Appel v. M/S Punjab State Cooperative Supply And Marketing Federation Ltd

Gurbax SinghIN THE HIGH COURT OF PUNJAB AND HARY ANA AD n2%4 c.020 |2017.04.03 16:33CHANDIGARH. ITA No. 26 of 2017 (O&M)Date of decision: 21.02.2017 Pr. Commissioner of Income Tax-2, Chandigarh ..-.-- Appel Vs. M/s Punjab State Cooperative Supply and Marketing Federation Ltd. ..-.Respondent CORAM: HON’BLE MR. JUSTICE AJAY KUMAR MITTALHON’ BLE MR. JUSTICE RAMENDRA JAIN. Present: Ms. Urvashi Dhugga, Advocate for the appellant. Ajay Kumar Mittal,J. 1,This appeal has been preferred by the appellant-revenue underSection 260A of the Income Tax Act, 1961 which (in short, “the Act”)against the order dated 07.06.2016, Annexure A.5, passed by the IncomeTax Appellate Tribunal, Division Bench, Chandigarh (in short, “theTribunal”) in ITA No. 710/CHD/2015, claiming following substantialquestions of law for the assessment year 2002-03:- (1) “Whether on the facts and circumstances of the case and inlaw, the Hon’ble ITAT was right in dismissing the appeal of therevenue by ignoring the fact that the said amount of<39,33,16,443/- was originally offered by the assessee fortaxation and later the same was reduced from taxable income? (11) Whether on the facts and circumstances of the case and in.law, the Hon’ble ITAT was right in dismissing the appeal of therevenue despite the fact that the assessee had reflected the saidamount ofd39,33,16,443/- as receivable from FCI in a writpetition filed by it before the Hon’ble High Court? (111) Whether on the facts and circumstances of the case and in.law, the Hon’ble ITAT was right in dismissing the appeal of therevenue by ignoring the fact that the assessee had also claimeddeduction of the amount of cess actually paid to Punjab Govt.,claiming it to be paid on behalf of FCI?” |A few facts relevant for the decision of the controversyinvolved as narrated in the appeal may be noticed. The assessee is engagedin the procurement of food grains on behalf of the Food Corporation of India(FCI). It had paid an amount of239,33,16,443/- to the State Government as|cess according to the relevant provisions of law. The assessee claimed theSaid amount from the FCI. The FCI challenged the validity of the claimbefore this Court. The matter was decided against the FCI and SLP was filedin the Apex Court. The assessee also challenged before this Court recoveryof the amount paid on behalf of the FCI to the Government. The writ petitionwas disposed of with the observation that the matter should be settledadministratively. Accordingly, a decision was taken that the assessee wasnot entitled to recover the impugned sum of)y39,33,16,443/- from the FCI.The assessee claimed that the impugned sum had never accured to it as itsincome and was not liable to be taxed. Assessment was completed underSection 143(3) of the Act on 28.02.2005, Annexure A.1 at an assessedincome of.<30,56,18,450/- against the returned income of Nil. Against the|order passed by the Assessing Officer, the assessee filed an appeal before theCommissioner of Income Tax (Appeals), Chandigarh |CIT(A)]. Vide orderdated 11.08.2005, Annexure A.2, the CIT(A) partly allowed the appeal of the assessee. Still the assessee filed an appeal before the Tribunal. Videorder dated 11.01.2012, Annexure A.3, the Tribunal sent the matter to thefile of the CIT(A). Vide order dated 01.03.2013, Annexure A.4, the CIT(A)allowed the appeal filed by the assessee. Aggrieved by the order, the revenuefiled an appeal before the Tribunal. Vide order dated 07.06.2016, AnnexureA.5, the Tribunal dismissed the appeal of the revenue. Hence, the instantappeal by the revenue. | the assessee. Still the assessee filed an appeal before the Tribunal. Videorder dated 11.01.2012, Annexure A.3, the Tribunal sent the matter to thefile of the CIT(A). Vide order dated 01.03.2013, Annexure A.4, the CIT(A)allowed the appeal filed by the assessee. Aggrieved by the order, the revenuefiled an appeal before the Tribunal. Vide order dated 07.06.2016, AnnexureA.5, the Tribunal dismissed the appeal of the revenue. Hence, the instantappeal by the revenue. | onAdmittedly, the respondent-assessee paid an amount ofy39,33,16,443/- to the State Government as cess. The assessee sought to.claim the said amount from the FCI. However, the FCI challenged thevalidity of law by which the cess was levied, before this Court. This Courtdecided the mater against the FCI. SLP was filed against the said orderbefore the Apex Court. The assessee also filed a writ petition before thisCourt for recovery of the amount paid on behalf of the FCI to the PunjabGovernment. The