TaxTMI 
TaxTMI 
2025 (7) TMI 299
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....) dated 30/3/2023 for asst. year 2014-15 is contrary to law and facts. 2. The learned CIT erred in dismissing the ground that the assessment is barred by limitation. The appellant contends that the asst. order was passed on 24/1/2020 while the limitation period for completing the assessment expired on 31/12/2019. The learned CIT(A) should have appreciated that the Assessment Order without DIN is invalid as per the Board Circular. 3. The learned CIT (A) erred in relying upon the clarification sought from Assessing Officer and screen shots without putting the same to the appellant for its objections. 4. The learned CIT(A) erred in confirming the addition/disallowance of the following items. Addition of privilege fees Rs.277,62,84,789 Addition of Spl. Privilege fees for sport promotion 25,00,00,000 Addition of Additional Privilege fee 429,23,75,131 Disallowance of Payment towards Leave encashment 8,42,385 Disallowance of Payments towards PF/SF GF and other fund 15,36,759 Total 726,10,39,064 The above additions/disallowance made are erroneous and the CIT (A) erred in confirming the additions/ disallowance wi....
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....g any of the submissions relating to the non-applicability of section 40a(iib) of the I.T. Act. 14. The learned CIT(A) erred in not considering the plea of the appellant that the levy of the privilege fee is not exclusive and the appellant has specifically raised this ground before CIT(A), which the CIT(A) did not address in the appellate order. 15. Without prejudice, the appellant submits that appellant is competent to raise this ground before CIT(A) even at the state of appeal proceedings and the learned CIT(A) erred in not adjudicating sting this issue. 16. The learned CIT(A) failed to consider that it is necessary to determine as to who paid the privilege fees and who received the privilege fees while considering whether or not the wholesale trade in liquor is conducted by the State or the appellant Corporation. 17. The learned CIT(A) was totally in error in observing that the disallowance u/s. 40a(iib) is not the subject matter of the remand when the subject falls for consideration for coming to the conclusion as to who carried on liquor business. The CIT(A) erred in ignoring he additional ground filed online on 21/3/2023 on this issue. ....
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.... 21.07.1993 to the Commissioner of Prohibition and Excise or the Government as privilege fee or special privilege fee or any other fee or cess, by whatever name called, as per the provisions of sections 23(1), 23A and 23B of the Andhra Pradesh Excise Act, 1968 shall be deemed to be and always deemed to have been the income of the Government and due payment for the relevant years in terms of section 4B of Act 1993. The amendment further states that, in the A.P. Excise Act, 1968, sec.23A and sec.23B shall be omitted. 3.1. For the assessment years 2014-2015 and 2015- 2016, assessment was originally completed u/sec. 143(3) vide order dated 30.12.2016. During the course of assessment proceedings, the Assessing Officer observed that, there is P & L A/c, to which, certain incomes are credited like retail out-let sales, other income like penalty levied of non-moving stock, penalty levied on un-lifted stock, sale of scrap etc., and special notes to the financial statements wherein the income from wholesale trading activity under GOAP-DDB Account is accounted for by way of a separate account. The Assessing Officer further observed that, from out of such revenues from the wholesale trading....
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....d 29.01.2019 in ITA.Nos.665 & 878/Hyd./2018 has remitted the issue back to the file of Assessing Officer for both the assessment years and directed the Assessing Officer to verify the letters filed by the assessee from various Officers of the Government of Andhra Pradesh and if, they are found to be correct and if it is found that, it is the Government of Andhra Pradesh which is carrying on the manufacturing and trading of liquor, the assessee cannot be considered to have earned income from sale of such liquor. 6. In pursuance to the directions of the ITAT, Hyderabad Bench (supra), the Assessing Officer has taken fresh assessment proceedings and after considering relevant evidences filed by the assessee and also by noticing relevant A.P. Excise Act, 1968 and 2012, observed that, the assessee is having privilege of importing, trading and distributing the IMFL/FL in the State of Andhra Pradesh and thus, the entire income generated by the assessee out of wholesale trading in IMFL/FL is the income of the assessee. Therefore, held that, the amount paid out of the said income in the name of privilege fee, special privilege fee, additional privilege fee and contribution to C.M. Relief ....
