Subscription   Feedback   New User   Login      
Tax Management India .com
TMI - Tax Management India. Com
Articles Highlights TMI Notes SMS News Newsletters Calendar Imp. Links Database Experts Contact us More....
Extracts
Home List
← Previous Next →

KAIRA DISTRICT CO OP MILK PRODUCERS UNION LIMITED Versus DEPUTY COMMISSIONER OF INCOME TAX

Reopening of assessment - receivable from GCMMFL for which a provision was made by the assessee which according to the Assessing Officer was not shown as income of the assessee in the Profit and Loss account - Held that:- Provision of ₹ 76 crores was made for milk purchases and sales account for milk pool price receivable from GCMMFL. It was clarified that same has been credited to respective primary cooperative societies. It was further clarified that to this extent trading, profit and lo .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

or reopening therefore, must fail. - Decided in favour of assessee. - Interest under section 80P(2)(d) was not allowable - Held that:- The entire issue of the petitioner's claim of deduction of interest of ₹ 2.29 crores under section 80P(2)(d) of the Act was examined by the Assessing Officer threadbare during the original assessment proceedings. It was in response to the queries raised by the Assessing Officer that the petitioner made a detailed representation and pointed out that the .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

e societies. It was stated that no expenditure in the form of interest was incurred for earning such interest. The assessee also submitted that the expenditure of interest has no nexus with the income of the interest earned during the year. The assessee relied on decisions in its own case for earlier years pointing out that on this very ground, the assessee has succeeded before the appellate Tribunal.However, having accepted the detail explanation of the assessee on the question of deduction of .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

come side. Though somewhat curiously and rather awkwardly, the assessee reduced the expenditure by ₹ 14.69 lacs and thereby indirectly increasing the income. The Assessing Officer was therefore, wrong in recording that said sum of ₹ 14.68 lacs represented prior period expenditure of the assessee. There was no material to support this assertion and consequently his conclusion that such expenditure though not allowable was claimed benefit of and income to that extent escaped assessment .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

by the Assessing Officer seeking to reopen the assessment of the petitioner for the assessment year 20102011 which was previously framed after scrutiny. 2. Brief facts are as under. The petitioner is a cooperative society of milk producers which purchases milk from primary cooperative societies which are members of the petitioner society and is also engaged in supplying such milk and milk products to the federal cooperative society namely, Gujarat Cooperative Marketing Federation Limited ( GCMM .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

f the 3CD Report, the assessee is following mercantile system of accounting. On perusal of notes on account of assessee in the audit report for financial year 200910 (Asst. Year 201011) read as provision of ₹ 76 crore for milk purchase/ sale account for milk pool price receivable from Gujarat Cooperative Milk Marketing Federation Ltd has been made by union and the same has been credited to respective primary cooperative societies. To this extent, trading, profit and loss account and balanc .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

Act provides that the total income of a person for any previous year shall include all incomes from whatever sources derived, actually received or accrued or deemed to be received or accrued. 3.3 As this involves income to the extent of ₹ 76 crore which falls within the ambit of section 5 of the Act. 4.1 On further perusal of P&L account, computation of income as well as Tax Audit Report in Form No. 3CD, it has been also noticed that the assessee has claimed deduction of ₹ 2,29, .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

paid interest of ₹ 12,52,58,000/. As such, net interest income of assessee is () ₹ 9,00,32,000/( ₹ 12,52,58,000 ₹ 3,52,26,000). As net interest income was in the negative, the assessee was not eligible for deduction of any amount u/s.80P(2)(d). 4.3 As per section 80P(2)(d) of the Act, where, in the case of an assessee being a cooperative society, the gross total income includes any income by way of interest or dividends derived by the cooperative society from its investm .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

decision of the Allahabad High Court in the case of CIT V/s. Dugdh Uptpadak Sehkari Sangh Ltd. 202 CTR 343 in which the above mentioned ratio was decided by the Hon ble High Court. 4.4 In view of the above facts. the assessee was not eligible for deduction of any amount u/s.80P(2)(d) of the Act of ₹ 2,29,17,577/ 5.1 On further perusal of Tax Audit Report in Form No.3CD, note forming part of income furnished by assessee and computation of income, it was noticed that though the assessee in .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

