The Sabarkantha Dist.Co.Op.Milk Producers Union Ltd., Himatnagar V. The ACIT., S.K. Circle, Himatnagar

CO 21/AHD/2013

• Counselvise Citation: [2013] 122 COUNSELVISE.COM (IT) 8820 (ITAT-AHMEDABAD)
• Duration Of Justice: 7 month(s) 27 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 27-09-2013
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 19-09-2013
• Assessment Year: 2009-2010
• Appeal Filed On: 31-01-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: O P BATHEJA
• Assessee Lawyers: YOGESH G SHAH
• Keywords: Depreciation; Rule of consistency
• Section: 143(3); 80IB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD A BENCH BEFORE: SRI D.K TYAGI, JUDICIAL MEMBER AND SHRI ANIL CHATURVEDI, ACCOUNTAN T MEMBER ASSTT. COMMISSIONER OF INCOME-TAX, SABARKANTHA CIRCLE, HIMMATNAGAR, (APPELLANT) VS SABARKANTHA DISTRICT CO- OPERATIVE MILK PRODUCERS UNION LTD, SABAR DAIRY, BORIYA, HIMMATNAGAR- 383006 PAN: AAAAS5265L (RESPONDENT) SABARKANTHA DISTRICT CO- OPERATIVE MILK PRODUCERS UNION LTD, SABAR DAIRY, BORIYA, HIMMATNAGAR- 383006 PAN: AAAAS5265L (CROSS OBJECTOR) VS ASSTT. COMMISSIONER OF INCOME-TAX, SABARKANTHA CIRCLE, HIMMATNAGAR (RESPONDENT) REVENUE BY: SRI O.P. BATHEJA, SR.D.R. ASSESSEE BY: SRI YOGESH G. SHAH, A.R . DATE OF HEARING : 19-09-2013 DATE OF PRONOUNCEMENT : 27-09-20 13 ITA NO. 2613/AHD/2012 ASSESSMENT YEAR 2009-10 CO NO. 21/AHD/2013 (IN ITA NO. 2613/AHD/2012) ASSESSMENT YEAR 2009-10 I.T.A NO.2613/AHD/2012 & CO NO. 21/AHD/2013 A.Y . 2009-10 PAGE NO ACIT VS. SABARKANTHA DISTRICT CO-OPERATIVE MILK PRO DUCERS UNION LTD. 2 / ORDER PER : D.K. TYAGI, JUDICIAL MEMBER:- THIS IS THE REVENUES APPEAL AND CO OF ASSESSEE AG AINST THE ORDER OF LD. CIT(A)-VIII DATED 22-08-2012. FIRST WE WILL TAKE UP REVENUES APPEAL IN ITA NO. 2 613/AHD/2012 2. REVENUE HAS TAKEN FOLLOWING EFFECTIVE GROUNDS:- 1. THE LD. CIT(A) ERRED IN LAW AND ON THE FACTS OF THE CASE IN DELETING THE DISALLOWANCE OF RS. 1,41,90,816/- MADE BY THE A.O. U/S. 80IB OF THE ACT, WITHOUT APPRECIATING THE FACT THAT , NO SEPARATE AUDITED P&L ACCOUNT AND BALANCE SHEET IS MAINTAINED FOR EACH UNDERTAKING IN RESPECT OF WHICH DEDUCTION U/S. 80IB IS CLAIMED. 2. THE LD. CIT(A) ERRED IN LAW AND ON THE FACTS OF THE CASE IN DELETING THE DISALLOWANCE OF RS. 1,42,19,515/- MADE BY THE A.O. U/S.80P(2)(D) OF THE ACT, WITHOUT APPRECIATING THE FACT THAT, ASSESSEE FAILED TO PROVE DIRECT NEXUS OF FUNDS FOR INVESTMEN T IN SHARE AND DEPOSIT WITH COOPERATIVE BANK. 3. BRIEF FACTS OF THE CASE ARE THAT ASSESSEE IS A M ANUFACTURER OF VARIOUS MILK PRODUCTS I.E. PANEER, SHRIKHAND, DAHI