DCIT, CIRCLE, SHIMLA vs. M/S HIMACHAL PRADESH CIVIL SUPPLIES CORPN. LTD., SHIMLA

PER DIVA SINGH, JM

The present appeal has been filed by the revenue assailing the correctness of the order dated 23/03/2017 of CIT(A) Shimla pertaining to 2013–14 assessment year on the following ground : 1. On the facts and in the circumstances, the Ld. CIT(A) has erred in deleting the addition of Rs. 56,23,9407- made by the A.O. on account of handling charges, without appreciating the facts that the liability on account of handling charges payable to Govt. of Himachal Pradesh was not an ascertained liability and hence, was taxable income of the assessee. 2. Both the parties have been heard. Whereas the Ld. Sr.DR relies upon the assessment order, the authorized representative of the assessee on the other hand relies upon the impugned order. Apart from that, copy of order dated 25/10/2012 in the case of the assessee in ITA 836/CHD/2012 pertaining to 2009-10 assessment year was filed in support of the conclusions drawn. 3. We have heard the rival submissions and perused the material available on record. It is seen that the assessee in the facts the present case is a State Government Corporation and is engaged in the business of running of various fair price shops for sugar, rice, wheat flour, edible oil, pulses, LPG, petrol, diesel, cement depots, medicine shops etc. The

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assessee’s return was picked up for scrutiny under CASS. The assessing officer in the course of the assessment proceedings noticed that during the year the assessee had received total amount of the Rs. 3.36 Lacs ( @ Rs. 1.50 per bag) on account of handling charges of cement bags supplied from Government against which income was shown at Rs. 28.12 lakh @ Rs. 0.50 per bag which is credited to P&L account and balance amount of Rs. 6.24 lakhs (i.e. @ Rs. 1 per bag ) has been added to working capital advance as per the instructions of HP Government and was not offered for tax. The assessing officer required the assessee to explain why the amount of Rs. 56,23,940/- may not be added to the income of the assessee for the year under consideration. Not convinced with the reply of the assessee wherein reliance was placed upon the consistent view taken in the early years which had been allowed by the ITAT the assessing officer rejected the explanation on the reasoning that the issue has been challenged by the Revenue before the Hon’ble High Court and as such it was pending. The issue was carried in appeal before the CIT(A) who considering the peculiar facts and circumstances of the present case, decided the issue in favour of the assessee holding as under : “5.1 I have gone through the facts of the case, order of Assessing Officer and submissions made by the assessee and the orders of my Id. Predecessor. The issue in this appeal stand decided by my predecessor vide orders in the appellant's own case for the A.Y. 2011-12 & 2012-13 in Appeal No.lT/494 /13-14/Sml dated 29.12.2014 & Appeal No.IT/296/Sml/2014-15 dated 06.12.2016 deciding the issue in favour of the assessee.” 4. We further find on a reading of the order dated 08/11/2012 passed by the coordinate Bench in ITA/836/CHD/2012 considering the past history of the issue as considered by the CIT(A) in the said year, the coordinate Bench was pleased to hold as under :

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capital advance and unsecured loans proves that the receipt is in the nature of an ascertained liability and has been rightly shown as such in the balance sheet by the appellant. It is noted that the appellant is under an obligation to remit the amount of handling charges to the Govt. of Himachal Pradesh @ Rs. 1 per bag of cement. As regards the remaining collection of handling charges to the extent of Rs.0.50 per bag, the appellant has duly shown the income to that extent. Keeping in view the history of the case and the decisions of the CIT(A), Shimla and the ITAT on the given issue for the A. Ys. 2002-03 to 2006-07, it is held that the Ld. A.0. is not justified in treating the handling charges of Rs.27,85,502/- as the taxable income of the appellant. 5. Having regard to the above rival submissions, facts of the case and respectfully following the decision of the Tribunal, as mentioned above, as also the findings recorded by CIT(Appeals), the appeal of the revenue is dismissed.”

4.1 Accordingly in the absence of any change either on facts or law brought to our notice by the parties, respectfully following the order of the coordinate Bench, the Departmental appeal is dismissed. None of the parties made any submissions to show that the consistent view taken by the ITAT over the years has been varied by the Hon’ble High Court in appeal. Thus in the aforementioned peculiar facts and circumstances of the present case, as set out herein above, the appeal of the Department is dismissed. Said order was pronounced at the time of hearing itself.

Order pronounced in the Open Court on 04.04.2018.

Sd/- Sd/- ( Dr.B.R.KUMAR) (DIVA SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER

‘Poonam’ Copy to: 1. The Appellant 2. The Respondent 3. The CIT 4. The CIT(A) 5. The DR

Asstt. Registrar ITAT,Chandigarh.