assessee itself. 5.2 As per section 37(1) of the act, any expenditure not being in the nature of capital expenditure or personal expenses of the assessee, laid out or expended wholly and exclusively for the purposes of the business or profession shall be allowed in computing the income chargeable under the head Profits and gains of business or profession . As per clause 22(b) of the 3cd report, the ca has to furnish particulars of income or expenditure of prior period credited to profit and loss .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

e petitioner objected to such notice of reopening. However, such objections were rejected by an order dated 25.8.2015. Hence this petition. 5. Upon perusal of the reasons, we notice that the Assessing Officer had recorded three separate reasons for issuing the notice for reopening. In short, these reasons are as under : 1) Regarding a sum of ₹ 76 crores, receivable from GCMMFL for which a provision was made by the assessee which according to the Assessing Officer was not shown as income of .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

section 80P(2)(d) could have been granted. 3) According to the Assessing Officer, the sum of ₹ 14.68. lacs (rounded off) which was a prior period expenditure was claimed by the assessee which was not allowable. 6. Inviting our attention to such reasons and other material on record, counsel for the petitioner challenged the notice for reopening on the following grounds : 1) That there has been no escapement of income regarding sum of ₹ 76 crores since it had already been included in .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

by the Assessing Officer during the original assessment for which written queries were raised and replies were given by the assessee. Any reexamination of such issue would only be on the basis of change of opinion not permissible even within period of four years from the end of relevant assessment year. 3) Regarding the ground no.3, counsel contended that sum of ₹ 14.68 lacs did not represent the assessee's prior period expenditure. It was in fact, income which was offered to tax by re .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

scaped assessment due to failure on part of the assessee to disclose truly and fully all material facts, therefore, cannot be applied. Admittedly so far as reasons no. 1 and 3 are concerned, there was no scrutiny during the original assessment. The Assessing Officer therefore, must be allowed to examine these questions. He further submitted that a sum of ₹ 76 crores had not been reflected in Profit and Loss account and, therefore, escaped assessment. Regarding 14.68 lacks, he submitted tha .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

on the basis of three separate reasons recorded by the Assessing Officer. 9. With respect to the first reason of sum of ₹ 76 crores previously receivable from GCMMFL not being offered to tax, we notice that the assessee had in the Profit and Loss account indicated sum of ₹ 736.68 crores by way of milk sales. As against that the assessee had shown a sum of ₹ 111.4 crores towards milk purchases during the previous year relevant to the assessment year 20092010. Thus the total mil .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

d Balance Sheet show provisional figures. 10. Thus, this note merely clarifies that provision of ₹ 76 crores was made for milk purchases and sales account for milk pool price receivable from GCMMFL. It was clarified that same has been credited to respective primary cooperative societies. It was further clarified that to this extent trading, profit and loss account and balance sheet show provisional figures. This note, in fact, clarified that said sum of ₹ 76 crores was a provisional .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ion of interest of ₹ 2.29 crores under section 80P(2)(d) of the Act. In this context, the Assessing Officer during the assessment proceedings had raised the following queries in writing : 9. Please furnish detailed interest account(s) for all sorts of interest paid/payable and received/receivable. 29. Justify your claim of deduction u/s.80G, 80P(2)(d) and 80(P)(2)(e) with cogent and sufficient evidences. 12. To these queries, the petitioner had replied as under : 5. Point No.9: Details of .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

