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DCIT, Circle 9 (1) , New Delhi Versus M/s State Farms Corporations of. India Ltd.

2015 (6) TMI 313 - ITAT DELHI

Determination of net taxable income - CIT(A) allowing revenue expenditure to be set off against quantum of subsidy receipts from the Government disclosed at ₹ 5,04,04,286/- whether the subsidy received is not covered u/s 14A as the same is merely a reimbursement of expenses by the Government and is not in the nature of income of the assessee? - Held that:- Since the entire income of the assessee had been held to be non-agriculture income, hence all the expenses incurred on purchase of seed .....

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s we have held that there is no exempt income, therefore, the question of applicability of section 14A, in any case, does not arise. - Decided against revenue. - C.O. Nos. 291/D/2010 & 403/Del/2012 ( In ITA nos. 3557/Del/2010 & 4455/Del/2012 ) - Dated:- 22-5-2015 - SHRI S.V. MEHROTRA AND SHRI A.T. VARKEY, JJ. For the Appellant : Shri Ramesh Chandra CIT(DR) For the Respondent : Shri P.N. Mehta FCA ORDER PER S.V. MEHROTRA, A.M:- The appeals, filed by the revenue and the cross-objections preferred .....

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imed as exempt u/s 10 of the I.T. Act and, accordingly, not included in the computation of income filed by the assessee. The assessee had filed return of income declaring total income at ₹ 6,25,63,250/-, which comprised of following: a) Income from house property ₹ 52,27,808/- b) Business income ₹ 546,17,971/- c) Income from other sources ₹ 27,17,467/- 2.1. The AO noticed that during the year under consideration the assessee had received subsidy to the tune of ₹ 10, .....

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income. 2.2. Ld. CIT(A) following the order of her predecessor for AY 2002-03, 2003-04 and 2004-05, directed the AO to determine the net taxable income after verifying and allowing revenue expenditure to be set off against quantum of subsidy receipts from the government disclosed at ₹ 5,04,04,280/-. 2.3. Ld. CIT(A) further observed that during the course of proceedings it had been submitted that the subsidy received by the assessee was not covered u/s 14A of the I.T. Act as the same was me .....

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Commissioner of Income Tax (Appeals) erred, in law and on the facts and circumstances of the case, in directing the AO to determine the net taxable income after verifying and allowing revenue expenditure to be set off against quantum of subsidy receipts from the Government disclosed at ₹ 5,04,04,286/- 2. Ld. Commissioner of Income Tax (Appeals) erred, in law and on the facts and circumstances of the case, in holding that the subsidy received by the assessee is not covered u/s 14A of the I .....

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sel pointed out that copy of CIT(A) s order for AY 2002-03 is at pages 10 to 15 of the PB. However, no details are there in regard to subsequent proceedings apropos AY 2002-03 to 2006- 07. We, therefore, proceed to decide this appeal. 4. We have considered the submissions of both the parties. The short dispute is whether the subsidy received by the assessee is in the nature of agriculture income or not. As per the annual report of assessee for AY 2006-07, the assessee corporation was managing si .....

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Govt. of India. 2 Seed Bank 6010590 Vide sanction dt. 7-2-2007 & 1-11-2006 by Min. of Agriculture, Govt. of India 3. Jatropha Plant Subsidy 5500000 4. Production subsidy 24032095 5. Distribution subsidy 7696513 6. Breeder seeds 7764339 4.2. As per the letter no. 8-6/2001-SD.VI dated 27-9-2006, issued by the Ministry of Agriculture, Govt. India, the subsidy was in the form of reimbursement towards expenditure incurred by it on account of 203 qtls. of jute seeds transported from outside the S .....

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of Agriculture, Govt. India, the subsidy was in the form of reimbursement towards maintenance cost of seeds kept in the seed bank under establishment & maintenance of seed bank. 4.5. Further, as per the letter no. 10-5/2006-SD.V/Pt. dated 1-11-2006, issued by the Ministry of Agriculture, Govt. India, in respect of funds to NSC, SFCI, GSSC and RSSC the subsidy was in the form of reimbursement towards maintenance cost of seeds kept in the seed bank under establishment & maintenance of see .....

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is to be taxed. 4.8. Ld. CIT(A) has further noted the observations of ld. CIT(A) for earlier years that AO had expressed the view that it was difficult to bifurcate the expenditure incurred by the assessee for earning agriculture income and for earning nonagriculture income. Since the entire income of the assessee had been held to be non-agriculture income, hence all the expenses incurred on purchase of seeds, transportation to remote areas like Jammu & Kashmir, Srinagar etc. would constitut .....

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income, therefore, the question of applicability of section 14A, in any case, does not arise. Accordingly, ground no. 2 is dismissed. 6. In the result department s appeal is dismissed. Assessee s C.O. no. 291/Del/2010 (AY 2007-08): 7. In its cross-objection the assessee has raised following grounds: 1. On the facts and circumstances of the case the learned Commissioner of Income tax (Appeals) has erred in holding that the subsidies received from the Government of India are in the nature of Reve .....

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