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....of the order on 07.01.2020 submitted that, if at all the claim of the Revenue is correct that, assessment order has been passed on 31.12.2019, then, it should have been served on the assessee on the same day. Further, going by the date of service of the order, it is undisputedly clear that the assessment order has been passed beyond the due date i.e., 31.12.2019 and backdated by generation of DIN which is evident from the multiple DIN nos. generated by the Department. Therefore, he submitted that, the assessment order passed by the Assessing Officer with multiple DIN nos. and beyond the due date is barred by limitation and should be quashed. 10. MS. M. Narmada, learned CIT-DR for the Revenue, on the other hand, submitted that the assessment order has been passed with DIN no. 20192014100018510 14C on 31.12.2019 itself which is evident from the conclusion drawn by the learned CIT(A) based on entry in ITBA portal wherein the demand of Rs. 313,17,11,113/- was generated on 31.12.2019 for the assessment year 2014-2015 u/sec. 143(3) r.w.s.254 of the Income Tax Act, 1961. She further submitted that, ITBA portal was newly introduced during the period, during which, the assessment order u....
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.... Instruction 144, clearly stated that since auto generation of DIN facility has been provided on AST/ITD, AO should not generate DIN in respect of legacy ITD/AST orders from ITBA portfolio, but, the Assessing Officer again generated separate DIN from ITBA common functions for intimation to the taxpayer on 24.01.2020 with DIN no.1024249037(1) which resulted in generation of additional DIN for order passed on 31.12.2019. Therefore, from the above, it is undisputedly clear that, order has been passed on 31.12.2019 with valid DIN and order is beyond limitation is devoid of merit and cannot be accepted. 11. We have heard both the parties, perused the material on record and gone through the orders of the authorities below. There is no dispute with regard to the fact that there are three DIN nos. in the present case. As per the assessment order dated 31.12.2019, the Assessing Officer referred DIN no.1024249037(1) and the said DIN has been generated on 24.01.2020 in ITBA Portal. There is another DIN no. generated on 31.12.2019 with DIN no.20192014 10001851014C and the same has been appearing in the screen-shot submitted by the Department downloaded from ITBA application and the said DIN....
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....his, there are 02 DIN nos for one assessment order i.e., one generated on 31.12.2019 and another was generated on 24.01.2020. Further, in respect of third DIN no., it is the DIN which has been generated for intimation letter for intimating the assessment order passed by the Assessing Officer to the assessee. Therefore, we are of the considered view that, there is no delay in order passed by the Assessing Officer as alleged by the Learned Counsel for the Assessee in light of subsequent two DIN nos. that, the assessment order has been passed beyond due date specified i.e., 31.12.2019 and further it has been backdated by referring a handwritten DIN no. in the first page of the assessment order and thus, it is devoid of merit and cannot be accepted. Therefore, we reject the grounds taken by the assessee challenging the validity of the assessment order in light of multiple DIN nos. and the argument that assessment order is barred by limitation. 12. The next issue that came up for consideration from ground nos.4 to 18 of assessee's appeal is, addition towards privilege fee, special privilege fee, additional privilege fee and contribution to C.M. Relief Fund. 13. Learned Counsel for....
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.... Managing Director of the Assessee-APBCL submitted that, they have explained the manner and method of carrying-out the business of wholesale trade in the State of Andhra Pradesh and as per their clarification it is the exclusive right of the Government of Andhra Pradesh to carry-on the business. The Government of Andhra Pradesh collects entire sale consideration in the PD A/c and the same has been appropriated to relevant Heads. The assessee neither collected the sale consideration nor privilege fee as claimed by the Assessing Officer. Further, the assessee has not paid any privilege fee, special privilege fee, additional privilege fee and contribution to C.M. Relief Fund etc. But, the same has been directly collected by the Government of Andhra Pradesh in the Treasury and, therefore, he submitted that, the allegation of the Assessing Officer that, in terms of sec.4 of A.P. Regulation of Wholesale Trade Act, 1993, the assessee is having exclusive right over wholesale trading in IMFL/FL, Beer and Wine and thus, the entire income is accrued to the assessee including privilege fee, special privilege fee, additional privilege fee and contribution to C.M. Relief Fund etc., collected by ....
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....nages few retail outlets and sale from the said outlets has been treated as income of the assessee. The assessee has also received discounts from the manufacturers of liquors and the same has been treated as income of the assessee. If we consider the total income of the assessee and expenditure, nowhere, the assessee has considered the sale proceeds as it's income. Further, the assessee has prepared separate account under GOAP-DDB A/c where the sale proceeds of IMFL and other has been accounted separately. However, the said income is not part of the assessee's financials. Although, these facts has been explained to the Assessing Officer and the learned CIT(A), but, both of them have rejected the explanation of assessee and made additions towards privilege fee, special privilege fee etc., 16. Further, Learned Counsel for the Assessee referring to addition of Rs. 429,23,75,131/- towards additional privilege fee submitted that, it is a receipt in the hands of Government of Andhra Pradesh through PD A/c which is evident from the separate accounts prepared for GOAP-DDB A/c where same has been treated as income. However, the Assessing Officer has made additions towards income and once....
