CIT vs. INDIAN FARMER FERTILIZER COOPERATIVE

IN THE HIGH COURT OF DELHI AT NEW DELHI . . . ITA 1291/2011 . . . CIT ..... Appellant . Through Mr. Kamal Sawhney, sr. standing counsel with Mr. Amit Shrivastava, Adv. . . . versus . . . . . INDIAN FARMER FERTILIZER COOPERATIVE.. Respondent . Through . . . CORAM: . HON'BLE MR. JUSTICE SANJIV KHANNA . HON'BLE MR. JUSTICE R.V.EASWAR . . . . . O R D E R . 22.12.2011 . . . The Revenue has preferred this appeal, which relates of assessment year 2006-07, under Section 260A of Income Tax Act, 1961 on two grounds : . (1) Disallowance of Rs.13,03,74,047/- under Section 43B of the Act. . (2) Disallowance of Rs.3,40,99,000/- towards contribution to the Cooperative Education Fund. . 2. Regarding the first ground the Tribunal has recorded its findings in para 5 of the impugned order dated 31/5/2011, which is as under : . ?We have heard both the parties. The assessee is a multi state cooperative Society having its sales office spread all over India and its accounts are decentralized. The tax audit report in form 3CD is compiled on the basis of tax audit reports received from various branch auditors in form 3CD. On identical issue, for assessment year 2004-05, the AO disallowed the payment u/s 43B, but the same was allowed by the CIT(A) on the ground that the dates of deposits have been verified and certified by the tax auditors of the assessee and the certificate of tax auditors was already available with the A.O. The ITAT vide order dated 16.1.2009 upheld the order of CIT(A). We have gone through the order for assessment year 2004-05 in I.T.A. No.244/Del./08 dated 16.1.2009 in assessee?s own case. ITAT, Delhi bench ?D? has allowed the issue in favour of the assessee by holding that the payments have been made before the due date for filing of return of income. The CIT(A) was justified in deleting the addition. From the tax audit report, we also find that amount of Rs.13,03,74,047/- has been shown as paid on or before due date for furnishing return of income for the previous year u/s 139(1) of the Act. Form 3CD has been prepared and signed by Rajnish and Associates, CA. The accounts of the assessee have been audited by statutory auditors. The assessee had filed the details of payment of Rs.13,03,74,047/-. The assessee is entitled for deduction u/s 43B of the Act in respect of amount of Rs.13,03,74,047/-. Accordingly, we do not find any infirmity in the order passed by the CIT(A) deleting the addition made u/s 43B of the Act.? . . . 3. It is clear from the aforesaid facts that payments of statutory dues and payments covered by 43B were specifically examined by both the CIT(A) and ITAT and these details were furnished. They were satisfied with the details and the factum that the payments were made before the due date of filing of the return of income. Ld. counsel for the appellant is not able to point out on what account the order passed by the Tribunal is factually incorrect or perverse. We do not find see any reason, therefore, to entertain the present appeal on the first ground. . 4. With regard to the second ground, the Tribunal has referred to Section 63 of Multi State Cooperative Society Act read with Rule 25 of Multi State Coop. Society Rules, 2002. It is not disputed that the respondent assessee is a cooperative society governed by the said Act and the Rule is applicable. In terms of the statutory provisions it is mandatory and a statutory requirement that the respondent cooperative . society has to credit a sum calculated at the rate of 1% of net profits every year as contribution to the Cooperative Education Fund maintained by the National Cooperative Union of India, New Delhi. The aforesaid contribution has been imposed by the statute itself. We fail to understand why statutory payment to the aforesaid fund cannot be allowed as a deduction and is not an expense. Earlier for the assessment years 1991-92 and 1992-93 the matter had come up to the Delhi High Court on the question whether the said contribution was a cess, tax, duty or fee and therefore, Section 43B of the Act was applicable. It is not disputed in the present case that aforesaid payment to the cess has been made. In earlier years the payment was not disallowed on the ground that it is not an expense under Section 37 of the Act or mere application of income. On the second ground, we do not see any reason to interfere. The appeal is accordingly dismissed. . . . SANJIV KHANNA,J . . . . . . . R.V.EASWAR, J . DECEMBER 22, 2011 . vld . . . $ 8 .