Income-tax Officer, Ward-1(1), Nashik V. M/s. Joshaba Self Employment & Training Services Co.op Ltd., Nashik

ITA 1349/PUN/2011

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 8530 (ITAT-PUNE)
• Duration Of Justice: 3 year(s) 1 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-12-2014
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 01-12-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 02-11-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: B C MALAKAR

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE SHRI R.S.PADVEKAR, JUDICIAL MEMBER AND SHRI R.K. PANDA, ACCOUNTANT MEMBER ITA NO. 1349/PN/2011 (ASSESSMENT YEAR : 2008-09) ITO, WARD-1(1), NASHIK .. APPELLANT VS. M/S. JOSHOBA SELF EMPLOYMENT AND TRAINING SERVICES CO-OP. LTD., BRAMHAGIRI HOUSING SOCIETY, JAIL ROAD, NASHIK ROAD-422 101 PAN NO.AAAAJ4144M .. RESPONDENT ASSESSEE BY : SHRI NIKHIL PATHAK REVENUE BY : SHRI B.C. MALAKAR DATE OF HEARING : 03-12-2014 DATE OF PRONOUNCEMENT : 09-12-2014 ORDER PER R.K. PANDA, AM : THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINS T THE ORDER DATED 18-08-2011 OF THE CIT(A)-I, NASHIK RELATING T O ASSESSMENT YEAR 2008-09. 2. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESS EE IS A COOPERATIVE SOCIETY ENGAGED IN SOCIAL ACTIVITY AND IMPLEMENTING VARIOUS GOVERNMENT PROJECTS FOR UPLIFTMENT OF THE POOR PEOP LE. IT FILED ITS RETURN OF INCOME ON 20-09-2009 DECLARING NIL INCOME AFTER CLAIMING DEDUCTION U/S.80P OF RS.16,16,869/-. THE CLAIM OF DEDUCTION U/S.80P BY THE ASSESSEE WAS ON THE BASIS OF THE FOLLOWING G ROUNDS : 2 1) THE ASSESSEE IS REGISTERED UNDER MAHARASHT RA STATE CO-OPERATIVE ACT, 1961, SEC 2(23) OF CO-OP ACT, 1961. 2) SEC 80P(A)(II) OF INCOME TAX ACT, 1961. IN CASE OF CO-OP, SOC. ENGAGED IN COTTAGE INDUSTRIE S, THE WHOLE AMOUNT OF PROFIT AND GAINS OF BUSINESS ATTRIBUTABLE TO SUCH ACTIVITY IS EXEMPTED. 3) SEC 80P(A)(IV) OF INCOME TAX ACT, 1961. IN CASE OF CO-OP SOCIETY, ENGAGED IN PURCHASES OF A GRICULTURE IMPLEMENTS, SEEDS, LIVE-STOCK OR OTHER ARTICLES INT ENDED FOR AGRICULTURE FOR THE PURPOSE OF SUPPLYING TO ITS MEM BERS. GROSS RECEIPTS OF THE ASSESSEE INCLUDES PURCHASES O F AGRICULTURE IMPLEMENT, SEEDS, LIVE STOCK. 