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....or of Assessee-Corporation submitted that, they have only explained the manner and method of business carried-out by the Assessee- Corporation. However, they never stated that, the business has been carried-out by the Government of Andhra Pradesh. Further, the accounting system in the books of accounts of the assessee and the manner in which the consideration has been received does not alter the nature of receipts. Going by the provisions of the Act, it is undisputedly clear that, the assessee-corporation has got exclusive privilege in trading of IMFL/FL, Beer and Wine etc., and whatever income accrued to the assessee-corporation out of sale proceeds is the income of the assessee and thus, even if the proceeds has been directly appropriated by the Government of Andhra Pradesh through PD A/c, it partakes the nature of income of the assessee and amount appropriated to Government in the names of privilege fee, special privilege fee, additional privilege fee and contribution to C.M. Relief Fund etc., falls under sec.40a(iib) of the Act. 18. The ld. CIT-DR, further referring to the provisions of sec.40a(iib) of the Act submitted that, as per the said provisions, any amount which is a....
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....n of payment of privilege fee, special privilege fee by APBCL to state government do not arise, consequently treatment of the same as application of income in hands of appellant or disallowance of same u/s. 40a(iib). Further, it is stated that there is no exclusive levy of privilege fee on APBCL to attract provisions of section 40a(iib). In support of this contention, APBCL has filed letter issued by Commissioner Excise & Prohibition as additional evidence. Hon'ble ITAT has set aside the issue to the file of AO with a direction to consider additional evidence and relevant facts come to conclusion regarding actual conduct of whole sale liquor business by AP statement or otherwise during the years under appeal. 12. In this connection, it is to state that Exclusive license to carry wholesale trade of liquor in state of AP was granted to APBCL by AP state government vide section 4 of The AP regulation of wholesale trade Act, 1993. Relevant portion of section reads as follows : "Taking over of wholesale trade in Indian liquor:- (1) Notwithstanding anything contained in the Andhra Pradesh Excise Act, 196$ the right to carry on whole sale trade and distribution of In....
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..... Notwithstanding anything contained in this Act, the Andhra Pradesh Excise Act, 1968 and the rules made there under or any order issued by the Government or the Commissioner of Prohibition and Excise, all amounts paid by the Corporation from 21-07-1993 to the Commissioner of Prohibition and Excise or the Government as privilege Fee or Special Privilege Fee or any other fee or cess, by whatever name called, in consideration of the privilege conferred on the Corporation, as per the provisions of sections 23(1), 23-A and 23-B of the Andhra Pradesh Excise Act, 1968 shall be deemed to be and always deemed to have been the income of the Government and due payment for the relevant years in terms of section 4B". 15. If right to carry on business has been assigned to a particular concern by way of insertion of certain provisions in a particular Act, the same can't be revoked unilaterally by state government without making suitable amendments to the concerned Act or without passing any order in writing to that effect. In the present case, Amended Act makes it abundantly clear that no amendments have been made revoking Exclusive license earlier granted to APBCL. Similarly, no or....
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....h wholesale liquor business is conducted. Changes that are brought in w.r.t. payments by Retailers are through bringing out specific GOs 114 dt 14-05-2013 and GO 200 dt 13-07-2013. It is submitted that no specific GO was issued where State Government has declared that henceforth it is going to carry whole sale liquor trade in state of AP post 2012. Therefore, it is the submission of department that contention of appellant regarding taking over of business by AP state government is simply based on changes brought in w.r.t. the way payments are made to suppliers and payments are collected from retailers but nothing else. 17. Combined reading of sections 4A, 4B, 4C with section 23C of Andhra Pradesh Excise Act shows that the Exclusive privilege granted to APBCL to carry wholesale trade of liquor has not been withdrawn by AP state Government vide amendment to The AP regulation of wholesale trade Act, 2012. Section 4C of regulation of wholesale Trade Act states that whatever privilege fee, special privilege fee is to be paid is in consideration for exclusive privilege given to APBCL to carry wholesale trade of liquor in AP. Section 4A of regulation of wholesale Trade Act states....
