ACIT, Panchkula V. M/s Haryana State Co-op Supply & Mkt. Fed. Ltd., Panchkula

ITA 1081/CHANDI/2010

• Counselvise Citation: [2011] 135 COUNSELVISE.COM (IT) 1416 (ITAT-CHANDIGARH)
• Duration Of Justice: 6 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-02-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 09-02-2011
• Assessment Year: 2007-2008
• Appeal Filed On: 16-08-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Business income; Opportunity of being heard

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL: A BENCH: CH ANDIGARH BEFORE HONBLE SHRI D K SRIVASTAVA, AM AND HONBLE MS. SUSHMA CHOWLA, JM ITA NO. 1081/CHANDI/2010 ASSESSMENT YEAR: 2007-08 ACIT CIRCLE, PANCHKULA V M/S HARYANA STATE CO-OPE RATIVE SUPPLY & MARKETING FEDERATION LTD PANCHKULA PAN: AAAJH 0022 R ITA NO. 1095/CHANDI/2010 ASSESSMENT YEAR: 2007-08 M/S HARYANA STATE CO-OPERATIVE V ADDL CIT RANGE, PANCHKULA SUPPLY & MARKETING FEDERATION LTD. PANCHKULA PAN: AAAJH 0022 R (APPELLANT-ASSESSEE) (RESPONDENT) DEPARTMENT BY: SHRI BINOD KUMAR, CIT-DR ASSESSEE BY: SHRI AMAN PARTI ORDER D K SRIVASTAVA: BOTH THE PARTIES, NAMELY, THE DEPAR TMENT AND THE ASSESSEE ARE IN APPEAL AGAINST THE ORDER PASSED BY THE LD. CIT(A) ON 4.6.2010. WE FIND IT CONVENIENT TO DISPOSE OFF BOTH THE APPEA LS BY A CONSOLIDATED ORDER. I.T.A NO. 1081/CHANDI/2010 DEPARTMENTS APPEAL 2. THE DEPARTMENT HAS TAKEN THE FOLLOWING GROUNDS O F APPEAL: (I) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS. 14 ,80,41,864/- WHEREAS THE BASIC ACTIVITY OF THE ASSESSEE IS PURCHASE/SALE OF FOOD GRAINS, TRANSPORTATION, HANDLING, STORAGE, MILLING ETC. (II) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN ALLOWING DEDUCTION U/S 80P(2)(E) OF INCOME-TAX ACT WHEREAS IT HAS BEEN HELD THAT THE IN COME OF THE ASSESSEE BY WAY OF STORAGE/CUSTODY RECEIPT IS IN NA TURE OF BUSINESS RECEIPT. (III) IT IS PRAYED THAT THE ORDER OF LD. CIT(A) BE SET ASIDE AND THAT OF THE AO BE RESTORED. 1081,1095/CHANDI/2010 HARYANA STATE COOP SUPPLY & MKT FED 2 2 3. WE HAVE HEARD BOTH THE PARTIES. THE ASSESSEE FIL ED ITS RETURN OF INCOME ON 31.10.2007 RETURNING ITS TOTAL INCOME AT RS. 80, 62,76,210/-. THE ASSESSEE- SOCIETY IS AN APEX COOPERATIVE SOCIETY. IT ALSO ACT S AS AGENT OF THE GOVERNMENT TO PROCURE AGRICULTURAL COMMODITIES FOR AND ON BEHA LF OF THE GOVERNMENT FROM GRAIN MARKETS IN HARYANA. IT PROCURES THE COMMODITI ES AT PRICES FIXED