M/s. The Orissa State Handloom Weavers Cooperative Society Limited, Bhubaneswar V. DCIT, Circle-4(1), Bhubaneswar

CO 24/CTK/2018

• Counselvise Citation: [2018] 123 COUNSELVISE.COM (IT) 3666 (ITAT-CUTTACK)
• Duration Of Justice: 7 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 09-04-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2014-2015
• Appeal Filed On: 02-04-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: D K PRADHAN
• Assessee Lawyers: B K MAHAPATRA
• Keywords: Business income
• Section: 142(1)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL CUTTACK BENCH CUTTACK BEFORE SHRI N.S.SAINI, AM & SHRI PAV AN KUMAR GADALE, JM ./ ITA NO. 36 4 &36 5 /CTK /20 1 7 ( / ASSESSMENT YEAR :20 13 - 2014 & 2014 - 2015 ) DCIT, CIRCLE - 4(1), BHUBANESWAR VS. M/S ORISSA STATE HANDLOOM WEAVERS COOP ERATIVE SOCIETY LTD., BAYAN BHAWAN, PT. J.N.MARG , BHUBANESWAR - 75100 1 ./ ./ PAN/GIR NO. : A A AAO 0474 F ( / APPELLANT ) .. ( / RESPONDENT ) AND CROSS OBJECTION NO. 2 3 & 2 4 /CTK /20 1 8 (ARISING OUT OF ITA NO.36 4 &36 5 /CTK/2017) ( / ASSESSMENT YEAR :2013 - 2014 & 2014 - 2015 ) M/S ORISSA STATE HANDLOOM WEAVERS COOPERATIVE SOCIETY LTD., BAYAN BHAWAN, PT. J.N.MARG, BHUBANESWAR - 751001 VS. DCIT, CIRCLE - 4( 1), BHUBANESWAR ./ ./ PAN/GIR NO. : A AAAO 0474 F ( / APPELLANT ) .. ( / RESPONDENT ) /REVENUE BY : SHRI D.K.PRADHAN, DR /AS SESSEE BY : SHRI B.K.MAHAPATRA , AR / DATE OF HEARING : 05 /0 4 /201 8 / DATE OF PRONOUNCEMENT 09 /0 4 /201 8 / O R D E R PER SHRI PAV AN KUMAR GADALE, JM : TH ESE ARE THE APPEAL S FILED BY THE REVENUE AGAINST THE SEPARATE ORDER OF THE CIT(A) - 2 , BHUBANESWAR, PASSED IN IT APPEAL NO. 006 7 /2016 - 17 & 01 12 /2016 - 17 , BOTH DATED 29.06.2017 U/S. 143 (3)/250 OF THE INCOME TAX ACT, 1961 FOR THE ASSESSMENT YEAR S 2013 - 2014 & 2014 - 2015 . THE ASSESSEE HAS ALSO FILED CROSS OBJECTIONS. ITA NO . 36 4 &36 5 /CTK/201 7 CO NO. 23 &2 4 /CTK/2018 2 2 . SINCE ISSUES IN BOTH THE APPEALS ARE COMMON, THEY ARE HEARD TOGETHER AND DISPOSED OF BY TH IS COMMON ORDER. FOR THE SAKE OF CONVENIENCE, WE TAKE UP THE APPEAL OF REVENUE I.E ITA NO. 36 4 /CTK/2017 AND THE FACTS NARRATED THEREIN, WHEREIN THE REVENUE HAS RAISED THE FOLLOWING GROUNDS : - 1. ON THE FACTS AND IN THE CI RCUMSTANCES OF THE CASE, THE LD. CIT(A) IS NOT JUSTIFIED IN LAW AS WELL AS ON FACTS IN DELETING THE ADDITION OF RS. 17 , 29 , 750 / - MADE BY THE AO TREATING IT AS INCOME FROM OTHER SOURCES, WHEN THE INTEREST INCOME EARNED FROM SURPLUS FUNDS NOT REQUIRED IMMEDI ATELY FOR BUSINESS PURPOSES IS NOT AN ALLOWABLE DEDUCTION U/S.80P(2)(II) AND IS TAXABLE U/S.56 OF THE I.T. ACT. 2 . ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) IS NOT JUSTIFIED IN LAW AS WELL AS ON FACTS IN RELYING ON THE DECISION OF THE HONBLE ITAT, CUTTACK BENCH IN THE ASSESSEES CASE FOR THE AY 2003 - 04, WHEN THE SAME HAS BEEN OVERRULED BY THE DECISION OF THE HONBLE APEX COURT IN THE CASE OF TOTGARS COOPERATIVE SALE SOCIETY LTD. VS. ITO (2010) 322 ITR 283. 3 . ON THE FACTS AND IN THE CI RCUMSTANCES OF THE CASE, THE LD. CIT(A) IS NOT JUSTIFIED IN LAW AS WELL AS ON FACTS IN DELETING THE ADDITION OF RS. 2,32,47,636 / - MADE BY THE AO TREATING IT AS INCOME FROM HOUSE PROPERTY, WHEN THE ASSESSEE DID NOT LET OUT THE PROPERTY IN QUESTION FOR GODO WN PURPOSE AND IS NOT AN ALLOWABLE DEDUCTION U/S.80P(2)(II) OF THE I.T. ACT. 4 . ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) IS NOT JUSTIFIED IN LAW AS WELL AS ON FACTS IN RELYING ON THE DECISION OF THE HONBLE ITAT, CUTTACK BENCH IN THE ORISSA STATE HANDLOOMS WEAVERS CO - OPERATIVE SOCIETY LTD. IN ITA NO.184/CTK/2007 FOR THE AY 2003 - 04, WHEN THE SAME HAS BEEN OVERRULED BY THE DECISION OF THE HONBLE APEX COURT IN THE CASE OF UDAYAPUR SAHAKARI UPABHOKTA THOK BHANDAR LTD. VS. CIT (2009) 182 TAXMANN 287. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS AN AOP REGISTERED UNDER THE COOPERATIVE SOCIETIES ACT, 1951 AND DEALING WITH TRADING AND MARKETING OF HANDLOOM ITEMS AND FILED ITS RETURN OF INCOME ELECTRONICALLY ON 2 4 .09.2013 FOR THE ASSESSME NT YEAR 2013 - 2014 AS RS . NIL. ITA NO . 36 4 &36 5 /CTK/201 7 CO NO. 23 &2 4 /CTK/2018 3 SUBSEQUENTLY, THE CASE WAS SELECTED FOR SCRUTINY AND NOTICE U/S.143(2) & 142(1) ALONG WITH QUESTIONNAIRE WERE ISSUED. IN COMPLIANCE LD. AR APPEARED FROM TIME TO TIME AND SUBMITTED THE DETAILS. THE AO AFTER CONSIDERING THE SUBMISSIONS AND VERIFICATION OF DOCUMENTS PLACED ON RECORD, FOUND THAT THE ASSESSEE HAS DISCLOSED A NET PROFIT OF RS. 7,64,93,157/ - AND CLAIMED DEDUCTION U/S.80P(2) OF THE ACT. THE ASSESSEE HAS ALSO DISCLOSED INTEREST INCOME OF RS.1,56,04,450/ - AND RENTAL INCOME OF RS. 2,32,47,636/ - ALONG WITH OTHER HEADS OF INCOME. THE AO CALLED FOR THE EXPLANATION S AND REPLY WAS FILED BY THE ASSESSEE, REFERRED AT PAGE 2 TO 3 OF THE AO ORDER , WHEREAS THE AO WAS NOT SATISFIED WITH THE EXPLANATION S AND TREATED THAT THE ASS ESSEE IS NOT ENTITLED DEDUCTION U/S.80P(2) OF THE ACT AND MADE ADDITION OF RS. 2,32,47,636/ - . SIMILARLY, AO IS OF THE OPIN ION THAT ASSESSEE HAS INTEREST INCOME OUT OF THE SURPLUS FUND AND WHEREAS THE ASSESSEE FILED EXPLANATION S AND SUBMITTED THAT THE A RESERVED FUND WAS CREATED TO MEET THE UNFORESEEN LOSS AS PER THE GUIDELINES OF THE ORISSA COOPERATIVE RULE, 1965 AND THE ASSESSEE HAS DEPOSITED RESERVED FUNDS WITH THE BANK AND INTEREST INCOME IS RECEIVED. BUT TH E CONTENTION OF THE ASSESSEE WAS NOT ACCEPTED AND THE AO TREATED THAT THE ASS ESSEE HAS SURPLUS F U ND S AND THESE ARE NOT REQUIRED IMMEDIATELY AND INVESTED IN THE BANK , THEREFORE, DENIED THE DEDUCTION U/S.80P(2) OF THE ACT AND ADDED RS.17,29,750/ - AND PASSED ORDER U/S.143(3) OF THE ACT, DATED 29.03.2016 . 4. AGGRIEVED BY THE ORDER OF AO, THE ASSESSE E HAS FILED AN APPEAL BEFORE THE CIT(A). IN THE APPELLATE PROCEEDINGS THE ASSESSEE ARGUED THE ITA NO . 36 4 &36 5 /CTK/201 7 CO NO. 23 &2 4 /CTK/2018 4 GROUNDS AND REITERATED THE SUBMISSIONS MADE IN THE ASSESSMENT PROCEEDINGS WHEREAS THE CIT(A) HAVING CONSIDERED THE GROUNDS AND THE FINDINGS OF AO DEALT ON TH E DISPUTED ISSUE S HAS RELIED ON THE DECISION OF THE TRIBUNAL IN ASSESSEES OWN CASE IN THE EARLIER ASSESSMENT YEAR REFERRED AT PARA 4.2 AND DELETED THE ADDITION, WHICH READS UNDER : - 4.2 ON PERUSAL OF THE ASSESSMENT ORDER, IT IS SEEN THAT THE ASSESSING OFFI CER HAS TREATED THE RENTAL INCOME OF RS. 2,32,47,636 / - AND INTEREST INCOME OF RS. 17,29,750 / - AS INCOME FROM OTHER SOURCES AND HAS DISALLOWED DEDUCTION U/S.80P OF I.T. ACT, 1961. DURING THE APPEAL PROCEEDINGS THE APPELLANT HAS FILED A JUDGEMENT DATED 01.12 .2008 OF HONBLE JURISDICTIONAL TRIBUNAL IN ITS OWN CASE IN ITA NO . 1 84/CTK/2007 FOR ASSESSMENT YEAR 2003 - 04. I FIND THAT THE APPELLANTS CASE FOR THE YEAR' UNDER CONSIDERATION IS FULLY COVERED BY THE ORDER OF THE JURISDICTIONAL HONBLE TRIBUNAL IN AS MUCH AS THE RENTAL INCOME AND THE INTEREST INCOME HAS BEEN TREATED AS BUSINESS INCOME AND DEDUCTION 80P OF I T ACT, 1961 HAS BEEN ALLOWED TO THE APPELLANT. CONSIDERING THESE ASPECTS, THE RENTAL INCOME AND TI THE INTEREST INCOME IS HELD AS INCOME FROM BUSINESS A ND DEDUCTION U/S.80P OF I.T. ACT; 1961 FOR THE YEAR UNDER CONSIDERATION IS ALLOWED. ACCORDINGLY THE ADDITIONS OF RS. 2,32,47,636 / - ON ACCOUNT OF RENTAL INCOME AND RS. 17,29,750 / - ON ACCOUNT OF INTEREST INCOME ARE ORDERED TO BE DELETED AND THE GROUNDS OF APP EAL ARE ALLOWED. 5. AGGRIEVED BY THE ORDER OF CIT(A), THE REVENUE IS IN APPEAL BEFORE US. 6. LD. DR SUBMITTED THAT THE CIT(A) HAS ERRED IN DELETING THE ADDITION WITHOUT CONSIDERING THE FINDINGS OF THE AO AND SUPPORTED THE ORDER OF AO. 7. CONTRA, LD. AR RELIED ON THE ORDER OF CIT(A) AND ALSO SUPPORTED WITH THE DECISION OF THE TRIBUNAL IN ASSESSEES OWN CASE. 8. WE HAVE HEARD SUBMISSIONS OF BOTH THE PARTIES AND PERUSED THE MATERIALS ON RECORD. LD. ARS SUBMISSION THAT THE ISSUE IS IN FAVOUR OF THE ASSES SEE BY THE DECISION OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2003 - 2004 AND THE DECISION S RELIED BY THE REVENUE ARE ITA NO . 