Commissioner of Income-tax, Kota v. Shiv Agrevo Ltd
[Citation -2017-LL-0801-41]

Citation 2017-LL-0801-41
Appellant Name Commissioner of Income-tax, Kota
Respondent Name Shiv Agrevo Ltd.
Court HIGH COURT OF RAJASTHAN
Relevant Act Income-tax
Date of Order 01/08/2017
Judgment View Judgment
Keyword Tags method of accounting • payment of interest • insurance expenses • accounting method • assessment record • rate of interest • question of law • interest paid • total income • market rate
Bot Summary: Whether in the facts and circumstances of the case, the ITAT was justified in law in allowing the deduction u/s.80IA when the assessee does not fall in the same Whether in the facts and circumstances of the case, the ITAT was justified in law in directing to allow the higher rate of interest to the persons specified u/s.40A(2)(b) of the Act. ITA-460/2009 Whether in the facts and circumstances of the case, the ITAT was justified in law in allowing the deduction u/s.80IA when the assessee does not fall in the same Whether in the facts and circumstances of the case, the ITAT was justified in law in directing to allow the higher rate of interest to the persons specified u/s.40A(2)(b) of the Act. After considering the said issue, the AO has observed in para 6 which reads as under:- Prepaid Insurance Expenses Vide letter dated 11.12.2007, the assessee has filed the details of insurance expenses debited to the PL account at Rs.6,50,098/- in response to question No.5 dated 30.11.2007. CIT(A), Kota has erred in deleting the disallowance of Rs.80,122/- made by the AO on account of insurance expenses despite the fact that the same was not allowable considering the method of accounting followed by the assessee. The Tribunal after considering the material on record has rightly held that the assessee has satisfied all the conditions in order to avail benefit of Section 80IA of the Income Tax Act. In view of the observations made, the second issue is also answered in favour of the assessee. The facts of the case are that the assessee has claimed the insurance expenses of Rs.6,50,098/- in the Profit Loss A/c.


HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT JAIPUR D.B. Income Tax Appeal No. 460 / 2009 COMMISSIONER OF INCOME TAX, Kota ----Appellant Versus M/s. Shiv AGREVO LTD., KALMANDA ROAD, BARAN ----Respondent Connected With D.B. Income Tax Appeal No. 547 / 2009 COMMISSIONER OF INCOME TAX, KOTA ----Appellant Versus M/S SHIV AGREVO LTS., KALMANDA ROAD, BARAN ----Respondent D.B. Income Tax Appeal No. 37 / 2010 COMMISSIONER OF INCOME TAX, KOTA ----Appellant Versus M/S SHIV AGREVO LTD., KALMANDA ROAD, BARAN ----Respondent D.B. Income Tax Appeal No. 72 / 2010 COMMISSIONER OF INCOME TAX, Kota ----Appellant Versus M/s SHIV AGREVO LTD., KALMANDA ROAD, BARAN ----Respondent D.B. Income Tax Appeal No. 348 / 2011 Commissioner of Income Tax, Kota ----Appellant Versus (2 of 8) [ ITA-460/2009] M/S Shiv Agrevo Ltd. Jhalawar Road, Baran. ----Respondent D.B. Income Tax Appeal No. 365 / 2011 COMMISSIONER OF INCOME TAX, KOTA ----Appellant Versus M/S SHIV AGREVO LTD. JHALAWAR ROAD, BARAN. ----Respondent For Appellant(s) : Mrs. Parinitoo Jain with Ms. Shiva Goyal For Respondent(s) : Mr. Mahendra Gargiya _____________________________________________________ HON'BLE MR. JUSTICE K.S. JHAVERI HON'BLE MR. JUSTICE INDERJEET SINGH Judgment 01/08/2017 1. Since in all these appeals, common questions of law and facts are involved, they are decided by this common judgment. 2. By way of these appeals, appellants have challenged judgment and order of Tribunal whereby Tribunal has partly allowed appeals of assessee and dismissed appeal of department modifying order of CIT(A) whereby CIT(A) has allowed appeal in favour of assessee. 