77; 1,06,54,490/has been claimed as deduction u/s.80P(2)(d) of the I.T Act as the amount was invested in earlier years from our own funds. Please note that we have not borrowed any funds for purchase of shares on which we earned dividend income and claimed as deduction u/s.80P(2)(d). As the interest and dividend has been received from the Cooperative Societies and earned out of investment made from our own funds, we are entitled to full deduction u/s 80P(2)(d) of the Incometax Act. We have earne .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

tment in A.Ys.199091, 199192, 199293. b) Hon'ble Appellate Tribunal has dismissed on similar grounds the appeal filed by the department in the case of (1) Kaira Dist. Coop Milk Producer's union Ltd. In A.Y. 198687 and (2) Sabarkantha Dist. Coop Milk Producer's Union Ltd in A.Ys. 199293 and 199394. c) CIT Vs. Haryana Coop Sugar Mills Ltd., 180 ITR 631 (P&H) 13. It can thus be seen that the entire issue of the petitioner's claim of deduction of interest of ₹ 2.29 crores u .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

tive society and earned out of investment made from its own fund, the assessee was entitled to full deduction under section 80P(2)(d) of the Act. It was further clarified that such interest was earned on short term deposits with the cooperative banks or from Cooperative societies. It was stated that no expenditure in the form of interest was incurred for earning such interest. The assessee also submitted that the expenditure of interest has no nexus with the income of the interest earned during .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

see further on this issue. However, having accepted the detail explanation of the assessee on the question of deduction of interest, the Assessing Officer cannot be allowed to reopen the issue on a mere rethinking. Though in the context of notice for reopening, the issue withing a period of four years from the end of relevant assessment year, the element of failure on part of the assessee to disclose truly and fully all material facts, cannot be brought into, it is well settled by the decision o .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

h was prior period expenditure was erroneously claimed by the assessee and thus income to that extent escaped assessment. We may however, notice the objections raised by the petitioner to this ground under communication dated 30.7.2015 which reads as under : 3. Prior period expenses of ₹ 14,68,985/ 3.1 The AO has proposed to disallow the prior period expenses of ₹ 14,68,985/. In this regard it is submitted that this net amount is not expenses but it is income. ₹ 14,68,985/is me .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

 

 

 

 

 

what is new what is new
  ↓     Latest Happenings     ↓  

News: GST implementation smoother than expected: Jaitley

News: Blockage of Working Capital of Exporters

News: Clarification about Transition Credit

Forum: GST - TRAN1 - filed - Data uploaded with Remarks Processed with Error - Not coming in Electronic credit ledger - need suggession guidance

Forum: 3B mistake

Forum: Input tax credit

Forum: Excise duty credit on finished stock at additional place of business.

Forum: Cess paid instead of SGST

Forum: Manpower Service provider

Forum: Due date of Filing TRAN-1

Highlight: Diversion of income at source - Joint venture agreement - 97% of the receipt transfer to M/s TRG Industries (P) Ltd. - scope of the agreement - it is diversion by overriding title - not taxable in the hands of assessee - HC

Highlight: Expenditure on eligible projects or schemes u/s 35AC - After 01.04.2017 the legislature desired to withdraw such deduction. - The Union legislature was competent to introduce such amendment - HC

Highlight: Transfer of trading assets at cost price, the profit component also stood transferred to the outgoing Directors, which otherwise belonged to the Company - the fact that AO has made the addition in the hands of the Directors would not make any difference - additions confirmed - HC

Highlight: The interest u/s 234B of the Act cannot go beyond the stage of S.245D(I) before the Settlement Commission - HC

Highlight: Galvanized iron pipe is a different commercial commodity than a iron pipe, therefore the activity of galvanization in our considered opinion amounts to manufacture - Deduction u/s 80-IB allowed - HC

Highlight: Penalty u/s 271C - non deduction of TDS on interest paid to sister concerns in terms of Section 194A - Levy of penalty confirmed - HC

Highlight: Disallowance of interest - reference to section 179 - The legislature has also recognised, that the doctrine of lifting of veil in the matter of tax dues is to be applied to prevent fraud etc. and not where the company has suffered despite its normal bona fide function. - HC

News: RBI Reference Rate for US $

Notification: Amendment in Notification No. S.O. 3118(E), dated the 3rd October, 2016

Highlight: Discount on ESOP to be allowed as business expenditure u/s 37(1), during the years of vesting on the basis of percentage of vesting during such period, subject to upward or downward adjustment at the time of exercise of option.

