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2015 (5) TMI 683 - HC - Income TaxAdditions on account of non refundable deposits, interest on non refundable deposit, the Indira Vikas Awas Nidhi, Earthquake fund, Chief Minister s fund, Area Development fund, Cane Development fund, Small Savings etc. - Held that - The non refundable deposits and interest thereon cannot be added to the income of the Sahakari Karkhana. To that extent the Revenue s stand has been negatived by this Court. Indira Awas Nidhi and Earthquake fund, the matter has been restored back to the Tribunal for being decided afresh and in the light of the judgment of this Court in the case of Shri Chhatrapati Sahakari Sakhar Karkhana Limited (2000 (5) TMI 22 - BOMBAY High Court). Chief Minister s fund, Area Development fund, Cane Development fund, Small Savings etc., insofar as the Chief Minister s fund is concerned, the question will have to be answered in favour of the assessee and against the Revenue in the light of the Division Bench judgment of this Court in the case of Shri Chhatrapati Sahakari Sakhar Karkhana Limited (2000 (5) TMI 22 - BOMBAY High Court). Area Development fund is concerned, the matter will have to go back to the Tribunal for being decided afresh and in the light of the authoritative pronouncement of the Division Bench. Cane development fund is a fund which has been said to be capable of treated as an income of the sugar factory and, therefore, the issue stands answered in favour of the Revenue and against the assessee. See CIT vs. Malegaon Sahakari Sakhar Karkhana Limited 2005 (8) TMI 90 - ALLAHABAD High Court & Siddheshwar Sahakari Sakhar Karkhana Limited vs. Commissioner of Income Tax, 2004 (9) TMI 6 - SUPREME Court . Area Development fund etc. are concerned, the matter must go back to the Tribunal for fresh consideration in the light of the Division Bench judgment. Small Savings are concerned, the issue is answered in favour of the assessee and against the Revenue in terms of the Division Bench judgment in the case of Malegaon Sahakari Sakhar Karkhana Limited (supra).
Issues:
Assessment of non-refundable deposits, interest on deposits, various funds, and deductions under the Income Tax Act. Analysis: The respondent, a cooperative sugar factory, was assessed for the assessment year 1993-94. The Assessing Officer made additions on account of non-refundable deposits, interest on deposits, and various funds like Indira Vikas Awas Nidhi, Earthquake fund, Chief Minister's fund, Area Development fund, Cane Development fund, and Small Savings. The Commissioner deleted these additions based on the Supreme Court decision in Bazpur Co-operative Sugar Factory Limited. The Tribunal followed the decision in the case of Shri Chhatrapati Sahakari Sakhar Karkhana Limited. However, a Division Bench of the Court held that not all funds could be deducted under the Income Tax Act, only some fell within permissible categories. The Court held that non-refundable deposits and interest thereon cannot be added to the income of the Sahakari Karkhana based on the Division Bench's authoritative pronouncement. The matter of Indira Awas Nidhi and Earthquake fund was sent back to the Tribunal for fresh consideration. Regarding Chief Minister's fund, it was decided in favor of the assessee based on the Division Bench's judgment. The Area Development fund's issue was also sent back to the Tribunal for reconsideration. The Cane Development fund was considered as income of the sugar factory, decided in favor of the Revenue based on previous judgments. The issue of Small Savings was resolved in favor of the assessee following the Division Bench's judgment in a related case. All references related to the issues mentioned were disposed of accordingly, with specific directions for each fund and deposit type based on the Court's analysis and previous judgments.
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