AGSRI AGRICULTURAL SERVICES PRIVATE LIMITED ,HYDERABAD vs. INCOME TAX OFFICER, WARD-1(1), HYDERABAD

To dispose of these appeals, we refer to the grounds from AY 2012-13 being ITA No. 1339/Hyd/2017. On the following grounds.

The Learned Commissioner of Income-tax (Appeals) erred in assuming that the Agreement / Contract between assessee and NIRMAN ( a Society registered in Kural village, Nayagarh District, Odisha ) resulted in a separate entity of Association of Persons (AOP).

The learned Commissioner of Income-tax ( Appeals ) erred in disallowing Rs.2,71,365 incurred by the assessee on different projects related to its business, without specifying any cogent reason.

Brief facts of the case are that the assessee is engaged in the business of Consultancy in the field of agricultural products, filed return of income on 27.09.2012 admitting total income at Rs.14,92,690/-. The case was selected for scrutiny and notices u/s. 142(1) and 143(2) were issued to the assessee. During the

The ld. AO observed that the assessee has entered into joint venture agreement with Krishi Vignan Kendra(KVK) to promote advanced methods of agriculture among farmers at Lathur and the assessee also entered into an agreement with NIRMAN and also debited loss and AO has also observed that other project expenses has already been debited by the assessee. During the course of assessment proceedings, the AO observed that the assessee has entered into joint venture, therefore, it is to be treated as an AOP and any loss/expenditure incurred from the AOP is not be allowed and he also observed that the agreement is totally different from the business carrying on by the assessee. Accordingly, he added into the total income of the assessee to the above expenditure debited by the assessee in profit and loss account. Aggrieved from the order of the AO, he filed appeal before the ld.CIT(A) and ld.CIT(A) after examining in details, he confirmed the additions made by the AO.

Aggrieved by the order of the ld.CIT(A), the assessee is in appeal before the Income tax Appellate Tribunal.

The ld. AR submitted that the assessee has incurred the expenditure in deletion to the income earned by the assessee, which is evident from the paper book page 43 under the head income-technical consultancy and as on 01.01.2012 he has received sum of Rs.54,49,918.03/-, which has been shown as income. Therefore, the corresponding expenditure should also be

On the other hand the ld. DR relied on the order of the lower authorities and he submitted that the assessee has entered into the joint venture agreement, which is a different from the regular business of the assessee. Therefore, there is a provision in the I.T.Act regarding computation of income of the Association of Person, as per section 86, 67A and 167B of the I.T.Act. The expenditure/loss incurred by the assessee is not be treated as regular business expenditure of the assessee. Therefore, it should not be allowed as a deduction from the income. The Joint Venture is separate entity

After hearing both the parties and perused the material available on record and order of the authorities below. We observed that the assessee has entered into agreement with KVK and NIRMAN and ld. AR also submitted that the corresponding income has been credited, however on perusal of the copy of ledger account of technical consultancy income, the assessee has credited the income of Rs.54,49,918/- on 01.01.2012 Dr. Solidaridad Latno America with the narration “ being the advance amount received from Solidaridad till Jan 2012 has taken into income”. The assessee has not brought into the notice of the lower authorities that there is a direct nexus between these income and expenditure. The ld. AR also could not produce any documents in regard to the relation between income and expenditure, but during the course of hearing he undertook that it will be proved before the lower authorities. Further it has been observed that it was not brought into the notice authorities below . During the course of arguments, the ld. AR also requested that the matter

As the facts and grounds are materially identical in AY 2013- 14 in ITA No.1789/Hyd/2018 to that of AY 2012-13 in ITA No.1339/Hyd/2017, following the decision in AY 2012-13 in ITA No.1339/Hyd/2017, we allowed for statistical purpose as well.

In the result, both the appeals filed by the assessee are allowed for statistical purposes. A common order passed be placed in the respective case files.