Fish Poultry And Egg Marketing Committee New Delhi

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ITA NO. 2348 & 2349/DEL/2009
A.Y. : 2003-04 & 2004-05
1

IN THE INCOME TAX APPELLATE TRIBUNAL

DELHI BENCH “G” NEW DELHI

BEFORE SHRI C.L. SETHI, JUDICIAL MEMBER

AND

SHRI B.C. MEENA, ACCOUNTANT MEMBER

I.T.A. No. 2348/Del/2009

AY 2003-04

Asstt. Commissioner of Income Tax Vs. M/s Fish Poultry and Egg
Circle 36(1), New Delhi Marketing Committee,
Fish Marketing Complex,
Ghazipur, Delhi-110092
AND

I.T.A. No. 2349/Del/2009

AY 2004-05

Asstt. Commissioner of Income Tax Vs. M/s Fish Poultry and Egg
Circle 36(1), New Delhi Marketing Committee,
Fish Marketing Complex,
Ghazipur, Delhi-110092
[Appellant] (Respondent)

Appellant by : Ms. Abha Rani Sinha, Sr. DR

Respondent by : Ms. Pavan Chaudhary, Advocate

ORDER

PER C.L. SETHI, JM

These two appeals filed by the revenue are against the two separate identical

orders both dated 13.3.2009 passed by the CIT(A) for the A.Y. 2003-04 and 2004-

05 respectively. In these two appeals a common and identical ground has been

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A.Y. : 2003-04 & 2004-05
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taken about the addition made by the Assessing Officer by disallowing the assessee’s

claim of deduction on account of payment/ contribution to Delhi Agricultural Produce

Marketing Board amounting to Rs. 12,21,598/- and Rs. 21,03,980/- for the A.Y. 2003-04

and 2004-05 respectively.

2. We have heard both the parties and have carefully gone through the orders of

the authorities below.

3. In the assessment made under section 143(3)/147 of the Act dated 2.12.2008,

the Assessing Officer has disallowed the claim of deduction on account of payment/

contribution to M/s Delhi Agricultural Produce Marketing Board for the reason that the

aforesaid contribution is not an expenditure to be allowed as deduction, but is a simple

disbursement of income and it has not been incurred wholly and exclusively for the

purpose of earning profit.

4. On an appeal the CIT(A) allowed the assessee’s claim by relying upon the

decision of the ITAT in the case of Agricultural Produce Marketing Committee, Azadpur,

Delhi which has been confirmed by the Hon’ble Delhi High Court and a Special Leave

Petition (SLP) filed before the Hon’ble Supreme Court of India has also been dismissed.

He also followed the decision of the Tribunal in the case of Agricultural Produce

Marketing Committee, Keshopur vide order dated 11.1.2007 in ITA No. 892/Del/2007 .

5. We have heard both the parties and carefully gone through the orders of the

authorities below. In the light of the decisions of the ITAT (Supra) which has been

confirmed by the Hon’ble Delhi High Court and a SLP filed by the revenue before the

Hon’ble Supreme Court of India stands dismissed. We are inclined to uphold the order

of the CIT(A) in allowing the assessee’s claim of deduction on

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A.Y. : 2003-04 & 2004-05
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account of payment/contribution to the Delhi Agricultural Produce Marketing

Committee. At this stage, we would like to reproduce the order of the CIT(A) to

bring the clarity to the reasons given by the CIT(A) in allowing the assessee’s

claim.

“5. Determination

The submissions made by the appellant have been carefully considered in view of the
facts and circumstances of the case and the provisions of law. It is observed that the
Assessing Officer has disallowed the contribution made by the assessee to Delhi
Agricultural Marketing Board fund on the ground that in the similar case of APMC,
Azadpur relied upon by the assessee, the Hon’ble ITAT had simply remanded the matter
back to the Ld. CIT(A) to decide the quantum of disallowance and did not exactly allow
the exactly allow the expenditure of the assessee with respect to contribution to the
board as claimed by it. The Assessing Officer further observed that the Hon’ble High
Court has not inferred because no substantial question of law arises for consideration
and not as the assessee has contended in its reply dated 30.11.2007.

5.1. It is, however, observed that the Hon’ble ITAT in the case of APMC, Azadpur
(supra) has remanded the matter back to the CIT(A) with the following observations:-

“We have considered the rival submissions and also perused the relevant
material on record. As per the provisions of Section 89(2) of the Delhi Agricultural
Produce Marketing (Regulation) Act, 1998, every marketing committee is required to pay
contribution to the DAMB out of its own fund being certain percentage of its income so
as to enable the Board to defray the expenses on office establishment etc. to be incurred
by the Board in the interest of marketing committees. The quantum of such
contribution is worked out on the basis of annual income of marketing committee. It is
thus clear that the contribution to be made to DAMB is a statutory payment and going
by its nature and purpose as provided in the relevant statute, the same is directly
connected with the business of a marketing committee. It is observed that in the present
case, such contribution made by the assessee, however, was disallowed by the Assessing
Officer mainly for the reason that the books of account of the assessee were not audited
at the relevant time and in the absence of the same, it was not possible to determine its
annual income which, according to him, was a pre-requisite to allow the deduction
claimed by the assessee on this count. At the time of hearing of the assessee’s appeal
before the CIT(A), the audit of its books of account had already been completed and the
audited balance sheet and profit and loss account were also filed by the assessee in
support of its claim for deduction on account of contribution to DAMB alongwith the
audit report. In the said audit report, it was observed by the auditors that the
assessment of the assessee’s case under DAPM Act was delayed due to administrative
reasons and in the absence of such regular and final assessment, it was difficult to find
out the correct amount of fees receivable as on 31.3.2003. It was also observed by the
auditors that the figures of market fees as received from individual traders shown by the

