The ITO, Ward-5(4), Surat V. The Puna Kumbharia Co.Op.Fruit & Vegetable So.Ltd., Surat

ITA 1082/AHD/2011

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 89679 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 2 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-06-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 17-06-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 13-04-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B L YADAV
• Assessee Lawyers: SAPNESH SHETH

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, AHMEDABAD , , BEFORE SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER AND SHRI KUL BHARAT, JUDICIAL MEMBER ./ I.T.A. NO.1082/AHD/2011 ( / ASSESSMENT YEAR : 2007-08) THE INCOME-TAX OFFICER WARD-5(4) MAJURA GATE SURAT / VS. THE PUNA KUMBHARIA CO- OP.FRUIT & VEGETABLE SOCIETY LTD. KRUSHI BHAVAN PUNA KUMBHARIA ROAD SURAT ' ./ ./ PAN/GIR NO. : AAAAP 1147 N ( '% / APPELLANT ) .. ( &''% / RESPONDENT ) '%( / APPELLANT BY : SHRI B.L. YADAV, SR.DR &''%)( / RESPONDENT BY : SHRI SAPNESH SHETH *) / DATE OF HEARING 17/06/2015 +,-.) / DATE OF PRONOUNCEMENT 25/06/2015 / O R D E R PER SHRI KUL BHARAT, JUDICIAL MEMBER : THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST TH E ORDER OF THE LD.COMMISSIONER OF INCOME TAX(APPEALS)-IV, SURAT (CIT(A) IN SHORT) DATED 30/12/2010 PERTAINING TO ASSESSMENT YEAR (AY) 2007-08. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: - ITA NO.1082 /AH D/2011 ITO VS. THE PUNA KUMBHARIA CO-OP.FRUIT & VEGETABL E SOC.LTD. ASST.YEAR 2007-08 - 2 - [1] ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW, THE LD.CIT(A), SURAT HAS ERRED IN RE-COMPUTING THE TOTAL INCOME AFTER DEDUCTION U/S.80P OF RS.10,81,712/- AS AGAINS T RS.50,04,034/- DETERMINED BY THE A.O. AFTER MAKING DISALLOWING ON ACCOUNT OF : I. DISALLOWANCE OF FERTILIZER INCOME RS. 2 8224/- II. DISALLOWANCE OF INCOME EARNED ON ACCOUNT F PETROL/CNG RS . 2337510/- III.DISALLOWANCE OF RENT INCOME RS. 1824305/- IV.DISALLOWANCE OF VEG.COMMISSION INCOME RS. 4 47430/- V. DISALLOWANCE OF INTEREST OF FD RS. 376565 /- ------------------ TOTAL RS. 5004034/- ----------------- [2] ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE, AND IN LAW, THE LD.CIT(A), SURAT OUGHT TO HAVE UPHELD THE ORDER OF THE ASSESSING OFFICER. [3] IT IS, THEREFORE, PRAYED THAT THE ORDER OF THE LD.CIT(A)-IV, SURAT MAY BE SET ASIDE AND THAT OF THE ASSESSING OFFICER RESTORED. 2. BRIEFLY STATED FACTS ARE THAT THE CASE OF THE AS SESSEE WAS REOPENED FOR ASSESSMENT AND THE ASSESSMENT U/S.143(3) R.W.S. 147 OF THE INCOME TAX ACT,1961 (HEREINAFTER REFERRED TO AS THE ACT) WAS FRAMED VIDE ORDER DATED 31/12/2009. WHILE FRAMING THE ASSESSME NT, THE ASSESSING OFFICER (AO IN SHORT) MADE DISALLOWANCE OF DEDUCTIO N ON VARIOUS ITEMS CLAIMED U/S.80P(2)(A)(III) OF THE ACT. THE AO MADE DISALLOWANCE OF RS.50,04,034/-. THE ASSESSEE FEELING AGGRIEVED BY THE ASSESSMENT ORDER, PREFERRED AN APPEAL BEFORE THE LD.CIT(A), WHO AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE HELD THAT THE TOTAL DED UCTION U/S.80-P