Notification: Central Government appoints the 20th September, 2017 as the date on which proviso to clause (87) of section 2 of the Companies Act 2013, shall come into force

Notification: Companies (Restriction on number of layers) Rules, 2017

Highlight: Penalty u/s 271(1)(c) - additional income disclosure - surrender of income post survey u/s 133A - he disclosure made by the assessee is voluntary in nature, in the revised return - no penalty

Highlight: Reopening of assessment - notice u/s 148 issued on the directions of JCIT / CIT - a perusal of reasons for initiating reassessment proceedings clearly show that they are against the sprit of provisions u/s 147

Notification: All Industry Rates of Duty Drawback Schedule

Highlight: MAT - Adjustment to book profit - computation u/clause (f) of Explanation-1 to section 115JB(2) is to be made without resorting to the computation as contemplated u/s 14A r.w.Rule 8D of I.T. Rules.

Notification: The Customs and Central Excise Duties Drawback Rules, 2017

Highlight: Addition on account of alleged suppression of service value received - the addition made simply believing the Form 26AS will be an arbitrary exercise of power which cannot be sustained

Notification: Exempts intra state supply of heavy water and nuclear fuels from DAE to NPCIL

Notification: Seeks to amend notification No. 12/2017-UTT(R) to exempt right to admission to the events organised under FIFA U-17 World Cup 2017

Notification: Seeks to amend notification No. 11/2017- UTT(R) to reduce CGST rate on specified supplies of Works Contract Services

Highlight: Liability to pay duty on import of software - Though no authorization was given by the appellant to DHL, it is an undisputed position that the software has, in fact, been ordered by the appellant and have been delivered to them by DHL - the appellant is to be considered as the importer

Notification: Exempts inter-state supply of heavy water and nuclear fuels from DAE to NPCIL

Notification: Seeks to amend notification No. 09/2017-IT(R) to exempt right to admission to the events organised under FIFA U-17 World Cup 2017

Notification: Seeks to amend notification No. 08/2017-IT(R) to reduce CGST rate on specified supplies of Works Contract Services

Notification: Exempts intra state supply of heavy water and nuclear fuels from DAE to NPCIL

Notification: Seeks to amend notification No. 12/2017-CT(R) to exempt right to admission to the events organised under FIFA U-17 World Cup 2017

Notification: Seeks to amend notification No. 11/2017-CT(R) to reduce CGST rate on specified supplies of Works Contract Services.

News: Tax on fuel more important for a dry state like Gujarat

Highlight: For an ayurvedic medicine to be classified under Chapter 30 has to pass the test whether it is for cure of any disease. If the same is only meant for care, then such product would not fall under medicament.

Highlight: Demand of interest - the period of limitation that applies to a claim for the principal amount should also apply to the claim of interest thereon.

Highlight: Government issues new notifications under CGST, IGST and UTGST to grant fresh exemptions in respect of certain supplies.

Circular: Extension of time limit for submitting the declaration in FORM GST TRAN-1 under rule 117 of the Central Goods and Services Tax Rules, 2017

Article: SIMPLIFIED E-WAY BILL UNDER GST

Article: SERVICES UNDER REVERSE CHARGE UNDER GST REGIME

Highlight: Rate of exchange of conversion of the foreign currency with effect from 22th September, 2017 - Notification

Highlight: Companies (Acceptance of Deposits) Second Amendment Rules, 2017 - Notification

Highlight: Implementing Electronic Sealing for containers by exporters under self-sealing procedure prescribed by Circular 26/2017-Cus dated 1st July, 2017 and Circular 36/2017 dated 28 th August, 2017. reg. - Circular

Highlight: Amendment to Paragraph 2.72 (b) of the Handbook of Procedures of the Foreign Trade Policy (FTP) 2015-20 - Public Notice

Notification: Amendment in Appendix 3 (SCOMET items) to Schedule- 2 of ITC (HS) Classification of Export and Import Items 2012



|| Home || Acts and Rules || Notifications || Circulars || Schedules || Tariff || Forms || Case Laws || Manuals ||

|| About us || Contact us || Disclaimer || Terms of Use || Privacy Policy || TMI Database || Members || Site Map ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.

Go to Mobile Version