The Bikatty Industrial Co-operative Tea Factory Ltd., The Nilgiris V. ACIT, Coimbatore

ITA 1103/CHNY/2015

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 9536 (ITAT-CHENNAI)
• Duration Of Justice: 11 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-05-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 24-02-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 11-05-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S BALASUBRAMANIAM
• Assessee Lawyers: T BANUSEKAR
• Section: 263

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : CHENNAI . . . , . , # [BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ] ./ I.T.A.NO.1103/MDS/2015 % % / ASSESSMENT YEAR : 2010-11 THE BIKATTY INDUSTRIAL CO - OPERATIVE TEA FACTORY LTD BIKATTY POST THE NILGIRIS 643 209 VS. THE ASSTT. COMMISSIONER OF INCOME-TAX COMPANY CIRCLE IV(1) COIMBATORE [PAN AAAAT 3434 A] ( ( /APPELLANT) ( )*( /RESPONDENT) ( + / APPELLANT BY : SHRI T. BANUSEKAR, CA )*( + /RESPONDENT BY : SHRI S.BALASUBRAMANIAM, CIT + / DATE OF HEARING : 24 - 02 - 2016 + / DATE OF PRONOUNCEMENT : 02 - 05 - 2016 / O R D E R PER A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST T HE ORDER OF THE PRINCIPAL COMMISSIONER OF INCOME-TAX-2, COIM BATORE, DATED 19.3.2015, PASSED U/S 263 OF THE INCOME-TAX ACT, 19 61. ITA NO.1103/15 :- 2 -: 2. THE ASSESSEE HAS RAISED SEVERAL GROUNDS IN ITS APPE AL, HOWEVER, THE CRUXES OF THE ISSUES ARE AS FOLLOWS: (I) THE LD. PRINCIPAL CIT HAS ERRED IN INVOKING TH E PROVISIONS OF SECTION 263 OF THE ACT BY HOLDING THA T THE DEDUCTION U/S. 80P WAS WRONGLY ALLOWED AMOUNTING TO ` 23,08,376/-. (II) THE LD. PRINCIPAL CIT HAS ERRED IN DISALLOWIN G THE PROVISION FOR MAINTENANCE EXPENDITURE AMOUNTING TO ` 6 LAKHS CLAIMED BY THE ASSESSEE. THE SECOND GROUND RAISED BY THE ASSESSEE WITH RES PECT TO MAINTENANCE EXPENDITURE OF ` 6 LAKHS IS NOT PRESSED BY THE LD. A.R AND THEREFORE, DISMISSED AS SUCH. THUS, THE LO NE GROUND THAT REMAINS TO BE ADJUDICATED IS WITH RESPECT TO GROUND NO. (I) I.E., INVOKING POWERS U/S. 263 BY THE LD. PRINCIPAL CIT A GAINST CLAIMING DEDUCTION U/S. 80P OF THE ACT. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A CO- OPERATIVE SOCIETY IN WHICH MAJORITY OF THE MEMBERS ARE REPRESENTATIVES OF THE GOVERNMENT OF TAMILNADU AND SMALL TEA GROWERS. THE ASSESSEES ACTIVITIES ARE PROCURING T EA LEAVES FROM ITS MEMBERS WHO ARE CLASSIFIED AS CLASS A MEMBERS A ND CLASS B MEMBERS. IN THE ASSESSMENT PROCEEDINGS U/S143(3) O F THE ACT, THE LEARNED ASSESSING OFFICER AFTER VERIFYING THE S TATUS OF THE ITA NO.1103/15 :- 3 -: ASSESSEE AND THE TYPES OF MEMBERS IN THE ASSESSEE-S OCIETY, GRANTED THE BENEFIT OF DEDUCTION U/S. 80P OF THE AC T. SUBSEQUENTLY, THE LEARNED PRINCIPAL CIT OPINED THAT THE ASSESSEE WOULD NOT BE ELIGIBLE FOR DEDUCTION U/S. 80P BECAUS E ITS MEMBERS WERE CLASSIFIED AS CLASS A AND B VIZ., ONE WITH THE VOTING POWER AND THE OTHER WITHOUT VOTING POWER. THE LEARNED PRI NCIPAL CIT WAS OF THE VIEW THAT