OF THE ITA NO.1082 /AH D/2011 ITO VS. THE PUNA KUMBHARIA CO-OP.FRUIT & VEGETABL E SOC.LTD. ASST.YEAR 2007-08 - 3 - ACT IS ADMISSIBLE TO THE APPELLANT TO THE EXTENT OF RS.4,73,695/-. AGGRIEVED BY THE ORDER OF THE LD.CIT(A), NOW THE RE VENUE IS IN APPEAL BEFORE US. 3. THE ONLY EFFECTIVE GROUND IN THIS APPEAL IS AGAI NST THE DISALLOWANCES OF DEDUCTION CLAIMED U/S.80P(2) OF TH E ACT. THE LD.SR.DR SHRI B.L.YADAV VEHEMENTLY ARGUED THAT THE LD.CIT(A) WAS NOT JUSTIFIED IN DELETING THE DISALLOWANCES. HE REITERATED THE S UBMISSIONS AS WERE MADE IN THE STATEMENT OF FACTS. HE SUBMITTED THAT THE LD.CIT(A) HAS NOT APPRECIATED THAT THE ASSESSEE HAS FAILED TO EXPLAIN THE JUSTIFICATION FOR CLAIMING DEDUCTION U/S.80P OF THE ACT. 3.1. ON THE CONTRARY, THE LD.COUNSEL FOR THE ASSESS EE SUPPORTED THE ORDER OF THE LD.CIT(A). 4. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. WE FIND THE LD.CIT(A) HAS GIVEN FINDINGS ON FACT IN PARAS-3.1 TO 5.1 OF HIS ORDER ARE AS UNDER:- 3.1.THE CORRECT METHOD FOR DETERMINING THE INCOME OF THE APPELLANT WHICH IS A CO-OPERATIVE SOCIETY WOULD BE TO FIRST DETERMINE ITS GROSS TOTAL INCOME FROM ALL ACTIVITIES CARRIED OUT BY IT AND THEN ALLOWING DEDUCTION U/S.80P(2) OF THE ACT, TO THE EXTENT IT PERTAINS TO ELIGIBLE ACTIVITI ES. THE DETERMINATION OF TAXABLE INCOME BY THE A.O. WHEREIN HE HAS SIMPLY CONSIDERED PROFITS FROM DIFFERENT INELIGIBLE ACTIVITIES AS TAXABLE INCOME IS INCORREC T. WITH A VIEW TO DETERMINE THE CORRECT INCOME OF THE APPELLANT, THE ACCOUNTS W ERE PERUSED WHICH SHOW THAT THE APPELLANT HAD CLAIMED SEVERAL CAPITAL EXPE NSES AND MADE PROVISIONS ITA NO.1082 /AH D/2011 ITO VS. THE PUNA KUMBHARIA CO-OP.FRUIT & VEGETABL E SOC.LTD. ASST.YEAR 2007-08 - 4 - AND RESERVES IN ITS ACCOUNTS WHICH WERE INADMISSIBL E AND SHOULD HAVE BEEN DISALLOWED FOR DETERMINING THE GROSS TOTAL INCOME O F THE APPELLANT. IT WAS FURTHER OBSERVED THAT INCOME FROM CNG OUT LET AND P ETROL/DIESEL DISTRIBUTION OUT LET WERE SITUATED ON THE HIGHWAY AND OPENED TO EVERY CUSTOMER IRRESPECTIVE OF THE FACT WHETHER HE WAS A MEMBER OR NOT. THESE OUTLETS SEEM TO BE SITUATED ON THE HIGHWAY AS THE PHOTOGRAPHS ON TH E PRINTED ACCOUNTS SHOW THEM SELLING FUEL TO AUTO-RIKS HAS AND MOTOR-CYCLES . THIS ACTIVITY WAS CLEARLY INELIGIBLE FOR DEDUCTION U/S. 80P(2) OF THE ACT AS IT DID NOT FALL WITHIN PROVISIONS OF SECTION 80P(2)(A)(III) OF THE ACT. (M ARKETING OF PRODUCE GROWN BY MEMBERS) OR SECTION 80P(2)(A)(IV) OF THE ACT (PROCU REMENT OF AGRICULTURE IMPLEMENTS FOR SUPPLYING THEM TO ITS MEMBERS). SIMI LARLY, INCOME FROM PREMISES GIVEN ON RENT TO BANK OF BARODA, M/S. DHIR AJ SONS (MEGA STORES) AND BARODA SWAROJGAR VIKAS SANSTHAN IS ALSO NOT ELI GIBLE FOR DEDUCTION U/S. 80P OF THE ACT AS IT DOES NOT FULFILL THE CRITERIA PRESCRIBED U/S. 80P(2)(E) AND (F) OF THE ACT. 3.2. BASED ON THE ABOVE THE FRESH COMPUTATION OF INCOME OF THE AP PELLANT WAS DONE ADDING BACK THE INADMISSIBLE EXPENSES IN THE N ATURE OF BUILDING FUND PROVISIONS, PROPERTY EXPENSES, DIFFERENT RESERVES, STAMP DUTY EXPENSES, DONATION, PROVISION FOR