BY THE GOVERNMENT AND DELIVERS THEM TO THE FCI. TILL ITS D ELIVERY, IT IS KEPT IN GODOWNS OF THE ASSESSEE. IN ADDITION TO THE PRICE OF THE CO MMODITIES PROCURED BY IT, THE ASSESSEE IS ALSO PAID FOR USE OF ITS GODOWN FOR STO RAGE. IT IS IN RESPECT OF THE INCOME RECEIVED ON ACCOUNT OF STORAGE CHARGES THAT THE ASSESSEE CLAIMED DEDUCTION U/S 80P(2)(E) WHICH WAS DISALLOWED BY THE AO BUT, ON APPEAL, ALLOWED BY THE LD. CIT(A) FOLLOWING THE ORDER OF TH E TRIBUNAL IN THE EARLIER YEARS. IT MAY BE MENTIONED HERE THAT THE RELIEF U/S 80P(2)(E) WAS ALLOWED BY THIS TRIBUNAL TO THE ASSESSEE IN RESPECT OF INCOME ARISING ON ACCOUNT OF FROM STORAGE IN EARLIER YEARS AGAINST WHICH APPEAL WAS F IELD BY THE DEPARTMENT BEFORE THE HON'BLE PUNJAB & HARYANA HIGH COURT. TH E HON'BLE HIGH COURT HAS DECIDED THE ISSUE IN FAVOUR OF THE REVENUE BY ITS J UDGMENT DATED 8.9.2010 IN CIT V. HARYANA STATE COOPERATIVE SUPPLY & MARKETING FEDERATION LTD, PANCHKULA, ITA NO.157/2005. THE OPERATIVE PORTION O F THE SAID ORDER READS AS UNDER: 14. IN THE PRESENT CASE, IT HAS BEEN CLEARLY HELD THAT THE ASSESSEE WAS PURCHASING THE GOODS AND THEN SELLING THE GOODS TO FCI AND IN SUCH A SITUATION, STORING WAS PART OF BUSINESS OF THE AS SESSEE AND DID NOT AMOUNT TO LETTING OUT OF STORAGE CAPACITY, AS TILL THE GOODS WERE SOLD TO FCI, GOODS BELONGED TO THE ASSESSEE ITSELF AND NOT TO THE FCI. THIS BEING THE FACTUAL SITUATION, THE MATTER IS FULLY COVERED BY JUDGMENT OF THE HON'BLE SUPREME COURT IN SURAT VENKAR SAHAKARI SANG H AND A VENKATA SUBBARAO AS REITERATED IN UDAIPUR SAHAKARI UPBHOKTA . THE INCOME OF THE ASSESSEE FOR STORAGE COULD NOT BE TREATED AT PAR WI TH THE CHARGES. QUESTIONS ARE ANSWERED IN FAVOUR OF REVENUE AND AGA INST THE ASSESSEE. ACCORDINGLY, I.T.A NOS. 157, 157, 159, 664 OF 2205, 477 OF 2006, 419 OF 2007, 275 OF 2009 AND 246, 251 OF 2010 ARE ALLOWED. 5. AT THE TIME OF HEARING BEFORE US, BOTH THE PARTI ES FAIRLY SUBMITTED THAT THE ISSUE WAS COVERED IN FAVOUR OF THE DEPARTMENT A ND AGAINST THE ASSESSEE BY 1081,1095/CHANDI/2010 HARYANA STATE COOP SUPPLY & MKT FED 3 3 THE AFORESAID ORDER PASSED BY THE HON'BLE JURISDICT IONAL HIGH COURT. IN THIS VIEW OF THE MATTER, THE APPEAL FILED BY THE DEPARTM ENT IS ALLOWED. ITA NO. 1095/CHANDI/2010 ASSESSEES APPEAL 6. THE ASSESSEE HAS TAKEN THE FOLLOWING GROUNDS OF APP EAL: 1 BECAUSE NO EXPENDITURE AS LAID U/S 57 HAVING BE EN INCURRED BY THE