4) SEC 80P(A)(III) OF INCOME TAX ACT, 1961. EXPRESSION MARKETING UNDER SECTION 80P(2)(A)(III) O F INCOME TAX ACT, 1961 INCLUDES PROCESSING' 2.1 HOWEVER, THE AO HELD THAT THE ACTIVITIES OF THE ASSESSEE DO NOT FALL UNDER ANY OF THE ABOVE CLASSES AS NONE OF THE ACTIVITIES CARRIED OUT BY THE ASSESSEE FALLS UNDER ABOVE CLAUSE OF SECTION 80P. HE, THEREFORE, REJECTED THE CLAIM OF DEDUCTION U/S.80P. SUBSEQUEN TLY, THE AO MADE THE FOLLOWING ADDITIONS/DISALLOWANCE TO THE TOTAL I NCOME OF THE ASSESSEE AND DETERMINED THE TOTAL INCOME AT RS.1,06 ,11,820/- AFTER ALLOWING DEDUCTION OF RS.50,000/- UNDER SECTION 80P (2)(C) OF THE INCOME TAX ACT, 1961. A. DISALLOWANCE U/S.40(A)(IA) FOR NON DEDUCTION OF TAX RS.26,52,701/- B. DISALLOWANCE U/S.40A(3) RS.5,69,750/- C. CASH CREDIT U/S.68 RS.56,83,000/- D. INTEREST ON SUCH CASH CREDIT RS.1,39,500/- ---------------------- RS.1,06,11,820/- ---------------------- 3. IN APPEAL THE LD.CIT(A) HELD THAT ASSESSEE SOCIE TY HAS CARRIED OUT THE ACTIVITIES, I.E. WORK OF CONSTRUCTING AND P ROVIDING HOUSES AND 3 WELLS TO ECONOMICALLY BACKWARD PEOPLE OF SC/ST AS P ER SCHEMES OF THE GOVT. WHICH AMOUNTS TO COTTAGE INDUSTRY AND WHI CH IS ENTITLED FOR DEDUCTION U/S.80P(20(A)(II) OF THE I.T. ACT, 1961. HE ACCORDINGLY DIRECTED THE AO TO RESTRICT THE DISALLOWANCE U/S.80 P TO THE EXTENT OF RS.73,000/- AND ALLOWED DEDUCTION TO THE EXTENT OF RS.15,43,869/-. 3.1 SO FAR AS THE OTHER DISALLOWANCES ARE CONCERNED , HE DELETED THE DISALLOWANCE OF RS.26,52,701/- U/S.40(A)(IA) MADE B Y THE AO ON THE GROUND THAT THE SAID AMOUNT IS NOT PAYABLE AT THE E ND OF THE YEAR. SO FAR AS DISALLOWANCE U/S.40A(3) IS CONCERNED, HE HEL D THAT THE AO IS NOT JUSTIFIED IN DISALLOWANCE OF RS.2,95,400/- U/S.40A( 3) OF THE I.T. ACT AND HE CONFIRMED DISALLOWANCE TO THE EXTENT OF RS.2 ,74,050/- ONLY U/S.40A(3) OF THE I.T. ACT. HE HOWEVER, HELD THAT SINCE THE ASSESSEE IS ENTITLED TO DEDUCTION U/S.80P(2)(A)(II) OF THE ACT IN RESPECT OF THE COTTAGE INDUSTRY INCOME, THEREFORE, THE ADDITION CO NFIRMED U/S.40A(3) BEING EXPENDITURE RELATING TO COTTAGE INCOME SHALL BE ALLOWED AS DEDUCTION U/S.80P(2)(A)(II) OF THE I.T. ACT. 3.2 SO FAR AS THE ADDITION OF RS.56,83,000/- U/S.68 AND INTEREST THEREON TO THE EXTENT OF RS.1,39,500/- IS CONCERNED , THE LD.CIT(A) ALSO DELETED THE SAME ON THE GROUND THAT THE CASH C REDITS EVEN IF TAXED IN THE HANDS OF THE ASSESSEE, WILL BE CONSIDERED AS INCOME FROM THE SAME BUSINESS, I.E., PROVIDING CREDIT FACILITIES TO THE MEMBERS AND THEREFORE THE ASSESSEE WILL BE ENTITLED TO DEDUCTIO N U/S.80P. 4. AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE REVE NUE IS IN APPEAL BEFORE US WITH THE FOLLOWING GROUNDS : 4 1. ON THE FACTS AND IN THE CIRCUMSTANCES AND IN LAW, THE LEARNED CIT (A)-I, NASHIK ERRED IN ADMITTING THAT SOCIETY FUL FILS THE CONDITION TO BE ELIGIBLE FOR DEDUCTION UNDER SEC.80P OF THE INCO ME-TAX ACT, 1961 UNDER 'COTTAGE INDUSTRY'. 