THE DCITGNR CIRCLE, GANDHINAGAR vs. GUJARAT STATE SEEDS CORPORATION LTD., GANDHINAGAR

The grounds raised by the Revenue read as under:- “1. The Ld. CIT(A) has erred in law and on facts in allowing/deleting the addition made on account of revolving fund of Rs.40,00,000/-

The Ld. CIT(A) has erred in law and on facts in allowing/deleting the addition made on account of value of seeds Rs.1,53,26,440/-.

On the facts and circumstances of the case the Ld. CIT(A) ought to have upheld the order of the Assessing Officer.”

At the time of hearing before us, learned representatives fairly agree that the above grievances are covered, in favour of the assessee, by the decision AY : 2012-2013 - 2–

1 With regard to deletion of addition made on account of revolving fund, the Co-ordinate Bench (supra) held as under:-

3 After considering the rival submissions and going through the material on record we find that the issue before us is treatment of revolving funds received from Government of Gujarat. The purpose of the funds is to augment the trading activity of the assessee meaning thereby if it was a case of non returnable grant or subsidy it would have been a revenue receipt. The Assessing Officer failed to appreciate that the fund is returnable on demand. The nature of this fund is that of a loan without interest. A loan can never partake the form of income. The amount given was neither returnable and nor a liability. It is utilized for the purpose it is given. So, this cannot be held to be of the nature of income. In this background, the addition made by the Assessing Officer was rightly deleted by the CIT(A). Same is upheld. This take care of this issue in both years i.e. Asst. Years 2008-09 & Asst. Year 2009-10.”

2 With regard to deletion of addition made on account of value of seeds, the Co-ordinate Bench (supra) held as under:- “3. 3. After going through the material on record, we find that Assessing Officer has added Rs.1,61,88,935/- i.e. 50% of 'jangad' stock of Rs.3,23,77,870/-. He observed that the assessee has neither shown seeds of Rs.3,23,77,870/- as purchases nor has included in its closing stock. The stand of the assessee has been that goods are received on approval basis. Till the goods are certified to be of reliable quality, the same remains property of farmers and are kept in the godown of assessee. Only after certification of the seeds by the concerned certifying agencies, the above seeds are taken into purchase account of assessee. Only then that would form closing stock at the end of the year. The Assessing Officer has further observed that assessee was making adhoc payment of 50% of the stock to the farmers as advances on receipt of goods on approval while as per the balance sheet, the assessee has not shown such advances on the asset side of the balance sheet. The assessee gave detailed bifurcation in this regard and had stated that it is evident from the annual accounts of the assessee. As per Schedule ''J'' of loans and advances, advances recoverable in cash or kind are shown at Rs.3,18,56,035/- in balance sheet. The grouping of Sch. ''J'' shows advances to producers (farmers against Jangad purchases) at Rs.56,64,882/- which is DCIT vs. Gujarat State Seeds Corp Ltd AY : 2012-2013 - 3–

We see no reason to take any other view of the matter than the view so taken by the Co-ordinate Bench. Respectfully following the same, we see no reasons to interfere in the conclusions arrived at by the ld. CIT(A) in this matter. Accordingly, we confirm the order of the learned CIT(A) and dismiss the appeal of the Revenue.

In the result, appeal of the Revenue is dismissed. Order pronounced in the Court on 9th October 2017 at Ahmedabad. (S.S. GODARA) JUDICIAL MEMBER Ahmedabad; Dated, 09/10/2017 8t आदेश क" ""त"ल"प अ"े"षत/Copy of the Order forwarded to : अपीलाथ" / The Appellant