Income Tax Appellate Tribunal - Ahmedabad
Gujarat Co.Op. Milk Marketing ... vs The Dy.Cit.,Anand Circle,, Anand on 5 July, 2017
आयकर अपील य अ धकरण, अहमदाबाद यायपीठ 'डी' अहमदाबाद ।
IN THE INCOME TAX APPELLATE TRIBUNAL
" D " BENCH, AHMEDABAD
सव ी एन.के. ब लैया, लेखा सद य एवं महावीर साद, या यक सद य के सम ।
BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER And
SHRI MAHAVIR PRASAD, JUDICIAL MEMBER
(i). MA No. 07/Ahd/2017 in ITA No.3037/Ahd/2010 for A.Y.2007-08
(ii). MA No.08/Ahd/2017 in ITA No. 1119/Ahd/2012 for A.Y.2005-06
(iii).MA No. 09/Ahd/2017 in ITA No.1900/Ahd/2012 for A.Y.2008-09
(iv).MA No.117/Ahd/2017 in ITA No.2968/Ahd/2010 for A.Y.2007-08
(v).MA No. 118/Ahd/2017 in ITA No.1977/Ahd/2012 for A.Y.2008-09
(vi).MA No. 119/Ahd/2017 in ITA No.924/Ahd/2013 for A.Y.2009-10
Gujarat Co.op Milk Marketing बनाम/ The Asst. Commissioner
Federation Ltd. Vs. of Income Tax
Amul Dairy Road, Anand Circle
Anand Anand
थायी ले खा सं . /जीआइआर सं . / PAN/GIR No. : AAACG 7189 H
(अपीलाथ' /Appellant) .. ( (यथ' / Respondent)
अपीलाथ' ओर से /Appellant by : Shri Sunil Talati, A.R.
(यथ' क* ओर से/Respondent by : Shri, Mudit Nagpal, Sr. D.R.
ु वाई क* तार.ख /
सन Date of Hearing 16/06/2017
घोषणा क* तार.ख /Date of Pronouncement 05/07/2017
आदे श / O R D E R
PER SHRI MAHAVIR PRASAD, JUDICIAL MEMBER :
These six Misc. applications Nos. 07/Ahd/2017, 08/Ahd/2017, 09/Ahd/2017, 117/Ahd/2017, 118/Ahd/2017, 119/Ahd/2017 are filed by the assessee for the A.Y.2007-08, 2005-06, 2008-09, 2007-08, 2008-09 & 2009-10 against the ITA No.3037/Ahd/2010, 1119/Ahd/2012, 1900/Ahd/2012, 2968/Ahd/2010, 1977/Ahd/2012, 924/Ahd/2013 MA No.07,08,09,117,118,119/Ahd/2017 (in ITA No.3037,1119,1900,2968,1977,924/Ahd/2013) Gujarat Co.op Milk Marketing Federation Ltd. vs.ACIT -2- respectively and it was mentioned therein that matter came before the Bench-'D'. ITAT passed the order dated 30/09/2016 comprising of Hon'ble Shri N.K. Billaiya, Accountant Member and Hon'ble Shri Mahavir Prasad, Judicial Member.
In this connection, assessee has raised the Ground No.1 to 6 in ITA No.3037/Ahd/2010 for Assessment Year 2007-08. 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 Appellant had submitted that this The CIT(A) has erred both in law and on ground is not pressed and thus the same facts in confirming the disallowance of be dismissed accordingly. 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. Ground No.4 The Appellant argued in length on the The learned CIT(A) erred in confirming basis of Paper Book & written the addition of Rs.87,00,000/- being submission filed, before ITAT and disallowance of expenses on repairs to accordingly this ground is allowed but
the plant considering the same as capital no specific finding is given in the order.
MA No.07,08,09,117,118,119/Ahd/2017 (in ITA No.3037,1119,1900,2968,1977,924/Ahd/2013) Gujarat Co.op Milk Marketing Federation Ltd. vs.ACIT -3- in nature. On the facts and circumstances of the case and on the basis of the details filed, the expenditure are in the nature of current repairs and are not at all in the nature of capital expenditure. In is submitted that the disallowance of Rs.
87,00,000/- effectively Rs.73,95,000/-
after granting depreciation be deleted and the claim of the appellant that the expenditure are of revenue in nature be allowed.
Notwithstanding the above, the learned CIT(A) has erred in not appreciating the fact and circumstances of the case with regard to the said claim that the appellant had received the insurance claim of Rs.72,83,686/- and in the event the expenditure of Rs.87,00,000/- is capitalized then the amount of insurance claim on the very same items, though credited and showed as income in the subsequent year be reduced from the treatment of the capital expenditure. It is therefore prayed that in the event Rs.87,00,000/- are not allowed as revenue expenditure, then additional cost of plant enhanced to Rs.87,00,000/- be reduced by Rs.72,83,686/- and the net addition of only Rs.14,16,314/- only be capitalized.
