AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2018 (8) TMI 654
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....cts and circumstances of the case. 4. The ld. AR further submits that the issue involved in both the appeals of assesse are covered by the order dt. 17-11-2017 of the Co-ordinate Bench of ITAT, Kolkata in assessee's own case for the A.Ys 2009-10 & 2010-11 and referred to paras 8 to 18 of the said order. 5. On the other hand, the ld. DR did controvert the above submissions of the ld.AR. 6. Heard rival submissions and perused the record. We find that the issue raised in both the appeals of assesse are covered by the order dt. 17-11-2017 in assessee's own case for A.Ys '09-10 & 10-11. Relevant portion of which is reproduced herein below:- "8. We have heard the submissions of the ld. Counsel for the assessee and the Learned DR. 9. The learned counsel for the Assessee submitted the contribution from Mother Dairy towards should not be treated as income of the assessee. The submission of the ld. Counsel for the assessee was that similar contributions received in the past were not treated as income. The character of the receipt in the hands of the Assessee is capital receipt and ot in the nature of income. The decision for the creation of TSS Grant had been adopted long time back, ....
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....dus operandi. The Ld. CIT(A) had placed too much emphasis on the form rather than the substance and the purpose of the Grant. 12. The Ld. DR however contended that the assessee was constituted for the purpose of making profits from manufacture, distribution of sale of milk and milk products. The amounts received though it was for improvement of infrastructure was in the course of business and therefore assumes the character of income. A query was raised by the Bench as to whether the money spent by the assessee for the purpose of TSS is claimed as an expenditure and whether the entire fund is brought to tax without considering the money spent for the purpose of envisage by TSS. It was agreed by the parties that the expenditure part of TSS has not been considered but the entire receipts from Mother Dairy towards TSS has been considered as income of the assessee by the revenue authorities. 13. We have given a careful consideration to the rival submissions. We have also perused various details furnished by the assessee in the paper book. The first aspect that needs to be understood is accounting treatment of the TSS by the assessee in its books of accounts. Though entries in the....
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....pt in question cannot be regarded as subsidy in the sense it was a voluntary contribution by Mother Diary and others. We have already seen that in the resolution dated 21.7.1998, it was resolved that the Assesssee, Mother Diary (out of the entire amount earmarked for infrastructure development of the Unions) and State Government (out of the amount payable by the Assessee to the State Government as dividend on its share capital) would contribute to a Fund called TSS. The various milk unions were also free to contribute to TSS. The fund so created was to be used only for infrastructure development of the Unions. It was also resolved that a task force headed by principal secretary, ARDD would examine proposals for utilization of the fund and approve the proposals. We should not forget that all the milk unions are members of the Assessee. The Milk Unions operate at the district or primary level and the Assessee operates at the State level. All the milk unions and the Assessee operate for their own interest and operate on the principles of mutuality. Therefore it cannot be said that the contribution to the fund are in the nature of subsidy which is generally understood as a form of fina....
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....by the Government of NCT of Delhi. In a meeting held on 24th April, 1989, it was observed that the Articles of Association and objectives of the assessee should be expanded to include investments in transport infrastructure particularly bridges, grade separators, underpasses and pedestrian cross, over bridges or sub-ways. It was also noticed that there was substantial shortage of funds being faced for creation of the said infrastructure in Delhi. There was a need to establish separate mechanism whereby resources, apart from the plan resources, were tapped and a major programme mounted. Retail trade in country liquor and 50 degree U.P. Rum was then undertaken by Excise Department, Delhi Administration. It was decided that this retail trade should be transferred to the assessee w.e.f. 15th May, 1989. The minutes of the said meeting record that this would generate a surplus of Rs. 100 crores in three financial years from 1989 to 1992 and enable construction of 20 flyovers and a substantial number of pedestrian facilities. The assessee did not treat "Transport Infrastructure Utilisation Fund as income on the ground that these receipts were mandatorily required to be spent for construct....
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....ipt as income. The Supreme Court expounded that the following questions should be raised and answered: (1) Do the receipts bear a character of income at the time it reached the hands of the assessee? (2) Does the title in the receipt vest with the assessee? (3) Does the assessee exercise complete dominion over the funds in question? (4) Does the assessee regarded the money as that of a third party or treat the money of that of a third party, with assessee having no unfettered dominion over the same? (5) Does the assessee stand in the position of debtor in relation to those funds/deposits? (6) What is the primary purpose of collection of said amount? 33. It was elucidated and explained in S. Shahakari Shakkar Karkhanna Ltd. (supra) :- "These factors may broadly satisfy the first test applied in Bazpur Cooperative Sugar's case *1988+ 172 ITR 321 (SC). The following are the relevant observations in this regard (page 329) : "It is clear that these amounts which were deducted by the respondent from the price payable to its members on account of supply of sugarcane were deducted in the course of the trading operations of the respondent and these deductions were a part of its....
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.... liability to return it to the party by whom or on whose behalf it is made on the fulfilment of certain conditions. Under the unamended bye-law, the amounts deducted from the price and credited to the said fund were first liable to be used in adjusting the losses of the respondentsociety in the working year; thereafter in the repayment of initial loan from the Industrial Finance Corporation of India and then for redeeming the Government share and only in the event of any balance being left, it was liable to be converted to share capital. The primary purpose for which the deposits were liable to be used were not to issue shares to the members from whose amounts the deductions were made but for discharging of liabilities of the respondent-society. In these circumstances, the receipts constituted by these deductions were really trading receipts of the assessee-society. . ." 34. Thus it is the true nature of the receipt and purpose thereof is the determinative factor and the relevant principle to apply to decide whether or not an amount should be included or excluded from the profit/income. This requires examination of the question from various angles as noticed above, do the receip....
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....ment Funds. The said order was issued in exercise of the power under section 79A of the Maharashtra State Co-operative Societies Act. This order passed during the middle of the last assessment year relevant to these appeals gives statutory basis for the already existing practice. It is difficult to equate this fund to the other categories of funds, as has been done by the Tribunal and affirmed by the High Court. Unlike the other funds like Chief Minister's Relief Fund, the amount collected towards Area Development Fund is retained by the sugar factory itself and utilized as per the guide lines issued by the Government or the National Co-operatives Development Corporation. The collective body of the society and its elected representatives take the decision as to how much amount has to be spent and for what purposes. The Director of Sugar or other designated official, no doubt acts in a supervisory capacity to oversee that the funds are properly utilized. On that account, it cannot be said that the collection is made by the society as an agent of the Government or the proprietary interest in the funds is vested with the Government. The conclusion has been reached by the Tribunal ....