TaxTMI 
TaxTMI 
TaxTMI 
2014 (8) TMI 1183
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....sp; 2. The assessee is a State Warehousing Corporation. The background of the case is that the assessment order u/s.143(3) of the Act was originally passed on 31.01.2005 determining the taxable income of Rs. 5,90,35,236/- wherein exemption u/s.10(29) of the Act was allowed on income from warehousing & fumigation amounting to Rs. 5,41,41,410/- and the remaining business income & income from other sources was brought to tax. Aggrieved by the assessment order, the assessee preferred an appeal and the CIT(A) upheld the computation of business income. In second appeal, ITAT, Pune set aside the assessment order and restored it back to the Assessing Officer with a direction to re-compute denovo the income. Accordingly, the order u/s.143(3) r.w.s. 254 of the Act was passed on 14.12.2009 determining total loss at Rs. 13,25,00,239/-. In this order, the handling charges of Rs. 17,30,89,840/- were allowed as expenses against income from taxable activities though it pertained to both i.e. income from exempt activity as well as taxable activity. According to the CIT, as the direct expenses on account of handling charges pertain to both exempt and taxabl....
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.... such as Food Corporation of India, Fertiliser Companies such as RCF, various marking federations for storage of food grains, fertilizer, cotton bales, etc. The MSWC reserves the godowns of various clients as per their requirements. The various clients sent their goods to nearest railway station. It is from this spot, the MSWC provide the services of engaging transportation from railway station to warehouse and unloading the goods at railway station and loading the same into trucks. Same activity is repeated when the delivery of the goods is given. For doing this work the MSWC engages contractors. The sample schedule of such contract is enclosed for your perusal. Once these charges are incurred the recovery of the same is made on actual basis from various clients. Only for engaging these services the MSWC charges the supervision charges which vary from 7 to 10% depending upon the nature of work, client and terms agreed with such client. The total transport and handling receipt appear in the accounts is Rs. 18,58,63,814/- is inclusive of such service charges. The total handling charges appearing on expenditure side of Rs. 17,30,8....
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.... to failure to examine the applicability of provisions of section 14A to the facts of the case and has rendered the assessment erroneous and prejudicial to the interests of revenue. According to the CIT, the Assessing Officer was duty bound to determine the expenditure which had been incurred in relation to income which did not form part of the total income under Act by adopting a reasonable basis or method consistent with all relevant facts and circumstances. Since the Assessing Officer failed to do so, the order passed by him was found erroneous and so as to prejudicial to the interests of revenue. Therefore, the same was set aside being erroneous and prejudicial to the interests of revenue with a direction to pass a fresh order after properly examining the issues referred to and giving effect to the provisions of section 14A of the Act in respect of expenses pertaining to exempt income. The same has been opposed before us on behalf of the assessee, inter alia, the learned Authorized Representative has submitted that on facts and circumstances prevailing in the case and as per provisions & scheme of the Act it be held that, the order passed by learned Comm....
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.... be read with Rule 8D of I.T. Rule. Following the above precedent, we hereby restore the issue raised in the ground back to the stage of A.O to recomputed denovo in terms as directed above. Resultantly, the ground may be treated as allowed for statistical purpose. 7. In the result, the appeal is allowed only for statistical purpose." 6.1 Consequently, the order was passed by the Assessing Officer giving effect to the order of ITAT which is placed on pages 47 to 50 of the Paper Book filed by the assessee. In para 3.1 of the assessment order, the calculation of taxable income as per section 14A r.w.r.8D has been referred wherein, indirect expenses allocated as per assessment order has been mentioned at Rs. 17,30,93,440/-. In response to show cause notice dt. 02.02.2011 of CIT, the assessee replied vide letters dated 31.10.2011 and 04.12.2012. The stand of the assessee has been that the handling charges of Rs. 17,30,89,840/- were directly related to income from taxable activities of Rs. 18,58,63,814/-. The same has been filed during the course of fresh assessment passed in pursuance of ITAT order as discussed above. From the p....