Cane Development Council (AY: 2015-16)

Parties Involved

Facts Summary

The assessee, Cane Development Council, filed a return of income electronically on 15.12.2015 declaring total income of Rs. NIL. The case was selected under Limited Scrutiny through CASS for the reason of Large Deduction claimed under Section 57. Notice under Section 143(2) was issued on 12.08.2016 fixing the date for compliance on 31.08.2016 and was duly served. Further, the notice under Section 142(1) along with a questionnaire was issued on 14.09.2016. The Assessing Officer (AO) noted that the expression ‘local authority’ means Panchayats and Municipalities as referred to in Article 243(d) and 243P(e) of the Constitution of India, Municipal Committees and District Boards, legally entitled to or entrusted by the Government with the control or management of a Municipal or a local fund and cantonment Boards as defined under Section 3 of the Cantonments Act, 1924. The Marketing Societies and Agricultural Authorities under other Central or State Legislation. Exemption under this clause would not be available to Port Trusts or the Cane Development Councils. AO further noted that the assessee has filed return on NIL income and observed that assessee has taken credit of TDS, which shows that assessee follows Mercantile System of accounting, but the assessee has not included receipts of Rs. 58,03,701/- in his income. Accordingly, AO completed the assessment under Section 143(3) at an income of Rs. 58,03,700/- against the returned income at Rs. NIL. Aggrieved with the above action o…

Legal Issues

• 1. Validity of the assessment order making assessment in the ‘status’ other than that in which the return has been filed.
• 2. Charging disclosed gross receipts of Rs. 55,39,562/- of so called commission (which is included in the assessed taxable income of Rs. 5803701/-) as ‘income’ and that too, taxable.
• 3. Charging disclosed bank interest of Rs. 264139/- (which is included in the assessed taxable income of Rs. 5803701) as ‘income’ and that too, taxable.
• 4. Disallowance of deduction claimed under Section 57 at Rs. 5803701/- (relating to the disclosed so called commission and the bank interest).

Judgment Outcome

Decided in favour of Assessee.

Precedents Relied Upon

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