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Cane Development Council & Others Versus Income Tax Officer & Others

2015 (5) TMI 578 - ITAT LUCKNOW

Income under section 2(24) - contribution in the form of commission" received from Sugar Mills and co-operative cane growers society and "Grants", received from State Government and Central Sugar Cane Committees for specified purposes being "construction of road" and "other development works" in the "assigned area" - Held that:- Since the above Grants or receipts are received by the assessee either from the government or any other agency for a particular purpose and assessee has no independent r .....

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claim of the assessee in the light of the new argument - Decided in favour of assessee for statistical purposes. - ITA No.246/LKW/2013, ITA No.624/LKW/2012 - Dated:- 16-4-2015 - Shri Sunil Kumar Yadav And Shri. A. K. Garodia JJ. For the Appellant : Shri. Shubham Rastogi, FCA For the Respondent : Shri. Punit Kumar, D.R. ORDER Per Sunil Kumar Yadav: These appeals are preferred by the assessee against the order of the ld. CIT(A) on a solitary ground that the ld. CIT(A) was not justified in confirmi .....

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ts, circumstances, Rules, Regulations and material on record. 2. The Ld. C. I. T. (A)- did not appreciated the effect of statutory provision of U.P. Sugar Cane (Regulation of Supply and Purchase) Act, 1953 and the Rules made there under, the receiving are not Income u/s 2(24) of the I. T. Act. In accordance to these provisions total receiving cannot be treated as "Income". 3. The Ld. C.I.T. (A) did not appreciated that as per the Sugar Cane (Regulation of Supply and Purchase) Act, 1953 .....

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not otherwise. Accordingly, the entire receiving cannot be treated as Income under section 2(24) of I. T. Act. 4. The Ld. C. I. T. (Appeals), did not appreciated that appellant has received "contribution in the form of commission" and "Grants" in accordance with the Act and Rules made by State Government to be utilized only for "specific projects" or "work" and there is no provision under the said Act/Rule authorizing the assessee to do any business activ .....

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facts and circumstances, the Hon'ble I.T.A.T. Bench-A, Lucknow, in IT.A. No; 56/LKW/2014 in the Appeal of Cane Development Counsel, Nanpara, Bahraich had allowed the Appeal for Statistical purpose and restore the issue to Assessing Officer. 3. Since the additional grounds are legal in nature and need no further enquiry or investigation and also go to the root of the case, we admit the same. 4. During the course of hearing of the appeal, the ld. counsel for the assessee has invited our attent .....

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Tribunal accordingly set aside the order of the ld. CIT(A) and restored the matter to the file of the Assessing Officer with a direction to re-examine the claim of the assessee in the light of the new arguments. The relevant observations of the Tribunal are extracted hereunder:- 6. Now, the assessee is before the Tribunal and has taken altogether a new plea or ground that the receipts of the assessee cannot be treated as income u/s 2 (24) of the Act as it was merely a grant from the Government a .....

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ne Development Counsel in ITA No.5602, 5603/Del/2011 & 3209/Del/2012. (iii) ACIT Vs Water and Sanitation Management Organization in ITA No.2804/Ahd/2009. Relinacewas also placed upon the judgment of Hon ble AllahabadHigh Court in the case of CIT Vs U.P. UpbhoktaSahkariSangh Limited reported in 288 ITR 106. The copy of the aforesaid orders are placed on record. 7. The Ld. Counsel for the assessee has further contended that since the receipts were received for specific purpose either from the .....

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nt right over it, it would not partake the character of income u/s 2 (24) of the Act. Though, this argument was not raised by the assessee before the lower authorities and the assessee had been claiming deduction u/s 80P (2) of the Act or exemption u/s 11 of the Act, but the ground or argument raised before us is plausible and legal. Therefore, it require the proper adjudication. 10. In the aforesaid order of the Tribunal, it has been held that the grant in aid or any other receipt which were no .....

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9. Considering the written submissions filed before the bench, it was seen that on behalf the assessee it has been canvassed that the assessee company has been established by an order dated 06.04.1989 passed by the Cane Commissioner of U.P. in exercise of Powers u/s 5 of the U.P. Sugar Cane (Regulation of Supply and Purchases) Act 1953 r/w rule 8 of the U.P. Sugar cane (Regulation of Supply and Purchases) Rules 1954. On division of the U.P. State and formation of Uttrakhand State later on, thes .....

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d-Act/Rule authorizing the appellant to do any business activity with profit motive or to earn any income/profit and the appellant carries out the development activities as specified under aforesaid Act on no profit no loss basis. The appellant is merely a fund management body without any right of absolute ownership over the funds placed at its disposal. It is further mentioned here that the said roads, culverts, etc. are constructed by the appellant on the land belonging to the govt. and constr .....

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of the sugar cane by it from the cane growers are the Cane Grower s Cooperative Society. Addressing the amount the commission, it is stated that it is worked out and paid by the Sugar Mill to the appellant, is not sold/supplied by the appellant to the sugar mill nor any service is rendered by the appellant to the Sugar Mill paying amount in the name of commission to the appellant as there is no provision under the aforesaid Act and Rule for it, hence the amount paid by the Sugar Mill to the app .....

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he appellant to utilized the said amount of said contribution paid in the name of commission for any purpose or to distribute it or any part of it to anybody as profit/income. It is also been submitted that in the present case the assessee has neither distributed the said contribution amount received in the name of commission to anybody not utilized it for any purpose other than that for which it has been paid to the appellant. It has also stated that there is no finding by any lower authorities .....

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round no. 1, 2 & 3 in the appeals of the assessee deserves to be dismissed as the same have not been addressed in the written submission and it is presumed that the assessee has nothing to say. The finding of the CIT(A) reproduced in the earlier part of this order as such are confirmed. Qua the grounds 4, 5 & 6 of the assessee and departmental grounds 1 & 2, the findings arrived at in para 6.6, the same is modified and the issue is restored to the file of the AO with the direction to .....

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- We have heard the Ld. DR and gone through facts on the case indisputably, the Ansh Dan and fund for NirmanYojna, where given to the assessee by the State Government & Sugar factories for specific projects of the road construction and as pointed out by the Ld.CIT(A) this funds have been spend also for those specific project. There is nothing to suggest that the assessee is carrying on any business activities, generating income. Accordingly, the ld. CIT(A) concluded that there was no surplus .....

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eipt. Therefore, considering the use for the worked include in section 2(24), the word income shall be construed as comprehending not only those items which said section declared that these shall include but also such items which said section declares that these shall include but also such items as it signified according to its natural import. Since section 2(24) has not declared that such a grant-in-aid shall be included in the income the word revenue shall be construed as comprehending what it .....

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he AO as a local authority. Therefore, such a grant-in-aid could not be termed as a revenue receipt so as to form part of the total income. As already pointed out, the ld CIT(A) concluded that the aforesaid funds received by the assessee from State Government and Sugar factories have been spend only for those specific projects and there was no surplus with the assessee. Since the Revenue have not placed before us any material, controverting these findings of facts recorded by the ld. CIT(A) so a .....

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risangh Ltd. (Supra), the Hon ble Allahabad High Court has held that where the amount was given by the State Government for specific purpose, it did not partake of the nature of the assessee. Even if it was treated as an income, it would not be liable to tax as it was stated that there was diversion of the income by way of overriding titles on the said amount by the way of condition. 13. In the case of DIT Vs. Society for Development Alternatives in ITA Nos.12 of 2012 and 18 of 2012, the Hon ble .....

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