ITO, WARD-4(2), BHUBANESWAR vs. TRIBAL DEVELOPMENT CO-OPERATIVE CORPORATION OF ODISHA LIMITED, BHUBANESWAR

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ITA 479/CTK/2017Status: DisposedITAT Cuttack27 September 2018AY 2014-155 pages
AI SummaryDismissed

What did the Tribunal hold?

The Tribunal upheld the CIT(A)'s order, finding that the CIT(A) had considered the assessee's submissions and the AO's findings. The Revenue failed to present new material to controvert the CIT(A)'s decision.

What were the facts?

The Revenue appealed against the CIT(A)'s order which deleted additions made by the AO. The assessee, a cooperative society, had its income assessed at a much higher figure than initially declared, with additions on account of brought forward loss, depreciation on gunny bags, legal fees, advertisement, transportation, and reimbursement of gunny bags.

What were the issues?

Whether the CIT(A) was justified in deleting the additions made by the AO, particularly concerning brought forward losses, depreciation on gunny bags, and other expenses, and whether proper opportunity was given to the AO for verification.

Which sections of the Income-tax Act were involved?

Section 143(3),Section 40(a)(ia),Section 32

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, CUTTACK BENCH CUTTACK

Before: SHRI N.S.SAINI, AM & SHRI PAVAN KUMAR GADALE, JM

Hearing: 12/09/2018Pronounced: 27/09/2018

आयकर अपील�य अ�धकरण, कटक �यायपीठ,कटक IN THE INCOME TAX APPELLATE TRIBUNAL CUTTACK BENCH CUTTACK BEFORE SHRI N.S.SAINI, AM & SHRI PAVAN KUMAR GADALE, JM आयकर अपील सं./ITA No.479/CTK/2017 (�नधा�रण वष� / Assessment Year :2014-2015) ITO, Ward-4(2), Bhubaneswar Vs. Tribal Development Co- operative Corporation of Odisha Limited, Rupali Square, Bhoi Nagar, Bhubaneswar-751002 �थायी लेखा सं./जीआइआर सं./PAN/GIR No. : AAAAT 3642 C (अपीलाथ� /Appellant) (��यथ� / Respondent) .. राज�व क� ओर से /Revenue by : Shri Subhendu Dutta, JCITDR �नधा�रती क� ओर से /Assessee by : Miss Swati Kejriwal, AR सुनवाई क� तार�ख / Date of Hearing : 12/09/2018 घोषणा क� तार�ख/Date of Pronouncement 27/09/2018 आदेश / O R D E R Per Shri Pavan Kumar Gadale, JM: This is an appeal filed by the Revenue against the order of CIT(A), Bhubaneswar, dated 30.08.2017, passed in I.T.Appeal No.0218/2016-17 for the assessment year 2014-2015. 2. The Revenue has raised the following grounds of appeal :- 1. The order of the Ld. CIT(Appeals) is erroneous both in facts and in law. 2. On the facts and circumstances of the case and having regard to the reasons stated by the Assessing Officer(AO) in Para (4.0) of the assessment order, the Ld. CIT(Appeals) is not justified in deleting the disallowance of claim of brought forward loss of Rs.16758010/- made by the AO in the assessment. 3. Having regard to the reasons stated by the AO in Para 5.0 of the assessment order and in absence of any opportunity given to the AO for verifying the claim/matter w.r.t., the submissions made by the assessee during the course of assessment proceedings, the Ld. CIT(Appeals) is not justified in deleting the disallowance of Rs.60,40,492/- made

2 ITA No.479/CTK/2017 by the AO in the assessment towards 'Depreciation on Gunny bags'. 4. On the facts and circumstances of the case and having regard to the reasons stated by the AO in Paras 6 & 7 of the assessment order and in absence of any opportunity provided to the AO for verifying the claim w.r.t., such submissions made during the appellate proceedings, the Ld. CIT(Appeals) is not justified in deleting the disallowances of Rs.6,65,055/- and Rs.2,95,809/- made u/s.40(a)(ia) of the I.T. Act, in the assessment. 5. Having regard to the specific reasons stated by the AO in Paras 8 & 9 of the assessment order and in absence of any opportunity given to the AO for verifying the claim/submissions made by the assessee during the appellate proceedings, Ld. CIT(Appeals) is not justified in deleting the disallowances of Rs.1,54,780/- and of Rs.20,93,209/- made under 'transportation charges' and towards 'reimbursement of gunny bags' in the assessment. 6. The appellant craves to alter, amend or add any other ground that may be considered necessary in course of the appeal proceeding. 3. Brief facts of the case are that the assessee is a cooperative

society and derives income from trading of forest products and income

from house property and filed the return of income electronically on

28.11.2014 for the A.Y.2014-2015 declaring total income at Rs.1,15,390/-.

The return of income was processed u/s.143(1) of the Act. Subsequently

the case was selected under scrutiny under CASS and notices u/s.143(2)

& 142(1) of the Act along with questionnaire were issued. In compliance

of the same, ld. AR appeared before the AO and case was discussed.

Thereafter the AO completed the assessment assessing total income of

Rs.2,60,07,360/- and passed order u/s.143(3) of the Act, dated

28.12.2016 making additions on account of net profit, depreciation on

gunny bags, legal and professional fees, advertisement & publicity,

transportation charges and reimbursement of gunny bags.

