M/s. Nilgiri Engineering Co-Operative Society Ltd., Balasore V. ITO, Ward-1, Balasore

CO 08/CTK/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 7616 (ITAT-CUTTACK)
• Duration Of Justice: 10 month(s) 4 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 29-01-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2014-2015
• Appeal Filed On: 25-03-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M K GOUTAM
• Assessee Lawyers: K K BAL
• Keywords: Business income; Opportunity of being heard; Corroborative evidences; TDS; Set aside
• Section: 80P; 201; 208

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL CUTTACK BENCH CUTTACK BEFORE SHRI C.M. GARG, JM & SHRI L.P. SAHU, AM . / ITA NO. 377 /CTK/201 8 ( / ASSESSMENT YEAR : 20 14 - 201 5 ) ITO, WARD - 1, BALASORE VS. M/S NI LGIRI ENGINEERING CO - OPERATIVE SOCIETY LIMITED, MAIN ROAD, RAJ NILGIRI, BALASORE - 756040 ./ PANNO. : A A ANO 0926 D AND CROSS OBJECTION NO. 08 /CTK/201 9 (ARISING OUT OF ITA NO.377/CTK/2018) ( / ASSESSMENT YEAR : 2014 - 2015 ) M/S NILGIRI ENGINEERING CO - OPERATIVE SOCIETY LIMITED, MAIN ROAD, RAJ NILGIRI, BALASORE - 756040 VS. ITO, WARD - 1, BALASORE ./ PANNO. : A AANO 0926 D ( / APPELLANT ) .. ( / RESPONDENT ) /REVENUE BY : SHRI M.K.GOUTAM, CIT - DR /ASSESSEE BY : SHRI K.K.BAL , ADVOCATE / DATE OF HEARING : 2 1 / 01 /20 20 / DATE OF PRONOUNCEMENT : 29 / 01 /20 20 / O R D E R PER L.P.SAHU , A M : TH E REVENUE HAS FILED THIS APPEAL AGAINST THE OR DER OF CIT(A), CUTTACK , DATED 30 . 07 .2018 FOR ASSESSMENT YEAR 201 4 - 201 5 AND THE ASSESSEE HAS FILED CROSS OBJECTION. 2. THE REVENUE IN ITS APPEAL HAS RAISED THE FOLLOWING GROUNDS : - ITA NO. 377 /CTK/201 8 CO NO.08/CTK/2019 2 GROUND NO. 1 : ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE CIT(AP PEALS) IS NOT JUSTIFIED IN ALLOWING THE DEDUCTION U/S 80P(2)(A)(VI) OF THE IT. ACT, 1961 IGNORING THE DECISION OF THE JURISDICTIONAL HIGH COURT RENDERED IN THE ASSESSEE'S OWN CASE FOR THE A.Y. 1984 - 85 REPORTED IN (1994) 208 ITR 326 (ORI) (COPY ENCLOSED), W HICH HAS UPHELD THE CONTENTION OF THE REVENUE THAT THE ASSESSEE - SOCIETY IS ENGAGING OUTSIDE LABOURERS/SUPERVISORS TO CARRY OUT THE CONTRACT WORK AND, THEREFORE, ITS CASE IS NOT COVERED U/S 80P(2)(A)(VI). GROUND NO. 2 : ON THE FACTS AND IN THE CIRCUMSTANCE S OF THE CASE, THE CIT(APPEALS) IS NOT JUSTIFIED IN HOLDING THAT THE ASSESSEE - SOCIETY IS ENTITLED TO AVAIL THE DEDUCTION U/S 80P(2)(A)(VI) WHEN THE ONLY WORK CARRIED OUT BY ITS MEMBERS WAS OVERALL SUPERVISION LIKE ANY OTHER PRUDENT BUSINESSMEN AND THE ACTU AL SUPERVISION AT THE FIELD WAS DONE BY THE PAID EMPLOYEES OF THE SOCIETY AND OUTSIDE LABOURERS ACTUALLY CARRIED OUT THE WORK. GROUND NO. 3 : ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE CIT(APPEALS) IS NOT JUSTIFIED IN ALLOWING THE DEDUCTION U/ S 80P(2)(A)(VI) WHEN IT WAS PROVED BEYOND REASONABLE DOUBT THAT THE WORK WAS NOT EXECUTED BY THE SOCIETY BY THE COLLECTIVE DISPOSAL OF ITS 'OWN MEMBERS'. GROUND NO.4 : THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND ONE OR MORE GROUNDS OF APPEAL BEFORE T HE APPEAL IS HEARD. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A CO - OPERATIVE SOCIETY DERIVING INCOME FROM THE EXECUTION OF CONTRACT WORKS. THE ASSESSEE - SOCIETY WAS REGISTERED UNDER THE ORISSA CO - OPERATIVE SOCIETY ACT, 1962 ON 29.09.1970 BY THE D EPUTY REGISTER OF CO - OPERATIVE SOCIETY, BALASORE. THE ASSESSEE FILED ITS RETURN OF THE INCOME FOR AY. - 2014 - 15 ON 27.11.2015 DECLARING A TOTAL INCOME OF 'NIL' AS THE ASSESSEE HAD CLAIMED A DEDUCTION U/S.80P (2)(A)(VI) OF THE I.T. ACT, 1961. DURING THE COURS E OF THE ASSESSMENT PROCEEDINGS, THE AO OBSERVED THAT THE ASSESSEE WAS NOT ELIGIBLE FOR A DEDUCTION U/S. 80P(2)(A)(VI) AS IT WAS UNABLE TO ESTABLISH THAT ITS INCOME WAS EARNED THROUGH THE COLLECTIVE DISPOSAL OF THE LABOUR OF ITS MEMBERS. ACCORDINGLY, THE A O ESTIMATED ITA NO. 377 /CTK/201 8 CO NO.08/CTK/2019 3 THE NET PROFIT OF THE ASSESSEE AT 8% OF ITS GROSS BILLS AT RS.80,94,632/ - . FURTHER, THE AO OBSERVED THAT AN AMOUNT OF RS. 2,95,74,686/ - SHOWN AS INCOME FROM OTHER SOURCES IS OUTSIDE THE SCO PE OF SECTION 80P(2)(A)(VI) AND ACCORDINGLY THE AO TAXE D THE SAME IN THE HANDS OF THE ASSESSEE - SOCIETY. 4. AGGRIEVED FROM THE ASSESSMENT ORDER, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A) AND THE CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND FINDINGS OF THE AO ALL OWED THE APPEAL OF THE AS SESSEE AFTER OBSERVING AS UNDER : - I HAVE PERUSED THE FACTS OF THE CASE AND THE DETAILED SUBMISSIONS OF THE ASSESSEE. IT IS SEEN THAT FOR THE ASSESSMENT YEARS 2003 - 04 TO 2008 - 09 THE AO HAD REJECTED THE CLAIM OF DECUCTION U/S. 80P(2)(A)(VF) OF THE ASSESSEE BUT THE 1TAT, CUTTACK HAD DECIDED THE ISSUE IN THE ASSESSEE'S FAVOUR AND GRANTED THE SAID DEDUCTION. FOR THE ASSESSMENT YEARS 1989 - 90 TO 1992 - 93 ALSO, THE IT AT HAD ACCEPTED THE CLAIM OF DEDUCTION OF THE ASSESSEE AND THE DEPARTMENT HAD FILED AN APPEAL AGAI NST THE SAID ORDER IN THE ODISHA HIGH COURT. THE HON'BLE ODISHA HIGH COURT VIDE THEIR ORDER DT.08.12.2008 DISPOSED THE APPEAL BY MAKING THE FOLLOWING OBSERVATION. 'AS THE MATTER RELATES TO DISPUTED QUESTIONS OF FACT, WE REMAND THE MATTER TO THE TRIBUNAL TO RECORD A FINDING AS TO WHETHER INCOME HAD BEEN OBTAINED BY SELF - EMPLOYMENT BY THE MEMBERS OF THE SOCIETY COLLECTIVELY OR BY EMPLOYING BUSINESS THROUGH CONTRACTORS. IN CASE IT IS DONE BY SELF - EMPLOYMENT, THE SOCIETY' SHALL BE ENTITLED FOR GETTING EXEMPTION OTHERWISE NOT.' THE TRIBUNAL CALLED FOR A REMAND REPORT FROM THE ASSESSING OFFICER BASED ON THE DIRECTION OF THE ODISHA HIGH COURT. IN HIS REPORT, THE AO CONCEDED THAT THE ASSESSEE SHOULD BE GRANTED EXEMPTION U/S. 80P (2)(A)(YFJ OF THE L.T. ACT, 