said writ petition was disposed of by this Court observingthat the matter should be resolved administratively. Accordingly, a meetingwas held on 01.04.2002. It was decided that the assessee was not entitled torecover the impugned sum ofy39,33,16,443/- from the FCI. Therefore, thematter was not agitated further. In appeal before the Tribunal, it wascontented by the assessee that the impugned sum never accrued to theassessee as its income and therefore was not liable to be taxed. Afterconsidering the submissions of the assessee, the Tribunal sent the matterback to the CIT(A) for fresh decision in conformity with law, after givingreasonable opportunity of hearing to both the parties. The CIT(A) decidedthe matter in favour of assessee holding that the assessee had made bookentry in its books of account only for the purpose that it could claim amountfrom FCI and contest the same before the authority. It was further held that the amount could not be assessed as income of the assessee since it was 2!hypothetical income. © 4Aggrieved by the order passed by CIT(A), the department filedan appeal before the Tribunal. The matter was considered by the Tribunalafter perusing the findings recorded by the authorities below and the materialavailable on record. It has been categorically recorded by the Tribunal that inpursuance of the order dated 22.04.2004 passed by this Court in CWPNo.9688 of 2002, on 04.03.2004, this Court had directed both the parties toconvene a meeting with respect to their claim and to consider the samewithout prejudice to the final order of this Court. Accordingly, a meetingwas held on 04.03.2004 wherein it was decided that the FCI shall releasepayments on account of infrastructural development fee to the State agencyand make payment of the same with effect trom 01.04.2002. Thus, it wasconcluded that the impugned sum ofy39,33,16,443/- related to the periodbefore 01.04.2002. Since the said amount was not recoverable by theassessee, it was recorded by the Tribunal that the same could not be treatedas income in the hands of the assessee. The relevant findings recorded by theTribunal read thus:- 7.“We have heard the learned representatives of both theparties, perused the findings of the authorities below andconsidered the material available on record. On perusal of theorder of the High Court in writ petition No. 9688 of 2002 dated22.04.2004 it becomes quite clear to us that on an earlieroccasion as on 04.03.2004, the Hon’ble High Court haddirected both the parties to convene meeting with respect totheir claim and to consider the same without prejudice to thefinal order of the Court. In pursuance of the same, the meetingwas called as on 04.03.2004, whereby it was decided that theFCI will release payments on account of infrastructuraldevelopment fee to the State agency and make payment of theparties, perused the findings of the authorities below andconsidered the material available on record. On perusal of theorder of the High Court in writ petition No. 9688 of 2002 dated22.04.2004 it becomes quite clear to us that on an earlieroccasion as on 04.03.2004, the Hon’ble High Court haddirected both the parties to convene meeting with respect totheir claim and to consider the same without prejudice to thefinal order of the Court. In pursuance of the same, the meetingwas called as on 04.03.2004, whereby it was decided that theFCI will release payments on account of infrastructuraldevelopment fee to the State agency and make payment of the same w.e.f. 01.04.2002. Further, by the final order of theHon’ble High Court, it has been stated that the matter in issuestands resolved in terms of the minutes of meeting recorded asstated here-in-above. In view of the same, it has become finalthat the FCI will make the payment to the assessee only on01.04.2002 and not before that. The impugned sum of<39,33,16,443/- relates to the period before this date. Since asper the order of the Hon’ble Court, the said amount is now notrecoverable to the assessee, we are of the view that the samecannot be treated as income in the hands of the assessee. In/view of this, we do not intend to interfere in the order of theCIT(Appeals).” 01.04.2002 and not before that. The impugned sum of 5 The findings recorded by the Tribunal are pure findings of factwhich have not been shown to be illegal or perverse by the learned counselfor appellant-revenue. Consequently, no substantial question of law arisesand the appeal stands dismissed. (Ajay Kumar Mittal) Judge February 21, 2017 Whether speaking/reasoned Whether reportable (Ramendra Jain) JudgeYes/NoYes.