The Bhadran Seva Sahakari Mandali Ltd., Anand V. The Income Tax Officer, Ward-3(4), Petlad

ITA 119/AHD/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 94547 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 9 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-10-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Next Hearing Date: 01-10-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 13-01-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: S N DIVETIA
• Section: 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD SMC BENCH AHMEDABAD BEFORE S/SHRI RAJPAL YADAV, JM & ANIL CHATURVEDI, AM. ITA NO. 2946/AHD/2013 ASST. YEAR 2009-10 AND ITA NO.119 & 120/AHD/2014 ASST. YEAR 2008-09 & 2010-11 THE BHADRAN SEVA SAHAKARI MANDLI LTD.,, NR. BUS STAND, AT & PO: BHADRAN, TAL.BORSAD, DIST. ANAND. VS INCOME-TAX OFFICER, WARD 3(4), PETLAD. (APPELLANT) (RESPONDENT) PA NO. AAAAB0580D APPELLANT BY SHRI S. N. DIVETIA, AR RESPONDENT BY SOMOGYAN PAL, SR.DR DATE OF HEARING: 1/10/2015 DATE OF PRONOUNCEMENT:19/10/2015 O R D E R PER SHRI RAJPAL YADAV, JUDICIAL MEMBER. THE PRESENT THREE APPEALS ARE DIRECTED AT THE INST ANCE OF ASSESSEE AGAINST SEPARATE ORDERS OF CIT(A) DTD. 23/ 09/2013, AND DTD.1.10.2013, PASSED FOR ASST. YEARS 2009-10, 2008 -09 & 2010-11 RESPECTIVELY. THE GROUNDS OF APPEAL TAKEN BY THE AS SESSEE ARE NOT IN CONSONANCE WITH RULE-8 OF ITAT RULES, 1963. THEY AR E DESCRIPTIVE AND ARGUMENTATIVE IN NATURE. IN BRIEF THE GRIEVANCE OF THE ASSESSEE IS THAT LD. CIT(A) HAS ERRED IN UPHOLDING THE DISALLOW ANCE OF DEDUCTION ITA NO.2946, 119 & 120 ASST. YEAR 2009-10, 2008-09 & 2010-11 2 UNDER SECTION 80P(2)(IV) OF THE INCOME-TAX ACT, 106 1 (IN SHORT THE ACT) IN RESPECT OF THE PROFIT EARNED FROM DIESEL PUMP DI VISION. 2. THE FACTS ON VITAL POINTS ARE COMMON, THEREFORE, FOR THE SAKE OF CONVENIENCE, WE TAKE THE FACTS FOR ASST. YEAR 2008- 09. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A CO-OPERATIVE SO CIETY ALLEGED TO HAVE BEEN ESTABLISHED IN 1958. IT IS ENGAGED IN THE BUSINESS OF SELLING FERTILIZERS, PETROL, DIESEL AND RETAIL CONS UMER ITEMS AS WELL AS PROVIDING CREDIT FACILITIES TO ITS MEMBERS THROUGH BANK ETC. THE ASSESSEE IS ASSESSED TO TAX FROM THE ASST. YEAR IT CAME INTO EXISTENCE. IT HAS FILED RETURNS OF INCOME IN ALL TH ESE THREE YEARS DECLARING NIL INCOME. THE LD. AO HAS COMPUTED THE I NCOME THESE YEARS AS UNDER :- FOR AY 2008-09 TOTAL INCOME AS PER RETURN OF INCOME RS.NIL ADD: NET PROFIT FROM DIESEL AND PETROL AS PER ACCOUNT FILED BY THE ASSESSEE RS.4,57,817/- ADD: NET PROFIT FROM PROVISION ITEMS INCLUDING EDIBLE OILS & MISC. RS.14,683/- TOTAL INCOME RS.4,72,500/- LESS: DEDUCTION U/S 80P(2)(II) RS.50,000/- TAXABLE INCOME `RS.4,22,500/- FOR AY 2009-10 TOTAL INCOME AS PER RETURN OF INCOME RS.NIL ADD: NET PROFIT FROM DIESEL AND PETROL AS PER ACCOUNT FILED BY THE ASSESSEE RS.3,94,740/- ADD: NET PROFIT FROM PROVISION ITEMS INCLUDING EDIBLE OILS & MISC. RS.55,508/- ADD: LOSS FROM HANDLOOM, HOSIERY & SCHOOL DRESS RS.