TaxTMI 
TaxTMI 
2023 (8) TMI 498
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....CB, and therefore, it is current liabilities of the appellant, and therefore, not liable to tax. It is submitted that it be so held now. 2. The learned C.I.T.(Appeals) has erred in confirming the balance amount of Rs. 2,50,36,450/- out of total Rs. 3,11,86,450/- being contribution received from member industries as revenue receipt. Your appellant submits that the said contribution is in the nature of deferred revenue receipt, and therefore, it is to be deferred over a period of five years, and therefore, only 20% of the total contribution received is liable to tax and balance 80% is to be deferred in succeeding years. It is submitted that the 80% of addition of the total contribution, be deleted now. 3. The learned C.I.T.(Appeals) has erred in enhancing the income by Rs. 39,19,484/- being 15th of contribution relating to Asst. Year 2007-08, 2008-09 and 2009-10. Your appellant submits that the said amount is not liable to tax. It is submitted that it be so held now. 3. Brief facts relating to the case are that the assessee company is a cooperative venture of member industries looking after disposal of effluent discharged by the companies into 55 km. long channel....
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....rs, the ld. CIT(A) admitted to the ITAT having held so in the case of the assessee in Asst. Year 2001-02, but at the same time, he noted that in Asst. Year 2009-10 the ld.CIT(A) had held entire capital receipts to be taxable in the same year noting that the assessee had violated the order of the ITAT directing deferment of capital contribution in five years, in the preceding years. The ld. CIT(A), in Asst. Year 2009-10, noted that the assessee had not returned to tax the said deferred income of the preceding year, and therefore, he had held the entire capital receipt of the impugned year to be brought to tax. Following this decision of the ld. CIT(A) in Asst. Year 2009-10 for the impugned year, the ld.CIT(A) held the entire amount of capital contribution to be subjected to tax. Further, he noted that since the assessee had not returned to tax deferred capital contribution of the preceding years, he directed the AO to subject the same to tax in the impugned year, thus resulting in enhancing the assessee's income to the extent of Rs. 39,19,848/-. Aggrieved by this order of the ld.CIT(A) the assessee has come in appeal before the Tribunal raising the grounds as noted above. 8. At t....
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....rposes." 9. The ld.DR however relied on the order of the ld.CIT(A) in this regard. He drew our attention to para 5.5 & 5.6 of the order which deal with the taxation of entire capital contribution received during the impugned year, as under: "5.5 Again, for the year under consideration the appellant has offered only Rs. 62,37,290/- out of total receipt of Rs. 3,11,86,450/-. However, it is seen that for the assessment year under consideration also 15th capital contribution received in assessment years 2007-08, 2008-09 and 2009-10 have not been offered by the appellant to tax. Besides, the capital contribution of Rs. 3,11,86,450/- received in FY 2010-11, 15th of contribution received in assessment years from 2007-08 to 2009-10 totaling to Rs. 39,19,848/- should also be taxed in AY 2011-12. Thus, the appellant did not follow the decision of the Hon'ble ITAT Ahmedabad which was given in its own case for AY 2001-02 and for subsequent years. 5.6 Considering all these facts, the Ld. CIT(A)-1, Baroda, i.e. my predecessor while deciding the appeal of the appellant for AY 2009-10 on similar issue has held that in absence of offer by the appellant to stagger/defer it o....
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....ground of appeal No. 1 and 2 of the appellant are dismissed." 10. He further drew our attention to para 5.7 to 5.9 of the order dealing with enhancement of the income on account of taxing the deferred capital contribution of the preceding years in the impugned order are as under: "5.7 Since the appellant failed to offer the 15th of capital contribution received in financial years 2006-07, 2007-08 and 2008-09 (i.e. relevant to assessment years from 2007-08 to 2009-10) to tax in assessment year 2011-12, i.e. for the year under consideration and therefore a show-cause noticed u/s 251(2) of the Act bearing No. CAB-1/123/14-15/ECPL/2014-15 dated 09/01/2015 was issued to it and such show-cause notice is reproduced hereunder for reference: "You have filed an appeal in your case against the order u/s 143(3) of the IT Act dated 12/02/2014 as passed by ACIT, Circle -l(2), Baroda for AY 2011-12. The appeal has been filed by you for this assessment year in respect of addition made by the AO of Rs. 3,11,86,450/- by treating capital receipt of members' contribution as received by you as revenue receipt On perusal of details and records as filed by you, it is seen that fr....
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.... in AY 2011-12. This amount of contribution was not recognized and thus did not offer such amount for tax due to negligence. However, there was no malafide intention of appellate to escape from the same and mere negligence was the base reason for not recognizing the contribution. Thus, Appellate has agreed to the enhancement of Rs. 39,19,848/- pertaining to the l/5th of the Contribution relating to AY 2007-08, 2008-09 & 2009-10. Please allow same and oblige. 5.9 The appellant's AR in her above submission has admitted the fact that 15th portion of contribution of assessment years 2007-08, 2008-09 and 2009-10 of Rs. 39,19,484/- was not offered for taxation in AY 2010-11. The submission of AR of the appellant is that this non offering of l/5th of capital contributions of these three assessment years was due to negligence. But the fact remains that the decision/direction of Hon'ble ITAT, Ahmedabad has not been fully complied with by the appellant and therefore the AO is directed to enhance the assessment for AY 2011-12 accordingly by Rs. 39,19,484/-. Since the appellant has failed to offer/disclose this amount of Rs. 39,19,484/- (being 15th of capital contribu....