Ground No.5 The Appellant had submitted that this The learned CIT(A) has erred in Ground is not pressed and thus the same confirming the amount received of be dismissed accordingly. Rs.237 lakhs being Security deposits written back as income and not as capital receipt. It is submitted that on the facts and circumstances of the case Security Deposits received from various Vendors were never allowed as a deduction in the MA No.07,08,09,117,118,119/Ahd/2017 (in ITA No.3037,1119,1900,2968,1977,924/Ahd/2013) Gujarat Co.op Milk Marketing Federation Ltd. vs.ACIT -4- previous year, 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 CIT(A) 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 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.
Ground No.6 The Ground is general in nature and be The learned CIT(A) has erred in decided accordingly as consequential. confirming the interest charged u/s.234 MA No.07,08,09,117,118,119/Ahd/2017 (in ITA No.3037,1119,1900,2968,1977,924/Ahd/2013) Gujarat Co.op Milk Marketing Federation Ltd. vs.ACIT -5- 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.
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 for A.Y.2005-06, 2007-08, 2008-09 & 2009-10 have been preferred by the assessee, whereas another four appeals in ITA No.1226/Ahd/2012, ITA No.2968/Ahd/2010, ITA No.1977/Ahd/2012 and ITA No.924/Ahd/2013 for A.Y.2005-06, 2007-08, 2008-09 & 2009-10 have been referred by the Department respectively against the order of the Commissioner of Income Tax(A). These all eight appeals were heard together and are being disposed of by this consolidated order for the sake of convenience.
Learned Authorized Representative (AR) Shri Sunil H. Talati has stated in the Miscellaneous Application for rectifying/correcting certain mistakes, which have been unintentionally crept in the order. The assessee had filed the Misc. Applications for the mistakes that crept in its Appeals and subsequently also filed another MA for certain mistakes that crept in the Appeals filed by the Revenue. Therefore, all the Misc. Applications have been heard together and are dealt with rectifying the errors that remained in the said order.
MA No.07,08,09,117,118,119/Ahd/2017 (in ITA No.3037,1119,1900,2968,1977,924/Ahd/2013) Gujarat Co.op Milk Marketing Federation Ltd. vs.ACIT -6- After careful hearing of both the parties and after perusing the original grounds for Appeal and detailed submission made at the time of hearing along with the Paper Book, we feel that the entire order is required to be cancelled for all the four Assessment Years. Therefore, the order dated 30th September, 2016 for all the four years, for all eight appeals is hereby cancelled/recalled and this fresh order is passed considering the Misc. Applications as well as other mistakes which have been crept in and brought to our notice. Assessment Year 2005-06 ITA No 1119/And/2012 Assessment Year 2005-06, the assessee has taken following Grounds:
1. The learned C.I.T.(Appeals) has erred in holding that issuance of Notice u/s.147 of the I.T. Act was valid and not accepting the contention that there being no escapement of income the reopening is bad in law. It is submitted that proceedings initiated u/s.147 and 148 of the I.T. Act are bad in law and the same be held so now.
2. The learned C.I.T.(Appeals) erred both in law and on facts in confirming the disallowance of Rs. 1,50,00,000/- being assistance given to JKMPC Ltd. on the ground that the said expenditure was not incurred for the purpose of business and the appellant did not gain any benefit thereon. It is submitted that the conclusion arrived at and the basis of disallowance is totally incorrect on facts and on law. The expenditure incurred in providing assistance to Jammu & Kashmir Milk Producers Co-Operative Limited was in the nature of Co-
operative 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 MA No.07,08,09,117,118,119/Ahd/2017 (in ITA No.3037,1119,1900,2968,1977,924/Ahd/2013) Gujarat Co.op Milk Marketing Federation Ltd. vs.ACIT -7- 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 wholly and exclusively for the purpose and directly connected with the appellant's business activities of procuring, producing milk, milk products and pouches. It is submitted that the expenditure on Directors' visit of Rs.2,17,000/- being wholly and exclusively incurred for the purpose of business, the same be allowed.
5. The learned C.I.T. (Appeals) erred both in law and on facts in confirming the disallowance of Rs. 51,800/- u/s. 14A of the I.T. Act, 1961. In view of the submission made that there were no expenses incurred to earn any exempt dividend, the disallowance of Rs. 51,800/- ought to have been deleted. It is submitted that the Assessing Officer has not been able to prove any nexus between money borrowed on interest and in turn used for exempt income. It is submitted that investment being old in nature, made out of its own fund, and the assessee is in a position to prove the nexus, the disallowance is totally uncalled for. It is therefore submitted that the addition be deleted.