(-)759/- TOTAL INCOME RS.4,49,489/- ITA NO.2946, 119 & 120 ASST. YEAR 2009-10, 2008-09 & 2010-11 3 LESS: DEDUCTION U/S 80P(2)(II) RS.50,000/- TAXABLE INCOME `RS.3,99,489/- I.E. RS.3,99,490/- FOR AY 2010-11 TOTAL INCOME AS PER RETURN OF INCOME RS.NIL ADD: NET PROFIT FROM DIESEL AND PETROL AS PER ACCOUNT FILED BY THE ASSESSEE RS.43,300/- ADD: NET PROFIT FROM PROVISION ITEMS INCLUDING EDIBLE OILS & MISC. RS.23,137/- ADD: LOSS FROM HANDLOOM, HOSIERY & SCHOOL DRESS RS.(-) 1,300/- TOTAL INCOME RS.65,137/- LESS: DEDUCTION U/S 80P(2)(II) RS.50,000/- TAXABLE INCOME `RS.15,140/- 3. THE APPEAL TO THE CIT(A) DID NOT BRING ANY RELIE F TO THE ASSESSEE. THE LD. COUNSEL FOR THE ASSESSEE HAS FILE D PAPER BOOK RUNNING INTO 272 PAGES. HE HAS ALSO PLACED ON RECOR D COPIES OF REGISTRATION CERTIFICATES OF THE TRACTORS OWNED BY THE MEMBERS OF THE SOCIETY. THE LD. COUNSEL FOR THE SOCIETY SUBMITTED THAT DIESEL IS AN ITEM WHICH IS USED BY THE FARMERS IN THE AGRICULTUR AL OPERATION. THEREFORE, AS PER SECTION 80P(2)(IV) ANY ARTICLE IN TENDED FOR AGRICULTURAL PURPOSES AND SUCH ARTICLES ARE BEING S UPPLIED BY THE ASSESSEE THAN PROFITS EARNED ON THE SUPPLY OF SUCH ARTICLES WOULD QUALIFY FOR EXEMPTION UNDER SECTION 80P(2) OF THE A CT. HE CONCEDED TO THE FACT THAT THE ASSESSEE HAS NOT BEEN MAINTAINING SPECIFIC ACCOUNT EXHIBITING THE PURCHASE AND SALE OF DIESEL TO THE M EMBERS ONLY. IN THE PAST ASSESSEE HAS RECOGNIZED 70% OF ITS SALE TO THE MEMBERS AND 30% TO GENERAL PUBLIC. THIS ACCOUNTING METHOD ADOPT ED BY THE ITA NO.2946, 119 & 120 ASST. YEAR 2009-10, 2008-09 & 2010-11 4 ASSESSEE HAS ALWAYS BEEN ACCEPTED BY THE AO. THIS Y EAR LD. AO HAS CONSTRUED THAT THE TOTAL SALE IS BEING MADE TO NON- MEMBERS AND DENIED EXEMPTION UNDER SECTION 80P(2) OF THE ACT TO THE ASSESSEE. FOR BUTTRESSING HIS CONTENTIONS HE PLACED ON RECORD COPIES OF CERTAIN BILLS, COPIES OF LEDGER ACCOUNT EXHIBITING DIFFEREN T SALES MADE BY THE ASSESSEE. HE ALSO PLACED ON RECORD DETAILS SHOWING HOW MEMBERS HAVE DEPOSITED THE AMOUNT WITH THE ASSESSEE OUT OF WHICH SALES WERE MADE TO THEM. 4. ON THE OTHER HAND, THE LD. DR RELIED UPON THE OR DER OF A.O. SHE CONTENDED THAT ASSESSEE FAILED TO DEMONSTRATE THE S ALES MADE TO THE MEMBERS AS WELL AS SALES MADE TO THE NON-MEMBERS. T HE ASSESSEE OUGHT TO HAVE MAINTAINED ACCOUNTS SPECIFYING ITS SA LES. 5. WE HAVE DULY CONSIDERED THE RIVAL CONTENTIONS AN D GONE THROUGH THE RECORD CAREFULLY. WE DEEM IT PERTINENT TO NOTE ALL THE RELEVANT PROVISIONS OF SECTION 80P(2) OF THE ACT. I T READ AS UNDER :- 80P. (1) WHERE, IN THE CASE OF AN ASSESSEE BEING A CO- OPERATIVE SOCIETY, THE GROSS TOTAL INCOME INCLUDES ANY INCOME REFERRED TO IN SUB-SECTION (2), THERE SHALL BE DEDUCTED, IN ACCORDANCE WITH AND SUBJECT TO THE PROVISIONS OF THIS SECTION, THE SUMS SPECIFIED IN SUB-SECTION (2), IN COMPUTING THE TOTAL INCOME OF THE ASSESSEE. (2) THE SUMS REFERRED TO IN SUB-SECTION (1) SHALL B E THE