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....stently is only in the nature of advance and therefore cannot be subjected to tax in the impugned year. The ld. counsel for the assessee pointed out that since the assessee was unable to substantiate its pleading, the ld.CIT(A) rejected the same. He drew our attention to para-5.4 of the order of the ld.CIT(A) containing the pleadings and the finding of the ld. CIT(A) on the issue as under: "5.4. However, for the year under consideration, the appellant has considered an amount of Rs. 61,50,000/- (i.e. the amount which is included in total receipt of Rs. 3,11,86,450/- as made for the year under consideration) as not taxable being the same as advance received from the persons to whom membership were not allotted and they were not allowed to get the benefit of disposal system. As per the AR such amount of Rs. 61,50,000/- is not taxable item as membership was not allotted to such industries and remaining amount of Rs. 2,50,36,450/- crore was to be deferred in 5 years. But this submission of the appellant is not found to be tenable. In my opinion, the entire receipt of Rs. 3,11,86,450/- as got by the appellant from different persons/industries are taxable item. The appellant has....
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....fter the receipt of the same, the impugned year involved being A.Y 2011-12 pertaining to F.Y 2010-11, and the same had neither been refunded nor claimed by the said parties. 14. The ld.counsel for the assessee thereafter contended that subsequent to the order passed by the ld.CIT(A) in 2015, the assessee had refunded all these amounts of advances received from the respective parties in the year 2016. He explained that the reason for the same was the fact that the acceptance of the membership of these companies was subjected to approval by the Gujarat Pollution Control Board (GPCB) which was a condition explicitly stated in the letter of intent issued to these parties; that since the approval of GPCB was not obtained, therefore, all amounts received by way of advances from these parties was refunded in 2016. The ld. counsel for the assessee stated that the assessee was now in possession of evidence of refund of all these advances by way of letters issued to the respective parties refunding their amounts, copies of cheques issued to the parties, as also bank statement of the assessee, reflecting the issuance of cheques to these parties in the year 2016-17, refunding the advance re....
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.... v. A. Subburaj Chettiar, reported in (2015) 17 SCO 713, the admissibility of additional evidence does not depend upon the relevancy to the issue on hand, or on the fact, whether the applicant had an opportunity for adducing such evidence at an earlier stage or not, but it depends upon whether or not the appellate court requires the evidence sought to be adduced to enable it to pronounce judgment or for any other substantial cause. It is further observed that the true test, therefore is, whether the appellate court is able to pronounce judgment on the materials before it without taking into consideration the additional evidence sought to be adduced. 5. Applying the law laid down by this Court in the aforesaid decision to the facts of the case on hand, we are of the opinion that while considering the application for additional evidence, the High Court has not at all adverted to the aforesaid relevant consideration, i.e., whether the additional evidence sought to be adduced would have a direct bearing on pronouncing the judgment or for any other substantial cause-As observed herein above, except sale deed 29.12.1987, which as such was rejected, there was no other material av....
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....- from the total membership fees received of Rs. 3,11,86,450/- separately and has rejected the stand of the Applicant on the ground of non-refund of such advances. Moreover, these documents being contemporary in nature and depicting events which occurred subsequently to the order of the learned C.I.T.(Appeals), the said evidence which is necessary to controvert those findings could not be produced before the lower authorities. 3. In this view of the matter, it is most humbly submitted that, above mentioned additional evidences are extremely important pieces of evidence, to prove the bona fides of the Applicant. The additional evidences sought to be adduced, removes the cloud of doubt cast upon the Applicant and such evidences have direct and important bearing on the issue impugned under the first ground of the present appeal. Thus, it is requested that, the aforesaid evidences may kindly be admitted for the substantial cause of justice and also in light of the recent judgment of Hon'ble Supreme Court in case of Sanjaykumar Singh vs. State of Jharkhand (Civil Appeal No.1760 of 2022 dated 10.03.2022) (copy attached herewith). All these evidences are going to the root of ....
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....sought to demonstrate and substantiate its pleading that the amount received from them was only in the nature of advances by way of capital contribution, which was refunded to them on account of approval of GPCB not being obtained in their cases. These evidences, undoubtedly being generated post the order passed by the ld.CIT(A), therefore, could not be filed before him, and at the same time, undoubtedly, they do substantiate the assessee's plea that the amount received from these parties was not full and final payment of these parties towards capital contribution, but was only portion of the capital contribution to be made by them given by way of advance towards membership of the assessee-company subjected to approval by GPCB. Since these evidences throw light and bring out the nature of the purported amount, they are relevant for adjudicating the controversy before us, whether the impugned amounts were in the nature of advance for capital contribution or not. The Revenue authorities have no basis for holding the entire receipts not being in the nature of advance except for the fact that they were retained by the assessee for a very long period of time. These evidences shedding li....
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....ation. (2) Your committed effluent quantity is 1,50,000 LPD. (3) Your units treated effluent will be allowed to discharge into the ECPL system at Village Karkhadi. (4) You will have to provide online flowmeter alongwith recorder in your premises; which should be easily approachable by the GPCB / ECPL officers. EFFLUENT CHANNEL PROJECT LIMITED. D ant to foc Document 2 (5) You will provide 'Intermediate Chamber', valve with locking arrangement, flowmeter with recorder at the end of effluent disposal pipeline in your premises. (6) You will have to provide 3 days storage in your premises to store effluent in emergency. (7) Your total Capital Contribution to the ECPL is Rs. 22,50,000/- at the rate of Rs. 15.00/ lit. (8) We have received Rs. 5,62,500/- as Capital Contribution (i.e. 25%) vide cheque No. 636872 of Axis Bank dt: 10.05.2010; which is non-refundable, In the event of the Industry not proceeding with the project for any reason whatsoever. (9) On receipt of 'NOC' from GPCB you will make 50% payment within 3 months to the ECPL of Capital Contribution i.e. Rs. 11,25,000/-. (10) Payment of remaining 25% Capital Con....