Commissioner Of Income Tax, Rohtak v. Haryana Seeds Development Corporation Limited

*** IN THE HIGH COURT OF PUNJAB AND HARYANA ATCHANDIGARH I.T.R No.11of 1994 Date of decision: 22.9.2010 Commissioner of Income Tax, Rohtak ...Petitioner Versus Haryana Seeds Development Corporation Limited ...Respondent CORAM: HON'BLE MR.JUSTICE ADARSH KUMAR GOEL HON'BLE MR.JUSTICE AJAY KUMAR MITTAL Present: Ms. Urvashi Dhugga, Advocate for the revenue. None for the assessee. **** ADARSH KUMAR GOEL, J (Oral) 1.The Income Tax Appellate Tribunal, Chandigarh Bench(hereinafter referred to as “the Tribunal”) has referred the followingquestions of law for opinion of this Court under Section 256 (1) ofthe Income Tax Act, 1961 ( for short “the Act') arising out of itsconsolidated order dated 11.3.1993 in I.T.A.No.528/ Chandi/88, inrespect of the assessment year 1984-85:- “1.Whether on the facts and in the circumstance ofthe case, the Tribunal was right in law in holding that theamount of Rs.2,08,419/- collected by the assessee fromthe farmers as inspection and registration fee for and onbehalf of the Haryana Seeds Certification Agency, was not a revenue receipt? 2.Whether, on the facts and in the circumstances ofthe case, the Tribunal was right in law in allowingdepreciation and investment allowance on plant andmachinery on the ground that the National SeedsCorporation had only rendered services under thecontract and the ownership over the plant and machineryat Umri remained with the assessee? 2.The assessee showed receipt of Rs.2,08,419/- by way ofinspection and registration fee which was treated by the AssessingOfficer to be the income of the assessee. The claim of the assesseethat the money was collected on behalf of the Haryana SeedCertification Agency and thus, was not income of the assessee wasrejected. On appeal, the Appellate Authority upheld the plea of theassessee. It was held that the money was collected by the assesseeonly as an agent and was not revenue receipt in its hands. Thisfinding was affirmed by the Tribunal. 3.The Assessing Officer also disallowed the claim of theassessee for depreciation and investment allowance on plant andmachinery on the ground that the assessee did not have ownershipthereof. Claim of the assessee that the National Seeds Corporationwas engaged only for carrying out the work on the plant and only torender certain services was rejected. On appeal, the AppellateAuthority reversed the said finding. It was held that the assessee wasowner of the plant and machinery and was entitled to depreciation and investment allowance thereon. This finding has been upheld bythe Tribunal. 4.Findings recorded by the Tribunal to the extent relevantfor determining the questions referred are as under:-for determining the questions referred are as under:- “16.Ground No.2 relates to the deletion of addition ofRs.2,08,419/- on account of inspection and registrationfees. The assessing officer had made the said addition onthe ground that the money was received by the assesseeand it was a revenue receipt.Rs.2,08,419/- on account of inspection and registrationfees. The assessing officer had made the said addition onthe ground that the money was received by the assesseeand it was a revenue receipt. and investment allowance thereon. This finding has been upheld bythe Tribunal. 4.Findings recorded by the Tribunal to the extent relevantfor determining the questions referred are as under:-for determining the questions referred are as under:- “16.Ground No.2 relates to the deletion of addition ofRs.2,08,419/- on account of inspection and registrationfees. The assessing officer had made the said addition onthe ground that the money was received by the assesseeand it was a revenue receipt.Rs.2,08,419/- on account of inspection and registrationfees. The assessing officer had made the said addition onthe ground that the money was received by the assesseeand it was a revenue receipt. 17.The ld. counsel for the assessee has argued thatthe collection made by the assessee by way of inspectionand registration fee was not trading receipt but wascollection for an on behalf of the Haryana SeedsCertification Agency, which was an independentstatutory body of Haryana Govt. It was a collect fromfarmers and the entire collection was passed on to thatAgency for the services rendered by it. It has also beenargued that this issue is also covered by the decision ofthe Tribunal for the earlier three assessment years.the collection made by the assessee by way of inspectionand registration fee was not trading receipt but wascollection for an on behalf of the Haryana SeedsCertification Agency, which was an independentstatutory body of Haryana Govt. It was a collect fromfarmers and the entire collection was passed on to thatAgency for the services rendered by it. It has also beenargued that this issue is also covered by the decision ofthe Tribunal for the earlier three assessment years. 18.We, therefore, dismiss ground no.2 as the issue iscovered by the earlier decision of the Tribunal. xxxxxxxxx 23.We find that there is no substance in the plearaised by the Revenue and looking to the details of thecontract regarding the plant and machinery at Umri, weraised by the Revenue and looking to the details of thecontract regarding the plant and machinery at Umri, we find that the National Seeds Corporation had only takenover the work under agreement and after the conclusionof the said agreement, the plant was handed over back tothe assessee-corporation. A certificate to this effect hasbeen placed at page 63 of the paperbook. In view of theabove, there is no force in ground No.4 of the Revenueand it is, therefore, rejected.” 5.From the findings extracted above, it is clear that theassessee received the amount in question on behalf of Haryana SeedsCertificate Agency, which was an independent and statutory body ofHaryana Government. The amount received was, thus, not income ofthe assessee. The Tribunal has also found that issue was covered bythe decision of the Tribunal for the earlier three assessment years.It is also clear that the Tribunal found the plant and machinery to beowned by the assessee. In such a situation claim of the assessee fordepreciation and investment allowance on the plant and machinerycould not be rejected. The Tribunal was, thus, justified in upholdingthe claim of the assessee for depreciation and investment allowanceon the plant and machinery. 6.In view of the above, the questions referred are answeredagainst the Revenue and in favour of the assessee. (Adarsh Kumar Goel) Judge September 22,2010Pka (Ajay Kumar Mittal) Judge