Income Tax Appellate Tribunal - Ahmedabad
M/S. Banaskanth Dist. Co.-Op. Milk ... vs The Asstt. Commissioner Of Income Tax, ... on 20 March, 2018
IN THE INCOME TAX APPELLATE TRIBUNAL
AHMEDABAD "C" BENCH
Before: Shri Rajpal Yadav, Judicial Member
And Shri Amarjit Singh, Accountant Member
ITA Nos. 1993 to 1994/Ahd/2016
Assessment Year 2009-10 & 2012-13
The ACIT, M/s. Banaskantha
B.K. Circle, Dist. Oil Seeds
Palanpur Vs Growers Union Ltd.
(Appellant) Post Bo x No. 30,
Gunj Road,
Palanpura-385001
PAN: AAAAS1902L
(Respondent)
ITA Nos. 2000 to 2001/Ahd/2016
Assessment Year 2009-10 & 2012-13
M/s. Banaskantha Dist Co- The ACIT,
op. Producers Union Ltd. B.K. Circle,
Banas Dairy, Palanpur Vs Palanpur
PAN: AAAAB0575E (Respondent)
(Appellant)
Reve nue by: Shri Prasoon Kabra, Sr. D.R.
Assessee by: Shri Suni l Talati, A. R.
Date of hearing : 07-03-2018
Date of pronounce ment :20-03-20 18
आदेश /ORDER
PER : AMARJIT SINGH, ACCOUNTANT MEMBER:-
These four appeals, two by Revenue and two by two different assessees for A.Y. 2009-10 and 2012-13, arise from order of the CIT(A)-4, Ahmedabad I.T.A Nos.1993-1994 & 2000-2001/Ahd/2016 A.Y. 2009-10 & 2012-13 Page No 2 ACIT vs. M/s Banaskantha Dist. Oil Seeds Growers Union Ltd & M/s Banaskantha Dist. Co-operative Milk Producers Union Ltd. vs. ACIT dated 25-05-2016, in proceedings under section 143(3) r.w.s. 147 of the Income Tax Act, 1961; in short "the Act".
2. The assessee has raised following grounds of appeal :-
ITA NO. 1993/Ahd/2016 "1) Whether on the facts of the case and in law CIT(A) erred in allowing the unabsorbed depreciation claimed of Rs. 38,01,74,402/- pertaining to AY 2001-02 beyond eight years as per provisions of section 32(2) of the Act."
3 As identical issues on similar facts are involved in ITA No. 1993 and 1994/Ahd/2016, therefore, for the sake of convenience, we adjudicate the ITA no. 1993/Ahd/2016 and its findings will be applicable to both the appeals.
4. The brief fact of the case is that the assessee has filed return of income declaring loss of Rs. 87,95,310/- on 29th Sep, 2009. The assessment was completed u/s. 143(3) of the act on 30th Nov, 2011 accepting the loss as per the return filed. Thereafter the assessing officer issued notice u/s. 148 of the act on 26th Feb, 2014 on the reasoning that assessee has carried forward the depreciation loss of Rs. 38,01,74,402/- beyond eight years. The assessing officer observed that as per provision of section 32(2), the depreciation loss cannot be carried forward beyond 8 years. Consequently, in the re-assessment order u/s 143(3) r.w.s. 147 of the act dated 14th August, 2014,the assessing officer has disallowed the claim of unabsorbed depreciation of assessment year 2002-2003 of Rs. 38,01,74,402/-
5. Aggrieved assesseee filed appeal before the ld. CIT(A). The ld. CIT(A) has allowed the appeal of the assessee. The relevant part of the decision of the CIT(A) is reproduced as under:-
"6.2 Alongwith the contention and other case laws the appellant cited the judgement of the Hon'ble jurisdictional High Court of Gujarat, Ahmedabad in the case of General Motors India (P.) Ltd. Vs. DCIT [ 354 ITR 244 ] [ 2012 ] "The said CBDT Circular clarifies the intent of the amendment that it is for enabling the industry to conserve sufficient funds to replace plant and machinery and, accordingly, the amendment dispenses with the restriction of 8 years for carry forward and set off of I.T.A Nos.1993-1994 & 2000-2001/Ahd/2016 A.Y. 2009-10 & 2012-13 Page No 3 ACIT vs. M/s Banaskantha Dist. Oil Seeds Growers Union Ltd & M/s Banaskantha Dist. Co-operative Milk Producers Union Ltd. vs. ACIT absorbed depreciation. This amendment has become applicable from assessment year . 