ETC. SIN CE SO MANY YEARS AND CLAIMING DEDUCTION U/S. 80IB ON UNDERTAKINGS OF ABO VE ITEMS SINCE ITS INSTALLATION. THE AO DURING THE YEAR UNDER APPEAL HAS DISALLOWED THE DEDUCTION CLAIMED U/S. 80IB ON FOLLOWING GROUNDS:- (I) AS PER THE PROVISIONS OF SECTION 80IB OF THE AC T, IT IS MANDATORY FOR THE APPELLANT TO SUBMIT SEPARATE AUDITED PROFIT AND LOS S ACCOUNT AND BALANCE I.T.A NO.2613/AHD/2012 & CO NO. 21/AHD/2013 A.Y . 2009-10 PAGE NO ACIT VS. SABARKANTHA DISTRICT CO-OPERATIVE MILK PRO DUCERS UNION LTD. 3 SHEET FOR EACH UNDERTAKING IN RESPECT OF WHICH DEDU CTION U/S 80-IB IS CLAIMED. (II) APPELLANT HAS INCURRED HUGE LOSS CONTINUOUSLY IN RESPECT OF UNDERTAKING IN WHICH THE APPELLANT IS NOT ELIGIBLE FOR DEDUCTIO N U/S. 80IB OF THE ACT. SHOWING HUGE LOSS IN NON-ELIGIBLE UNIT IS A DEVICE ADOPTED BY THE APPELLANT TO AVOID TAX. (III) THE APPELLANT HAS NOT PRODUCED ANY LOGICAL EX PLANATION FOR ALLOCATION OF EXPENDITURE AND ALLOCATED AS PER ITS CONVENIENCE. 4. BEFORE LD. CIT(A) ASSESSEE RELIED ON THE FOLLOWI NG WRITTEN SUBMISSIONS:- 'THE APPELLANT MANUFACTURES VARIOUS MILK PRODUCTS I .E. PANEER, SHRIKHAND, DAHI ETC. SINCE SO MANY YEARS. THE DETA ILS OF WHICH WERE PRODUCED BEFORE THE ASSESSING OFFICER VIDE LETTER D ATED 9 TH AUGUST, 2011 WHICH ARE SUMMARIZED HERE UNDER. O PANEER PLANT WAS INSTALLED DURING THE ASST. YEA R 1998-99 AND CLAIMED THE DEDUCTION U/S. 80IB FROM THAT YEAR AFTER SATISFYING ALL THE CONDITIONS OF NEW INDUSTRIAL UND ERTAKING. O SHRIKHAND PLANT WAS INSTALLED IN A.Y. 2004-05 A ND CLAIMED THE DEDUCTION U/S. 80IB FROM THAT YEAR AFTER SATISF YING ALL THE CONDITIONS OF NEW INDUSTRIAL UNDERTAKING, O DAHI PLANT WAS INSTALLED IN A,Y. 2000-01 AND CL AIMED THE DEDUCTION U/S. 801B FROM THAT YEAR AFTER SATISFYING ALL THE CONDITIONS OF NEW INDUSTRIAL UNDERTAKING. (2) DURING THE YEAR, THE APPELLANT HAD CLAIMED THE FOLLOWING DEDUCTION U/S 80IB IN RESPECT OF EACH UNIT AS UNDER : 0 PANEER UNIT : RS.1,16,62,076/- O SHRIKHAND UNIT RS. 1,20,62,755/- O DAHI UNIT : RS. 46,56,801/- (3) THE AO HAD ISSUED THE SHOW CAUSE NOTICE ASKING AS TO WHY EXPENSES AND INCOME SHOULD NOT BE REALLOCATED PROPO RTIONATELY ON THE BASIS OF DETAILS SUBMITTED. HOWEVER WITHOUT REALLOC ATING THE INCOME AND EXPENSES OR WITHOUT FINDING OR PROVING THE DEFE CT IN ALLOCATION MADE BY THE APPELLANT HE JUST DISALLOWED 50% OF DED UCTION CLAIMED BY I.T.A NO.2613/AHD/2012 & CO NO. 21/AHD/2013 A.Y . 2009-10 PAGE NO ACIT VS. SABARKANTHA DISTRICT CO-OPERATIVE MILK PRO DUCERS UNION LTD. 4 THE APPELLANT WITHOUT PROVIDING ANY BASIS FOR SUCH DISALLOWANCE OF 50%. (4) THE AO HAS DISALLOWED THE DEDUCTION CLAIMED U/S . 