6. The learned C.I.T. (Appeals) 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 C.I.T. (Appeals) be deleted.
Disposing each of the ground in seriatim, so far as the first ground of Appeal is concerned, challenging the issuance of Notice u/s. 147 and passing of the order u/s. 148, A.R. submitted that this ground is not MA No.07,08,09,117,118,119/Ahd/2017 (in ITA No.3037,1119,1900,2968,1977,924/Ahd/2013) Gujarat Co.op Milk Marketing Federation Ltd. vs.ACIT -8- pressed. In view of this, the ground challenging the re-opening is dismissed.
The Second Ground of Appeal is with regard to confirming the disallowance of Rs.1,50,00,000/- being assistance given to JKMPC Ltd. The A.R. made a very detailed submission and filed voluminous paper- book, explaining the nature and purpose of the expenditure. The assessee is a Co-operative Society. It derives income from business of marketing and manufacturing of milk and milk products, packing pouched milks, consignee agent of member unions for milk products.
On going through the P&L A/c. filed with the return of income and annual report for the year 2004-2005, it was found that the assessee has debited Rs.334.48 lacs towards Cooperative Development Expenses which include the assistance of Rs.150 lacs given to JKMPC Ltd. (Jammu& Kashmir Milk Producers" 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 Co- operative 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 MA No.07,08,09,117,118,119/Ahd/2017 (in ITA No.3037,1119,1900,2968,1977,924/Ahd/2013) Gujarat Co.op Milk Marketing Federation Ltd. vs.ACIT -9- 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 milk and milk products business in organized manner, it was feared that the milk producers at village level are likely to be misdirected by the private entrepreneurs and thereby the milk producers would be tempted to divert supply of milk to these private parties and it would result into reduction in quantum of the procurement of milk and affect the business of the Federation adversely.
iii. Federation started the cooperative development programme in the earlier ears also and developed in respect of mild cooperative, it is financial involvement of members, development activities in respect of fodder, milk production, enhancement, scientific Animal husbandry practices and overall structural development of Anand pattern diary cooperative by direct participation of the member based on international recognized principles of co- operation."
During the years, assessee/appellant have evolved following activities, in respect of cooperative movement. They have implemented Internal Consultant Development (ICD) intervention for developing self leadership among member producers and thereby enabling them to manage their dairy business efficiently leading to their overall development. Under ICD they have implemented module on Vision Mission Strategy (VMS) for primary milk producer members & Village Dairy Cooperatives. Facilitated by specially trained consultants, Village Dairy Cooperative Societies (VDCS) MA No.07,08,09,117,118,119/Ahd/2017 (in ITA No.3037,1119,1900,2968,1977,924/Ahd/2013) Gujarat Co.op Milk Marketing Federation Ltd. vs.ACIT
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have conducted Mission Strategy Workshops, prepared their Mission Statements Business Plans for next five years. A copy of the business plan developed by the village dairy cooperative society is also enclosed. They also carry out cleanliness audit at VDCS. In addition on 2nd October (Gandhi Jayanti day) VDCS also carry out Red Tag day where cleaning of VDCS, surroundings, and its records / register is conducted.
Breakup of Co-operative Development Expenditure for the Financial Year 2004-05 Sr. Particulars Rs.(In Lacs) No.
1. Reimbursement to Member Unions against 124.60 Co-operative Development Exp.
2. Assistance to JKMPCL 150.00
3. HACCP Audit Reimbursement to Member 2.29 Unions (Hazard Analysis and Critical Control Point)
4. Technical training of Staff to Denmark & 14.86 Sweden
5. Directors Visit to Various Dairy Plants 2.17
6. Amul Yatra Expense (Co-operative Yatra) 40.56 and other Misc. exp.
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 MA No.07,08,09,117,118,119/Ahd/2017 (in ITA No.3037,1119,1900,2968,1977,924/Ahd/2013) Gujarat Co.op Milk Marketing Federation Ltd. vs.ACIT
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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 expenditures were allowed in Appeal No.3356/Ahd/2008. Copy of the said decision is for A.Y.2005-06 is filed. The A.R. further submitted that coming to the specific disallowance of Rs.150 lakhs being assistance to JKMPC Ltd. the crux of the arguments of the learned A.R. was that in September 2012-13, Hon'ble Chief Minister of Jammu & Kashmir late Shri Mufti Mohammed Sayed visited Anand along with various Senior Ministers and requested the assessee that Anand type Dairy Co-operative infrastructure be established in Kashmir. The objective was to associate the assessee in procuring, processing and producing milk and milk producers by setting up a financially viable co-operative dairy in Jammu and Kashmir on the Amul Pattern. The assessee therefore assisted the said JKMPC Ltd. in establishing the dairy in Jammu and Kashmir so that milk and milk products in the name of Amul can also be manifested and marketed in the state of Jammu & Kashmir. The A.R. submitted that by incurring such MA No.07,08,09,117,118,119/Ahd/2017 (in ITA No.3037,1119,1900,2968,1977,924/Ahd/2013) Gujarat Co.op Milk Marketing Federation Ltd. vs.ACIT
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expenditure a dairy was set up by JKMPC Ltd., which supplied Pouch milk of 186.14 lakh.
