TaxTMI 
TaxTMI 
2017 (7) TMI 1306
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.... At the time of passing the order, Bench has decided the appeal in favour of the assessee by mentioning in Para No.25.2 on Page No.27 of the order that "Therefore in view of the above judgements, appeal of the assessee is allowed and Departmental appeal is dismissed." However, it is also submitted by the assessee that at the same time there was no specific finding given by the Hon'ble Bench on following Grounds i.e. Ground No.3 to 6, which requires adjudication based on the Argument of learned AR and learned DR. Grounds of Appeal Prayer before your ITAT Ground No. 3 The CIT(A) has erred both in law and on facts in confirming the disallowance of Rs. 72,855/- u/s 14A of the I.T. Act, 1961. In view of the submission made there were no expenses incurred to earn any exempt dividend, the disallowance of Rs. 72,855/- ought to have been deleted. The Appellant had submitted that this ground is not pressed and thus the same be dismissed accordingly. Ground No.4 The learned CIT(A) erred in confirming the addition of Rs. 87,00,000/- being disallowance of expenses on repairs to the plant considering the same as capital in nature. On the facts and circumstances of the case and on ....
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....dered and decided in subsequent Asst. Year 2008-09. In any event the credit of amount of deposits of Rs. 239.07 lakhs in Profit & Loss Account and its treatment as income or otherwise is not at all an item of income in this year and it cannot be added in the hands of the income of the appellant in the Asst. Year 2007-08. The action of learned CIT(A) directing the Assessing Officer to enhance the income further by Rs. 239.07 lakhs is bad in law and also not correct on facts and circumstances of the case. It is submitted that the same be held accordingly. The Appellant had submitted that this Ground is not pressed and thus the same be dismissed accordingly. Ground No.6 The learned CIT(A) has erred in confirming the interest charged u/s.234 of the Income Tax Act. It is submitted that on the facts and circumstances of the case interest u/s.234B is not at all chargeable to the appellant and interest so charged and confirmed by the learned CIT(A) be deleted. The Ground is general in nature and be decided accordingly as consequential. These are eight appeals, out of which four appeals in ITA No.1119/Ahd/2012, ITA No.3037/Ahd/2010, ITA No.1900/Ahd/2012 and ITA No.597/Ahd/2013 f....
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....ct on facts and on law. The expenditure incurred in providing assistance to Jammu & Kashmir Milk Producers Co-Operative Limited was in the nature of Cooperative development expenditure incurred wholly and exclusively for the purpose of business of the assesses. It is accordingly submitted that the disallowance confirmed by the learned C.I.T. (Appeals) be deleted. 3. The learned C.I.T.(Appeals) further erred both in law and on facts in confirming the action of the Assessing Officer allowing only 10% depreciation as against 100% depreciation on Amul Parlours. On the facts of the case and in view of the legal position, the learned C.I.T.(Appeals) ought to have directed to grant depreciation at 100% as claimed. It be so held now and the depreciation be allowed at 100%. 4. The learned C.I.T. (Appeals) further erred both in law and on facts in confirming the action of the Assessing Officer to disallow the expense incurred in connection with directors' visit to various dairy plants of Rs. 2,17,000/- on the ground that such expenditure were not incurred for the purpose of business. It is submitted that the Directors, who visited various dairy plants were incurred whol....
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....cers" Co-operative Ltd.). It was found that the expenditure of Rs. 334.48 lacs towards Co-operative Development Expenses is of capital expenditure in nature and therefore, not allowable as revenue expenditure as per the provisions of the Act. Further, the Cooperative Development Expenses includes assistance of Rs. 150 lacs to JKMPC Ltd. Which is also not allowable either u/s.36 or u/s.37 of the Act for the single reason that any expenses in the nature of "assistance" was to be qualified as capital expenditure only. In view of the above, the assessee was required vide para-6 of questionnaire letter dated 20/08/2010 to explain with cogent and sufficient evidences as to why co-operative development exp. (including assistance of Rs. 150 lacs to JKMPC Ltd) of Rs. 334.48 lacs should not be treated as capital expenditure. In response to this, a written submission dated 24/11/2010 was furnished and the relevant paragraphs of the submission are reproduced below. i. "Apart from marketing and distribution, the key role of federation is to develop, promote and support co-operative movement. ii. We have to further state that with the introduction of the private parties in the ....