2002-03 and subsequent years meaning that any unabsorbed depreciation available to an - assessee on 1st day of April, 2002 (assessment year 2002-03) will be dealt within accordance with the provisions of section 32(2) as amended by Finance Act, 2001 and not by the provisions of section 32(2) as it stood before the said amendment. It the intention of the Legislature has been to allow the unabsorbed depreciation allowance worked out in assessment year 1997-98 only for eight subsequent assessment years even after the amendment of section 32(2) by Finance Act, 2001, it would have incorporated a provision to that effect. However, it does not contain any such provision. Hence, a purposive and harmonious interpretation has to be taken keeping in view the purpose of amendment of section 32(2). While construing taxing statutes, rule of strict interpretation has to be applied, giving fair and reasonable construction to the language of the section without leaning to the side of assessee or the revenue. But if the Legislature fails to express clearly and the assessee becomes entitled for a benefit within the ambit of section by the clear words used in section, the benefit accruing to the assessee cannot be denied. However, Circular No. 14 of 2001 had clarified that under section 32(2), in computing the profits and gains of business or profession for any previous year, deduction of depreciation under section 32 shall be mandatory. Therefore, the provisions of section 32(2) as amended by Finance Act, 2001 would allow the unabsorbed depreciation allowance available in the assessment years 1997-98, 1999- 2000, 2000-01 and 2001-02 to be carried forward to the succeeding years, and if any unabsorbed depreciation or part thereof could not be set off tillthe assessment year 2002- 03 then it would be carried forward till the time it is set off against the profits and gains of subsequent years."
It further stated that " It is held that any unabsorbed depreciation available to an assessee on 1st day of April, 2002 (A. Y. 2002-03) will be dealt with in accordance with the provisions of section 32(2) as amended by Finance Act, 2001. And once the Circular No. 14 of 2001 clarified that the restriction of 8 years for carry forward and set off of unabsorbed depreciation had been dispensed with, the unabsorbed depreciation from Assessment year 1997-98 up to the assessment year 2001-02 got carried forward to the assessment year 2002-03 and became part thereof, it came to be governed by the provisions of section 32(2) as amended by Finance Act, 2001 and were available for carry forward and set off against the profits and gains of subsequent years, without any limit whatsoever."
6.3 After going through the facts of the case and the judgement of Hon'ble High Court of Gujarat, Ahmedabad in the above mentioned case which contains identical facts, the disallowance made by the AO deserves to be deleted, therefore, it is deleted. This ground of appeal is allowed."
6. We have heard rival contentions and perused the material on material carefully. We have noticed that the Co-ordinate Bench of ITAT Ahmedabad vide ITA No. 2393/Ahd/2013 dated 03-05-2017 in the case of Gujarat Leas e Finance Ltd has decided the identical issue in favour of assessee. The part of the judicial findings and the principles laid down by the Hon'ble Jurisdictional High Court in the case of General Motors India(P) Ltd are reproduced here as under :-
I.T.A Nos.1993-1994 & 2000-2001/Ahd/2016 A.Y. 2009-10 & 2012-13 Page No 4 ACIT vs. M/s Banaskantha Dist. Oil Seeds Growers Union Ltd & M/s Banaskantha Dist. Co-operative Milk Producers Union Ltd. vs. ACIT "We are of the considered opinion that any unabsorbed depreciation available to an assessee on 1st day of April 2002 (A.Y. 2002-03) will be dealt with in accordance with the provisions of section 32(2) as amended by Finance Act, 2001. And once the Circular No. 14 of 2001 clarified that the restriction of 8 years for carry forward and set off of unabsorbed depreciation had been dispensed with, the unabsorbed depreciation from A.Y. 1997-98 upto the A.Y. 2001-02 got carried forward to the assessment year 2002-03 and became part thereof, it came to be governed by the provisions of section 32(2) as amended by Finance Act, 2001 and were available for carry forward and set off against the profits and gains of subsequent years, without any limit whatsoever."