With reference to the assistance provided by the federation to the Jammu & Kashmir Milk Producers' Co-operative Limited, the board resolutions for providing such assistance and copy of MOU have been filed. It is one of the objective of Federation to promote co-operative movement and for that purpose these were Development and Education programme expenditure and every year such expenditure for Co- operative Development is a routine nature of expenditure. With reference to Amul Yatra, it is submitted that to get exposure to our network of Co-operative institution, we organize Amul Yatra for our Channel Partner, distribution and major retailers form across the country to come to Anand in Amul Yatra programme. So far more than 7700 distributors and other channel partner have visited Anand in Amul Yatra. To substantiate incurrence of similar business expense as regular business expenses, the Federation provides details of similar expense in immediately two preceding assessment years as under: A.Y. 2003-04 Rs. 186.36 Lacs, A.Y. 2004-05 Rs.213.66 Lacs. Further, during the year under consideration, total expenditure is Rs.334.48 Lacs includes assistance of Rs.150 Lacs to Jammu & Kashmir Milk Producers' Cooperative Ltd. Further, the same being expended for co-operative development and therefore 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 MA No.07,08,09,117,118,119/Ahd/2017 (in ITA No.3037,1119,1900,2968,1977,924/Ahd/2013) Gujarat Co.op Milk Marketing Federation Ltd. vs.ACIT
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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 firm of Chartered Accountant, which audited the accounts of the society and that there are no objections from the Registrar of Co-operative Society also for treating such expenditure as revenue. Arguing the necessity of such expenditure from law point of view it was submitted that development of co-operative movement for which the Appellant organization which is marketing Amul milk products was Gujarat but across the country. Such expenditure incurred MA No.07,08,09,117,118,119/Ahd/2017 (in ITA No.3037,1119,1900,2968,1977,924/Ahd/2013) Gujarat Co.op Milk Marketing Federation Ltd. vs.ACIT
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voluntarily on the grounds of commercial expediency are allowable expenditure being incurred wholly and exclusively for the purpose of business as envisaged under Section 37 of the Income Tax Act. Reliance was placed on following decisions:-
(1) Sasoon J. David Vs CIT - 118 ITR 261 (SC) (2) CIT Vs. Malayalam Plantation Ltd - 53 ITR 140 (SC) (3) Madhav Prasad Jatiar Vs CIT - 118 ITR 200 (SC) (4) Sri Venkata Satyanarayan Rice Mill Contractors Co. Vs CIT 223 ITR 101 (SC) (5) CJ. Patel & Co. Vs CIT - 158 ITR 487 (Guj. HC) The learned D.R. heavily relied on the order of the lower Authorities namely the A.O. and also the learned CIT (Appeals) and strongly submitted that the expenditure is of enduring benefit and should be treated as capital expenditure or should be spread over a period of 3 to 5 years.
The learned Assessing Officer has reproduced the submission and explanation given by the appellant in the Assessment Order from page 2 to 6, but has summarily rejected the claim on the ground that they are not connected with the ordinary course of business of the assessee. It is submitted that the finding given is totally erroneous, incorrect and absolutely contrary to the consistent fact being accepted for all these years. In view of these facts, the addition made of Rs.334.48 Lacs be deleted.
MA No.07,08,09,117,118,119/Ahd/2017 (in ITA No.3037,1119,1900,2968,1977,924/Ahd/2013) Gujarat Co.op Milk Marketing Federation Ltd. vs.ACIT
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Without prejudice to the above the learned Assessing Officer has grossly erred in contradicting himself by holding a second alternative view that development expenses are of enduring nature and they are capital in nature, without granting any depreciation. Thus, the Assessing Officer is not at all confident and sure about the treatment of the development expenses incurred by the appellant wholly and exclusively for the purpose of business. It is submitted that the addition made of Rs.334.48 Lacs is contrary to the facts, contrary to the consistent principle and against the 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 MA No.07,08,09,117,118,119/Ahd/2017 (in ITA No.3037,1119,1900,2968,1977,924/Ahd/2013) Gujarat Co.op Milk Marketing Federation Ltd. vs.ACIT
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Limited are of revenue in nature and same be allowed. This ground of appeal is accordingly allowed.