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A.Y. : 2003-04 & 2004-05
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ADC Department did not match with the receipts shown by the details prepared by the
staff at the entry gate. Keeping in view these adverse observations of the auditors, the
ld. CIT(A) inferred that the ‘market fund’ as defined in section 88 of the DAPM Act was
not correctly determined and proceeded to confirm the disallowance on account
contribution to DAMP fund which was claimed by the assessee at a higher figure of Rs.
6,35,81,772/- on the basis of audited accounts. After taking into consideration the
submissions made on behalf of both the sides before us in the light of material available
on record, we find no justification in the impugned order of the ld. CIT(A) on this issue. If
at all there was some difficulty in determining the annual income of the assessee
because of the difference in the figures of market fees as noted by the auditors, the ld.
CIT(A) ought to have given an opportunity to the assessee to reconcile the said
difference especially when it was pointed out on behalf of the assessee before him than
such difference could be because of the cash system of accounting followed by it.
Moreover, any delay in the audit under the Delhi Agricultural Produce Marketing Act,
was beyond the control of the assessee and in any case, if at all there was any dispute in
the matter of determining the market fund, disallowance on this count should have been
restricted only to the extent of such disputed amount. As such, considering all the facts
of the case, we find it just and proper to remand this mater to the learned CIT(A) for
giving an opportunity to the assessee to reconcile the aforesaid difference and,
accordingly, to decide the quantum of disallowance on this issue.”

5.2 It is, thus, observed that contribution to Delhi Agricultural Marketing board fund
was allowed by the Hon’ble ITAT as a statutory payment directly connected with the
business of a marketing committee and the matter was remanded to the ld. CIT(A) only
for giving an opportunity to the assessee to reconcile the difference in the figures of the
market fees and accordingly, to decide the quantum of disallowance on this issue which
should have been restricted only to the extent of disputed amount, if at all there was any
dispute in the mater of determining the market fund.

5.3 Similarly, in the departmental appeal before the Hon’ble Delhi High court
against the above order, the Hon’ble High court has observed that :

“We are of the opinion that the view expressed by the Hon’ble Tribunal does not call
for any interference. All that has been done is to remand the mater back to the CIT(A)
for looking into the issue afresh and also to look into the audited accounts which have
since been filed by the assessee and take into consideration the fact that for almost 20
years, the contributions made by the assessee have been exempted by the Revenue”.

5.4. Thus, it is very clear that the issue has been decided in favour of the appellant by
the higher appellate authorities as above. It has further been submitted by the ld. AR
that the issue now stands settled in favour of the appellant, as the Hon’ble Supreme
Court has been pleased to dismiss the Special leave Petition filed by the department
against the aforesaid order of the Hon’ble High court. A copy of the order of the Hon’ble
Supreme Court rejecting the Special Leave Petition as above has been placed on record.

5.5. It is further observed that on exactly the facts and circumstances in the case of
APMC, Keshopur, the Hon’ble ITAT in ITA No. 892/Del/2007 dated 11.1.2007 has

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A.Y. : 2003-04 & 2004-05
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categorically allowed the contribution to DAMB as a statutory payment with the
following observations:-

“On careful consideration and on perusal of the order of the Tribunal in case of
APMC Azadpur, we find that this issue had been considered by the Tribunal in
the said case and similar arguments had been advanced that the contribution
had been made as per requirement of section 89 of Delhi Agricultural Produce
Marketing (Regulation) Act, 1998. The Tribunal after necessary examination
held that the contribution made to DAMB was a statutory payment and going by
its nature and purpose as provided in the relevant statute the same was directly
connected with the business of marketing committee. The Tribunal however,
restored this issue to the Assessing Officer for determining the quantum of
allowance. In the present case, there is no dispute about the quantum of
contribution made to DAMB. As regards the judgement of Hon’ble High Court
of Rajasthan in the case of Jodhpur Marketing Cooperative Society (supra),
relied upon by the revenue authorities, we find that the same is distinguishable.
In that case, the disallowance was in respect of reserve created for the use of the
assessee itself and it was not any statutory body and the case is, therefore,
distinguishable. In our view, the statutory payments to DAMB are allowance
as deduction and we order accordingly respectfully following the decision of the
Tribunal in the case of APMC Azadpur (supra).”

5.6 In view of the above discussion and respectfully following the decisions cited
supra, it is hereby held that the Assessing Officer was not justified in disallowing
the contribution to the Delhi Agricultural Marketing Board claimed by the
assessee as revenue expenditure. The addition of Rs. 13,83,848/- made on this
count is, accordingly, hereby deleted.”

6. In the result, both the appeals filed by the revenue are dismissed.

th
Order pronounced in the open court on 13 August, 2009 immediately

after conclusion of the hearing.

Sd/- Sd/-

[B.C. MEENA] [C.L. SETHI]
ACCOUNTANT MEMBER JUDICIAL MEMBER
SRB

Copy forwarded to: –

1. Appellant 2. Respondent 3. CIT 4. CIT (A)
5. DR, ITAT
TRUE COPY By Order,

Deputy Registrar,

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ITA NO. 2348 & 2349/DEL/2009
A.Y. : 2003-04 & 2004-05
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ITAT, Delhi Benches

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