80IB ON FOLLOWING GROUNDS. (I) AS PER THE PROVISIONS OF SECTION 80IB OF THE A CT, IT IS MANDATORY FOR THE APPELLANT TO SUBMIT SEPARATE AUDITED PROFIT AND LOSS ACCOUNT AND BALANCE SHEET FOR EACH UNDERTAKING IN R ESPECT OF WHICH DEDUCTION U/S. 80-IB IS CLAIMED. (II) APPELLANT HAS INCURRED HUGE LOSS CONTINUOUSLY IN RESPECT OF UNDERTAKING IN WHICH THE APPELLANT IS NOT ELIGIBLE FOR DEDUCTION U/S. 80IB OF THE ACT. SHOWING HUGE LOSS IN NON-ELI GIBLE UNIT IS A DEVICE ADOPTED BY THE APPELLANT TO AVOID TAX. (III) THE APPELLANT HAS NOT PRODUCED ANY LOGICAL EX PLANATION FOR ALLOCATION OF EXPENDITURE AND ALLOCATED AS PER ITS CONVENIENCE. (5) THE AO FAILED TO APPRECIATE THE FACTS THAT: (I) THERE IS NO REQUIREMENT U/S. 80IB TO MAINTAIN SEPARATE PROFIT AND LOSS ACCOUNT AND SEPARATE BALANCE SHEET FOR EACH PLANT. THE APPELLANT HAD FILED THE PRESCRIBED REPOR T IN FORM NO. 10CCB INCLUDING DIVISION WISE PROFIT AND LOSS ACCOU NT AND IT IS SUFFICIENT COMPLIANCE WITH THE PROVISIONS OF THE AC T (II) THE APPELLANT MAINTAINS SEPARATE BOOKS OF ACC OUNT FOR DAIRY AS A WHOLE (INCLUDING DAHI, PANEER, SHRIKHAND & OTHER PLANTS) AND ALSO FOR CATTLE FEED PLANT CATTLE FEED UNIT IS PHYSICALLY SEPARATE UNIT AND ITS BOOKS OF ACCOUNTS ARE ALSO MAINTAINED SEPARATELY. LOSS SHOWN IS ACTUAL LOSS IN CURRED FOR CATTLE FEED PLANT. CATTLE FEED UNIT IS ESTABLISHED FOR THE PURPOSE OF PROCURING CATTLE FEED FOR ANIMALS AND TURNS HELP ING THE FARMERS. (III) THE SEPARATE PROFIT AND LOSS ACCOUNT IN RESPE CT OF EACH DIVISION WERE WORKED OUT AFTER ALLOCATION OF COMMON EXPENSES ON RATIONAL BASIS. THE COPY OF DIVISION WISE PROFIT AND LOSS ACCOUNT FOR THE YEAR IS ENCLOSED. (IV) ALL THE PRODUCTS IN DAIRY ARE MANUFACTURED BY UTILIZING MILK. TO PRODUCE MILK/CURD/ CREAM, GHEE/TABLE BUTTE R, AMUL SPRAY, PANEER, SHRIKHAND ETC. HOW MUCH MILK IS UTIL IZED OR HOW MUCH MILK CAN BE CONSUMED FOR SPECIFIC PRODUCT AND SPECIFIC QUANTITY ARE FIXED. THIS IS ARRIVED AT AS PER PAST EXPERIENCE AND ON THE BASIS OF OPINION OF TECHNICAL PERSONS WORKIN G IN THE PROJECT. I.T.A NO.2613/AHD/2012 & CO NO. 21/AHD/2013 A.Y . 2009-10 PAGE NO ACIT VS. SABARKANTHA DISTRICT CO-OPERATIVE MILK PRO DUCERS UNION LTD. 5 SIMILARLY, EXPENDITURE LIKE CO-OPERATIVE DEVEL OPMENT, SALARY, MACHINE REPAIRING, INSURANCE, RENT & TAXES, AUDIT FEES & GENERAL EXPENSES HAVING NATURE OF FIXE D EXPENSES HAVE BEEN ALLOCATED ON THE BASIS OF MATERI AL CONSUMPTION. POWER AND FUEL EXPENSES HAVE BEEN ALLOCATED ON THE BASIS OF POWER CONSUMPTION. EXPENDITURE LIKE PROCESSING AND LABORATORY EXPE