3. In Appeal No.460/2009, originally matter was admitted by order dated 02.09.2009 only on one issue which was subsequently amended by us on 24.2.2017 pursuant to (3 of 8) [ ITA-460/2009] application preferred by department which reads as under:- (i) Whether in facts and circumstances of case, ITAT was justified in law in deleting and restricting trading additions which was made after rejecting books of accounts u/s.145(3) of Act?. (ii) Whether in facts and circumstances of case, ITAT was justified in law in allowing deduction u/s.80IA when assessee does not fall in same? (iii) Whether in facts and circumstances of case, ITAT was justified in law in directing to allow higher rate of interest to persons specified u/s.40A(2)(b) of Act. D.B. INCOME TAX APPEAL NO.547/2009 admitted on 07.09.2009:- (i) Whether in facts and circumstances of case, ITAT was justified in law in deleting and restricting trading additions which was made after rejecting books of accounts u/s.145(3) of Act?. (ii) Whether in facts and circumstances of case, ITAT was justified in law in allowing deduction u/s.80IA when assessee does not fall in same? (iii) Whether in facts and circumstances of case, ITAT was justified in law in directing to allow higher rate of interest to persons specified u/s.40A(2)(b) of Act. D.B. INCOME TAX APPEAL NO.37/2010 admitted on 3.2.2011:- (i) Whether in facts and circumstances of case, ITAT was justified in law in deleting and restricting trading additions which was made after rejecting books of accounts u/s.145(3) of Act?. (4 of 8) [ ITA-460/2009] (ii) Whether in facts and circumstances of case, ITAT was justified in law in allowing deduction u/s.80IA when assessee does not fall in same? (iii) Whether in facts and circumstances of case, ITAT was justified in law in directing to allow higher rate of interest to persons specified u/s.40A(2)(b) of Act. D.B. INCOME TAX APPEAL NO.72/2010 admitted on 03.02.2011:_ (i) Whether in facts and circumstances of case, ITAT was justified in law in allowing deduction u/s.80IB when assessee does not fall in same? D.B. INCOME TAX APPEAL NO.348/2011 admitted on 12.10.2011:- (i) Whether Tribunal was justified in answering issue contained in paragraph 17 and 19 of impugned order as ground no.1 and 2 against Revenue (appellant herein) without assigning any reasons except to rely upon their earlier view said to have been taken by Tribunal in respect of this very assessee for previous year without quoting as to what was that view? (ii) Whether Tribunal was justified in holding that assessee is entitled to claim deduction of Rs.1,29,629/- by taking recourse to provisions of Section 40A(2)(b) of Act? (iii) Whether Tribunal was justified in holding that assessee is entitled to claim benefit of deletion of Rs.80,91,340/- as required under Section 80IB of Act? D.B. INCOME TAX APPEAL NO.365/2011 admitted on 9.4.2012:- (5 of 8) [ ITA-460/2009] (i) Whether under facts and circumstances of case ITAT is justified in confirming order of CIT(A) of allowing deduction under Section 80IB of Rs.48,29,638/- which was disallowed by AO, particularly when assessee does not fulfill conditions laid down for claim of deduction under Section 80IB of Act? (ii) Whether under facts and circumstances of case and in law, ITAT is justified in confirming order of CIT(A) of deleting addition of Rs.3,15,647/- made by AO on account of interest paid to specified persons u/s. 40A(2)(b)? (iii) Whether under facts and circumstances of case ITAT is justified in confirming order CIT(A) directing AO to allow expenses of Insurance of Rs.80,122/- relating to earlier year?. 4. Counsel for appellant has taken us to order of AO as well as order of CIT(A) and contended that issue of Section 145(3) which has been adjudicated by AO has wrongly been considered by CIT (A) and Tribunal. On question of deduction made u/s.80IA, she further contended that benefits were not granted in view of short fall which was made in view of observations made by AO. Even as per Section 40A(2)(b), rate of interest which was paid to family members was not consistent with other persons whereas family members were granted amount on higher side, and therefore, Tribunal has seriously committed error in allowing these expenses. 5. In one of appeal No.365/11, additional issue is framed regarding insurance expenses which reads as under:- Whether under facts and circumstances of case, ITAT is justified in confirming order of CIT(A) directing AO to allow expenses of Insurance (6 of 8) [ ITA-460/2009] of Rs.80,122/- relating to earlier year? 6. After considering said issue, AO has observed in para 6 which reads as under:- Prepaid Insurance Expenses Vide letter dated 11.12.2007, assessee has filed details of insurance expenses debited to P&L account at Rs.6,50,098/- in response to question No.5 dated 30.11.2007. This claim of expenditure includes sum of Rs.80,122/- of prepaid expenses pertaining to previous year. Further, from assessment records of preceding year, it is seen that while finalizing assessment proceedings for assessment year 2004-05, Assessing Officer has not made any additions on this account. Thus, considering accounting method of assessee, this expenditure is not allowable in this year, hence same is disallowed and added back to total income of assessee. 