1961 AND BASED ON SUCH REPORT OF THE AO, THE IT AT ACCEPTED THE CLAIM OF EXEMPTION OF THE ASSESSEE. FOR THE IMMEDIATELY PRECEDING TWO ASSESSMENT YEARS I.E. AY'S - 2010 - 11 & 2011 - 12, THE CIT(A), CUTTACK VIDE ORDER DT.06.08.2015 IN ITA APPEAL NO.'S 296 & 606/2013 - 14 HAS UPHELD THE CLAIM OF DEDUCTION OF THE ASSESSEE U/S. 80P(2)(A)(VI). THE CIT(A), CUTTACK HAS ALSO UPHELD THE APPEAL OF THE ASSESSEE REGARDING THE DEDUCTION CLAIMED ON INTEREST INCOME BY OPINING AS FOLLOWS: - ITA NO. 377 /CTK/201 8 CO NO.08/CTK/2019 4 'FROM THE DETAILS IT APPEARS THAT THE INTEREST INCOME EARNED BY THE APPELLANT WERE FROM HIRED DEPOSITS MADE FOR PERFORMANCE GUARANTEE OF CONTRACT. HAD THE PERFORMANCE GUARANTEE NOT BEEN THE PRE - CONDITION OF RECEIVING THE CONTRACT THE APPELLANT COULD HAVE USED THE AMOUNT IN ITS OWN BUSINESS RATHER THAN GOING FOR CASH CREDIT ACCOUNTS IN THE BANK. HENCE, THE AO IS DIRECTED TO TREAT THE INCOME FROM FIXED DEPOSITS MADE FOR PERFORMANCE GUARANTEE OF THE CONTRACT AS INCOME FROM BUSINESS AND EXEMPT THE SAME U/S. 80P(2)(A)(VI) OF THE I.T. ACT,1961'. THE ORDER O F THE CIT(A), CUTTACK HAS BEEN UPHELD BY THE JURISDICTIONAL ITAT, CUTTACK FOR AY'S - 2010 - 11 & 2011 - 12 VIDE ORDER DT. 06.01.2016 IN ITA NO.'S 425 & 426/CTK/2015. HENCE, KEEPING IN VIEW THE ABOVE MENTIONED FACTS IT IS SEEN THAT THE ELIGIBILITY OF THE ASSESS E FOR A DEDUCTION U/S. 80P(2)(A)(VI) HAS BEEN REPEATEDLY UPHELD BY THE ITAT, CUTTACK. SINCE THE FACTS IN THE PRESENT APPEAL ARE IDENTICAL, THE DECISION OF THE JURISDICTIONAL ITAT, CUTTACK IN THE ASSESSEE'S CASE GRANTING THE DEDUCTION U/S. 80P (2)(A)(VI) IN PREVIOUS YEARS IS RESPECTFULLY FOLLOWED IN THIS YEAR ALSO. THE DISALLOWANCE MADE BY THE AO IS HEREBY DELETED AND THE ASSESSEE'S APPEAL IS ALLOWED. 5. AGAINST THE ABOVE OBSERVATIONS OF THE CIT(A), THE REVENUE IS IN APPEAL BEFORE THE INCOME TAX APPELLATE T RIBUNAL. 6. LD.DR BEFORE US , AT THE OUTSET, PRODUCED A COPY OF THE DECISION OF JURISDICTIONAL HIGH COURT IN THE ASSESSEES OWN CASE REPORTED IN (1994) 208 ITR 326 (ORI) AND SUBMITTED THAT THE CIT(A) WHILE ALLOWING THE CLAIM OF THE ASSESSEE U/S.80P(2)(A)(V I) OF THE ACT IGNORING THE ABOVE DECISION OF THE HONBLE HIGH COURT WHEREIN THE CONTENTION OF REVENUE THAT THE ASSESSEE - SOCIETY IS ENGAGING OUTSIDE LABOURERS/SUPERVISORS TO CARRY OUT THE CONTRACT WORK HAS BEEN UPHELD. IT WAS ALSO SUBMITTED BY THE LD. DR T HAT WHEN THE ONLY WORK CARRIED OUT BY ITS MEMBERS WAS OVERALL SUPERVISION LIKE ANY OTHER PRUDENT BUSINESSMEN AND THE ACTUAL SUPERVISION AT THE FIELD WAS DONE BY THE PAID EMPLOYEES OF THE SOCIETY ITA NO. 377 /CTK/201 8 CO NO.08/CTK/2019 5 AND OUTSIDE LABOURERS ACTUALLY CARRIED OUT THE WORK , THEREFOR E, THE ASSESSEE CANNOT BE ENTITLED TO AVAIL THE DEDUCTION U/S 80P(2)(A)(VI) OF THE ACT. ACCORDINGLY, LD. DR SUBMITTED THAT THE ORDER OF THE AO SHOULD BE UPHELD. 7. ON THE OTHER HAND, LD.AR SUPPORTED THE ORDER OF CIT(A) AND ALSO FILED WRITTEN SUBMISSION TO SUBSTANTIATE HIS CLAIM AS UNDER : - THE APPELLANT IS THE COOPERATIVE SOCIETY CLAIMING DEDUCTION U/S 80P(2)(A)(VI) OF THE ITAT. FROM A.Y. 1972 - 73, THE BUSINESS INCOME OF LABOUR COOPERATIVE SOCIETIES FORMED BY PERSONS OF SMALL MEANS FOR THE COLLECTIVE DISPOSA L OF LABOUR IS EXEMPT UNDER THIS SECTION. TO ENSURE THAT THIS EXEMPTION IS NOT EXPLOITED BY OTHERS, THE SECTION REQUIRES THAT THE EXEMPTION UNDER THIS PROVISION IS AVAILABLE ONLY WHERE THE VOTING RIGHTS IN SUCH SOCIETY ARE CONFINED TO THE LABOURERS THEMSEL VES, COOPERATIVE SOCIETIES PROVIDING ASSISTANCE TO THEM AND THE STATE GOVERNMENT. IF THE COOPERATIVE SOCIETY GIVES THE RIGHT TO VOTE TO ANY OTHER PERSON, THE SOCIETY WOULD NOT BE ENTITLED TO THE BENEFIT CONFERRED UNDER THIS SECTION. THE RATIO OF DECISION I N THE CASE OF GORA VIBHAG JUNGLE KAMDAR MANDALI VS CIT 161 ITR 658(GUJ.)(1986). UNDER THIS SECTION THE ELIGIBILITY TO EARN EXEMPTION IS WHERE THE WHOLE AMOUNT OF PROFITS AND GAINS OF BUSINESS ARE ATTRIBUTABLE TO THE COLLECTIVE DISPOSAL OF LABOUR OF ITS ME MBERS. THE WORDS ARE VERY CLEAR AND ONLY MEAN THAT THE EARNING OF THE SOCIETY MUST HAVE BEEN THROUGH UTILIZATION OF ACTUAL LABOUR OF ITS MEMBERS. THE GUIDING FACTOR MUST BE THAT THE EARNING OF THE SOCIETY MUST BE THROUGH UTILIZATION OF THE PARTICULAR KIND OF LABOUR IN WHICH MEMBERS SPECIALIZE. FOR INSTANCE, IF THE UNEMPLOYED MATHEMATICS GRADUATES FORM A COOPERATIVE SOCIETY TO WRITE TEXT BOOKS OF MATHEMATICS AND MAKE INCOME OUT OF SUCH ACTIVITY, THE INCOME EARNED WHICH IS ATTRIBUTABLE TO DISPENSATION OF LABO UR OF THE MEMBERS DIRECTLY IS EXEMPT UNDER THE SECTION. WHERE THE MAJOR CONTRIBUTION IS ONLY FROM NON - MEMBERS, AND THE CONTRIBUTION OF MEMBERS IS ONLY MINIMAL, SECTION 80P(2)(A)(VI) CAN HAVE NO APPLICATION. THIS WAS DECIDED BY HON'BLE TRIBUNAL IN THE CASE OF ITO VS GANESH COOPERATIVE SOCIETY LTD. 67 ITD 436. WHERE SOME SOCIAL WORKERS WHO ARE NOT CONTRIBUTING LABOUR WERE GIVEN VOTING RIGHTS, THE SOCIETY WAS HELD TO BE NOT ENTITLED TO EXEMPTION U/S 80P(2)(A)(VI) AS HELD IN GORA VIBHAG JUNGLE KAMDAR MANDALI V S CIT 161 ITR 658(GUJ.)(1986). WHERE A COOPERATIVE SOCIETY CONSISTING OF GRADUATE ENGINEERS HAD ENGAGED LABOUR OUTSIDE ITS MEMBERSHIP FOR SUPERVISION IN EXECUTION OF WORK ASSIGNED TO IT, IT WAS FOUND THAT THE SOCIETY WILL NOT BE ELIGIBLE U/S 80P(2)(A)(VI) BY THE JURISDICTIONAL HIGH COURT IN THE ITA NO. 377 /CTK/201 8 CO NO.08/CTK/2019 6 APPELLANT'S OWN CASE. SIMILARLY, A SOCIETY WHICH WAS MERELY PURCHASING TODDY FROM ITS MEMBERS AND SELLING IT THROUGH THE SHOPS RUN BY IT FOR PROFIT, IT WAS HELD THAT IT IS NOT A CASE OF COLLECTIVE DISPOSAL OF LABOUR OF ITS MEMBERS AND HENCE NOT ELIGIBLE FOR DEDUCTION U/S 80P(2)(A)(VI). THIS WAS HELD IN THE CASE OF NILESWAR RANGE KALLU CHETHU VYAVASAYA THOZHILALI SAHAKARANA SANGHAM V CIT (2015) 234 TAXMAN 698 (KER); PERAVOOR RANGE KALLU CHETHU VYAVASAYA THOZHILALI SAHA KARANA SANGHAM V CIT(2016) 380 ITR 34 (KER). FURTHER, MERELY BECAUSE RELIEF WAS ALLOWED FOR EARLIER AND LATER YEARS, DEDUCTION NEED NOT BE ALLOWED SOLELY ON THAT BASIS, SINCE EACH ASSESSMENT YEAR IS INDEPENDENT AS DECIDED BY PUNJAB & HARYANA HIGH COURT IN THE CASE OF BANDI COOPERATIVE LABOUR AND CONSTRUCTION SOCIETY V CIT 300 ITR 107(2008). THE APPELLANT'S CASE WAS SUBJECT MATTER OF JUDICIAL SCRUTINY BY THE JURISDICTIONAL HIGH COURT WHICH IS REPORTED IN 208 ITR 326(1994). IN THE SAID ORDER, THE HON'BLE HI GH COURT IN CLEAR AND UNAMBIGUOUS TERMS DENIED THE EXEMPTION U/S 80P(2)(A)(VI) AND CONFIRMED THE ORDERS OF THE LOWER AUTHORITIES. THE SAID ORDER HAS REACHED FINALITY AS THE APPELLANT HAS NOT FILED ANY SLP BEFORE THE SUPREME COURT. IN TA NO. 67 TO 70 OF 20 00 DECIDED ON 08.12.2008, THE MATTER WAS SET ASIDE BY THE JURISDICTIONAL HIGH COURT TO ITAT TO DECIDE THE DISPUTED QUESTION OF FACT. DURING THE COURSE OF THE HEARING BEFORE THE HIGH COURT, THE COUNSEL OF THE APPELLANT MISLEAD THE COURT WHICH IS EVIDENT FRO M THE FOLLOWING OBSERVATION: 'MR. SUSANT DAS, LEARNED COUNSEL APPEARING FOR THE ASSESSEE SUBMITS THAT THE ' ORDER PASSED BY THE TRIBUNAL ALLOWING EXEMPTION TO THE ASSESSEE IS IN ACCORDANCE WITH THE LAW AND ALSO AS PER THE DECISION OF THIS COUR T IN OJC NO. 3781 OF 1992' THIS IS A CLEAR AND ABSOLUTE WRONG STATEMENT OF FACT BEFORE THE HON'BLE HIGH COURT BY THE COUNSEL OF THE APPELLANT AS THE DECISION OF THE HIGH COURT IN OJC NO. 3781 OF 1992(208 ITR 326) IS AGAINST THE ASSESSEE WHICH ATTENDED FIN ALITY. THAT IS TA NO. 67 TO 70 OF 2000 DECIDED ON 08.12.2008 BY THE H.C, IN DEPARTMENTAL APPEAL THE HON'BLE ITAT WAS DIRECTED BY THE HON'BLE HIGH COURT AFTER TAKING INTO CONSIDERATION WRONG FACTUAL ASPECT AS THE DECISION IN OJC NO - 3781 OF 1992 WAS AGAINST THE ASSESSEE AND AGAIN NO MATTER WHAT IT MAY BE THE DIRECTION OF THE H.C. WAS NOT CARRIED OUT IN LETTER AND IN SPRIT AS THE ITAT SEEKING REMAND REPORT FROM THE A.O. ALLOWED THE EXEMPTION MISJUDGING THE FACTUAL MATRIX FOR BETTER UNDERSTANDING OF FACTS THE H.C. DIRECTION IS REPRODUCED HERE UNDER: ' AS THE MATTER RELATES TO DISPUTED QUESTION OF FACTS, WE REMAND THE MATTER TO THE TRIBUNAL TO RECORD A FINDING AS TO WHETHER INCOME HAD BEEN OBTAINED BY SELF EMPLOYMENT BY THE MEMBERS OF THE ITA NO. 377 /CTK/201 8 CO NO.08/CTK/2019 7 SOCIETY COLLECTIVELY OR EMPLOYING LABOURERS THROUGH CONTRACTORS. IN CASE IT IS DONE BY SELF EMPLOYMENT, THE SOCIETY SHALL BE ENTITLED FOR GETTING EXEMPTION OTHERWISE NOT' I AM ENCLOSING THE REMAND REPORT AND IT IS CRYSTAL CLEAR THAT IT IS SUFFICIENT TO DENY EXEMPTION TO THE ASS ESSEE.(COPY ENCLOSED) APART FROM THE ABOVE, FOLLOWING POINTS PROVIDED HEREUNDER WILL PROVE BEYOND DOUBT THAT THE APPELLANT IS NOT ENTITLED FOR DEDUCTION U/S 80P(2)(A)(VI): A. THE SOCIETY MAINTAINS A MEMBERSHIP OF AROUND 69 MEMBERS AS ON 31.03.2016 (COPY ENCLOSED) WHICH IS A LIST OF ENGINEERS FROM DIFFERENT BRANCHES LIKE ELECTRICAL, MECHANICAL, COMPUTER SCIENCE, CIVIL, SOFTWARE TECHNOLOGY, COMPUTER AND TELECOMMUNICATION ETC. BUT EXCEPT ABOUT 6 MEMBERS, WHO ARE ACTIVE AND THERE IS NO COLLECTIVE DISPOSAL OF LABOUR. OTHER THAN, THE 6 MEMBERS OTHER MEMBERS ARE TOTALLY IGNORANT ABOUT THE ACTIVITIES OF THE SOCIETY. THE APPELLANT DOES NOT HAVE ANY EVIDENCE OF DISTRIBUTION OF PROFIT TO THESE MEMBERS. B. THE ACTUAL FACT IS THE SOCIETY TAKES THE CIVIL CONTRACTS FRO M THE GOVERNMENT, WITHDRAWS CASH FROM THE BANK ACCOUNT UNDER THE GARB OF INCURRING EXPENDITURE. THE CASH WITHDRAWN IS TAKEN BY THE ACTIVE MEMBERS AND WORK IS EXECUTED THROUGH SUB CONTRACTORS. THAT IS THE REASON IN P & L ACCOUNT, FOR THE HEAD ' PAYMENTS FOR FINAL AND RUNNING BILLS RS. 9.37 CRORE' , THERE IS NO ANNEXURE GIVING THE DETAILS. IN LAST 30 YEARS, THE APPELLANT HAS NOT PRODUCED ANY BOOKS OF ACCOUNTS, HAS NOT DEDUCTED TAX AT SOURCE ON ANY PAYMENTS TO SUB - CONTRACTORS AND NOR THE ACTIVE MEMBERS ARE PAY ING ANY TAXES FOR EXECUTING THE WORK AND POCKETING THE PROFITS FROM THE BUSINESS. IF IT IS A FACT THAT THE CONTRACTS ARE EXECUTED BY THE MEMBERS OF THE SOCIETY, WHICH ARE IN CRORES, AT LEAST THE MEMBERS NEED TO FILE THEIR RETURNS. BUT NONE OF THE MEMBERS A RE FILING ANY RETURNS SHOWING INCOME FROM THE APPELLANT'S SOCIETY. THE INCOME OF THE SOCIETY IS ALWAYS ESTIMATED AS NO PROPER BOOKS OF ACCOUNT ARE MAINTAINED AND HOW STATUTORY AUDIT TAKES PLACE WITHOUT PROPER BOOKS OF ACCOUNT IS ANYBODY'S GUESS. WHY NO PRO PER CASH BOOK IS PRODUCED FOR EXAMINATION? BECAUSE WHATEVER CASH BOOK MAINTAINED DEPICTS HUGE CASH WITHDRAWAL AND PAID TO INDIVIDUAL MEMBERS THAT TO ONLY A FEW AND NO ACCOUNTS MAINTAINED IN THIS REGARD AND NO TDS IS EVER DEDUCTED. C. IF THE WORK IS EXECUT ED BY COLLECTIVE DISPOSAL OF ITS MEMBERS DOES THAT MEAN NO OUTSIDE LABOURS ARE EMPLOYED? AS FOUND FROM THE REMAND REPORT THE SOCIETY EMPLOYS A LARGE CONTINGENT OF OUTSIDE LABOURS TOO AND IF IT IS WITHOUT THE HELP OF CONTRACTORS THEN WHY NO LABOUR LICENCE O R EPF AND ESI DEDUCTED OR MASTER ROLE MAINTAINED. WHY NO MAINTENANCE OF PURCHASE REGISTER WHETHER FROM REGISTERED OR UNREGISTERED DEALERS AND WHY NO PAYMENT TO THEM BY THE SOCIETY. IF THE WORK IS ONLY SUPERVISED BY ITS MEMBERS AND NOT EXECUTED BY THEM AS P ER THE REMAND REPORT 'IT IS FOUND THAT AT LEAST ONE MEMBER OF THE SOCIETY SUPERVISES THE WORK OF THE ITA NO. 377 /CTK/201 8 CO NO.08/CTK/2019 8 SITES', THEN WHY SUPERVISION CHARGES IS PAID TO OUTSIDERS AS EVIDENT FROM WHATEVER ACCOUNTS MAINTAINED, (COPY ENCLOSED). AND IF SUPERVISION CHARGES PAID TO MEMBERS (THEY MAY CLAIM THAT PAYMENT IS MADE TO OUTSIDERS AS WELL AS MEMBERS) THEN WHY SUPERVISION CHARGES ARE PAID TO MEMBERS OF THE SOCIETY. THE ASSESSMENT ORDER OF THE YEAR 2008 - 09 A DETAIL ORDER OF 32 PAGES IN SUPPORT OF MY SUBMISSIONS BUT MERELY BECA USE ONE EARLIER ORDER MISCARRIED JUSTICE, UNDER THE GARB OF COVERED CASE, ALL SUBSEQUENT ORDERS ARE BEING PASSED IN FAVOUR OF THE APPELLANT WHICH NEED TO END. IN ADDITION TO THE ABOVE WRITTEN SUBMISSIONS, LD. AR ALSO SUBMITTED THAT THE CIT(A) WHILE CONSID ERING THE CLAIM OF THE ASSESSEE THAT THE INTEREST INCOME EARNED BY THE ASSESSEE WERE FROM HIRED DEPOSITS MADE FOR PERFORMANCE GUARANTEE OF CONTRACT. IT WAS ALSO CONTENTION OF THE LD. AR OF THE ASSESSEE THAT THE CIT(A) HAS ALLOWED THE CLAIM OF THE ASSESSEE AFTER CONSIDERING THE EARLIER DECISIONS OF THE TRIBUNAL . THEREFORE, THE LD. AR SUBMITTED THAT THERE IS NO CASE WITH THE REVENUE AS THE ISSUE INVOLVED IN THE PRESENT APPEAL HAS ALREADY BEEN SETTLED AND PRAYED FOR DISMISSAL OF THE APPEAL OF REVENUE. LD. AR ALSO SUBMITTED THAT THE AO HAS WRONGLY RECORDED HIS FINDING THAT THE BOOKS OF ACCOUNTS ARE NOT MAINTAINED BY THE ASSESSEE. IT WAS ALSO SUBMITTED THAT THE ASSESSEE HAS MAINTAINED BOOKS OF ACCOUNTS AND IF REQUIRES, THE ASSESSEE IS READY TO PRODUCE THE SAME B EFORE THE AO. TO SUPPORT HIS CONTENTIONS, LD. AR RELIED ON THE FOLLOWING DECISION OF THE COORDINATE BENCH OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR DIFFERENT ASSESSMENT YEARS : - I) ITA NOS.425&426/CTK/2015, ORDER DATED 06.01.2016; II) ITA NOS.527 TO 531/C TK/1992, ORDER DATED 14.11.1994; AND I II) ITA NO.238/CTK/1981, ORDER DATED 11.03.1982; ITA NO. 377 /CTK/201 8 CO NO.08/CTK/2019 9 8. AFTER HEARING BOTH THE SIDES AND PERUSING THE ENTIRE MATERIAL AVAILABLE ON RECORD, WE FIND THAT THE AO IN THE ASSESSMENT ORDER IN PARA 2.1 HAS MENTIONED THAT THE AS SESSEE COULD NOT BE ABLE TO PRODUCE BOOKS OF ACCOUNT, SUPPORTING BILLS & VOUCHERS TO SUBSTANTIATE ITS CLAIM MADE IN THE RETURN OF INCOME. IT WAS ALSO NOTED BY THE AO THAT AS THE BOOKS OF ACCOUNTS WERE NOT PRODUCED, THEREFORE, IT IS NOT POSSIBLE TO VERIFY T HE CORRECTNESS AND COMPLETENESS OF THE AUDITED STATEMENT OF ACCOUNT OF THE ASSESSEE. FURTHER THE AO NOTED THAT ALTHOUGH THE OBJECTIVES OF THE ASSESSEE SOCIETY APPEAR TO BE IN CONSONANCE WITH THE PROVISION OF 80P(2)(A)(VI) OF THE ACT , IN VIEW OF THE PROVISI ONS OF SECTION 101 OF THE INDIAN EVIDENCE ACT, 1872 THE BURDEN WAS ON THE ASSESSEE TO PROVE WITH SUPPORTING EVIDENCE/FACT THAT DURING THE RELEVANT PERIOD THE CONDITIONS FOR CLAIMING DEDUCTION U/S 80P(2)(A)(VI) OF THE ACT WERE SATISFIED. ACCORDINGLY, THE AO DENIED THE CLAIM OF THE ASSESSEE FOR DEDUCTION U/S 80P(2)(A)(VI) OF THE ACT. HOWEVER, THE CIT(A) HAS FOLLOWED THE CONSISTENCY OF THE DECISION OF THE TRIBUNAL IN ASSESSEES OWN AND ALLOWED THE CLAIM OF THE ASSESSEE FOR DEDUCTION U/S.80P(2)(A)(VI) OF THE AC T. THE OBJECTION OF THE LD. DR BEFORE US IS THAT WHEN THE ONLY WORK CARRIED OUT BY ITS MEMBERS WAS OVERALL SUPERVISION LIKE ANY OTHER PRUDENT BUSINESSMEN AND THE ACTUAL SUPERVISION AT THE FIELD WAS DONE BY THE PAID EMPLOYEES OF THE SOCIETY AND OUTSIDE LABO URERS ACTUALLY CARRIED OUT THE WORK, THEREFORE, THE ITA NO. 377 /CTK/201 8 CO NO.08/CTK/2019 10 ASSESSEE IS NOT ENTITLED TO THE BENEFIT OF DEDUCTION U/S.80P(2)(A)(VI) OF THE ACT. IN THIS REGARD, LD. AR OF THE ASSESSEE SUBMITTED THAT T HE GUIDING FACTOR MUST BE THAT THE EARNING OF THE SOCIETY IS THROU GH UTILIZATION OF THE PARTICULAR KIND OF LABOUR IN WHICH MEMBERS SPECIALIZE. IT WAS VEHEMENTLY SUBMITTED BY LD. AR THAT THE ASSESSEE IS THE C OOPERATIVE S OCIETY CLAIMING DEDUCTION U/S 80P(2)(A)(VI) OF THE IT ACT FROM A.Y. 1972 - 73, THE BUSINESS INCOME OF LAB OUR COOPERATIVE SOCIETIES FORMED BY PERSONS OF SMALL MEANS FOR THE COLLECTIVE DISPOSAL OF LABOUR , IS EXEMPT UNDER THIS SECTION. CONSIDERING THE OVERALL FACTS AND THE STRENUOUS SUBMISSIONS OF BOTH THE PARTIES, WE ARE OF THE VIEW THAT THE MATTER NEEDS VERIFI CATION AT THE LEVEL OF AO FOR A LIMITED PURPOSE AS TO WHETHER THE WORKS EXECUTED BY THE SOCIETY BY THE COLLECTIVE DISPOSAL OF ITS 'OWN MEMBERS' OR NOT AFTER PROVIDING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE . BEFORE US THE LD. AR OF THE ASSESS EE HAS ACCEDED THAT IF REQUIRES, THE ASSESSEE IS READY TO PRODUCE THE BOOKS OF ACCOUNTS BEFORE THE AO FOR VERIFICATION. IF THE AO FINDS THAT THE WORK S EXECUTED BY THE ASSESSEE SOCIETY FALL WITHIN THE FRAMEWORK OF THE PROVISIONS OF SECTION 809(2)(A)(VI) OF THE ACT , THEN THE AO SHALL ALLOW DEDUCTION U/S. 80P(2)(A)(VI) OF THE ACT TO THE ASSESSEE SOCIETY . ACCORDINGLY, WE RESTORE THE MATTER TO THE FILE OF AO FOR CONSIDERATION OF THE CLAIM OF THE ASSESSEE AS PER OUR ABOVE OBSERVATIONS AND THE ASSESSEE SHALL COOPER ATE WITH THE AO FOR EARLY DISPOSAL OF THE CASE. ITA NO. 377 /CTK/201 8 CO NO.08/CTK/2019 11 THUS, GROUNDS RAISED BY THE ASSESSEE ARE A LLOWED FOR STATISTICAL PURPOSES AND CONSEQUENTLY APPEAL OF THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSES. 9. SINCE WE HAVE SET ASIDE THE ORDER OF CIT(A) AND RESTORE D THE ISSUE RAISED BY THE REVENUE TO THE FILE OF AO FOR LIMITED PURPOSE ALLOWING THE APPEAL OF REVENUE FOR STATISTICAL PURPOSES, THEREFORE, THE CROSS OBJECTION FILED BY THE ASSESSEE SUPPORTING ORDER OF CIT(A) IS ALSO ALLOWED STATISTICALLY. 10 . IN THE RES ULT, APPEAL OF THE REVENUE AND CROSS OBJECTION OF THE ASSESSEE BOTH ARE ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 29 / 01 /20 20 . S D/ - ( C.M.GARG ) S D/ - (L.P.SAHU) / JUDICIAL MEMBER / ACCOUNTANT MEMBER CUTTACK; DATED 29 / 01 /20 20 PRAKASH KUMAR MISHRA, SR.P.S. / COPY OF THE ORDER FORWARDED TO : / BY ORDER, ( SENIOR PRIVATE SECRETARY ) ITAT CUTTACK BENCH, CUTTACK 1. / THE APPELLANT - 2. / THE RESPONDENT - 3. ( ) / THE CIT(A), 4. / CIT 5. , , / DR, ITAT, CUTTACK 6. / GUARD FILE. //TRUE COPY//