The Third Ground of Appeal is with regard to granting depreciation of Amul Parlour at 10% as against 100% depreciation claimed by the Appellant. So far as the depreciation is concerned, AO allowed only 10% depreciation as against 100% on Amul Parlours. In this case, matter was decided in favour of assesse 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.4 is with regard to disallowance of expenditure of Director's visit to various Dairy plants amounting to Rs.2,17,000/-. The Assessing Officer disallowed the expenditure being MA No.07,08,09,117,118,119/Ahd/2017 (in ITA No.3037,1119,1900,2968,1977,924/Ahd/2013) Gujarat Co.op Milk Marketing Federation Ltd. vs.ACIT
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incurred by the Directors of this co-operative society on the ground that they are not incurred for the purpose of business. Learned CIT (Appeals) confirmed the disallowance in his order holding that Directors visited the plant at Jammu & Kashmir from which the Appellant is getting the Pouch Milk and held that assessee could not explain how the visit of Directors at Plant of Jammu & Kashmir was manifested to the assessee and how it is concerned that the standard of Plant of Federation, which is situated in different States. The leaned Authorized Representative strongly argued that the expenditure incurred by the asseseee for the visit done by the Directors are in normal course of co-operative societies business activities and such expenditures are incurred every year. Directors need to visit the plant situated at various places and satisfy themselves with regard to the standard maintained and to see whether it requires any improvement. This year the Directors visited Jammu & Kashmir as it was not possible for society to receive the milk 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. MA No.07,08,09,117,118,119/Ahd/2017 (in ITA No.3037,1119,1900,2968,1977,924/Ahd/2013) Gujarat Co.op Milk Marketing Federation Ltd. vs.ACIT
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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 co- operative 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 sixth ground of Appeal being interest charged under Section 234B, we held that interest has to be charged under Section 234B. However, the same shall be charged after giving effect to this order. This ground is accordingly, partly allowed. Thus, the appeal for the Assessee for A.Y.2005-06 is partly allowed.
We now come to the Appeal filed by the Revenue in Para 23 of the Tribunal order.
In ITA No.1226/Ahd/2012 for Assessment Year 2005-06, the Revenue has taken following grounds:-
1. On the facts and in the circumstances of the case and in law, the learned CIT (A) erred in deleting the addition of Rs. 124.60 lacs on account of reimbursement of member unions against Co-op.
MA No.07,08,09,117,118,119/Ahd/2017 (in ITA No.3037,1119,1900,2968,1977,924/Ahd/2013) Gujarat Co.op Milk Marketing Federation Ltd. vs.ACIT
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Development Expenses without appreciating the fact that such expenditure is not connected with the ordinary course of business of the assessee and that the Cooperative Development Expenses are of enduring nature and therefore they are capital in nature.
2. On the facts and in the circumstances of the case and in law, the learned CIT (A) erred in deleting the addition of Rs.40.56 lacs on account of disallowance of Amul Yatra Expenses (Co- operative Development Yatra) without appreciating the fact that such expenditure is of enduring nature and therefore, capital in nature."
The First ground of appeal of revenue is with regard to the deleting the addition of Rs.124.60 lacs on account of reimbursement of member unions against Co-op. Development Expenses. The Ld. D.R. in detail read out the Assessment Order as well as the findings given by the learned CIT (Appeals). The learned A.O. heavily relied on his argument that these are part of the dairy development expenditure and reiterated that the expenditure are fully covered by the decision of Ahmedabad ITAT in the case of Valsad District Co-Op. Society supra. In view of this, we held that the expenditure of Rs.124.60 lakh incurred on account of emoluments of member unions are allowed as revenue expenditure. The Appeal of the Revenue is dismissed accordingly.
The Second Ground of Appeal is with regard to deleting the addition of Rs.40.56 lacs on account of disallowance of Amul Yatra Expenses. The learned D.R heavily relied on the orders and observations made by the lower authorities and strongly argued that these are not in the nature of business expenditure. Whereas learned A.R. relied on the same MA No.07,08,09,117,118,119/Ahd/2017 (in ITA No.3037,1119,1900,2968,1977,924/Ahd/2013) Gujarat Co.op Milk Marketing Federation Ltd. vs.ACIT
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submissions 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 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 Parlors. On the facts of the case and in view of the legal position, the learned C.I. T. (Appeals) ought to have directed to MA No.07,08,09,117,118,119/Ahd/2017 (in ITA No.3037,1119,1900,2968,1977,924/Ahd/2013) Gujarat Co.op Milk Marketing Federation Ltd. vs.ACIT
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grant depreciation at 100% as claimed. It be so held now and the depreciation be allowed at 100%.