3 ITA No.479/CTK/2017 4. Aggrieved by the order of AO, the assessee preferred an appeal

before the CIT(A). In the appellate proceedings, the assessee reiterated

the submissions made before the AO and the CIT(A) after considering the submissions of assessee and findings of the AO, deleted the additions

and allowed the appeal of the assessee. 5. Aggrieved by the order of the CIT(A) the Revenue has filed an

appeal before the Tribunal. 6. Before us, ld. AR of the assessee supported the order of CIT(A).

7.

Contra, ld.DR relied on the order of AO and submitted that the

CIT(A) is not justified in deleting the additions made by the AO as the

CIT(A) has not provided any opportunity to the AO for verifying the claim

of the assessee and, therefore, ld. DR prayed for allowing the appeal.

8.

We have heard rival submissions and perused the materials

available on record. We found that the ld. CIT(A) while deleting the

addition made by the AO on account of brought forward loss, has

observed as under :-

“3.3 I have carefully examined the assessment order as well as the submission of the appellant. The appellant has shown current year's income of Rs.3,80,94,520/- comprising of net profit of Rs.1,67,58,011/- in which interest income of Rs.2,15,15,249/- has been added back. Thereafter, the appellant has set off brought forward loss of Rs.3,80,94,520/-. The assessing officer has not doubted the correctness of brought forward loss. The reasons and the justification for making addition of Rs.1,67,58,010/- by the assessing officer are not known. Considering these aspects, the addition made by the assessing officer of Rs.1,67,58,010/- is ordered to be deleted. The ground of appeal is allowed.”

4 ITA No.479/CTK/2017 With regard to addition made on account of depreciation on gunny bag,

the CIT(A) observed as under :-

“4.3 I have carefully examined the assessment order as well as the submission of the appellant. The appellant has used the term "Depreciation on gunny bag" in keeping with the nomenclature used as per the "Government of India guidelines for Paddy Procurement" and it has nothing to do with depreciation as defined u/s. 32 of the IT Act, 1961. In any case, gunny bag is not a capital asset, but, it is revenue expenditure. Similarly, this expenditure on gunny bag of Rs 60,40,492/-has nothing to do with reimbursement expenditure of gunny bags of Rs ,2,09,32,090/-. The assessing officer has not doubted incurring of expenditure of Rs 60,40,492/-. Considering these aspects, the addition made by the assessing office of Rs60,40,492/-: is ordered to be deleted. The ground of appeal is allowed.”

With regard to addition made on account of legal and professional fees as

well as on advertisement and publicity expenses, the CIT(A) observed as

under :-

“5.2 It is seen that the appellant has deducted tax at source on legal and professional fees as well as on advertisement and publicity expenses. Accordingly, the additions of Rs.6,65,055/- and of Rs.2,95,809/- are ordered to be deleted. The grounds of appeal are allowed.”

Further the CIT(A) in respect to addition made on account of

transportation charges and re-imbursement of gunny bags, observed as

under :-

“6.2 I have carefully examined the assessment order as well as the submissions of the appellant. It is to be noted that the appellant is owned to the extent of 100% by Government of Odisha. All the payments of transportation charges as well as reimbursement of gunny gas charges have been made in cheque. Moreover, transportation charges have been paid at fixed 'rate as per the order of Food Corporation of India vide their letter dated 26.11.2013. Considering these accepts, the addition made by the assessing officer of Rs.1,54,780/- and of Rs 20,93,209/-is ordered to be deleted. The grounds of appeal are allowed.”

5 ITA No.479/CTK/2017 9. From the above observations of the CIT(A), we find that the CIT(A) has considered the submissions of the assessee and findings of Assessing Officer and deleted the additions made by the AO. Ld. DR could not bring any new material fact or any cogent material to controvert the above findings of the CIT(A). Accordingly, we do not find any good reason to interfere with the above findings of the CIT(A) and we uphold the same and dismiss the grounds of appeal of the Revenue. 10. In the result, appeal of the Revenue is dismissed. Order pronounced in the open court on this 27/09/2018. Sd/- Sd/- (N.S.SAINI) (PAVAN KUMAR GADALE) लेखा सद�य / ACCOUNTANT MEMBER �या�यक सद�य / JUDICIAL MEMBER कटक Cuttack; �दनांक Dated 27/09/2018 �.कु.�म/PKM, Senior Private Secretary आदेश क� ��त�ल�प अ�े�षत/Copy of the Order forwarded to : अपीलाथ� / The Appellant- 1. ITO, Ward-4(2), Bhubaneswar ��यथ� / The Respondent- 2. Tribal Development Co-operative Corporation of Odisha Limited, Rupali Square, Bhoi Nagar, Bhubaneswar-751002 आयकर आयु�त(अपील) / The CIT(A), 3. आयकर आयु�त / CIT 4. �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, कटक / DR, ITAT, Cuttack 5. गाड� फाईल / Guard file. 6. आदेशानुसार/ BY ORDER, स�या�पत ��त //True Copy// (Senior Private Secretary) आयकर अपील�य अ�धकरण, कटक / ITAT, Cuttack

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