2016 (10) TMI 1321 - HC - Income Tax

Distribution of profit - payment of rate difference after the closure of the accounting year - commercial expediency - Whether amount to be paid was not out of the profits ascertained at the Annual General Meeting ? - HELD THAT - It is an agreed position between the parties that the issue raised herein stands concluded by the decision of this Court in Kolhapur Zilla Sahakari Dudh Utpadak Sangh Ltd. 2009 (4) TMI 19 - BOMBAY HIGH COURT in favour of the Respondent-Assessee - question as framed does not give rise to any substantial question of law as the impugned order has merely followed the binding decision of this Court. Thus, not entertained. Depreciation on fixed assets on project - Non deducting subsidy received from the National Dairy Development Board, ignoring the provisions of section 43(1) and Explanation 10 to section 43(1) - HELD THAT - Revenue is unable to points out whether or not any appeal on the issue raised herein, has been filed by the Revenue. In fact, the order of this Court in Kolhapur Zilla Sahakari Dudh Utpadak Sangh Ltd. (supra), appears to be an appeal by the Revenue in respect of the very orders which are being relied upon by the impugned order (as evident from paragraph 14 of the order of the CIT(A)). However, the issue raised herein was not even an issue raised therein. Question as framed does not give rise to any substantial question of law as the impugned order of the Tribunal has merely followed its own orders for the earlier Assessment Years, which have been accepted by the Revenue.

Summary

Issues:
1. Interpretation of payment of rate difference after the closure of the accounting year.
2. Prospective nature of Explanation 10 to Section 43(1).

Analysis:

Interpretation of payment of rate difference after the closure of the accounting year:
The Tribunal's order was challenged by the Revenue on the grounds that the payment of rate difference after the closure of the accounting year should be considered as a distribution of profit. However, the Tribunal upheld its decision based on the precedent set by the Court in CIT v/s. Kolhapur Zilla Sahakari Dudh Utpadak Sangh Ltd. The parties agreed that the issue was settled in favor of the Respondent-Assessee by the previous decision. Therefore, the question did not raise any substantial legal issue as the Tribunal merely followed the binding decision of the Court. Hence, the appeal on this issue was dismissed.

Prospective nature of Explanation 10 to Section 43(1):
Regarding the prospective nature of Explanation 10 to Section 43(1), the Tribunal dismissed the Revenue's appeal by relying on its own previous order in the Respondent-Assessee's case for different assessment years. The Revenue's counsel failed to demonstrate whether an appeal had been filed on this specific issue. It was noted that the issue in question was not raised in the previous appeal. As a result, the Tribunal's decision was based on its consistent application of previous orders accepted by the Revenue. Consequently, the question did not present a substantial legal issue, and the appeal was not entertained.

In conclusion, both appeals under Section 260A of the Income Tax Act, challenging the Tribunal's common order for the Assessment Years 2007-08 and 2008-09, were dismissed. No costs were awarded in this matter.