THOUGH THE CHENNAI BENCH OF TH E TRIBUNAL AND CERTAIN OTHER HIGHER JUDICIARY HAD DECIDED THE MATTER IN FAVOUR OF THE ASSESSEE, THE DEPARTMENT HAS FILED AP PEAL TO KEEP THE MATTER ALIVE, AND THEREFORE IT IS BINDING ON HI S PART TO INVOKE POWERS U/S. 263 OF THE ACT, ACCORDINGLY HE HELD THE ORDER OF THE ASSESSING OFFICER TO BE ERRONEOUS AND PREJUDICIAL T O THE INTEREST OF THE REVENUE AND THEREBY INVOKED HIS POWERS U/S. 263 OF THE ACT. THE LEARNED PRINCIPAL CIT ALSO ARRIVED AT THE CONCLUSION THAT THE ASSESSEE-SOCIETY IS USING POWER FOR PROCESSING THE GREEN TEA INTO BLACK TEA AND THEREFORE, THE EXEMPTION IS NOT AVAILABLE U/S. 80P(2)(5) OF THE ACT. WHILE DOING SO, HE OBSERVED A S FOLLOWS IN HIS ORDER:- 2.6 IT IS SEEN THAT THE A.R HAS NOT GIVEN ANY SP ECIFIC SUBMISSIONS JUSTIFYING THE CLAIM OF DEDUCTION U/S 80P(2)(A)(V) WHEN THE PROVISIONS ARE CLEAR THAT THE DEDUCTION IS NOT AVAILABLE WHEN THE SOCIETY USES PO WER FOR ITA NO.1103/15 :- 4 -: THE PROCESSING OF THE AGRICULTURAL PRODUCE. THE A. R HAS NOT REFUTED THE FACT THAT THE ASSESSEE-SOCIETY IS U SING POWER FOR THE PROCESSING OF GREEN TEA INTO BLACK TE A. IN VIEW OF THE FACT THAT THE ASSESSEE-SOCIETY IS USING POWER FOR PROCESSING THE TEA, THE EXEMPTION IS NOT AVAILA BLE FOR THE ASSESSEE U/S 80P(2)(V) ALSO. 2.7 WITH REGARD TO THE QUESTION OF WHETHER MANUFACTURING OF TEA FALLS WITHIN PROCESSING OF AGRICULTURAL PRODUCE, COMING UNDER THE PURVIEW OF S.80P(2)(III) OR S.80P(2)(V), THE A.R. HAS STATED T HAT THE CASE IS COVERED SQUARELY BY THE DECISION OF THE HON 'BLE ITAT, CHENNAI IN THE SALISBURY INDUSTRIAL CO-OP TE A FACTORY LTD., GUDALUR, NILGIRIS, IN I.T.A.NOS.243 T O 248/MDS/2012, WHEREIN THE QUESTION HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE AND THE EXEMPTION HAS BEEN ALLOWED HOLDING THAT THE MANUFACTURING TEA IS NOTHI NG BUT AGRICULTURAL PRODUCE. 2.8 IT IS TO BE STATED THAT THE DEPARTMENT HAS NO T ACCEPTED THE DECISION OF THE HON'BLE ITAT, CHENNAI IN THE ABOVE CASE AND HAS PREFERRED AN APPEAL BEFORE T HE HON'BLE HIGH COURT OF CHENNAI, AS SUBSTANTIAL QUEST ION OF LAW IS INVOLVED. HENCE, IN ORDER TO KEEP THE ISSUE ALIVE AND IN LINE WITH THE STAND TAKEN BY THE DEPARTMENT, THE SUBMISSIONS OF A.R ARE NOT ACCEPTED. 2.9 COMING TO THE ISSUE OF PROCUREMENT OF AGRICU LTURAL PRODUCE FROM NON-MEMBERS, I.E B CLASS MEMBERS, WH O DO NOT HAVE SHARE CAPITAL AD DO NOT HAVE VOTING RIGHTS , AND AGAIN SELLING THE SAME TO THEM, THE A.R HAS SUBMITT ED THAT THE ISSUE HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE IN THE CASE OF M/S SL(SPL), 151 KARKUDALPA TTY PRIMARY AGRICULTURAL CO-OPERATIVE CREDIT SOCIETY LT D VS ITO BY THE HON'BLE ITAT, CHENNAI AND IN THE CASE OF S- ITA NO.1103/15 :- 5 -: 6608 NARASINGAPURAM PACB LIMITED VS ITO WHEREIN IT HAS BEEN HELD THAT FOR AVAILING DEDUCTION U/S 80P, CLASSIFICATION OF MEMBERS IN A AND B IS IRRELEV ANT. THE ASSESSEE-SOCIETYS APPEAL FR THIS A.Y 2010-11 ON TH IS ISSUE HAS ALSO BEEN ALLOWED BY THE CIT(A) VIDE