1/HYD/2012 M/S. MARGADARSI CHIT FUND (P)LTD. HYDERABAD 3 VIDE ITS ORDER DATED 11 TH AUGUST 2011 FOLLOWING THE EARLIER DECISIONS OF THE BANGALORE BENCH OF THE TRIBUNAL IN THE CASE OF MARGA SOOCHI CHIT PVT. LTD. IN ITA NO.965/BANG/2008);BESIDES OF THE HONBLE DELHI HIGH COURT IN THE CASE OF SAHIB CHITS(DELHI)(P)LTD. IN I.T.A. NO.44 OF 2008 DATED 24.7.2009; AND OF THE HONBLE MADRAS HIG H COURT IN THE CASE OF CIT V/S. BILAHARI INVESTMENT PVT. LTD.(288 ITR 39) WHICH HAS BEEN AFFIRMED BY THE APEX COURT IN 299 ITR 1 HELD THAT THE PAYMENT OF DIVIDEND TO THE SUBSCRIBERS OF A CHIT TOWARDS D IVIDEND DOES NOT PARTAKE THE CHARACTER OF INTEREST AND ACCORDINGLY THE ASSESSEE IS NOT LIABLE TO DEDUCT TDS UNDER S.194A OF THE ACT AND N OT LIABLE TO INTEREST U/S. 201(1) AND 201(1A) OF THE ACT. 5. FOLLOWING THE ABOVE DECISION OF THE HYDERAB AD BENCH B OF THIS TRIBUNAL TO WHICH BOTH OF US ARE MEMBERS IN THE CASES OF M/S. VINUTNA CHIT FUNDS (P) LTD.(ITA NOS.1280-1281/HYD/2 011 FOR ASSESSMENT YEAR 2006-07 AND 2007-08) VIDE ORDER DA TED 31.10.2011 HELD THAT THE ASSESSEE-COMPANY IN THOSE CASES IS N OT LIABLE TO DEDUCT TDS U/S. 194A OF THE ACT AND NOT LIABLE FOR INTERES T U/S. 201(1) AND 201(1A) OF THE ACT AND CONSEQUENTLY DISMISSED THE APPEALS OF THE REVENUE. 6. FOLLOWING THE ABOVE DECISION OF THE TRIBUNAL IN THE CASES OF M/S. VINUTNA CHIT FUNDS (P) LTD. (ITA NOS.1280-1281 /HYD/2011 FOR ASSESSMENT YEARS 2006-07 AND 2007-08) NOTED ABOVE HYDERABAD BENCH A OF THE TRIBUNAL TO WHICH AGAIN BOTH OF U S ARE PARTIES IN THE CASES OF ITO V/S. LAXMAN CHIT FUND & FINANCE (P) LT D. HYDERABAD (ITA NOS.526 TO 529/HYD/2011 FOR ASSESSMENT YEARS 2004-05 TO 2007-08) HELD THAT THE ASSESSEE-COMPANY IN THOSE C ASES WAS NOT LIABLE TO DEDUCT TDS U/S. 194A OF THE ACT AND NOT L IABLE FOR INTEREST U/S. 201(1) AND 201(1A) OF THE ACT AND CONSEQUENTL Y DISMISSED THE APPEALS OF THE REVENUE. TITA NO.973/HYD/2011 & CO NO.1/HYD/2012 M/S. MARGADARSI CHIT FUND (P)LTD. HYDERABAD 4 7. THOUGH THE REVENUE SOUGHT TO DISTINGUISH THE DE CISION OF THE MADRAS HIGH COURT IN THE CASE OF BILAHARI INVES TMENTS (SUPRA) AND OTHER DECISIONS REFERRED TO BY THE CIT(A) IN THE I MPUGNED ORDER AND ALSO CITED CERTAIN DECISIONS IN THE GROUNDS OF THIS APPEAL IN THE ABSENCE OF ANY CONTRARY DECISION OF JURISDICTIONAL HIGH COURT OR APEX COURT BROUGHT TO OUR NOTICE BY THE REVENUE WE ARE INCLINED TO FOLLOW THE CONSISTENT VIEW TAKEN BY THE TRIBUNAL IN SIMILA R MATTERS DISCUSSED ABOVE RENDERED BY THE COORDINATED BENCHES OF THIS T RIBUNAL TO SOME OF WHICH BOTH OF WHICH ARE PARTIES INVOLVING THE D ETERMINATION OF NATURE OF DIVIDEND DISTRIBUTED BY THE ASSESSEE-CO MPANY AMONG ITS CHIT SUBSCRIBERS MONTH AFTER MONTH AND ALSO FOLLOW ING IN THAT PROCESS THE DECISION OF THE HONBLE MADRAS HIGH COURT IN T HE CASE OF BILAHARI INVESTMENTS (P)LTD.(288 ITR 39) AND HOLD THAT THE DIVIDEND DISTRIBUTED BY THE ASSESSEE HEREIN DOES NOT PARTAKE THE CHARACTER OF INTEREST AND CONSEQUENTLY THE ASSESSEE IS NOT L IABLE TO DEDUCT TAX AT SOURCE. 