NEW LAND COMPOUND, COMPOUND PROVISION, PROPERTY TAX, TDS, BUILDING FUNDS, SABAR GRAM PROJECT PROVIS ION, ETC AND COMPUTING INCOME FROM PROPERTY RENT UNDER HOUSE PROPERTY INCO ME AND INTEREST AND DIVIDEND AS INCOME FROM OTHER SOURCES. IT WAS OBSER VED THAT ASSESSEE WAS ELIGIBLE FOR DEDUCTION U/S. 80P(2)(D) OF THE ACT OF RS.3,92,471/- (INTEREST AND DIVIDEND EARNED FROM OTHER CO-OPERATIVES INCLUDING BANK) AND 80P(2)(C) OF RS.50,000/- AND. 80P(2)(IV) OF THE ACT, RS.28,224/- (PURCHASE AND SALES OF FERTILIZERS FOR MEMBERS). NO DEDUCTION U/S. 80P(2)( A)(III) OF THE ACT - SALE OF PRODUCE OF MEMBERS WAS AVAILABLE SINCE THIS ACTIVIT Y HAD RESULTED IN LOSS TO THE APPELLANT. THE ASSESSEE WAS GIVEN A SHOW CAUSE IN TERMS OF PROVISIONS OF SECTION 251(2) OF THE ACT AS TO WHY HIS INCOME SHOU LD NOT BE DETERMINED IN THIS WAY. THE APPELLANT WAS ALSO REQUIRED TO SHOW A S TO WHETHER PAYMENT OF PROVIDENT FUND AND OTHER SIMILAR DUES AND TAXES WER E ACTUALLY MADE OR NOT WITH A VIEW TO DETERMINE THEIR ADMISSIBILITY. 4. IN ITS REPLY TO THE SHOW CAUSE, IT WAS SUBMITTED BY THE APPELLANT T HAT TAXES HAD BEEN DULY PAID AND PF, ESI DEPOSITED. XEROX OF THESE WERE SUBMITTED. THE APPELLANT SUBMITTED ITS COMPUTATION OF TOTAL INCOME DETERMINING ITS GROSS TOTAL INCOME FROM THE ACTIVITY AT RS. 13,44,132/- AND AFT ER CLAIMING DEDUCTION OF RS.1013074/- ARRIVED AT ITS TAXABLE INCOME OF RS.33 1058/-. THE DEDUCTION CLAIMED UNDER CHAPTER-VIA IN THIS REVISED COMPUTATI ON BY THE ASSESSEE AMOUNTING TO RS.10,13,074/- COMPRISES :- ITA NO.1082 /AH D/2011 ITO VS. THE PUNA KUMBHARIA CO-OP.FRUIT & VEGETABL E SOC.LTD. ASST.YEAR 2007-08 - 5 - I) AGRICULTURAL IMPLEMENTS FOR SUPPLY TO MEMBE RS RS. 28,224/- U/S 80P(2)(A)(IV). II) INTEREST AND DIVIDEND FROM OTHER CO-OPERATI VE SOCIETY RS. 95,471/- U/S 80P(2)(D). III) MARKETING OF AGRICULTURAL PRODUCE OF MEMBER S RS. 5,39,379/- U/S 80P(2)(A)(III). IV) BASIC DEDUCTION RS. 50,000/- U/S 80P(2)(C). TOTAL... RS. 10,13,074/- 5. IT IS SEEN FROM THE COMPUTATION OF INCOME SUBMITTED BY THE APPELLANT'S A.R. DURING THE COURSE OF APPEAL IN RESPONSE TO THE SHOW CAUSE THAT IT HAD NOT DISALLOWED THE FOLLOWING INADMISSIBLE :- COMPOUND PROVISION RS.50,000/- LAND DEVELOPMENT RS. 7,650/- CONSTRUCTION CONTRIBUTION RS.40,825/- MUNICIPAL TAXES PERTAINING TO HOUSE PROPERTY RS.55 ,400/- TOTAL.. RS.L,54,875/- 5.1. IN ADDITION TO THIS THE APPELLANT HAD WRONGLY REDUCED THE ITEMS OF' MUN ICIPAL TAXES PERTAINING TO HOUSE PROPERTIES AS AGAINST ADD ING IT BACK. THIS WOULD INCREASE THE INCOME FROM BUSINESS ACTIVITY FURTHER BY RS.56, 400/-. THEREFORE THE INCOME DETERMINED FROM ITS BUSINESS AND PROFESSION WOULD B E RS.77,598/- (LOSS) AS AGAINST LOSS OF RS.2,88,873/- SHOWN BY THE APPELLANT [ - R S.2,88,873/- + RS.L,54,875/- + RS.56,400/-]. THE GROSS TOTAL INCOME OF THE APPELLA NT WOULD BE HIGHER BY AN AMOUNT OF RS.211275/- THAN WHAT HAS BEEN SHOWN BY THE APPE LLANT IN ITS COMPUTATION OF INCOME SUBMITTED IN RESPONSE TO THE SHOW CAUSE. THE GROSS TOTAL INCOME OF THE APPELLANT IS THEREFORE TAKEN AT RS.1555407/- AS AGA INST