ORDER IN A PPEAL NO.168/13-14 DATED 12.11.2014 IN VIEW OF THE CASE L AWS MEMNTIONED ABOVE. AGAIN, THE DEPARTMENT HAS CONTES TED TH ORDER OF THE HON'BLE ITAT IN THE CASE OF M/S SL(SPL), 151, KARKUDALPATTY PRIMARY AGRICULTURAL CO - OEPRATIVE CREDIT SOCIETY LTD VS ITO BEFORE THE HON' BLE HIGH COURT, CHENNAI, WHICH IS STILL PENDING. AS SU CH, IN ORDER TO KEEP THE ISSUE ALIVE AND IN LINE WITH THE STAND TAKEN BY THE DEPARTMENT, THE SUBMISSIONS OF A.R ARE NOT ACCEPTED. FURTHER, AS THE ENTIRE CLAIM OF DEDUCTIO N U/S 80P IS NOT IN ORDER, THE ISSUE OF PROCUREMENT AND S ALE OF TEA FROM THE CLASS B MEMBERS DOES NOT ARISE. 10. IN VIEW OF THE ABOVE DISCUSSIONS, THE CLAIM O F DEDUCTION U/S 80P IS NOT CORRECT AND THE ORDER OF THE ASSESSING OFFICER IN ALLOWING THE DEDUCTION IS ERRO NEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. 4. THE LD. A.R SUBMITTED BEFORE US THAT THAT THE LEAR NED PRINCIPAL CIT INVOKED HIS POWERS U/S. 263 OF THE AC T ON THE ISSUES THAT WAS ALREADY DECIDED BY THE HIGHER JUDICIARY IN FAVOUR OF THE ASSESSEE WHICH THE LEARNED ASSESSING OFFICER HAS FO LLOWED. THEREFORE, THE ORDER OF HE LEARNED ASSESSING OFFICE R IS NOT ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE RE VENUE. HENCE, ITA NO.1103/15 :- 6 -: IT WAS SUBMITTED THAT THE ORDER UNDER SECTION 263 O F THE LD. PRINCIPAL CIT MAY BE QUASHED. 5. ON THE OTHER HAND, THE LD. DEPARTMENTAL REPRESENTAT IVE ARGUED IN SUPPORT OF THE ORDER OF THE LD. PRINCIPAL CIT. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSE D THE MATERIAL AVAILABLE ON RECORD. FROM THE FACTS OF THE CASE IT IS APPARENT THAT THE LD. PRINCIPAL CIT HAS INVOKED HIS POWERS U/S. 263 BECAUSE THE IDENTICAL ISSUE WAS PENDING BEFORE THE HONBLE CHENNAI HIGH COURT THOUGH THE SAME WAS DECIDED IN F AVOUR OF THE ASSESSEE BY THIS BENCH OF THE TRIBUNAL AND ALSO BY OTHER THE HIGHER JUDICIARY. IN THESE CIRCUMSTANCES, IT CAN B E ONLY CONSIDERED, AS ANOTHER POSSIBLE VIEW ON THE ISSUE. IN THE CASE OF CIT VS GREENWORLD CORPORATION, REPORTED IN (2009)31 4 ITR 81, DECIDED BY THE HONBLE APEX COURT IT HAS BEEN CATEG ORICALLY HELD THAT THE ORDER OF THE LEARNED ASSESSING OFFICER CAN NOT BE INTERFERED ONLY FOR THE REASON THAT ANOTHER VIEW IS POSSIBLE WHILE INVOKING THE POWERS U/S.263 OF THE ACT BY THE LEARN ED CIT. RELYING ON THE ABOVE DECISION OF THE HONBLE APEX C OURT, WE ARE OF THE CONSIDERED VIEW THAT THE LD. PRINCIPAL CIT I S NOT JUSTIFIED IN INVOKING THE POWERS U/S. 263 OF THE ACT IN THE RELE VANT CASE ITA NO.1103/15 :- 7 -: BEFORE US. THEREFORE, WE HEREBY QUASH THE ORDER PA SSED BY THE LD. PRINCIPAL CIT. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWE D. ORDER PRONOUNCED IN THE OPEN COURT ON THE 2 ND MAY, 2016, AT CHENNAI. SD/ - SD/ - ( . . . ) ) (N.R.S. GANESAN) / JUDICIAL MEMBER ( . ) (A. MOHAN ALANKAMONY) / ACCOUNTANT MEMBER / CHENNAI 2 / DATED: 2 ND MAY, 2016 RD + )34 54 / COPY TO: 1. ( / APPELLANT 4. 6 / CIT 2. )*( / RESPONDENT 5. 4 ) / DR 3. 6 () / CIT(A) 6. % / GF