7. Tribunal while considering observations of CIT(A) which is contrary to evidence on record has observed in para 10 as under:- 10. fourth ground of Revenue is as under:- on facts and in circumstances of case, ld. CIT(A), Kota has erred in deleting disallowance of Rs.80,122/- made by AO on account of insurance expenses despite fact that same was not allowable considering method of accounting followed by assessee. 8. Counsel for respondent has placed reliance on judgments in case of CIT Vs. Satellite Engineering Ltd. (1978) 113 ITR 208(Guj), CIT Vs. Seeyan Plywoods (1991) 190 ITR 564 (Guj) and CIT Vs. Bhawani Forge P. Ltd. in Tax Appeal No.1321, 1326 & 1328/2006 decided on 1.12.2014 (Guj.) (7 of 8) [ ITA-460/2009] 9. We have heard counsel for parties. 10. On first issue, in our considered opinion, in view of observations made by tribunal with regard to section 145(3), unelss books of accounts which have been found not genuine and reasons for rejecting books of accounts is just and proper, view taken by Tribunal is required to be upheld. In that view of matter, issue is answered in favour of assessee. 11. With regard to second issue, counsel for respondent has placed reliance on judgment rendered in case of CIT Vs. Bhawani Forge P. Ltd. in Tax Appeal No.1321,1326 & 1328 decided on 1.12.2014 wherein it has been observed as under:- In view of aforesaid, we are of opinion that Tribunal has given cogent and convincing reasons in arriving at conclusion and we are in complete agreement with view taken by Tribunal. Tribunal after considering material on record has rightly held that assessee has satisfied all conditions in order to avail benefit of Section 80IA of Income Tax Act. Apart from that, learned advocate for appellant-revenue is not in position to show how findings of Tribunal are bad in law and on facts. In that view of matter, we do not find any error in order of Tribunal. Hence, present appeals are dismissed. Accordingly, question of law posed in these appeals is answered in favour of assessee and against revenue. 12. In view of observations made, second issue is also answered in favour of assessee. 13. With regard to issue of loan which was advanced by family members, Triubnal has rightly observed in para 13 (8 of 8) [ ITA-460/2009] which reads as under:- 13. We have heard rival contentions and perused facts of case. We are convinced with arguments of ld. AR as to prevailing market rate for loands of permanent in natur and long term loans is between 18% to 24% whereas cases compared by AO are pertaining to loans of temporary in nature. Also assessee has advanced money for purpose of business needs, is not under dispute. Therefore, in such circumstances and facts of case, AO is not justified in considering said payment of interest as excessive or unreasonable and same is directed to be deleted. Thus ground No.1 of CO of assessee is allowed. 14. With regard to additional issue of insurance, Tribunal has rightly observed in para 11 which reads as under:- 11. facts of case are that assessee has claimed insurance expenses of Rs.6,50,098/- in Profit & Loss A/c. On being asked, it is explained that amount of Rs.6,50,098/- also includes expenses of Rs.80,122/- of prepaid expenses pertaining to previous year. AO found from assessment record of preceding year that in assessment year 2004-05, AO has not made addition on this account. Thus according to AO and considering accounting method of assessee, this expenditure is not allowable in this year and hence he made addition of Rs.80,122/- 15. In that view of matter, all issues are answered in favour of assessee and against department. 16. appeals stand dismissed. copy of this order be placed in each file. (INDERJEET SINGH),J. (K.S. JHAVERI),J. Pdaiya/29-34 Powered by TCPDF (www.tcpdf.org) Commissioner of Income-tax, Kota v. Shiv Agrevo Ltd
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