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.... Total 334.48 It is submitted that though it is difficult to measure economic benefit in money terms, but it was seen that the milk production/procurement in these unions have been increased by 15 per cent when compared to earlier year. It is observed that out of total expenditure 334.48 lacs, which were disallowed by the A.O., the learned CIT (Appeals) allowed all other expenditure except assistance given by the assessee Co-op. Society to Jammu & Kashmir Milk Producers' Co-operative Limited of Rs. 150 lakhs. The Assessee is in Appeal for disallowance and submitted vehemently that all the expenditure of Rs. 334.48 lakhs are fully and exclusively expenditure in the nature of Dairy Development Expenditure. It was argued that all the expenditure incurred for the upliftment and development of the dairy incurred in the normal course of business activities and in furtherance of cooperative movements to procure and sell more milk, is part and parcel of the business expenditure. The reliance was placed on the decision of Ahmedabad Bench ITAT in the case of Valsad District Co-op. Society, wherein the Assessee is claimed of incurring expenditure on dairy development ....
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....ore incurred wholly and exclusively for the purpose of business and does not give any enduring benefit and being pari material similar to the expenses incurred and allowed in all earlier assessments year and also during assessment completed u/s.143(3) of the Act. Further we have to submit that JKMPC Ltd. have supplied Pouch Milk (Milk Product) of Rs. 186.14 Lacs during the A.Y.2005-06 and Rs. 951.21 during the A.Y.2006-07 to GCMMF Ltd. Jammu Branch. Thus, it helped to introduce AMUL Pouch milk in Jammu and Srinagar area. It was also submitted that such kind of expenditure were regularly incurred by the Federation and similar expenditure in immediate 3 preceding years were incurred and allowed. The crux of the submission of the Appellant was that such expenditures are wholly and exclusively for the purpose of business, it does not give any enduring benefit. Such kind of expenditures were incurred in earlier years also when diaries were set up in Maharashtra and in other States in 1994-95 and earlier Assessment Years and the same have been consistently allowed. It was also argued that such expenditure debited have been considered correctly as revenue expenditure by a renowned f....
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....e settled legal proposition. In view of this, the addition of Rs. 334.48 Lacs be deleted. After considering the order of the Assessing Officer, the order passed by the learned Commissioner of Income Tax (Appeals) and after carefully considering the submissions made by the leaned AR and the learned DR and after pursuing the paper book and written submissions we are of the considered view that the expenditure incurred by way of assistance to Jammu & Kashmir Milk Producers' Co-operative Limited are not at all of capital in nature or of any benefit enduring nature. The same are incurred in the normal course of business activities and in furtherance of milk and Amul products. The expenditures are incurred wholly and exclusively for the purpose of business. The decision cited above in case of Valsad District Co.op. Society in the ratio decided therein is fully applicable to Appellant's case, we therefore, hold that the expenditure incurred of Rs. 150 lakhs being the expenditure incurred as assistance to Jammu & Kashmir Milk Producers' Co-operative Limited are of revenue in nature and same be allowed. This ground of appeal is accordingly allowed. The Third Ground of Appe....
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.... in pouched pack as per standard fixed by them without visiting the plant, verifying the hygienic condition and purity and packing of the milk. It was submitted that therefore the existence wholly and exclusive for the purpose of business and same should be allowed. As against this, the learned DR relied on the observations made by the Assessing Officer and the learned CIT (Appeals). We have carefully gone through the Assessment Order, order of learned CIT (Appeals) and the submissions made by the learned A.R. Once we have held that the expenditure incurred by the Assessee for dairy development incurred to assist JKMPC Ltd. is revenue expenditure, then the expenditure incurred by the Directors of the cooperative society are also akin to the business of the society. There is no element of any capital expenditure incurred therein. The expenditure incurred of Rs. 2,17,000/- accordingly are allowed as revenue expenditure. This ground of Appeal is accordingly allowed. The fifth ground of Appeal being addition made of Rs. 51,800/- under Section 14A is not pressed by the appellant looking to the smallness of amount involved there in and is therefore dismissed accordingly. The ....
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....sions made on the ground that it is part of dairy development expenditure and incurred to let public at large to know about Amul Milk products. After carefully perusing both the orders and submissions made by the A.R. we hold that the expenditure incurred on Amul Yatra is incurred by the appellant for business purpose, the same is part and parcel of the dairy development expenditure incurred in normal course of business. In view of this, the expenditure of Rs. 14.66 lakh incurred by the appellant are allowable expenditure. This ground of Appeal of Revenue is dismissed. In the result the Appeal of the Assessee is partly allowed and Appeal of the Revenue is dismissed. Assessment Years 2007-08 We now come to the Appeals filed by Assessee in Appeal No.3037/Ahd/2010 for the Assessment Years 2007-08. 1. The learned C.I.T. (Appeals) erred both in law and on facts in confirming the disallowance of Rs. 3,64,32,000/- being amount transferred to reserve fund u/s.67 of Gujarat Co.op. Societies Act. On the facts of the case and in law, the deduction of the aforesaid amount ought to have been given. It be so held now and the said amount be allowed as claimed. 2. The le....