The relevant part of the decision of the Co-ordinate Bench of the ITAT decided in the case of Gujarat Lease Finance Ltd. vide ITA No. 2393/Ahd/2013 dated 03/05/2017 is reproduced as hereunder:-
"6. We have heard the rival contentions. We have also perused the judicial pronouncement delivered by the Hon'ble High Court of Gujarat in the case of General Motors India (P.) Ltd vs. DCIT (2012) 25 taxmann.com which was elaborated in detail by the Ld. CIT(A) in his order as supra in this order. We have also perused the judicial pronouncement of Hon'ble Gujarat High Court in the case of CIT vs. Gujarat Themis Biosyn Ltd. [2014] 44 taxmann. com 204 (Gujarat) in which after considering the judgment given in General Motors India (P) Ltd, it was held that carry forward of unabsorbed depreciation concerning impugned assessment years could be set off in subsequent years without any set time limit. In view of the above judicial pronouncement on the issue and the elaborate findings of the ld. CIT(A), we do not find any reason to interfere in the decision of the ld. CIT(A)."
Respectfully following the decision of the Co-ordinate Bench as supra, we do not find any error in the finding of ld. CIT(A), therefore, the appeal of the revenue is dismissed. In the result, both the appeals of the revenue are dismissed.
ITA No. 2000/Ahd/20167. The assessee has raised following grounds of appeal:-
"Your appellant being aggrieved by the Order passed by the learned Commissioner of Income Tax, (Appeals) -4, Ahmedabad presents this appeal against the same on the following amongst other grounds.
1. The Ld. CIT(A) has erred in holding that assessment u/s 147 of the Act was valid and not accepting the contention of the appellant that all the facts and relevant details have :
already been scrutinized at the time of original assessment proceedings u/s 143(3) and hence the reopening of assessment u/s 147 is totally bad in law, void-ab-initio and without jurisdiction. It is submitted that the order passed by A.O. u/s 143(3) r.w.s. 147 deserves to be quashed and be set aside.
I.T.A Nos.1993-1994 & 2000-2001/Ahd/2016 A.Y. 2009-10 & 2012-13 Page No 5 ACIT vs. M/s Banaskantha Dist. Oil Seeds Growers Union Ltd & M/s Banaskantha Dist. Co-operative Milk Producers Union Ltd. vs. ACIT
2. The Ld. CIT(A) has erred in law and on facts in confirming the action of Assessing Officer treating the total Agmark Charges of Rs. 27,70,753/- as intangible asset within the meaning of Section 32(1)(ii) and thus thereby making the net disallowance of Rs.
20,78,065 after allowing the depreciation of Rs. 6,92,688/- .It is submitted that the payment made towards Agrnark Charges is recurring in nature and it is incurred periodically/regularly as well as it is a statutory requirement under provisions of Agricultural Produce (Grading and Marketing) Act of 1937 (amended in 1986). Thus the addition made after allowing depreciation of Rs. 20,78,065/- treating the same as capital expenditures is illegal and unjustifiable. The same be held so now and the addition of Rs. 20,78,065/- be deleted."
8. The assessee has filed return of income declaring income of Rs. 4,87,41,040/- and assessment u/s. 143(3) was completed on 19th December, 2011 determining total income of Rs. 9,65,55,450/- and agricultural income of Rs. 3,62,467/-. Subsequently, the case of the assessee was reopened and assessment u/s 143(3) r.w.s.147 has been made on 20/03/2015 assessing the total income at Rs.9,63,53,074/- Thereafter the High Court of Gujarat has set aside the assessment to the assessing officer. The assessing officer has completed the set a side assessment on 17/08/2015 by making an addition of Rs. 20,78,065/- in respect Agmark charges claimed by the assessee. The assessing officer observed that Agmark charges is of the nature of capital expenditure having benefit to the assessee for several years therefore the same was not admissible as revenue expenditure within the meaning of section 37(1) of the act. He has classified these as a capital expenditure under the provisions of section 32(i)(ii) as intangible assets carrying depreciation at 25% of the cost/expenses. Consequently, the assessing officer has disallowed the expenses to the extent of Rs. 20,78,065/- (27,70,189-6,92,124/-) after allowing the admissible depreciation at 25%.