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....by government hence privilege fee cannot be treated as application of income in the hands of APBCL. In this connection, it is submitted that state government has issued GO 614 dated 06.05.2005 in which the manner in which privilege fee, special privilege fee, additional privilege fee is to be remitted to state government has been prescribed. The appellant has relied on same GO during course of appeal proceedings before ITAT for assessment years 2006-07, 2008-09 and 2009-10 (ITA No.302-303&545/Hyd/ 2013 dated 21.01.2014). The same GO is referred to in notes given under GOAPDDB A/c for assessment year 2014-15 (page 442/paper book vol. 6). As per the GO, even prior to amendment of regulation of wholesale trade Act 2012, the procedure of remittance of privilege fee, special privilege fee, additional privilege fee has been same since 2005. The GO directs APBCL to collect sale proceeds of IMFL by the licensees of the retailers in the form of demand drafts in the name of GOAPDDB, remit the same to PD account and directs Director of Distilleries and Breweries to apportion the sale proceeds of liquor deposited in treasury account to remit among different heads by way of VAT, privilege fee, ....
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....at it has not carried wholesale liquor business, cash discounts received from IMFL suppliers for early clearance of dues amounting to Rs. 56,63,38,350/-has been admitted as its income by crediting the amount to profit and loss account for assessment year 2014-15(page 423, paper book vol VI). This is on par with cash discounts received from IMFL suppliers for A.yr 2013-14 of Rs. 58,71,31,301/-, period prior to amendment to wholesale trade Act. Kind consideration may be given to Invitation of offers for supply of Foreign Liquor (No APBCL/1/2013-14/1 dt 26-10-2013) submitted during course of hearing which establishes that even after 2012, it is APBCL which enters into" Rate contract agreement' with IMFL suppliers but not state government. The APBCL can extend the rate contract for period of another two years after expiry of contract period without seeking any permission from state government of AP. APBCL can allow suppliers to supply new brands/labels not mentioned in rate contract. APBCL in its own discretion can place supply orders with persons though not participated in tender. It is against APBCL, IMFL suppliers makes claims for payment due to them by furnishing re....
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.... per GOMS No.542 dated 25.08.2012 (page No.543/paper book Vol.7) that special privilege fee would be difference between issue price before and after rounding it off to next highest rupee. Kind attention is drawn to GOMS No.47 dated 30.01.2013 (page No.548/paper book Vol.7) wherein Commissioner of Distilleries and Breweries, Hyderabad is directed to remit additional privilege fee generated from the sale proceeds of IMFL and FL. It may kindly be noted that this instruction was given even after amendment to regulation of wholesale Trade Act. Therefore, it is incorrect to state that since remittances mentioned under GOAP DDB A/c mentioned at page 442/paper book vol.6 does not include specific item named additional privilege fee, there is no remittance of additional privilege fee to the state government during the year, therefore, disallowance of additional privilege fee of Rs. 429,23,75,131 amounts to double addition. There is specific G.O given by state government to determine additional privilege fee and another specific G.O in the form of G.O.No.47 which directs remittance of additional privilege fee to state government. Therefore, it is incorrect to state that there is no remittanc....
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....gn Liquor, Wine and Beer and the appellant- corporation is only a facilitator of the said trade on behalf of the Government is devoid of merit and cannot be accepted. 20. It was the argument of the learned Counsel that, although, the wholesale trade has been taken-over by the Government of Andhra Pradesh by virtue of A.P. [Regulation of Trade in Indian made Foreign Liquor, Foreign Liquor] Act, 1993 from the appointed date and entrusted to the appellant-corporation, but, subsequently the Act has been amended w.e.f. 2012, thereby, the entire trade has been taken-over by the Government of Andhra Pradesh and appellant-corporation is only a Nodal Agency for carrying- out the trade on behalf of the Government of Andhra Pradesh. The appellant-corporation has referred to various G.Os issued by the Government of Andhra Pradesh and letters addressed by the Senior Officers of the Government of Andhra Pradesh to the Income Tax Department and claimed that, the appellant-corporation is only a facilitator in the trade by handling the stock from various godowns for the purpose of easy disbursement of the goods, but, in fact, the trade has been carried-out by the government of Andhra Pradesh, wh....
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....tion so as to invoke the provisions of section 40(a)(iib) of the Income Tax Act, 1961. 21. We have given our thoughtful consideration to the relevant provisions of A.P. [Regulation of Trade in Indian made Foreign Liquor, Foreign Liquor] Act, 1993 and the amendment to the said Act w.e.f.2012. As per section 4 of A.P. [Regulation of Trade in Indian made Foreign Liquor, Foreign Liquor] Act, 1993, the right to carry on wholesale trade and distribution of Indian Liquor, Foreign Liquor, Wine and Beer shall on and from the appointed date solely vest with the Government and subject to Rules as may be made in this behalf, the appellant-corporation shall have the exclusive privilege of importing, exporting and carrying on the wholesale trade and distribution of Indian Liquor, Foreign Liquor, Wine and Beer in the State of Andhra Pradesh and no other person shall be entitled to any privilege of carrying on the business. In terms of section 4(3) of the Act, till APBCL takes-over the business of wholesale trade, the Andhra Pradesh State government would deploy it's Department Officers to carry-on the business. On a plain reading of Section-4 of A.P. [Regulation of Trade in Indian made Foreign....