3. The learned C.I.T. (Appeals) 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 that there were no expenses incurred to earn any exempt dividend, the disallowance of Rs.72,855/- ought to have been deleted. It be so held now.
4. The learned C.I.T. (Appeals) 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 the basis of the details filed, the expenditure are in the nature of current repairs and are not at all in the nature of capital expenditure. It is submitted that the disallowance of Rs.87,00,000/- effectively Rs.73,95,0007- after granting depreciation be deleted and the claim of the appellant that the expenditure are of revenue in nature be allowed.
Notwithstanding the above, the learned C.I.T. (Appeals) has erred in not appreciating the fact and circumstances of the case with regard to the said claim that the appellant had received the insurance claim of Rs.49,00,000/- and in the event the expenditure of Rs.87,00,000/- is capitalized then the amount of insurance claim on the very same items, though credited and showed as income in the subsequent year be reduced from the treatment of the capital expenditure. It is therefore prayed that in the event Rs.87,00,000/- are not allowed as revenue expenditure, then additional cost of plant enhanced to Rs.87,00,000/- be reduced by Rs.72,83,686/- and the net addition of only Rs.14,16,314/- only be capitalized.
5. The learned C.I.T.(Appeals) has erred in confirming the amount received of Rs.237 lakhs being Security deposits written back as income and not as capital receipt. It is submitted that on the facts and circumstances of the case Security Deposits received from various Vendors were never allowed as a deduction in the MA No.07,08,09,117,118,119/Ahd/2017 (in ITA No.3037,1119,1900,2968,1977,924/Ahd/2013) Gujarat Co.op Milk Marketing Federation Ltd. vs.ACIT
- 22 -
previous year, 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 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.
6. The learned C.I.T.(Appeals) 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 C.I.T. (Appeals) be deleted.
With regard to first Ground, the matter was decided against the Assessee by Hon'ble ITAT Ahmedabad in Assessee's own case for A.Y.2006-07 in ITA No.3270/Ahd/2009 on Page 15, Para 11 of the ITAT Order. Therefore, this Ground of Appeal of the Assessee is dismissed.
MA No.07,08,09,117,118,119/Ahd/2017 (in ITA No.3037,1119,1900,2968,1977,924/Ahd/2013) Gujarat Co.op Milk Marketing Federation Ltd. vs.ACIT
- 23 -
So far as the Second Ground is concerned, the A.O. allowed only 10% depreciation as against 100% depreciation claimed by the Appellant on Amul Parlor. So far as the depreciation is concerned, AO allowed only 10% 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.72,855/- under Section 14A is not pressed by the appellant looking to the smallness of amount involved therein and is therefore dismissed accordingly.
MA No.07,08,09,117,118,119/Ahd/2017 (in ITA No.3037,1119,1900,2968,1977,924/Ahd/2013) Gujarat Co.op Milk Marketing Federation Ltd. vs.ACIT
- 24 -
The Ground No.4 is regarding disallowance for expenses of Rs.87,00,000/-. The Assessing Officer treated the expenditure claimed as repair to the damage caused to the plant considering the same to be capital in nature. The 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 restore the plant and not to bring any new capital asset into assist, least, any benefit of enduring nature as it was only to continue to maintain and run the same plant. Reliance was also placed on the copy of decision filed in case of CIT vs. Saravana Spinning Mills Limited 293 ITR 201. Learned A.R. MA No.07,08,09,117,118,119/Ahd/2017 (in ITA No.3037,1119,1900,2968,1977,924/Ahd/2013) Gujarat Co.op Milk Marketing Federation Ltd. vs.ACIT
- 25 -
further argued that the appellant received an insurance claim on the same of Rs.72,83,686/- in the next year which was offered as income also in the next year. He accordingly submitted that if insurance claim received is not capitalized and is not treated as capital receipt in subsequent year, the expenditure incurred for such repairs must be allowed as revenue expenditure. The learned D.R. supported the order of the A.O. and heavily relied on the findings given by the CIT (Appeals).
We have carefully perused the order of the Assessing Officer CIT(Appeals) and papers filed in the paper-book. It is evident from the Appeal and submissions that the expenditure incurred is to restore and repair the existing plant and commissioning the same which was stopped due to heavy damage. The fact that in subsequent year insurance receipt has been taxed as revenue income is also confirmed in the statement of income filed for A.Y.2008-09. Once the assessee and department have taken a view that insurance claim received on the damage of one big plant is a revenue income, the corresponding expenditure incurred towards such insurance claim for replacement and repair, expenditure incurred of Rs.87 lakh has to be treated as revenue in nature. Particularly relying on the decision of Hon'ble Supreme Court in case of CIT vs. Saravana Spinning Mills Limited 293 ITR 201. The Assessee's appeal, accordingly allowed considering the expenditure of Rs.87 lakhs as revenue and the A.O. is accordingly directed to delete the disallowance of Rs.73,95,000/-
MA No.07,08,09,117,118,119/Ahd/2017 (in ITA No.3037,1119,1900,2968,1977,924/Ahd/2013) Gujarat Co.op Milk Marketing Federation Ltd. vs.ACIT
- 26 -
The next Ground No.5 is CIT (Appeals) confirming the amount received on Rs.237 lakhs being security deposits received and is accordingly dismissed particularly because the very same amount has been treated as income by the Assessee and is taxed in subsequent Assessment Year 2008-09. This Ground is not pressed by the Appellant.