36 4 &36 5 /CTK/201 7 CO NO. 23 &2 4 /CTK/2018 5 DISTINGUISHABLE ON FACTS OF THE CASE . WE HAVE PERUSED THE COPY OF THE COORDINATE BENCH ORDER AND FOUND THAT THE TRIBU NAL IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2003 - 2004 IN ITA NO.184/CTK/2007, ORDER DATED 01.12.2008 HAS HELD AS UNDER : - 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT THE ASSESSING OFFICER HAS MADE THE ADDITION WITHOUT GIVING ANY REASON WHATSOEVER AND HE PASSED A VERY CRYPTIC ORDER. WE FURTHER FIND THAT THE LD. CIT(A) HAS PASSED THE ORDER AFTER VERIFYING ALL THE DETAILS AND BOOKS OF ACCOUNTS OF THE ASSESSEE AND AFTER PERUSING THE CASE LAWS CITED BY THE ASSESSEE AT THE TIME OF FIRST APPELLATE PROCEEDINGS. IN VIEW OF THE ABOVE, WE ARE OF THE CONSIDERED OPINION THAT THE LD. CIT(A) HAS RIGHTLY TREATED THE INTEREST INCOME OF RS.7,02,256/ - OF THE ASSESSEE AS BUSINESS INCOME AND ALLOWED EXEMPTION U/S.80 P(2)(II) OF THE ACT. THIS GROUND OF THE REVENUE IS, THEREFORE, DISMISSED. W E RESPECTFULLY FOLLOW THE JUDICIAL PRECEDENCE AND FIND THAT THE CIT(A) HAS CONSIDERED VITAL FACTS AND SUPPORTED THE CASE WITH THE TRIB U NAL DECISION AND HAS PASSED REASONED ORDER. ACCORDINGLY WE ARE NOT INCLINED TO INTERFERE WITH THE ORDER OF CIT(A) AND THE SAME IS UPHELD AND THE GROUNDS OF APPEAL OF REVENUE ARE DISMISSED. 9. SIMILAR ISSUE HAS BEEN RAISED BY THE REVENUE FOR THE ASSESSMENT FOR THE ASSESSMENT YEAR 2014 - 2015. WE FOLLOWING THE RATIO OF EARLIER DECISION ARE NOT IN CLINED TO INTERFERE WITH THE ORDER OF CIT(A) AND UPHELD THE SAME AND THE GROUNDS OF APPEAL OF THE REVENUE ARE DISMISSED. 10. THE ASSESSEE HAS FILED CROSS OBJECTIONS IN CO NOS.2 3 & 2 4 /CTK/2018 SUPPORTING THE ORDER OF CIT(A). SINCE WE HAVE DISMISSED THE APPE ALS OF REVENUE, ACCORDINGLY, THE CROSS OBJECTIONS FILED BY THE ASSESSEE HAVE BECOME INFRUCTUOUS AND DISMISSED. ITA NO . 36 4 &36 5 /CTK/201 7 CO NO. 23 &2 4 /CTK/2018 6 11. IN THE RESULT, APPEAL OF THE REVENUE I.E. ITA NOS.362&363/CTK/2017 ARE DISMISSED AND CROSS OBJECTIONS FILED BY THE ASSESSEE I.E CO NO.21&22/C TK/2018 ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 09 / 0 4 /201 8 . SD/ - (N. S. SAINI) SD/ - ( PAVAN KUMAR GADALE ) / ACCOUNTANT MEMBER / JUDICIAL MEMBER CUTTACK ; DATED 09 / 0 4 /201 8 . . / PKM , SENIOR PRIVATE SECRETARY / COPY OF THE ORDER FORWARDED TO : / BY ORDER, ( SENIOR PRIVATE SECRETARY ) , / ITAT, C UTTACK 1. APPELLANT - DCIT, CIRCLE - 4(1), BHUB ANESWAR 2. RESPONDENT M/S ORISSA STATE HANDLOOM WEAVERS COOPERATIVE SOCIETY LTD., BAYAN BHAWAN, PT. J.N.MARG, BHUBANESWAR - 751001 3. ( ) / THE CIT(A), 4. / CIT 5. , , / DR, ITAT, CUTTA CK 6. / GUARD FILE. //TRUE COPY//