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....cted by the appellant-corporation from the retailers or licence holders in the name of privilege fee, special privilege fee, additional privilege fee and contribution to CM Relief Fund is the income of the appellant-corporation and apportionment of said income to the Government of Andhra Pradesh in terms of sections-4A, 4-B and 4-C of A.P. [Regulation of Trade in Indian made Foreign Liquor, Foreign Liquor] Act, 1993, falls under the provisions of section 40(a)(iib) of the Income Tax Act, 1961 or not, has to be seen. The A.P. [Regulation of Trade in Indian made Foreign Liquor, Foreign Liquor] Act, 1993, has been amended w.e.f. 2012 and new sections-4A, 4-B and 4-C were inserted. For better understanding, relevant provisions of sections-4A, 4- B and 4-C of A.P. [Regulation of Trade in Indian made Foreign Liquor, Foreign Liquor] Act, 1993 are reproduced as under : "4-A. The Government shall from time to time, specify the Trade margin, Privilege fee or any other levy, by whatever name called, to be collected by the Andhra Pradesh Beverages Corporation Limited from the holders of licences. 4-B. The Amount realized under section 4A, being the income of the Government, s....
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....bove amendment, the Government of Andhra Pradesh has levied privilege fee, additional privilege fee, special privilege fee and contribution to CM Relief Fund on the holders of the license and authorised the appellant- corporation to collect along with sale proceeds of Indian Liquor, Foreign Liquor, Wine and Beer etc. Therefore, once the Government of Andhra Pradesh has levied any fees by whatever name called, in our considered view, the said levy is, in accordance with the State Legislature be the "Income" of the Government of Andhra Pradesh and thus, the amount collected by the appellant-corporation from the license holders cannot be treated as "Income" accrued to the appellant-corporation and the same has been appropriated to the Government which can be considered under section 40(a)(iib) of the Income Tax Act, 1961. In our considered view, it is purely "Fees" or "levy" of the State Government in terms of Act of Legislature, but, not an "Income" of the appellant-corporation in terms of wholesale trade carried- out in accordance with provisions of section-4 of A.P. [Regulation of Trade in Indian made Foreign Liquor, Foreign Liquor] Act, 1993. Therefore, the conclusion drawn by the....
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....ome by overriding title, which is clearly evident from the fact that the appellant-corporation has been authorised to collect privilege fee, special privilege fee, additional privilege fee and contribution to CM Relief Fund in terms of section 4-A, 4-B and 4-C of the Act, and, therefore, the amount collected by the appellant-corporation from the holders of the license cannot be treated as "Income" which has been accrued for the year under consideration. Since the income has been diverted by overriding title, the same cannot be treated as "Income" and consequently, the apportionment of the said amount from the PD account, cannot be treated as payment of privilege fee, special privilege fee, additional privilege fee and contribution to CM Relief Fund directly or indirectly from a State Government undertaking by the State Government as defined u/s 40(a)(iib) of the Act. The Assessing Officer and the learned CIT(A) without appreciating the relevant facts, erred in making additions towards privilege fee, special privilege fee, additional privilege fee and contribution to CM Relief Fund under sec.40(a)(iib) of the Income Tax Act, 1961. Thus, we set aside the order of the learned CIT(A) o....
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....g Officer to delete the additions made towards privilege fee, special privilege fee, additional privilege fee and contribution to CM Relief Fund etc. 29. The next issue that came for consideration from ground no.16 of appellant-corporation's appeal is disallowance of leave encashment and disallowance of PF, superannuation, gratuity and other amounts. 30. During the course of assessment proceedings, the Assessing Officer has disallowed leave encashment and disallowance of PF, superannuation, gratuity and other amounts upon verification of the 3CD report attached to the financial accounts and noted that the above amounts were not paid within the due date of filing of return of income u/sec. 139(1) of the Act and, therefore, disallowed the said amounts. With respect to prior period expenses also, the Assessing Officer observed that it is not an allowable expenditure u/sec. 37 and hence disallowed the same and added to the total income of the appellant corporation. 31. Aggrieved by the assessment order, the appellant- corporation filed an appeal before the learned CIT(A) and the learned CIT(A) in absence of any submissions or proof against the above disallowances, upheld the d....