The Ground No.6 of Appeal is with regard to interest charged under Section 234, we held that interest has to be charged under Section 234B. However, the same shall be charged after giving effect to this 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 MA No.07,08,09,117,118,119/Ahd/2017 (in ITA No.3037,1119,1900,2968,1977,924/Ahd/2013) Gujarat Co.op Milk Marketing Federation Ltd. vs.ACIT
- 27 -
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 ITA No.1900/Ahd/2012 for Assessment Year 2008-09, wherein the assessee has taken following grounds:-
"1. The learned C.I.T. (Appeals) erred both in law and on facts in confirming the disallowance of Rs.3,86,21,189/- 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 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%.
3. The learned C.I.T.(Appeals) erred both in law and on facts in confirming the disallowance of Rs.63,929/- u/s. 14A of the I.T. Act, 1961. In view of the submission made that there were no expenses incurred to earn any exempt dividend, the disallowance of Rs.63,929/- ought to have been deleted. It be so held now.
4. The learned C.I.T.(Appeals) erred in confirming the disallowance of interest of Rs.24,812/- separately on the ground that interest pertains to the borrowing to make payment of MA No.07,08,09,117,118,119/Ahd/2017 (in ITA No.3037,1119,1900,2968,1977,924/Ahd/2013) Gujarat Co.op Milk Marketing Federation Ltd. vs.ACIT
- 28 -
advance tax. It is submitted that on the facts and circumstances of the case the finding and working out of the interest is incorrect both on facts and on law and the same be deleted.
5. The learned C.I.T. (Appeals) 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 C.I.T.(Appeals) be deleted."
With regard to first Ground, the matter was decided against the Assessee by Hon'ble ITAT Ahmedabad in Assessee's own case for A.Y.2006-07 in ITA No.3270/AHD/2009 on Page 15, Para 11 of the ITAT Order. Therefore, this Ground of Appeal of the Assesse is dismissed.
So far as the Second Ground is concerned, the A.O. allowed only 10% depreciation as against 100% depreciation claimed by the Appellant on Amul Parlor. So far as the depreciation is concerned, AO allowed only 10% 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 MA No.07,08,09,117,118,119/Ahd/2017 (in ITA No.3037,1119,1900,2968,1977,924/Ahd/2013) Gujarat Co.op Milk Marketing Federation Ltd. vs.ACIT
- 29 -
(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 with regard to the disallowance of interest of Rs.24,812/-. The A.R. during course of hearing agreed not to press this ground looking to the smallness of amount involved in addition made.
The Ground No. 5 of Appeal is with regard to interest charged under Section 234, we held that interest has to be charged under Section 234B. However, the same shall be charged after giving effect to this order. This ground is accordingly, partly allowed.
Now we take up the appeal filed Revenue for Asst Year 2008-09 in ITA No.1977/Ahd/2012 for Assessment Year 2008-09, the Revenue has taken following grounds:-
"1. On the fact and in the circumstances of the case and in law, the learned CIT (A) erred in deleting the addition of Rs. 616.36 lacs on account of Co-op. Development Expenses which includes MA No.07,08,09,117,118,119/Ahd/2017 (in ITA No.3037,1119,1900,2968,1977,924/Ahd/2013) Gujarat Co.op Milk Marketing Federation Ltd. vs.ACIT
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breed improvement expenses without appreciating the fact that such expenditure is not connected with the ordinary course of business of the assessee and that the Co-operative Development Expenses are of enduring nature and therefore they are capital in nature.
2. On the facts and in the circumstances of the case and in law, the learned CIT (A) erred in deleted the dis-allowance of additional depreciation of Rs.10.99 lacs, overlooking the provisions of section 32(1)(iia) of the Act and also the fact that no new identifiable product or thing had come into existence."