9. Aggrieved assessee filed appeal before the ld. CIT(A). The ld. CIT(A) sustained the addition made by the assessing officer by observing as under:-
"5.1 The second ground of appeal is against the additions of Rs.20,78,065/- made by the AO by considering Agrnark Charges as capital expenditure. The total expenditure of Agmark charges is Rs.27,70,753/-. The AO allowed 25% depreciation on the same and remaining 75% has been disallowed. The appellant contented that the expenditure on Agmark charges is revenue expenditure. But the contention of the appellant is not acceptable for the reason that the expenditure on Agmark charges has been classified as I.T.A Nos.1993-1994 & 2000-2001/Ahd/2016 A.Y. 2009-10 & 2012-13 Page No 6 ACIT vs. M/s Banaskantha Dist. Oil Seeds Growers Union Ltd & M/s Banaskantha Dist. Co-operative Milk Producers Union Ltd. vs. ACIT "Intangible Assets" u/s 32(1)(ii) upon which the depreciation @ 25% is allowed. It is clear from the facts of the case that certificate for Agmark was given for 5 years which prove that the appellant is deriving benefit of enduring nature. Looking to these facts and the provisions of the Act, the AO is justified in making these additions. These additions are confirmed. This ground is dismissed."
10. We have considered the rival contentions and perused the material on record carefully. The Ld. Counsel has placed reliance on the decision of ITAT Mumbai in the case of Red Chillies Entertainment Pvt.Ltd.vs ACIT vide ITA No.5271/Mum/2013.However, we find the cited case pertain to certification expenses in production of feature films and Television Programms having different facts from the case of the assessee. This submission of the counsel is not acceptable as the facts of the case of the assessee are distinguishable from the cited case. We observe that Agmark is a kind of brand which certify the quality benchmark for all agricultural products produced in India. Agmark certification process helps to make certified all the agricultural products to be available in the market. India exports its large number of agricultural products and commodities which are required to be certified under AGMARK Act as per the World Trade Organization (WTO). It is provided to those agricultural products that have passed through quality tests as mark of reliable products. The Government of India provides this certification and Agmark as a symbol is printed on the product. An intangible asset is an asset that is not physical in nature. Corporate intellectual property, including items such as patents, trademarks, copyrights and business methodologies, are intangible assets, as are goodwill and brand recognition. In view of the above we consider that Agmark is also a kind of brand recognition therefore the same is of the nature of intangible asset on which the depreciation is to be allowed. Therefore, the appeal of the assessee is dismissed on this issue.
Reopening of assessment u/s. 147
11. The first ground of appeal of the assessee is against the reopening of assessment u/s. 147 of the act. It is stated that that all facts and relevant details have already been scrutinized at the time of original assessment 143(3) therefore, reopening of assessment u/s. 147 of the act was totally bad in law. The assessee has filed appeal on this issue before the ld. CIT(A). The ld. CIT(A) has dismissed the appeal of the assessse by observing as under:-
I.T.A Nos.1993-1994 & 2000-2001/Ahd/2016 A.Y. 2009-10 & 2012-13 Page No 7 ACIT vs. M/s Banaskantha Dist. Oil Seeds Growers Union Ltd & M/s Banaskantha Dist. Co-operative Milk Producers Union Ltd. vs. ACIT "DECISION:
5. I carefully considered the submissions of the appellant and the assessment order. The first ground of appeal is against the re-opening of assessment u/s 147 of the Act. On going through the submission of the appellant in this regard, the contention of the appellant are not found acceptable for the reasons that the appellant has challenged the assessment order passed by the AO u/s 143(3) r.w.s. 147 of the Act dtd. 20-03-2015 before the Hon'ble High Court of Gujarat, Ahmedabad. The Hon'ble High Court of Gujarat, Ahmedabad set aside the assessment order with a direction to the AO that objections raised by the appellant may be disposed off by passing speaking order and then frame the fresh assessment order. Accordingly, the AO disposed off the objections raised by the appellant by passing the speaking order, which has not been challenged by the appellant before the Hon'ble High Court. As per the directions given by the Hon'ble High Court, the AO made fresh assessment order u/s 143(3) r.w.s. 147. From the facts mentioned above, it is clear that the re-opening proceedings has been challenged by the appellant before the Hon'ble High Court of Gujarat, Ahmedabad j and the AO passed the order as per directions of Hon'ble High Court after disposing off the objection which were not challenged by the appellant. Now raising the ground against the re-opening of assessment proceedings is not as per the provisions of the Act as well as judicial pronouncements on this issue by the Hon'ble High Court of Gujarat, Ahmedabad.