FOLLOWING, NAMELY: (A) IN THE CASE OF A CO-OPERATIVE SOCIETY ENGAGED I N (I) CARRYING ON THE BUSINESS OF BANKING OR PROVID ING CREDIT FACILITIES TO ITS MEMBERS, OR (II) A COTTAGE INDUSTRY, OR (III) THE MARKETING OF AGRICULTURAL PRODUCE GROWN BY ITS MEMBERS, OR ITA NO.2946, 119 & 120 ASST. YEAR 2009-10, 2008-09 & 2010-11 5 (IV) THE PURCHASE OF AGRICULTURAL IMPLEMENTS, SEED S, LIVESTOCK OR OTHER ARTICLES INTENDED FOR AGRICULTURE FOR THE PURPOSE OF SUPPLYI NG THEM TO ITS MEMBERS, OR (V) THE PROCESSING, WITHOUT THE AID OF POWER, OF T HE AGRICULTURAL PRODUCE OF ITS MEMBERS, OR (VI) THE COLLECTIVE DISPOSAL OF THE LABOUR OF ITS M EMBERS, OR A BARE PERUSAL OF SUB-CLAUSE (IV) OF SECTION 80P(2) (A) WOULD INDICATE THAT THE SALE OF DIESEL TO THE FARMERS WHO ARE MEMB ERS OF THE ASSESSEE SOCIETY WOULD FALL WITHIN THE MEANING OF E XPRESSION OTHER ARTICLES INTENDED FOR AGRICULTURE FOR THE PURPOSE O F SUPPLYING THEM TO ITS MEMBERS. THUS IF DIESEL IS BEING SUPPLIED TO T HE FARMERS FOR AGRICULTURAL USE, THEN THE PROFIT WOULD QUALIFY FOR DEDUCTION UNDER SECTION 80P(2) OF THE ACT. HOWEVER, WE FIND THAT AS SESSEE HAS NOT BEEN ABLE TO MAINTAIN SPECIFIC DETAILS DEMONSTRATIN G THE SALES EXCLUSIVELY MADE TO THE FARMERS AND WHO HAVE USED S UCH DIESEL FOR AGRICULTURAL OPERATION. IN THE PAST ASSESSEE HAS BE EN CLAIMING DEDUCTION TO THE EXTENT OF 70% ON THE GROUND THAT O NLY 30% OF THE SALES WERE MADE TO THE OUTSIDERS, BUT THIS FIGURE H AS ALWAYS BEEN ADOPTED BY THE ASSESSEE ON ESTIMATE BASIS. THIS SIT UATION PUT US IN A DIFFICULT POSITION. TAKING INTO CONSIDERATION THE M ATERIAL PLACED ON RECORD, THOUGH REMAINED UNVERIFIABLE AND IT IS NOT POSSIBLE TO VERIFY THE SALE BILLS AT THIS STAGE BECAUSE TO IDENTIFY PU RCHASERS OUT OF THE SALE BILLS IS QUITE DIFFICULT FOR ANY ADJUDICATOR. THUS IN THE TOTALITY OF FACTS AND CIRCUMSTANCES OF THE CASE WE DIRECT THE A O TO CONSIDER 50% OF THE SALES TO THE FARMERS WHO ARE MEMBERS OF ASSESSEE SOCIETY. THE REST 50% IS BEING ESTIMATED AS MADE TO THE NON- MEMBERS. THIS ESTIMATION SHOULD NOT BE CONSIDERED A S GUIDING FACTOR ITA NO.2946, 119 & 120 ASST. YEAR 2009-10, 2008-09 & 2010-11 6 IN FUTURE. WE HOPE THAT ASSESSEE WOULD MAINTAIN SPE CIFIC DETAILS EXHIBITING SALES MADE TO THE FARMERS. RATHER THE AS SESSEE SHOULD KEEP SPECIFIC ACCOUNT OF EACH MEMBER WHO IS OWNER O F A TRACTOR OR A DIESEL PUMP OR ANY OTHER MACHINERY REQUIRED FOR AGR ICULTURAL OPERATION. THE AO CAN VERIFY SUCH DETAILS IN FUTURE BY CALLING THAT FARMER. WE ALLOW THE APPEAL PARTLY AND DIRECT THE A O TO RE-COMPUTED THE INCOME OF ASSESSEE AFTER TREATING 50% SALES IN THE DIESEL PUMP OPERATION DIVISION MADE TO THE MEMBERS. THE PROFIT ON SUCH SALES COULD BE CONSIDERED AS ELIGIBLE FOR DEDUCTION UNDER SECTION 80P(2). 6. IN THE RESULT, ALL THE APPEALS FILED BY THE ASSE SSEE ARE PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 19/10/2015 SD/- SD/- (ANIL CHATURVEDI) ACCOUNTANT MEMBER (RAJPAL YADAV) JUDICIAL MEMBER DATED 19/10/2015