NSES, SUGAR EXPENSES, PACKING EXPENSES. DEPRECIATION HAVE BEEN TAKEN ACTUAL. SIMILARLY, INCOME LIKE SALES, OTHER INCOME AND CLOSING STOCK HAVE BEEN TAKEN ACTUAL. SALES RELATED EXPENSES LIKE FREIGHT & FORWARDING , MARKETING, POST & TELEPHONE EXPENSES, REGISTRATION & LICENSE FEE HAVE BEEN ALLOCATED ON THE BASIS OF SAL ES RATIO. (6) THE AO HAS ALLEGED THAT APPELLANT HAS SHOWN THE LOSS IN THE CATTLE FEED BY ALLOCATING MORE EXPENSES TO PLANT WHICH IS NOT ELIGIBLE FOR DEDUCTION U/S. 80IB. IN THIS REGARD APPELLANT SUBMI TS THAT AS MENTIONED ABOVE CATTLE FEED PLANT IS PHYSICALLY SEP ARATE PLANT FROM DAIRY PLANT. THEREFORE, ITS EXPENDITURE AND INCOME ARE ACTUAL EXPENDITURE AND INCOME. THERE IS NO COMMON EXPENSE HENCE QUESTION OF ALLOCATION OF MORE OR LESS EXPENDITURE DOES NOT ARISE. ITS BOOKS OF ACCOUNTS ARE ALSO MAINTAINED SEPARATELY. HE ALSO ALLEGED THAT OUT OF THE TOTAL CLOSING STOCK OF FINISHED GOODS OF RS 565 LACS, ONLY STOCK OF RS. 6 LACS HAVE BEEN SHO WN FOR CATTLE FEED PLANT AND THEREBY INCREASED THE LOSS OF THE UNIT. I N THIS REGARD APPELLANT SUBMITS THAT IT IS ACTUAL CLOSING STOCK O F CATTLE FEED PLANT. REMAINING STOCKS ARE PERTAINING TO OTHER PLANTS. IN THE CATTLE FEED PLANT THERE IS ALWAYS SHORTAGE OF SUPPLY HENCE ALWA YS STOCKS INVENTORIES ARE LOWER. FURTHER AT THE END OF EVERY FINANCIAL YEAR, PRODUCTION IS CLOSED FOR SOME PERIOD DUE TO PHYSICA L VERIFICATION AGAINST WHICH SALE IS CONTINUED; HENCE STOCK AT THE END OF THE YEAR IS ALWAYS MAINTAINED AT LOWER SIDE. IT IS ALSO TO BE N OTED THAT IN THE PRECEDING YEAR I.E. A.Y. 2008-09, STOCK OF CATTLE F EED WAS RS. 31,382 ONLY AGAINST THE SALES OF RS. 83 CR. (7) THE APPELLANT HAS APPLIED VERY SAME METHOD AND BASIS OF ALLOCATION IN ALL THE PREVIOUS YEARS WHICH IS ACCEP TED BY THE DEPARTMENT IN ASSESSMENT MADE U/S 143(3). THE COPY OF LAST YEAR'S I.T.A NO.2613/AHD/2012 & CO NO. 21/AHD/2013 A.Y . 2009-10 PAGE NO ACIT VS. SABARKANTHA DISTRICT CO-OPERATIVE MILK PRO DUCERS UNION LTD. 6 PROFIT AND LOSS ACCOUNT AS WELL AS FOR A.Y. 2003-04 IS ENCLOSED FOR YOUR READY REFERENCE. YOUR HONOUR CAN OBSERVE THAT METHOD AND BASIS OF ALLOCATION OF EXPENSES IS CONSISTENTLY FOL LOWED BY THE APPELLANT AND ACCEPTED BY THE DEPARTMENT. (8) HOWEVER, WITHOUT APPRECIATING THE ABOVE FACTS T HE AO HAS DISALLOWED RS. 1,41,90,816 BEING 50% OF AMOUNT CLAI MED U/S. 80IB WITHOUT REALLOCATING THE EXPENSES OR WITHOUT PROVID ING ANY BASIS. (9)THE APPELLANT REQUESTS YOUR HONOUR TO DELETE THE ADDITION MADE BY THE AO AS APPELLANT HAS PROPERLY APPLIED THE METHOD AND BASIS FOR ALLOCATION OF EXPENSES WHICH ARE CONSISTENTLY FOLLO WED AND WHICH ARE ACCEPTED BY THE DEPARTMENT OVER THE YEARS. 5. ASSESSEE FURTHER FILED FOLLOWING DETAILS BEFORE LD. CIT(A) AND ALSO PLACED RELIANCE ON VARIOUS CASE LAWS. ONE OF THE GROUND OF DISALLOWANCE DEDUCTION U/S. 8 0-IB IS NOT MAINTAINING THE SEPARATE ACCOUNT FOR EACH UNIT. IN THIS REGARD APPELLANT FURTHER SUBMITS THAT AS PER SUB SECTION 1 3 OF SECTION 80-IB OF THE ACT, THE PROVISIONS OF SECTION (5) AND SUBSECTI ON (7) TO (12) OF THE SECTION 80-IA SHALL APPLY TO THE SECTION. THE SUBSE CTION 13 IS REPRODUCED HEREUNDER. '80-IB (13) : THE PROVISIONS CONTAINED IN SUB-SECTI ON (5) AND SUB- SECTIONS (7) TO (12) OF SECTION 80-IA SHALL, SO FAR AS MAY BE, APPLY TO THE ELIGIBLE BUSINESS UNDER THIS SECTION' SUB SECTION 7 OF SECTION 80-LA DEALS WITH ISSUE OF MAINTENANCE OF ACCOUNTS AND FILING OF AUDIT REPORT, WHICH IS RE-PR ODUCED HEREUNDER: 80-IA (7): THE DEDUCTION UNDER SUB-SECTION (1) FROM PROFITS AND GAINS DERIVED FROM AN UNDERTAKING SHALL NOT BE ADMISSIBLE UNLESS THE ACCOUNTS OF THE UNDERTAKING FOR THE PREVIOUS YEAR R ELEVANT TO THE ASSESSMENT YEAR FOR WHICH THE DEDUCTION IS CLAIMED HAVE BEEN AUDITED BY AN ACCOUNTANT, AS DEFINED IN THE EXPLANATION BEL OW SUB-SECTION (2) OF SECTION 288, AND THE ASSESSES FURNISHES, ALONG W ITH HIS RETURN OF INCOME, THE REPORT OF SUCH AUDIT IN THE PRESCRIBED FORM DULY SIGNED AND VERIFIED BY SUCH ACCOUNTANT. I.T.A NO.2613/AHD/2012 & CO NO. 21/AHD/2013 A.Y . 2009-10 PAGE NO ACIT VS. SABARKANTHA DISTRICT CO-OPERATIVE MILK PRO DUCERS UNION LTD. 7 AS PER THE ABOVE SAID PROVISIONS, IT IS REQUIRED TH AT ALONG WITH RETURN OF INCOME THE REPORT IN PRESCRIBED FORM SHOULD BE F ILED. IN PRESENT CASE WE HAVE FILED THE FORM NO. 10CCB FOR ALL THE T HREE UNITS I.E. PANEER, SHRIKAND AND DAHI SEPARATELY. THE COPY OF WHICH IS ENCLOSED HEREWITH (PAGE 23 TO 53). ALONG WITH ABOVE SAID REP ORT PROFIT AND LOSS ACCOUNT OF EACH UNIT ALONG WITH BASIS OF ALLOCATION OF EXPENSES AND INCOME WAS ALSO FILED. THE COPY OF WHICH SUBMITTED BEFORE YOUR HONOUR ALONG WITH EARLIER SUBMISSIONS. IN VIEW OF T HE ABOVE, YOUR HONOUR WOULD APPRECIATE THAT IT CANNOT BE SAID THAT WE HAVE NOT COMPLIED WITH REQUIREMENT OF THE SECTION. THE AO CA NNOT DISALLOW THE DEDUCTION ON THAT BASIS. 6. AFTER TAKING INTO CONSIDERATION THE SUBMISSION O F THE ASSESSEE AND THE CASE LAWS LD. CIT(A) DELETED THIS ADDITION. 7. BEFORE US LD DR RELIED ON AOS ORDER WHILE LEARN ED COUNSEL OF THE ASSESSEE RELIED ON THE ORDER OF LD. CIT(A). 8. AFTER HEARING BOTH THE PARTIES AND PERUSING THE RECORD, WE FIND THAT ASSESSEE IS IN THE BUSINESS OF MANUFACTURING VARIOU S MILK PRODUCTS LIKE PANEER, SHRIKHAND DAHI ETC SINCE SO MANY YEARS. TH ERE ARE DIFFERENT UNDERTAKINGS OF THE ASSESSEE WHICH ARE GROUPED UNDE R THE DAIRY BUSINESS. IT IS NOT IN DISPUTE THAT ASSESSEE CLAIMED DEDUCTION U /S. 80IB ON PLANT OF PANEER, SHRIKHAND AND DAHI SINCE ITS INSTALLATION A ND KEEPS BOOKS OF ACCOUNT FOR DAIRY AS A WHOLE AND ALLOCATE THE COMMON INCOME AND EXPENDITURE AMONG THESE UNDERTAKINGS. IN EARLIER YEARS AO NEVE R DISPUTED THE DEDUCTION AS WELL AS THE CALCULATION OF DEDUCTION. IT WAS FO R THE FIRST TIME THAT AO HAS DISPUTED THE CALCULATION OF DEDUCTION CLAIMED BY TH E ASSESSEE AND DISALLOWED 50% OF THE AMOUNT CLAIMED ON THE GROUND THAT NO SEP ARATE AUDITED PROFIT AND LOSS ACCOUNT AND BALANCE SHEET WAS MAINTAINED BY TH E ASSESSEE FOR EACH UNDERTAKING IN RESPECT OF WHICH DEDUCTION U/S. 80IB HAVE BEEN CLAIMED. IT I.T.A NO.2613/AHD/2012 & CO NO. 21/AHD/2013 A.Y . 2009-10 PAGE NO ACIT VS. SABARKANTHA DISTRICT CO-OPERATIVE MILK PRO DUCERS UNION LTD. 8 WAS ALSO THE CONTENTION OF THE AO THAT ASSESSEE HAS INCURRED HUGE LOSSES IN NON ELIGIBLE UNITS AND THAT THE ASSESSEE HAS NOT PR ODUCED ANY LOGICAL EXPLANATION FOR ALLOCATION OF EXPENDITURE AND ALLOC ATED THE SAME AS PER ITS CONVENIENCE. THE ASSESSEES CONTENTION ON THE OTHE R HAND HAS BEEN THAT AS FAR AS KEEPING SEPARATE BOOKS OF ACCOUNT WAS CONCER NED, THE ASSESSEE HAD FILED THE PRESCRIBED REPORT IN FORM NO. 10CCB INCLU DING DIVISION-WISE PROFIT AND LOSS ACCOUNT AND IT WAS SUFFICIENT TO CO MPLY WITH THE PROVISIONS OF THE ACT. THE SEPARATE PROFIT AND LOSS ACCOUNT IN RE SPECT OF EACH DIVISION WERE WORKED OUT AFTER ALLOCATION OF COMMON EXPENSES ON T HE RATIONAL BASIS. THE COPY OF DIVISION-WISE PROFIT AND LOSS ACCOUNT FOR T HE YEAR WAS PLACED ON RECORD ALONG WITH BASIS OF ALLOCATION OF THE EXPENS ES. THE ASSESSEE HAD APPLIED THE SAME METHOD AND BASIS OF ALLOCATION IN ALL THE PREVIOUS YEARS AND THE SAME WAS ACCEPTED BY THE REVENUE IN ASSESSMENTS MADE U/S. 143(3) OF THE ACT. THE RELIANCE WAS ALSO PLACED BEFORE THE L OWER AUTHORITIES ON THE DECISION OF HONBLE ITAT IN THE CASE OF BANASKANTHA DISTRICT CO-OPERATIVE MILK IN 3599/AHD/2008 FOR A.Y. 2005-06 WHEREIN ON I DENTICAL FACTS IT WAS HELD THAT EVEN IF NO SEPARATE BOOKS WERE MAINTAINED OR SEPARATE BALANCE SHEETS WERE FILED DEDUCTION U/S. 80IB OF THE ACT C ANNOT BE DENIED. IN VIEW OF THIS, WE ARE OF THE CONSIDERED OPINION THAT LD. CIT(A) WAS JUSTIFIED IN HOLDING THAT FOR CLAIMING DEDUCTION U/S. 80IB NO SE PARATE BOOKS OF ACCOUNT WERE REQUIRED TO BE MAINTAINED FOR DIFFERENT UNDERT AKINGS. SINCE BASIS OF ALLOCATION OF EXPENSES WAS ACCEPTED BY THE REVENUE OVER THE PAST SO MANY YEARS THEREFORE IT CANNOT BE REJECTED IN THIS YEAR. THE OTHER CONTENTION OF THE AO REGARDING HUGE LOSSES INCURRED IN NON-ELIGIBLE U NIT WAS ALSO FOUND NOT ON SOUND BASIS BY THE LD. CIT(A) AS CATTLE FEED PLA NT WAS PHYSICALLY SEPARATE UNIT AND ALLOCATION OF COMMON EXPENSES OUT OF DAIRY BUSINESS WITH IT DID NOT ARISE. THE AO HAD DISALLOWED THE EXPENS ES ON ESTIMATED BASIS I.T.A NO.2613/AHD/2012 & CO NO. 21/AHD/2013 A.Y . 2009-10 PAGE NO ACIT VS. SABARKANTHA DISTRICT CO-OPERATIVE MILK PRO DUCERS UNION LTD. 9 ONLY WITHOUT FINDING ANY SPECIFIC DEFECT IN THE ALL OCATION OF EXPENSES DONE BY THE ASSESSEE WHICH WAS DONE BY THE ASSESSEE ON T HE SAME LINE AS WAS DONE IN EARLIER YEARS WHICH WERE ACCEPTED BY THE RE VENUE OVER THE YEARS SO APPLYING THE RULE OF CONSISTENCY LD. CIT(A) HAS RIG HTLY DIRECTED THE AO TO DELETE THE DISALLOWANCE OF RS. 1,41,90,816/- REJECT ING THE CLAIM OF DEDUCTION OF THE ASSESSEE U/S. 80IB OF THE ACT. THIS GROUND OF THE REVENUE IS DISMISSED. 9. SECOND GROUND OF REVENUES APPEAL RELATES TO DIS ALLOWANCE OF DEDUCTION U/S. 80P(2)(D) OF THE ACT. DURING THE AS SESSMENT PROCEEDINGS, AO OBSERVED THAT ASSESSEE HAS CLAIMED DEDUCTION OF RS. 2,51,35,500 U/S. 80P(2)(D) OF THE ACT IN RESPECT OF INTEREST AND DIV IDEND EARNED FROM CO- OPERATIVE SOCIETIES AND BANKS DURING THE YEAR UNDER APPEAL. AO DISALLOWED AN AMOUNT EQUIVALENT TO 50% OF INTEREST EXPENSES OU T OF THE CLAIM OF THE ASSESSEE ON THE BASIS THAT DETAILS OF EXACT SOURCE OF INVESTMENT MADE DURING THE YEAR UNDER CONSIDERATION AS WELL AS IN THE EARL IER YEARS HAVE NOT BEEN FURNISHED, THE ASSESSEE WAS HAVING HUGE BORROWED AN D HUGE AMOUNT OF INTEREST ON THE SAME AND THAT IN ABSENCE OF ANY SAT ISFACTORY DETAILS OF SOURCE OF INVESTMENT OUT OF OWN FUNDS IT COULD BE INFERRED THAT THE ASSESSEE- COMPANY HAS INVESTED INTEREST BEARING FUNDS TO EARN INTEREST AND DIVIDEND INCOME WHICH WAS CLAIMED AS DEDUCTION U/S. 80P(2)(D ). 10. AFTER TAKING INTO CONSIDERATION THE SUBMISSION OF THE ASSESSEE WHICH WAS REPRODUCED BY HIM IN HIS ORDER IN PARA 4.2 AND 4.3 LD. CIT(A) DELETED THE DISALLOWANCE MADE BY AO U/S. .80P(2)(D) OF THE ACT. I.T.A NO.2613/AHD/2012 & CO NO. 21/AHD/2013 A.Y . 2009-10 PAGE NO ACIT VS. SABARKANTHA DISTRICT CO-OPERATIVE MILK PRO DUCERS UNION LTD. 10 11. AFTER HEARING BOTH THE PARTIES AND PERUSING THE RECORD, WE FIND THAT AO WHILE DISALLOWING THE 50% OF EXPENDITURE CLAIMED BY THE ASSESSEE WAS OF THE VIEW THAT INTEREST EXPENSES INCURRED BY THE ASSESSEE ON BORROWED FUNDS MIGHT HAVE BEEN USED FOR THE PURPOSE OF MAKIN G INVESTMENT, INCOME OF WHICH WAS CLAIMED AS DEDUCTION U/S. 80P(2)(D) OF THE ACT. BEFORE LD. CIT(A) THE ASSESSEES SUBMISSION WAS THAT THEY ARE HAVING SUFFICIENT FUNDS OF RS. 50.19 CRORE AS ON 31.03.2009 IN THE FORM OF CAPITAL OF RS. 10.19 CRORE AND RESERVE AND SURPLUS OF RS. 40 CRORE AGAINST WHI CH THE FIXED DEPOSITS WITH COOPERATIVE BANKS AND SOCIETIES WERE OF RS. 36.28 C RORE ONLY. SINCE INTEREST FREE FUNDS WERE MORE THAN THE INVESTMENT MADE IN SU CH DEPOSITS WITH COOPERATIVE BANKS AND SINCE THE FUNDS WERE MIXED FU NDS THE PRESUMPTION WAS THAT THE SAID DEPOSITS WERE MADE OUT OF OWN NON INTEREST BEARING FUNDS. RELIANCE WAS ALSO PLACED ON THE DECISION OF SUPREME COURT IN THE CASE OF MUNGAL SALES CORPORATION 298 ITR 298 AND DECISION O F MUMBAI HIGH COURT IN THE CASE OF RELIANCE UTILITIES AND POWER LTD 313 ITR 340. KEEPING THESE FACTS AND THE CASE LAWS IN VIEW, LD. CIT(A) HELD TH AT IT WAS NOT REQUIRED TO LOOK INTO THE SOURCE OF THE FUNDS. THE PLAIN LANG UAGE OF SECTION DID NOT SPEAK OF ANY SUCH ADJUSTMENT. THE ONLY REQUIREMENT WAS THAT INCOME SHOULD BE RECEIVED FROM INVESTMENT IN CO-OPERATIVE SOCIETI ES AND CO-OPERATIVE BANKS. SINCE IN THE PRESENT CASE, IT WAS UNDISPUTE D FACT THAT INCOME CLAIMED U/S. 80P(2)(D) WAS RECEIVED FROM THE INVESTMENT MAD E IN CO-OPERATIVE SOCIETIES AND CO-OPERATIVE BANKS, THEREFORE ASSESSE E WAS ELIGIBLE FOR DEDUCTION U/S. 80P(2)(D) OF THE ACT. WE FURTHER FI ND THAT EVEN OTHERWISE SINCE ASSESSEE WAS HAVING MIXED FUNDS AND THE INTER EST FREE FUNDS WERE MORE THAN INVESTMENT IN CO-OPERATIVE BANKS AND CO-OPERAT IVE SOCIETIES NO DISALLOWANCE WAS CALLED FOR FROM ELIGIBLE DEDUCTION U/S 80P(2(D) OF THE ACT. I.T.A NO.2613/AHD/2012 & CO NO. 21/AHD/2013 A.Y . 2009-10 PAGE NO ACIT VS. SABARKANTHA DISTRICT CO-OPERATIVE MILK PRO DUCERS UNION LTD. 11 THEREFORE WE FEEL NO NEED TO INTERFERE WITH THE ORD ER PASSED BY LD. CIT(A) AND THE SAME IS HEREBY UPHELD. 13. NOW COMING TO THE CO FILED BY THE ASSESSEE, WE FIND THAT THE SAME IS IN SUPPORT OF LD CIT(A)S ORDER. IN VIEW OF OUR DE CISION IN REVENUES APPEAL UPHOLDING THE SAME, THE CO FILED BY THE ASSESSEE HA S BECOME INFRUCTUOUS AND THE SAME IS DISMISSED AS INFRUSTUOUS. 14. IN THE RESULT, APPEAL FILED BY THE REVENUE AND CO FILED BY THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON THE DATE MENTIONE D HEREINABOVE AT CAPTION PAGE SD/- SD/- (ANIL CHATURVEDI) ( D.K. TYAGI) ACCOUNTANT MEMBER J UDICIAL MEMBER AHMEDABAD : DATED 27/09/2013 AK / COPY OF ORDER FORWARDED TO:- 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER/ , / ,