RS.1344132/- DETERMINED BY HIM. COMING TO THE DEDUCTIONS CLAIMED BY THE APPELL ANT IN ITS REVISED COMPUTATION BEFORE ME, THE DEDUCTIONS OF RS.28,224/- U/S. 80P(2)(A)(IV) OF THE ACT, RS.50,00 0/- U/S. 80P(2)(C) OF THE ACT AND RS.395471/- U/S. 80P (2)(D) OF THE ACT ARE HELD AS ADMISSIBLE TO THE APPELLANT. ITS CLAIM OF DEDUCTION OF RS.539379/- U/S. 80P(2)(III) OF THE ACT IN RESPECT OF VEGETABLE COMMISSION IS INADM ISSIBLE AS THERE WAS NO PROFIT FROM THIS ACTIVITY. THIS ACTIVITY HAS RESULTED IN A LOSS WHICH HAS WIPED OUT THE PROFITS GENERATED BY THE CNG AND PETROL BUSINESS. THE APPEL LANT IS THEREFORE NOT ELIGIBLE FOR ANY DEDUCTION U/S. 80P(2)(A)(III) OF THE ACT. ITS C LAIM THAT NO EXPENDITURE RELATING TO COMMISSION INCOME RECEIVED FROM MEMBERS IS DEBITED IN THE P. & L. ACCOUNT IS UNTENABLE. ALL EXPENSES PERTAINING TO ALL OTHER ACT IVITIES HAVE BEEN ACCOUNTED FOR SEPARATELY, I.E. IN THE ACCOUNTS MAINTAINED INDIVID UALLY FOR EACH ACTIVITY. THE EXPENSES IN THE P. & L. ACCOUNT PERTAINED ONLY TO T HE VEGETABLE COMMISSION ACTIVITY. THE TOTAL DEDUCTION U/S. 80P OF THE ACT IS ADMISSIB LE TO THE APPELLANT IS ONLY RS.473695/- [ RS.28,224/- + RS.3,95,471/- + RS.50,0 00/-]. THE TOTAL TAXABLE INCOME ITA NO.1082 /AH D/2011 ITO VS. THE PUNA KUMBHARIA CO-OP.FRUIT & VEGETABL E SOC.LTD. ASST.YEAR 2007-08 - 6 - OF THE APPELLANT WHICH IS GROSS TOTAL INCOME LESS D EDUCTION U/S. 80P(2) OF THE ACT WORKS OUT TO RS.10,81,712/- [ RS.15,55,407/- - RS.4 ,73,695/-). THE TOTAL TAXABLE INCOME IS DETERMINED AT RS.1081710/-. THE A.O. IS DIRECTED TO CONSIDER THIS AS TAXABLE INCOME OF THE APPELLANT. 5. THE AFORESAID FINDINGS OF THE LD.CIT(A) IS NOT C ONTROVERTED BY THE REVENUE BY PLACING ANY MATERIAL CONTRARY TO THE FIN DING ON RECORD, THEREFORE WE DO NOT SEE ANY REASON TO INTERFERE WIT H THE ORDER OF THE LD.CIT(A), SAME IS HEREBY CONFIRMED. THUS, GROUND NOS.1(I) TO (V) OF REVENUES APPEAL ARE REJECTED. 6. GROUND NOS.2 & 3 ARE GENERAL IN NATURE WHICH REQ UIRE NO INDEPENDENT ADJUDICATION. 7. IN THE RESULT, REVENUES APPEAL STANDS DISMISSED . ORDER PRONOUNCED IN THE COURT ON THURSDAY, THE 25 TH DAY OF JUNE, 2015 AT AHMEDABAD. SD/- SD/- ( ) ( ) ( ANIL CHATURVEDI ) ( KUL BHARAT ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 25/ 06 /2015 2..,.../ T.C. NAIR, SR. PS ITA NO.1082 /AH D/2011 ITO VS. THE PUNA KUMBHARIA CO-OP.FRUIT & VEGETABL E SOC.LTD. ASST.YEAR 2007-08 - 7 - !'#$%&%# / COPY OF THE ORDER FORWARDED TO : 1. '% / THE APPELLANT 2. &''% / THE RESPONDENT. 3. 345 6 / CONCERNED CIT 4. 6 ( ) / THE CIT(A)-IV, SURAT 5. 78& 45 , 45. , 3 / DR, ITAT, AHMEDABAD 6. 8:;<* / GUARD FILE. / BY ORDER, '7 & //TRUE COPY// / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD 1. DATE OF DICTATION .. 18.6.15 (DICTATION-PAD 4 + P AGES ATTACHED AT THE END OF THIS FILE) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 19.6.15 3. OTHER MEMBER 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. P.S./P.S.25.6.15 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 25.6.15 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER