2015 (7) TMI 844 - AT - Income Tax

Addition on account of press mud - CIT(A) deleted the addition - Held that - This issue is covered in favour of the assessee by the Tribunal decision in assessee s own case 2014 (4) TMI 1074 - ITAT LUCKNOW and for assessment year 2008-09. We decline to interfere in the order of CIT(A) - Decided against revenue Addition on interest payable on loan from Sugar Development Fund - CIT(A) deleted the addition - Held that - This amount of addition was worked out by the Assessing Officer on the basis that as per Schedule-C of accrued interest, ₹ 3,81,83,228/- has been shown payable as against 3,46,17,476/- shown in the immediately preceding year and on this basis, the Assessing Officer has come to the conclusion that there is accrued interest of ₹ 35,65,752/- relating to the year under consideration. As per the ledger account, available on page No. 9 of the paper book, there is opening balance of ₹ 3,46,17,476/- to which the amount of present years accrued interest of ₹ 51,30,697/- was added resulting into total of ₹ 3,97,48,173/- and against this, there are two payments totaling ₹ 15,64,945/- and after deducting this payment, the net balance has been shown at ₹ 3,81,83,228/-. When the assessee has suo motu added the entire amount of the present year accrual of ₹ 51,30,697/-, no further addition is called for on account of such unpaid interest on secured loans and therefore, the same was rightly deleted by CIT(A) - Decided against revenue Addition on unsecured loan from the U.P. Cooperative Sugar Factories Federation Limited , Lucknow for Cane Price Payment - CIT(A) deleted the addition - Held that - The Assessing Officer made addition of ₹ 84.20 lac being incremental liability of the present year. Against this objection of the Assessing Officer that the assessee has not established the genuineness of the incremental liability, the CIT(A) has decided the issue on the basis that the assessee received an amount of ₹ 17500000.00 from U.P. Cooperative Sugar Factories Federation Ltd. Lucknow and repaid ₹ 9080000.00 and U.P. Cooperative Sugar Factories Federation Ltd. is regular assessee with JCIT-II Lucknow having PAN-AAAAU 0391D and thus the genuineness of loan cannot be doubted. When this is the admitted position that the assessee has not given any reply to the Assessing Officer regarding genuineness of this liability, CIT(A) was not justified in deleting the addition without obtaining remand report from the Assessing Officer on this aspect and since this was not done by learned CIT(A), we are of the opinion that his order is not sustainable but at the same time, we feel that in the interest of justice, the matter should go to learned CIT(A) to decide the issue afresh after obtaining remand report - Decided in favour of revenue for statistical purposes. Addition on deduction of Share Money from Producer, Members - CIT(A) deleted the addition - Held that - It is submitted by the assessee before the Assessing Officer that there was opening balance of ₹ 105.88 lac on 01/04/2005 and the amount taken was ₹ 9.46 lac against which allotment of shares was made of ₹ 7.35 lac in the present year and now it has been shown to us that there was further allotment of shares of ₹ 3.75 lac in next year. Hence, if we consider the allotment of shares in the present year and next year, we find that total is more than amount taken in the present year. This is the policy of the assessee that allotment is made when the amount of a grower comes to ₹ 100/- and every year some allotments are made. Considering all these facts, we feel that the addition made by the Assessing Officer is not justified and therefore, we decline to interfere in the order of learned CIT(A) - Decided against revenue Addition on account of nonrefundable deposit - CIT(A) deleted the addition - Held that - In assessment year 2005-06, this issue was decided by the Tribunal in favour of the assessee by following a judgment of Hon ble Allahabad High Court rendered in the case of CIT vs. Ramala Sahkari Chini Mills Ltd. 2005 (3) TMI 82 - ALLAHABAD High Court and also Siddheshwar Sahkari Sakhar Karkhana Ltd. vs. CIT 2004 (9) TMI 6 - SUPREME Court . No difference in facts could be pointed out by Learned D.R. of the Revenue and therefore, we do not find any reason to take a contrary view in the present year.- Decided against revenue Addition on account of payment of subscription to Federation under section 40(a)(ia) - CIT(A) deleted the addition - Held that - As relying on assessee previous year judgments wherein held that the services rendered by federation does not come within the definition of any services rendered u/s 194J of the Act, addition correctly deleted by CIT(A). - Decided in favour of assessee. Addition on account of School Fund - CIT(A) deleted the addition - Held that - From the the order of learned CIT(A), we find that no deduction was made in the present year. We also find that the copy of ledger account is available on page No. 62 of the paper book and as per the same, there is opening balance of ₹ 390062.46 and the same amount is the closing balance and therefore, there is no deduction from cane growers in the present year. In view of this fact that there is no deduction in the present year, the disallowance made by the Assessing Officer is not justified and therefore, we hold that the same was rightly deleted by learned CIT(A). - Decided in favour of assessee. Addition on account of link road - CIT(A) deleted the addition - Held that - We find that in the assessment order, the Assessing Officer has made addition of ₹ 8,68,560/- by stating that this amount has not been deposited till the filing of return of income and since it is self-generated liability and addition was made. We fail to understand that when this is opening balance then how it can be income of the present year. We decline to interfere in the order of CIT(A). - Decided in favour of assessee. Addition on account of eye relief - CIT(A) deleted the addition - Held that - We find that this amount was also added by the Assessing Officer by making this observation that this amount of ₹ 6,85,397.79 has not been deposited till the filing of return of income and this is self-generated liability. Copy of ledger account is available on page No. 65 of the paper book and from the same, this is seen that it is opening balance and therefore, this amount also cannot be added in the present year. We, therefore, decline to interfere in the order learned CIT(A).- Decided in favour of assessee.

Summary

Issues Involved:
1. Deletion of addition on account of press mud.
2. Deletion of addition on account of interest payable on loan from Sugar Development Fund.
3. Deletion of addition on account of unsecured loan from U.P. Cooperative Sugar Factories Federation Limited.
4. Deletion of addition on account of deduction of Share Money from Producer Members.
5. Deletion of addition on account of nonrefundable deposit.
6. Deletion of addition on account of payment of subscription to Federation under section 40(a)(ia) of the Income Tax Act.
7. Deletion of addition on account of School Fund.
8. Deletion of addition on account of link road.
9. Deletion of addition on account of eye relief.

Issue-wise Detailed Analysis:

1. Deletion of Addition on Account of Press Mud:
The Revenue's appeal contested the deletion of Rs. 22,725/- added by the Assessing Officer (AO) for press mud. The Tribunal found that similar issues in previous years (2005-06 and 2008-09) were decided in favor of the assessee. Since no difference in facts was pointed out, the Tribunal upheld the CIT(A)'s decision, rejecting the Revenue's ground.

2. Deletion of Addition on Account of Interest Payable on Loan from Sugar Development Fund:
The AO added Rs. 35,67,752/- for interest payable on loans from the Sugar Development Fund. The assessee had already added the accrued interest of Rs. 51,30,697/- in its computation of income. The Tribunal noted that the AO's additional amount was based on a misunderstanding of the ledger accounts. Since the assessee had already accounted for the interest, the Tribunal upheld the CIT(A)'s deletion of this addition.

3. Deletion of Addition on Account of Unsecured Loan from U.P. Cooperative Sugar Factories Federation Limited:
The AO added Rs. 84,20,000/- for an unsecured loan from U.P. Cooperative Sugar Factories Federation Limited, doubting its genuineness. The CIT(A) deleted the addition, noting the Federation's status as a regular assessee. However, the Tribunal found that the CIT(A) should have obtained a remand report from the AO. The matter was remanded back to the CIT(A) for fresh decision after obtaining the remand report.

4. Deletion of Addition on Account of Deduction of Share Money from Producer Members:
The AO added Rs. 8,45,133.13 for deductions from producer members for share money. The Tribunal found that the assessee had a policy of allotting shares based on cumulative amounts and had provided sufficient evidence of share allotments in the subsequent year. The Tribunal upheld the CIT(A)'s deletion of the addition.

5. Deletion of Addition on Account of Nonrefundable Deposit:
The AO added Rs. 22,50,165/- for nonrefundable deposits. The Tribunal noted that similar issues in the assessee's case for 2005-06 were decided in favor of the assessee, following judgments from the Hon'ble Allahabad High Court and the Supreme Court. No new facts were presented, so the Tribunal upheld the CIT(A)'s decision.

6. Deletion of Addition on Account of Payment of Subscription to Federation under Section 40(a)(ia) of the Income Tax Act:
The AO added Rs. 13,41,800/- for subscription payments to the Federation, citing non-compliance with Section 40(a)(ia). The Tribunal found that the services rendered by the Federation did not fall under professional or technical services requiring TDS under Section 194J, as decided in a previous Tribunal decision. The Tribunal upheld the CIT(A)'s deletion of the addition.

7. Deletion of Addition on Account of School Fund:
The AO added Rs. 3,90,062.46 for school fund deductions, claiming it was a self-generated liability. The CIT(A) found no deductions were made in the current year, and the opening and closing balances were the same. The Tribunal upheld the CIT(A)'s deletion of the addition.

8. Deletion of Addition on Account of Link Road:
The AO added Rs. 8,68,560/- for link road expenses, stating it was a self-generated liability. The Tribunal noted this amount was an opening balance and could not be considered income for the current year. The Tribunal upheld the CIT(A)'s deletion of the addition.

9. Deletion of Addition on Account of Eye Relief:
The AO added Rs. 6,85,397.79 for eye relief, claiming it was a self-generated liability. The Tribunal found this amount was also an opening balance and not income for the current year. The Tribunal upheld the CIT(A)'s deletion of the addition.

Conclusion:
The Tribunal upheld the CIT(A)'s decisions on most issues, except for the unsecured loan from U.P. Cooperative Sugar Factories Federation Limited, which was remanded back for fresh consideration. The appeal of the Revenue was partly allowed for statistical purposes.