M/s. Hasana Valaya Adike Belagarara Sahakara Sangha Niyamitha, Shivamogga V. The Assistant Commissioner of Income tax, Circle - 1, Shivamogga

ITA 1028/BANG/2019

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 4550 (ITAT-BANGALORE)
• Duration Of Justice: 2 year(s) 4 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-09-2021
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 16-09-2021
• Assessment Year: misc
• Appeal Filed On: 13-05-2019
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: K MALLAHARAO
• Keywords: Opportunity of being heard; Principle of natural justice; Earning of tax free income; Set aside
• Section: 80(P); 80P; 12

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : BANGALORE BEFORE SHRI N.V. VASUDEVAN, VICE PRESIDENT AND SHRI CHANDRA POOJARI , ACCOUNTANT MEMBER IT A NO S . 1026 TO 1029/BANG/2019 ASSESSMENT YEAR S : 2011 - 12 TO 2014 - 15 M/S. HASANA VALAYA ADIKE BELAGARARA SAHAKARA SANGHA NIYAMITHA, C-BLOCK, C-1, APMC YARD, SAGAR ROAD, SHIVAMOGGA 577 204. PAN: AAAJT 1256F VS. THE INCOME TAX OFFICER, WARD-2, SHIVAMOGGA. APPELLANT RESPONDENT APPELLANT BY : SHRI K. MA LLAHA RAO, ADVOCATE RESPO NDENT BY : SHRI K. SANKAR GANESH , JT . C IT(DR)(ITAT ), BENGALURU. DATE OF HEARING : 1 6 . 0 9 .2021 DATE OF PRONOUNCEMENT : 28 .0 9 .202 1 O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER THESE APPEALS BY THE ASSESSEE ARE DIRECTED AGAINST DIFFERENT ORDERS OF THE CIT(APPEALS), ALL DATED 26.3.2019 FOR THE AB OVE ASSESSMENT YEARS. THEY WERE HEARD TOGETHER AND ARE DISPOSED OF BY THI S CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. 2. THE ASSESSEE HAS RAISED THE FOLLOWING COMMON GRO UNDS IN ALL THE APPEALS:- ITA NOS. 1026 TO 1029/BANG/2019 PAGE 2 OF 5 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, ORD ER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) DATED 24/03/2019, FOR THE AY-2011-12 IS NOT MAINTAINABLE IN LAW. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, ORDE R OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS), OUGHT TO HAVE BEEN ALLOWED THE APPEAL IN FULL, INSTEAD OF PARTLY ALLOWING THE APPEAL, IN THE INTEREST OF JUSTICE AND EQUITY. 3. ON THE FACTS AND THE CIRCUMSTANCES OF THE CASE THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) OUGHT TO HAVE APPRECIATED THAT, THE APPELLANT SOCIETY IS ESTABLIS HED WITH THE OBJECTIVE FOR MARKETING OF AGRICULTURE PRODUCE GROW N BY ITS MEMBERS, PROVIDING CREDIT FACILITIES TO ITS MEMBERS AND OTHER INCIDENTAL ACTIVITIES MORE FULLY DESCRIBED IN BYE-L AW. THE CLAIM OF APPELLANT EXEMPTION UNDER SECTION 80(P) FOR PROV IDING THE CREDIT FACILITY TO ITS MEMBERS, ARE CORRECT, THUS T HE REJECTED CLAIM OF THE APPELLANT AND CONFIRMED THE ADDITIONS IS AGA INST THE LAW. HENCE THE ORDER OF THE ASSESSING AUTHORITY IS NOT C ORRECT, AND THE SAME WAS UPHELD BY THE CIT(A), IS NOT MAINTAINABLE IN LAW AND LIABLE TO BE SET ASIDE. 4. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) OUGHT TO HAVE APPRECIATED THAT, THE CLAIM UNDER SECTION 80P(2)(A) OF THE ACT BY THE APPELLANT IS CORRECT, BUT THE CIT(A) DISALLOWED THE CLAIM OF THE APPELLANT IS NOT CORRECT, THUS THE ORDER OF THE CIT(A) IS AGAINST THE PRINCIPLE OF NATURAL JUSTICE. 5. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) FAILED TO APPR ECIATE THAT THE CLAIM OF THE APPELLANT UNDER SECTION 80P(2)(A)( III) OF THE INCOME TAX ACT IS CORRECT, BUT WITHOUT CONSIDERING THE SAME, UPHELD THE ADDITIONS MADE BY THE ASSESSING AUTHORIT Y ARE NOT CORRECT, THUS ORDER OF THE CIT(A) ARE LIABLE TO BE SET ASIDE. 6. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) FAILED TO APPR ECIATE THAT, THE JUDGMENT RELIED BY THE APPELLANT IN SUPPORT OF THE APPELLANT CLAIM, WHICH IS SQUARELY APPLICABLE IN THE ASSESSEE CASE AND THE JUDGMENT WHICH IS RELIED BY THE CIT(A) IS DISTINGUI SHABLE FROM ITA NOS. 1026 TO 1029/BANG/2019 PAGE 3 OF 5 THE FACT OF THE APPELLANT CASE, THUS WITHOUT APPREC IATING THE JUDGMENT WHICH IS RELIED BY THE APPELLANT AND PASSE D ORDER IS NOT CORRECT, HENCE THE ORDER OF THE CIT(A) IS LIABLE TO BE SET ASIDE. 7. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN TREAT ING A PART OF THE COMMISSION EARNED FROM MARKETING OF AGRICULTURA L PRODUCE GROWN BY MEMBERS AS NON EXEMPT INCOME AND LEARNED C IT(A) OUGHT TO HAVE TREATED ENTIRE INCOME FROM COMMISSION EARNED FROM MARKETING OF AGRICULTURAL PRODUCE AS EXEMPT IN COME. 8. WITHOUT CONSIDERING THE FACT AND MERIT OF THE CA SE THE LEARNED CIT(A) CONFIRMING PARTLY AND DISALLOWANCES MADE BY THE ASSESSING AUTHORITY AND CONFIRMING INTEREST IS EXCE SSIVE, ARBITRARY AND LIABLE TO BE DELETED. 9. FOR SUCH OTHER GROUNDS THAT MAY BE URGED AT THE TIME OF HEARING AND IT IS PRAYS THAT KINDLY MAY ALLOW THE A PPEAL IN THE INTEREST OF JUSTICE AND EQUITY. 3. OUT OF THE ABOVE GROUNDS OF APPEAL, THE LD. AR A T THE TIME OF HEARING HAS PRESSED THE ONLY THE COMMON GROUND NO.7 FOR ALL THE YEARS. 4. THE CONTENTION OF THE LD. AR IS THAT THE ASSESSE E EARNED COMMISSION FROM MARKETING AGRICULTURAL PRODUCE WHIC H IS ELIGIBLE BUSINESS AND ENTITLED FOR DEDUCTION U/S. 80P(2)(A)(III) OF T HE INCOME-TAX ACT, 1961 [THE ACT]. HOWEVER, THE AO AS WELL AS THE CIT(AP PEALS) CONSIDERED THE SAME AS INCOME NOT ELIGIBLE FOR DEDUCTION U/S. 80P( 2)(A)(III) OF THE ACT. ACCORDING TO HIM, THE ISSUE MAY REMITTED BACK TO TH E AO TO CONSIDER THE INCOME FROM COMMISSION ON MARKETING AND AGRICULTURA L PRODUCE FOR DEDUCTION U/S. 80P(2)(A)(III) OF THE ACT. 5. ON THE OTHER HAND, THE LD. DR SUBMITTED THAT THE ASSESSEE IS ENGAGED IN 3 KINDS OF ACTIVITIES VIZ., :- ITA NOS. 1026 TO 1029/BANG/2019 PAGE 4 OF 5 PURCHASE OF ARECANUT FROM GROWERS MEMBERS; PURCHASE OF ARECANUT FROM OTHER CO-OPERATIVE SOCIET IES; AND PURCHASE OF ARECANUT FROM TRADERS. 6. ACCORDING TO THE LD. DR, ANY INCOME EARNED OUT O F PURCHASE OF ARECANUT FROM TRADERS AND INCOME FROM TRADING ACTIV ITY ENGAGED FROM PERSONS OTHER THAN GROWERS MEMBERS IS NOT ENTITLED FOR DEDUCTION U/S. 80P(2)(A)(III) OF THE ACT. ACCORDING TO HIM, THE CIT(APPEALS) IS JUSTIFIED IN RESTRICTING THE DEDUCTION TO THE EXTENT OF INCOME F ROM ELIGIBLE BUSINESS ONLY. 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL ON RECORD. ADMITTEDLY, IN THIS CASE, THE ASSESSEE HAS NOT MAIN TAINED SEPARATE BOOKS FOR EACH ACTIVITY CARRIED OUT BY IT. THE ASSESSEE PURCHASED AND SOLD ARECANUT FROM MEMBERS AND NON-MEMBERS AND ALSO EARN ED INCOME FROM MEMBERS AND DERIVED COMMISSION INCOME FROM TRADING ACTIVITY ALSO. THE CONTENTION OF THE LD. AR IS THAT THE CIT(APPEALS) A RBITRARILY ADOPTED THE FIGURES FOR DETERMINING DEDUCTION U/S. 80P(2)(A)(II I) OF THE ACT. ACCORDING TO HIM, AN OPPORTUNITY MAY BE GIVEN TO PRESENT THE COR RECT FIGURES SO AS TO DETERMINE PROPER DEDUCTION U/S. 80P(2)(A)(III) OF T HE ACT. IN OUR OPINION, IN THE INTEREST OF JUSTICE IT IS APPROPRIATE TO REMIT THIS ISSUE TO THE AO ONLY FOR THE PURPOSE OF QUANTIFICATION OF DEDUCTION U/S. 80P (2)(A)(III) OF THE ACT, AFTER GOING THROUGH THE BOOKS OF ACCOUNT OF THE ASSESSEE. THE AO HAS TO VERIFY THE CORRECTNESS OF BOOKS OF ACCOUNT PRODUCED BY THE ASSESSEE SO AS TO DETERMINE THE ELIGIBLE INCOME FOR DEDUCTION U/S. 80 P(2)(A)(III) OF THE ACT. WITH THESE OBSERVATIONS, THE ORDER OF THE CIT(APPEA LS) IS SET ASIDE ON THIS ISSUE AND THE ISSUE IS REMITTED TO THE AO FOR FRESH DECISION IN ACCORDANCE WITH LAW, AFTER PROPER OPPORTUNITY OF BEING HEARD T O THE ASSESSEE. ITA NOS. 1026 TO 1029/BANG/2019 PAGE 5 OF 5 8. IN THE RESULT, ALL THE APPEALS BY THE ASSESSEE A RE PARTLY ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON THIS 28 TH DAY OF SEPTEMBER, 2021. SD/- SD/- ( N V VASUDEV AN ) ( CHANDRA POOJARI ) VICE PRESIDENT ACCOUNTANT MEMBER BANGALORE, DATED, THE 28 TH SEPTEMBER, 2021. / DESAI S MURTHY / COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. BY ORDER ASSISTANT REGISTRAR ITAT, BANGALORE.