APPELLANT WHOLLY AND EXCLUSIVELY FOR EARNING DI VIDEND AND INTEREST INCOME COMPUTABLE UNDER THE HEAD INCOME FROM OTHER SOURCES THE ORDER OF THE WORTHY CIT(A) CONFIRMING THE AOS ORDE R SUBSTANTIALLY REDUCING THE DEDUCTION CLAIMED U/S 80P(2)(D) ON THE ASSUMPTION OF APPELLANT HAVING INCURRED EXPENDITURE IS ERRONEOUS AND BAD IN LAW. 2 BECAUSE THE ORDER OF THE WORTHY CIT(A) UPHOLDIN G THE AOS ORDER DISALLOWING THE PRIOR PERIOD EXPENSES AMOUNTING TO RS.13,31,002/- IS ILLEGAL, ARBITRARY AND AGAINST THE FACTS OF THE CAS E AS THESE EXPENSES BECAME CRYSTALLIZED AND THE LIABILITY TO PAY THESE EXPENSES ACCRUED DURING THE YEAR 2006-07 ITSELF. 7. WE HAVE HEARD BOTH THE PARTIES. AT THE TIME OF H EARING, BOTH THE PARTIES FAIRLY CONCEDED THAT IDENTICAL ISSUE HAS BEEN CONSI DERED AND ADJUDICATED UPON BY THE TRIBUNAL IN THE APPEALS FILED BY THE ASSESSE E IN EARLIER YEARS. OUR ATTENTION HAS BEEN DRAWN TO THE ORDER PASSED BY THI S TRIBUNAL ON 31.12.2009 IN THE ASSESSEES OWN APPEAL FOR ASSESSMENT YEAR 20 06-07 (ITA NO. 867/CHANDI/2009) IN WHICH THE TRIBUNAL HAS HELD AS UNDER:- 4 SIMILAR ISSUE OF COMPUTING DEDUCTION U/S 80P(2)( D) OF THE ACT AROSE IN ASSESSEES OWN CASE RELATING TO ASSESSMENT YEAR 2004-05 & 2005-06 AN THE TRIBUNAL VIDE CONSOLIDATED ORDER DAT ED 31.10.2008, THE ISSUE HAS BEEN RESTORED BACK TO THE FILE OF THE AO FOR FRESH ADJUDICATION IN ACCORDANCE WITH LAW BY HOLDING AS UNDER: THE NEXT GROUND I.E. GROUND NO. 3 IS THAT THE LEARN ED FIRST ASSESSING AUTHORITY IS NOT JUSTIFIED IN REDUCING TH E DEDUCTION CLAIMED U/S 80P(2)(D) AFTER DEDUCTING 5% EXPENSES W HICH IS AGAINST THE LAW AND HAS TO BE COMPUTE UNDER THE PRO PER HEAD. DURING ARGUMENTS, THE CLAIM OF THE ASSESSEE IS THAT THE ASSESSEE CLAIMED DEDUCTION ON ACCOUNT OF DIVIDENDS RECEIVED FROM 1081,1095/CHANDI/2010 HARYANA STATE COOP SUPPLY & MKT FED 4 4 COOPERATIVE SOCIETIES AMOUNTING TO RS. 2,39,42,070/ - AND THE ASSESSEE CLAIMED 100% DEDUCTION ON ACCOUNT OF DIVID END. ON QUESTIONING BY THE DEPARTMENT THE ASSESSEE CLAIMED THAT SINCE IT IS A BUSINESS INCOME, THEREFORE, EXPENSES CANNOT BE APPORTIONED. THE AO DISALLOWED 20% OF THE EXPENSES, WHICH COMES TO RS. 47,88,414/-. THE ARGUMENT ON BEHALF OF THE ASSESSEE IS THAT NEITHER THE ASSESSEE HAS TAKEN ANY LOAN, THEREFORE, THERE IS NO QUESTION OF ANY DIRECT EXPENSES TO THIS ACTIVITY, S O NO INDIRECT EXPENSES ARE TO BE ADJUSTED. RELIANCE WAS PLACED I N 189 ITR 89 (P & H). ON THE OTHER HAND, THE LEARNED, DR CONTEND ED THAT IT REQUIRES EXAMINATION PURSUANT TO RULE 8-D OF THE RU LES. RELIANCE WAS ALSO PLACED IN THE CASE OF ACIT V. CITICORP FIN ANCE INDIA LTD (108 ITD 457) (MUMBAI). BOTH THE LEARNED REPRESENTA TIVES AGREED THAT THIS ISSUE MAY BE SENT TO THE FILE OF THE LEAR NED AO FOR FRESH ADJUDICATION IN ACCORDANCE WITH LAW. IN VIEW OF THE SE FACTS, THIS GROUND IS SENT TO THE FILE OF THE LEARNED AO TO EXA MINE THE CLAIM OF THE ASSESSEE/REVENUE AND THEN DECIDE IN ACCORDAN CE WITH LAW. THIS WILL ALSO COVER GROUND NO. 3 OF THE APPEAL OF THE REVENUE (I.T.A NO. 575/CHANDIGARH/2008). NEEDLESS TO MENTI ON HERE THAT DUE OPPORTUNITY OF BEING HEARD BE PROVIDED TO THE A SSESSEE. THE ASSESSEE IS ALSO AT LIBERTY TO FURNISH EVIDENCE, IF ANY, TO SUBSTANTIATE ITS CLAIM, THEREFORE, THESE GROUNDS OF THE ASSESSEE/REVENUE ARE ALLOWED FOR STATISTICAL PURPOS ES ONLY. 5. THE ISSUE ARISING IN THE PRESENT APPEAL IS IDENT ICAL TO THE ISSUE RAISED IN THE EARLIER YEARS AND FOLLOWING THE RULES OF CONSISTENCY, WE REMIT THIS ISSUE BACK TO THE FILE OF AO FOR FRESH A DJUDICATION IN ACCORDANCE WITH LAW. A REASONABLE OPPORTUNITY OF H EARING SHALL BE AFFORDED TO THE ASSESSEE AND THE GROUND OF APPEAL R AISED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 8. AT THE TIME OF HEARING BOTH THE PARTIES FAIRLY S UBMITTED THAT THE ISSUE WAS COVERED BY THE AFORESAID ORDER OF THIS TRIBUNAL AND, THEREFORE, THE MATTER SHOULD BE RESTORED TO THE FILE OF AO TO ENSURE CONS ISTENCY IN HIS DECISION. THE SUBMISSIONS MADE BY BOTH THE PARTIES ARE REASONABLE . THE ORDER PASSED BY THE LD. CIT(A)/ASSESSING OFFICER IN THIS BEHALF IS, THE REFORE, SET ASIDE AND THE 1081,1095/CHANDI/2010 HARYANA STATE COOP SUPPLY & MKT FED 5 5 MATTER IS RESTORED TO THE FILE OF THE AO FOR FRESH DECISION IN THE LIGHT OF THE DIRECTIONS GIVEN BY THIS TRIBUNAL (SUPRA). APPEAL F IELD BY THE ASSESSEE IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON 18 FEBRUARY 2011 SD/- SD/- (SUSHMA CHOWLA) (D K SRIVASTAVA) JUDICIAL MEMBER ACCOUNTANT MEMBER CHANDIGARH: THE 18 FEBRUARY 2011 SURESH COPY TO: 1. THE APPELLANT, M/S HARYANA STATE COOPERATIVE SUP PLY & MKT FEDERATION LTD. PANCHKULA 2. THE RESPONDENT, A.C.I.T. / ADDL C.I.T. PANCHKULA 3. THE CIT(A), PANCHKULA 4. THE LD. CIT, PANCHKULA 4. THE D.R, INCOME-TAX DEPARTMENT, CHANDIGARH TRUE COPY BY ORDER ASSISTANT REGISTRAR, ITAT, CHANDIGARH