Therefore, this ground of appeal is dismissed."
We have considered the rival contentions of both the sides on this issue and perused the material on record. We are inclined with the findings of the Ld.CIT(A) that the assessing officer has carried out the fresh assessment as per the direction of Hon'ble High Court, therefore, we do not find any error in the decision of the Ld.CIT(A) on this issue. Accordingly, this ground of appeal of the assessee is dismissed.
ITA No. 2001/Ahd/201612. The assessee has raised following grounds of appeal:-
"Your appellant being aggrieved by the Order passed by the learned Commissioner of Income Tax, (Appeals)-4, Ahmedabad presents this appeal against the same on the following amongst other grounds.
1. The CIT(A) has erred in confirming the action, of Assessing Officer not reducing the income of the assessee to the extent of donation made of Rs. 11,00,000/- being mistake apparent from the record . It is submitted that the donation made of Rs. 11,00,000/- during the year consideration , has been wrongly added back by the assessee to the income of the year while filing of return of income, as it is neither debited to P & L A/c nor claimed as expenses in the books of accounts. The assessee has also filed all the details and explanations before the A.O. to rectify the mistake being apparent from the record vide its submission filed dated 16/09/2014, which is not appreciated at all by the A.O. It is submitted that the same may be considered now and Hon'ble ITAT may please direct the A.O. to reduce the income for the year to that extent accordingly. It be so held now."
I.T.A Nos.1993-1994 & 2000-2001/Ahd/2016 A.Y. 2009-10 & 2012-13 Page No 8 ACIT vs. M/s Banaskantha Dist. Oil Seeds Growers Union Ltd & M/s Banaskantha Dist. Co-operative Milk Producers Union Ltd. vs. ACIT
13. Assessee has given donation of Rs. 11 lacs during the year under conbsideration which was wrongly added back given by the assessee to the income of the year under consideration. The assessee has filed application for rectification which was rejected by the assessing officer stating that there was no apparent mistake from record.
14. Aggrieved assessee filed appeal before the ld. CIT(A). The ld. CIT(A) has dismissed the appeal of the assessee by observing as under:-
"7. The fourth ground of appeal is against not rectifying the mistake apparent from the record by the A.O. with regard to donation of Rs.11 lakhs given by the appellant. On going through the enclosures with Form no. 35 and submission of the appellant, there is no order u/s 154 of the Act passed by the A.O. on record. Even if such order is passed by the A.O. rejecting the appellant's claim, another /appeal against such order should have been filed by the appellant. Looking to these facts, this ground of appeal is not maintainable, therefore it is dismissed."
15. We have heard rival contention and perused the material on record carefully. The assessee has filed the necessary details and explanation before the assessing officer to rectify the mistake being apparent from record vide its letter dated 16th Sep, 2014 which was not decided on merit. After perusal of all these details and facts, we considered that it will be appropriate to restore this case to the file of assessing officer with a direction to decide this issue afresh after verification of the details and affording necessary opportunities to the assessee. Accordingly, the appeal of the assessee is allowed for statistical purposes. In the result, the appeal of the assessee is allowed for statistical purposes.
16. In the combined result, ITA nos. 1993 to 1994/Ahd/2016 filed by revenue are dismissed and ITA No. 2000/Ahd/2016 filed by assessee is dismissed and ITA No. 2001/Ahd/2016 filed by assessee is allowed for statistical purposes. Order pronounced in the open court on 20-03-2018 Sd/- Sd/-
(RAJPAL YADAV) (AMARJIT SINGH) JUDICIAL MEMBER ACCOUNTANT MEMBER I.T.A Nos.1993-1994 & 2000-2001/Ahd/2016 A.Y. 2009-10 & 2012-13 Page No 9
ACIT vs. M/s Banaskantha Dist. Oil Seeds Growers Union Ltd & M/s Banaskantha Dist. Co-operative Milk Producers Union Ltd. vs. ACIT Ahmedabad : Dated 20/03/2018 आदेश क त ल प अ े षत / Copy of Order Forwarded to:-
1. Assessee
2. Revenue
3. Concerned CIT
4. CIT (A)
5. DR, ITAT, Ahmedabad
6. Guard file.
By order/आदेश से, उप/सहायक पंजीकार आयकर अपील य अ धकरण, अहमदाबाद