The first ground of appeal is with regard to learned CIT (A) erred in deleting the addition of Rs.616.36 lacs on account of Co-op. Development Expenses which includes breed improvement expenses learned D.R. relied heavily on the Assessment Order and submitted that expenditure are in nature of enduring benefit and therefore capital in nature. The entire expenditure incurred of Rs.616.36 Lakhs are in the nature of Dairy Development Expenditure. We have in Appellant's case for A.Y.2005-06 in detail have held that the entire expenditure on Dairy Development are wholly and exclusively for the purpose of business and therefore are allowable as revenue expenditure. In view of this, the expenditure of Rs.616.36 lakhs are allowed as revenue expenditure, the Appeal of the Revenue is dismissed accordingly.
The second ground of Revenue is with regard to additional depreciation of Rs.10.99 lakhs. As held by us in Assessee's own Appeal for A.Y. 2007-08 by us as well as in earlier appeal of the Assessee in A.Y 2006-07 we held that appellant is allowed for additional MA No.07,08,09,117,118,119/Ahd/2017 (in ITA No.3037,1119,1900,2968,1977,924/Ahd/2013) Gujarat Co.op Milk Marketing Federation Ltd. vs.ACIT
- 31 -
depreciation of Rs.10.99 lakhs. The Appeal of the Revenue is accordingly dismissed.
Asst. Year: 2009-10 Now we take up the appeal filed Assessee for Asst Year 2009-10 in ITA No.597/Ahd/2013 for Assessment Year 2009-10, the Revenue has taken following grounds :
1. CIT(A) erred in both law and on facts in confirming the disallowance of Rs.5,40,09,134/- being amount transferred to reserve fund u/s. 67 of Gujarat Co-op, societies Act.
2. CIT(A) has erred both in law and on facts in confirming the action of A.O. allowing only 10% depreciation as against 100% depreciation on Amul Parlours and making disallowance of Rs.
89,38,131/- connected with the ordinary course business and the Co. op. Development Exp. are of capital nature.
3. CIT(A) has erred in deleting the addition of Rs.34.72 lacs on account of Amul Yatra expenses which is not connected with the ordinary course business and the Co. Op. Development Exp. are of capital nature.
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 all these three various expenditures incurred in form of Co. Op. Development expenses 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 MA No.07,08,09,117,118,119/Ahd/2017 (in ITA No.3037,1119,1900,2968,1977,924/Ahd/2013) Gujarat Co.op Milk Marketing Federation Ltd. vs.ACIT
- 32 -
expenditures are incurred wholly and exclusively for the purpose of business. This issue have already been discussed in great detailed by us, in Ground No. 2 raised by assessee for A.Y.2005-06 in ITA No.1119/Ahd/2012, wherein finally the issues has been decided in favour of Appellant. Thus all the above three grounds raised by the Revenue are dismissed accordingly.
In view of the above, the Appeal filed by the Revenue for A.Y.2009-10 is hereby dismissed.
In the result, the Appeals filed by the assessee are partly allowed, whereas the Appeals filed by the Revenue are dismissed.
This Order pronounced in Open Court on 05/07/2017
Sd/- Sd/-
एन.के. ब लैया महावीर साद
(लेखा सद य) ( या यक सद य)
( N.K. BILLAIYA ) ( MAHAVIR PRASAD )
ACCOUNTANT MEMBER JUDICIAL MEMBER
Ahmedabad; Dated 05/07/2017
Priti Yadav, Sr.PS
MA No.07,08,09,117,118,119/Ahd/2017
(in ITA No.3037,1119,1900,2968,1977,924/Ahd/2013) Gujarat Co.op Milk Marketing Federation Ltd. vs.ACIT
- 33 -
आदे श क त ल!प अ"े!षत/Copy of the Order forwarded to :
1. अपीलाथ' / The Appellant
2. (यथ' / The Respondent.
3. संबं6धत आयकर आयु8त / Concerned CIT
4. आयकर आय8 ु त(अपील) / The CIT(A)
5. 9वभागीय त न6ध, आयकर अपील.य अ6धकरण, अहमदाबाद / DR, ITAT, Ahmedabad
6. गाड फाईल / Guard file.
आदे शानुसार/ BY ORDER, स(या9पत त //True Copy// उप/सहायक पंजीकार (Dy./Asstt.Registrar) आयकर अपील य अ धकरण, अहमदाबाद / ITAT, Ahmedabad True Copy
1. Date of dictation 21/06/2017 (dictation-pad 3 pages attached at the end of this appeal-file)
2. Date on which the typed draft is placed before the Dictating Member ...22/06/2017
3. Other Member...
4. Date on which the approved draft comes to the Sr.P.S./P.S.....
5. Date on which the fair order is placed before the Dictating Member for pronouncement......
6. Date on which the fair order comes back to the Sr.P.S./P.S ..27/06/02017
7. Date on which the file goes to the Bench Clerk.....................
8. Date on which the file goes to the Head Clerk..........................................
9. The date on which the file goes to the Assistant Registrar for signature on the order..........................
10. Date of Despatch of the Order..................