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....provisions of Sec.41(1) are not applicable and therefore, writing off and crediting Security deposits as no more payable cannot be treated as income. It is submitted that the deposits so written off of Rs. 237 lakhs as not payable is capital receipt and not an income and the same be allowed accordingly. Without prejudice to the above, the learned C.I.T. (Appeals) has further enhanced the addition by not following the appropriate procedure of issuing appropriate notice and by making a further addition of Rs. 239.07 lakhs being security deposits written off in the subsequent year. It is submitted that the appellant is following Mercantile system of accounting duly audited and writing off of other security deposits of Rs. 239.07 lakhs was not at all an issue for the year under appeal, but is to be considered and decided in subsequent Asst. Year 2008-09. In any event the credit of amount of deposits of Rs. 239.07 lakhs in Profit & Loss Account and its treatment as income or otherwise is not at all an item of income in this year and it cannot be added in the hands of the income of the appellant in the Asst. Year 2007-08. The action of learned C.I.T,(Appeals) directing the Asses....
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....e A.O. found that payment of Rs. 87,00,000/- was made by the Appellant to GEA Processing Engineering India Ltd. and the bill raised described the work as "design, supply, irrigation and commissioning of 100 MTDP Milk Powder Plant". The A.O. observed that along with the bill there are other items of purchases and therefore took a view that it is not revenue or repairing expenditure and held that a new asset was created giving benefit of enduring nature. After allowing the depreciation thereon the A.O. made addition of Rs. 73,95,000/-. The learned CIT (Appeals) confirmed the same view of the A.O. The Appellant is now in Appeal. The learned A.R. vehemently argued that from the copy of the appeal filed from the paper-book Page 59 it can be seen that various parts which were imported as well as indigenous were supplied by GEA Processing Engineering India Limited. It was the contention of the appellant that there was heavy damage to the plant and it was repaired by taking corrective actions. It was argued that this repair was done to a big plant which was of Rs. 50 crores already in existence and incurring repair and replacing some parts of Rs. 87 lakh is a normal repair to maintain and ....
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....is order. This ground is accordingly, partly allowed. Thus, the appeal for the assessee for A.Y. 2007-08 is partly allowed. We now come to the Appeal filed by the Revenue in ITAT No.2968/Ahd/2010 for Assessment Year 2007-08, wherein the Revenue has taken following grounds:- "On the facts and circumstances of the case and in law, the Ld.CIT(A) has erred in deleting the additional deprecation of Rs. 54,00,000/- overlooking the provision of Section 32(1)(iia) of the Act, and also the fact that no new identifiable product or thing had come into existence." The only ground of appeal taken by the Revenue is that CIT(A) has erred in deleting the additional depreciation of Rs. 54,00,000/- overlooking the provision of Sec. 32(1)(iia) of the Act. This matter is decided in favour of the Assessee by Hon'ble ITAT in Assessee's own case in A.Y.2006-07 in ITA No.43/Ahd/2010 on Page 26, Para 23 of the ITAT Order. The copy of the said order is placed on record. In view of the same, Assessee is entitled to the additional depreciation of Rs. 54,00,000/- lacs. Appeal of the Revenue is accordingly dismissed. A.Y.2008-09 We now take up the Appeal filed by the assessee In ....
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.... depreciation as against 100% on Amul Parlours. In this case, matter was decided in favour of assessee by the Hon'ble ITAT in assessee's own case for A.Y.2002-03 in ITA No.475/Ahd/2006 and now eth same has been confirmed by the Hon'ble Gujarat High Court in assesses own case in Tax Appeal No.759 of 2013, dated 23/01/2014. In this case, Hon'ble High Court has held hats milk dairy procure land on lease basis and constructed temporary sheds for sale of milk products and Hon'ble High Court has also cited similar decision in the case of CIT vs. TVS Lean Logistics Ltd. Reported in (2007) 293 ITR 432 (Mad) and held that construction of building on a leasehold land resulted into assessee only a business advantage and the assessee cannot be stated to have acquired any capital asset. Therefore in view of the above judgments, appeal of the assessee is allowed and Departmental appeal is dismissed. Therefore this ground of appeal is allowed. The next Ground No.3 of Appeal being addition made of Rs. 63,929/- under Section 14A is not pressed by the appellant looking to the smallness of amount involved there in and is therefore dismissed accordingly The Ground No. 4 is wi....