8. WE ARE FORTIFIED IN FOLLOWING THE CONSISTENT V IEW TAKEN BY THE DECISION IN SIMILAR MATTERS BY THE RATIO OF THE DECISION OF THE MADRAS HIGH COURT IN THE CASE OF CIT V/S. L.G.RAMA MURTHY AND OTHERS (110 ITR 453) WHEREIN EMPHASIZING THE NECES SITY OF UNIFORM CONCLUSION ON SAME MATTER AND SCOPE OF ADJUDICATIO N BY A TRIBUNAL IT HAS BEEN HELD BY THE HONBLE HIGH COURT AS FOLLOWS- NO TRIBUNAL OF FACT HAS ANY RIGHT OR JURISDICTION TO COME TO A CONCLUSION ENTIRELY CONTRARY TO THE ONE REACHED BY ANOTHER BENCH OF THE SAME TRIBUNAL ON SAME FACTS. IT MAY BE THAT THE MEMBERS WHO CONSTITUTED THE TRIBUNAL AND DECIDED ON THE EARLIER OCCASION WERE DIFFERENT FROM THE MEMBERS WHO DECIDED ON THE PRESENT OCCASION. BUT WHAT IS RELEVANT IS NOT THE PERSONALITY OF THE OFFICERS TITA NO.973/HYD/2011 & CO NO.1/HYD/2012 M/S. MARGADARSI CHIT FUND (P)LTD. HYDERABAD 5 PRESIDING OVER THE TRIBUNAL OR PARTICIPATING IN THE HEARING BUT THE TRIBUNAL AS AN INSTITUTION. IF IT IS TO BE CONCEDED THAT SIMPLY BECAUSE OF THE CHANGE IN THE PERSONNEL OF THE OFFICERS WHO MANNED THE TRIBUNAL IT IS OPEN TO THE NEW OFFICERS TO COME T O A CONCLUSION TOTALLY CONTRADICTORY TO THE CONCLUSION WHICH HAD BEEN REACHED BY THE EARLIER OFFICERS MANNING THE SAME TRIBUNAL ON THE SAME SET OF FACTS IT WILL NOT ONLY SHAKE THE CONFIDENCE OF THE PUBLIC IN JUDICIAL PROCEDURE AS SUCH BUT IT WILL ALSO TOTALL Y DESTROY SUCH CONFIDENCE. THE RESULT OF THIS WILL B E CONCLUSIONS BASED ON ARBITRARINESS AND WHIMS AND FANCIES OF THE INDIVIDUALS PRESIDING OVER THE COURT S OR THE TRIBUNALS AND NOT REACHED OBJECTIVELY ON THE BASIS OF THE FACTS PLACED BEFORE THE AUTHORITIES. IF A BENCH OF A TRIBUNAL ON THE IDENTICAL FACTS IS ALLOWED TO COME TO A CONCLUSION DIRECTLY OPPOSED TO THE CONCLUSION REACHED BY ANOTHER BENCH OF THE TRIBUNAL ON AN EARLIER OCCASION THAT WILL BE DESTRUCTIVE OF THE INSTITUTIONAL INTEGRITY ITSELF. . IN THIS VIEW OF THE MATTER THE PROVISIONS OF S.40( A)(IA) OF THE ACT ARE NOT ATTRACTED AND ACCORDINGLY THE CIT(A) WAS JUST IFIED IN DELETING THE ADDITION MADE BY THE ASSESSING OFFICER BY RESORTING TO DISALLOWANCE IN TERMS OF S.40(A)(IA) OF THE ACT.. WE ACCORDINGLY U PHOLD THE ORDER OF THE CIT(A) AND DISMISS THE APPEAL OF THE REVENUE. 9. NOW TURNING TO THE CROSS-OBJECTION FILED BY THE ASSESSEE WE MAY NOTE AT THE OUTSET THAT THERE IS A DELAY OF 143 DAYS IN FILING THE SAME BY THE ASSESSEE. ASSESSEE HAS FILED A PET ITION SEEKING CONDONATION OF DELAY. WE ARE CONVINCED WITH THE RE ASONABLENESS OF THE CAUSE FOR THE DELAY. WE ACCORDINGLY CONDONE THE SAME AND PROCEED TO DISPOSE OF THE CROSS-OBJECTION ON MERIT S. 10. THE ONLY EFFECTIVE GRIEVANCE OF THE ASSESSEE I N ITS CROSS OBJECTION IS THAT THE CIT(A) WAS NOT JUSTIFIED IN D ISMISSING THE GROUND OF APPEAL OF THE ASSESSEE ON THE POINT THAT THE ASS ESSING OFFICER ERRED TITA NO.973/HYD/2011 & CO NO.1/HYD/2012 M/S. MARGADARSI CHIT FUND (P)LTD. HYDERABAD 6 IN NOT CONSIDERING INCOME FROM BUSINESS AT RS.69 18 98 030 AS PER REVISED COMPUTATION OF INCOME FILED DURING THE COUR SE OF HEARING AS AGAINST RS.69 88 96 4890 DECLARED IN THE RETURN. 11. