THE SHAHABAD COOP SUGAR MILLS LTD. vs. CIT, AAYAKAR BHAWAN, SECTOR 13, KARNAL (HR.)

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ITA/86/2009HC Punjab & HaryanaPHHC01084876200913 August 2014Author: MR. JUSTICE GURDEV SINGH,MR. JUSTICE MAHAVIR SINGH CHAUHAN3 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that the matter was no longer res integra. It referred to its own prior decision dated 24.10.2013 in ITA No. 235 of 2009 (The Shahabad Cooperative Sugar Mills Limited vs. CIT), which dealt with an identical question in the case of the same assessee. In that prior decision, the substantial questions of law were answered against the assessee. Therefore, for the reasons stated in that earlier judgment, the present appeal was also dismissed, with the substantial questions of law being answered against the assessee. The specific reasoning from the prior judgment is not detailed in this excerpt, but it implies that the denial of deduction on interest on sticky loans was upheld.

What were the facts?

The appellant, The Shahabad Cooperative Sugar Mills Limited, is a cooperative sugar mill. For the assessment year 2003-04, it filed a return declaring a loss, later revised. The case was selected for scrutiny. The Assessing Officer (AO) made an addition of ₹67,67,142/- on account of interest accrued but not received, which the assessee had credited to a suspense account. The AO rejected the assessee's submission that interest recoverable from a cooperative society was exempt under Section 80P(2)(d) of the Income Tax Act, 1961, citing a prior ITAT ruling for assessment year 1992-93. The CIT(A) dismissed the assessee's appeal. The Income Tax Appellate Tribunal (ITAT) partly allowed the appeal for statistical purposes. The assessee filed an appeal before the High Court.

What were the issues?

1. Whether, on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was justified in law and on facts in confirming the denial of deduction on account of interest on sticky loans (interest doubtful of recovery) credited to a suspense account, in light of established principles of law and accountancy, as supported by the judgment in UCO Bank vs. CIT (1999) 237 ITR 889 (SC)? (Question of law) 2. Whether, on the facts and circumstances of the case, the order of the Income Tax Appellate Tribunal is perverse to the extent of the above-said grounds/questions of law? (Question of mixed law and fact) Assessee's Contention: The assessee argued that interest recoverable from a cooperative society was exempt under Section 80P(2)(d) of the Act, relying on an ITAT decision for assessment year 1992-93. They also relied on established principles of law and accountancy, supported by the Supreme Court's decision in UCO Bank vs. CIT. Revenue's Contention: The judgment does not record specific contentions made by the revenue before the High Court. However, the AO and CIT(A) had denied the deduction.

Which sections of the Income-tax Act were involved?

Section 260A,Section 80P(2)(d),Section 143(1)

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH ITA No.86 of 2009(O&M) Date of decision: 13.8.2014 The Shahabad Cooperative Sugar Mills Limited ……Appellant Vs. CIT, Aayakar Bhawan, Sector 13, Karnal (HR.) …..Respondent CORAM: HON’BLE MR. JUSTICE AJAY KUMAR MITTAL HON’BLE MR. JUSTICE DR. BHARAT BHUSHAN PARSOON Present: Mr. S.K.Mukhi, Advocate for the appellant. Mr. Yogesh Putney, Advocate for the respondent.

Ajay Kumar Mittal,J.

1.

This appeal has been preferred by the appellant under Section 260A of the Income Tax Act, 1961 (in short, “the Act”) against the order dated 31.10.2008, Annexure A.1 passed by Income Tax Appellate Tribunal, Chandigarh Bench, Chandigarh (in short, “the Tribunal') in ITA No.501/CHANDI/2008, for the assessment year 2003-04. It was admitted on 28.4.2010 to consider following substantial questions of law:- “Whether on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was justified on facts and in law in confirming the findings of the authorities below while denying deduction on account of interest on sticky loans being the interest doubtful of recovery and having been credited to suspense account in view of the established principles of law GURBAX SINGH 2014.08.21 12:37 I attest to the accuracy and integrity of this document High Court Chandigarh and that of accountancy as supported by the judgment of Hon'ble Supreme Court of India in the case of UCO Bank vs. CIT (1999) 237 ITR 889 (SC)? b) Whether on the facts and circumstances of the case, the order of the Income Tax Appellate Tribunal is perverse to the extent of above said grounds/questions of law?

2.

A few facts relevant for the decision of the controversy involved as narrated in the appeal may be noticed. The appellant is a cooperative society - a sugar mill based at Shahabad, District Kurukshetra. It filed its return of income for the assessment year 2003-04 at a loss of ` 7,92,15,648/- on 28.11.2003 which was processed under section 143(1) of the Act on 30.12.2003. The return of income was accompanied by a set of income and expenditure account and balance sheet duly certified by the Chartered accountant. A revised return was filed by the assessee on 7.2.2005 declaring net loss of ` 7,97,89,834/-. The case of the appellant was selected for scrutiny. The assessee appeared before the Assessing officer and submitted the reply alongwith necessary documents. During the assessment proceedings, the issue before the Assessing officer was regarding receipt of interest as accrued which was not in fact received and thus the appellant kept the same under suspense account. The appellant submitted that the Income Tax Tribunal, Delhi had held in its case for the assessment year 1992-93 that interest recoverable from Cooperative Society was exempt under section 80P (2)(d) of the Act. However, the reply filed by the appellant was not accepted and addition of ` 67,67,142/- was made in the income of the appellant, vide order dated 24.3.2006, Annexure A.

3.

Aggrieved by the order, the assessee filed appeal before the Commissioner of Income Tax (Appeals) [CIT(A)]. Vide order dated 15.4.2008, Annexure A.2, the CIT(A) dismissed the appeal. The appellant filed further appeal GURBAX SINGH 2014.08.21 12:37 I attest to the accuracy and integrity of this document High Court Chandigarh before the Tribunal. Vide order dated 31.10.2008, Annexure A.1, the Tribunal partly allowed the appeal for statistical purposes only. Hence the instant appeal by the appellant-assessee.

3.

We have heard learned counsel for the parties and perused the record.

4.

The matter is no longer res integra. Vide order dated 24.10.2013 passed by this Court, identical question in the case of the assessee in ITA No.235 of 2009 (The Shahabad Cooperative Sugar Mills Limited vs.CIT, Aayakar Bhawan, Sector 13, Karnal) has been decided against the assessee. Accordingly, for the reasons mentioned in the said order, the substantial questions of law are answered against the assessee and the appeal stands dismissed. (Ajay Kumar Mittal) Judge August 13, 2014 (Dr. Bharat Bhushan Parsoon) Judge ‘gs’ GURBAX SINGH 2014.08.21 12:37 I attest to the accuracy and integrity of this document High Court Chandigarh

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