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES. IT IS EVIDENT FROM THE IMPU GNED ORDERS OF THE LOWER AUTHORITIES THAT THE ASSESSEE DURING THE ASSE SSMENT PROCEEDINGS FILED REVISED COMPUTATION OF INCOME AL ONGWITH ITS LETTER DATED 11.11.2010 WHEREIN IT HAD OFFERED INCOME FRO M SHORT TERM CAPITAL GAINS ON SLUMP SALE OF ITS PRINTING DIVISI ON UNDER S.50B OF THE ACT AT RS.5 78 40 622 AS AGAINST RS.1 70 12 168 ADM ITTED IN THE RETURN OF INCOME. THE SAID REVISED COMPUTATION RE SULTED IN THE WRITTEN DOWN VALUE OF VARIOUS ASSETS GOING UP TO RS .1 96 80 611 AS AGAINST RS.1 26 82 152 ADMITTED IN THE ORIGINAL RET URN AND THE SAME FURTHER CONSEQUENTLY RESULTED IN HIGHER DEPRECIATIO N BY RS.69 98 459 AND LOWER INCOME FROM BUSINESS. WITHOUT TAKING I NTO ACCOUNT THIS REVISED COMPUTATION THE ASSESSING OFFICER HAS COMP LETED THE ASSESSMENT ADOPTING THE ASSESSEES INCOME FROM BUS INESS AT RS.69 18 98 030 AS DISCLOSED IN THE RETURN ORIGINAL LY AS AGAINST RS.69 88 96 489 DETERMINED IN THE REVISED COMPUTATI ON FILED AS NOTED ABOVE DURING THE COURSE OF ASSESSMENT PROCEEDINGS. ON APPEAL THE CIT(A) TAKING NOTE OF THE FACT THAT THE ASSESSEE D ID NOT PRODUCE ANY DEPREECIATI0ON SCHEDULE TO SUBSTANTIATE THE CLAIM O F THE ASSESSEE AND IN THE ABSENCE OF ANY EVIDENCE TO SHOW THAT DEPRECI ATION HAS BEEN WRONGLY CALCULATED OR THE EXACT DEPRECIATION SCHEDU LE REJECTED THE CONTENTION OF THE ASSESSEE AND UPHOLDING THE ACTIO N OF THE ASSESSING OFFICER. CONSIDERING TOTALITY OF FACTS AND CIRCUMS TANCES OF THE CASE AND TAKING INTO CONSIDERATION THE FACT THAT THE ASSESSI NG OFFICER HAS NOT TAKEN INTO ACCOUNT THE REVISED COMPUTATION FILED BY THE ASSESSEE DURING THE ASSESSMENT PROCEEDINGS AND THE CIT(A) HAS CONFIRMED THE ACTION OF THE ASSESSING OFFICER IN THE ABSENCE OF D EPRECIATION SCHEDULE TITA NO.973/HYD/2011 & CO NO.1/HYD/2012 M/S. MARGADARSI CHIT FUND (P)LTD. HYDERABAD 7 OR ANY EVIDENCE PRODUCED BEFORE HIM TO SUBSTANTIATE THE CLAIM OF THE ASSESSEE WE FIND IT JUST AND PROPER TO SET ASIDE THE ORDERS OF THE LOWER AUTHORITIES ON THIS ISSUE AND RESTORE THE MA TTER TO THE FILE OF THE ASSESSING OFFICER WITH A DIRECTION TO EXAMINE THE S AME AFRESH AFTER GIVING REASONABLE OPPORTUNITY TO THE ASSESSEE TO AD DUCE THE NECESSARY EVIDENCE TO SUBSTANTIATE ITS CLAIM WITH REGARD TO T HE DEPRECIATION. HE SHALL ACCORDINGLY DECIDE THE ISSUE AFRESH IN ACCORD ANCE WITH LAW AFTER GIVING REASONABLE OPPORTUNITY OF HEARING TO THE ASS ESSEE. 12. IN THE RESULT REVENUES APPEAL IS DISMISSED A ND THE ASSESSEES CROSS-OBJECTION IS ALLOWED FOR STATISTIC AL PURPOSES. ORDER PRONOUNCED IN THE COURT ON 24.2.2012 SD/- SD/- (CHANDRA POOJARI) (ASHA VIJAYARAGHAVAN) ACCOUNTANT MEMBER. JUDICIAL MEMBER. DT/- 24 TH FEBRUARY 2012 COPY FORWARDED TO: 1. M/S. MARGADARSI CHIT FUND (P)LTD. 5 - 10 - 195 CORPORATE OFFICE OPP. POLICE CONTROL ROOM FATEH MAIDAN ROAD HYDERABAD 2. ASSTT. COMMISSIONER OF INCOME-TAX CIRCLE 16(2) HYDERABAD 3. COMMISSIONER OF INCOME - TAX(A) - V HYDERABAD I 4. COMMISSIONER OF INCOME - TAX IV HYDERABAD 5. THE D.R. ITAT HYDERABAD. B.V.S.