2. ON THE FACTS AND IN THE CIRCUMSTANCES AND I N LAW, THE LEARNED CIT (A)-I, NASHIK ERRED IN DELETING THE ADDITION AT RS 16,16,869/- ON ACCOUNT OF DISALLOWANCE OF THE CLAIM OF THE SOCIETY U NDER SEC. 80P OF INCOME TAX ACT, 1961. 3. ON THE FACTS AND IN THE CIRCUMSTANCE AND I N LAW OF THE CASE, THE CIT, APPEAL ERRED IN ADMITTING THAT THE SOCIETY HAS C ARRIED OUT CONTRACT AT VARIOUS PLACES AND SAME HAD BEEN CARRIED OUT BY MEM BERS AND ALSO ERRED IN HOLDING THAT MAJOR CONTRIBUTION OF WORK UN DERTAKEN BY THE SOCIETY IS FROM MEMBERS. 4. ON THE FACTS AND IN THE CIRCUMSTANCE AND IN LAW OF THE CASE, THE CIT(A)-I ERRED IN NOT APPRECIATING THAT TDS IS REQUI RED TO BE MADE FROM CONTRACT PAYMENT OF RS.26,52,701/-, WHICH WAS R IGHTLY DISALLOWED UNDER SEC.40(A)(IA)OF THE I T ACT, 1961. FURTHER, CIT(A) ALSO FAILED TO APPRECIATE THAT SOCIETY IS NOT ELIGIBLE FOR DEDUCTION UNDER SEC.80P OF THE INCOME-TAX ACT, 1961 ON THIS DISALLOWAN CE. 5. ON THE FACTS AND IN THE CIRCUMSTANCE AND I N LAW OF THE CASE, THE CIT(A)-I ERRED IN, DELETING ADDITION OF RS 2,95,040/ - AS THE SOCIETY HAS VIOLATED PROVISIONS OF SEC.40A(3) OF THE INCOME-TAX A CT, 1961. FURTHER, CIT(A) ALSO FAILED TO APPRECIATE THAT SOCIETY IS NOT E LIGIBLE FOR DEDUCTION UNDER SEC.SOP OF THE INCOME-TAX ACT, 1961 ON THIS DISALLOWANCE. 6. ON THE FACTS AND IN THE CIRCUMSTANCE AND I N LAW OF THE CASE, THE CIT(A) ERRED IN DELETING THE ADDITION OF RS 56,83,00 0/-, MADE UNDER SEC.68 OF THE I T ACT, 1961 BEING UNEXPLAINED CASH C REDITS. FURTHER, THE LD. CIT(A) HAS ALSO ERRED IN DELETING THE CONSEQUENTIA L DISALLOWANCE OF INTEREST RS 1,39,500/- ON THE SAID DEPOSITS. FURTHER, CI T(A) ALSO FAILED TO APPRECIATE THAT SOCIETY IS NOT ELIGIBLE FOR DEDUCT ION UNDER SEC.80P OF THE INCOME-TAX ACT, 1961 ON THIS DISALLOWANCE. 7. IT IS THEREFORE PRAYED THAT THE ORDER OF THE LEARNED CIT (A) BE VACATED AND THAT OF THE ASSESSING OFFICER ITO WARD 1(1) , NASHIK, BE RESTORED. 8. THE APPELLANT CRAVES LEAVE TO ADD, AMEND AND ALTER ANY GROUND(S) OF APPEAL. 5. THE LD. COUNSEL FOR THE ASSESSEE AT THE OUTSET R EQUESTED THE BENCH FOR ADMISSION OF THE FOLLOWING NEW ALTERNATE PLEA IN RESPECT OF THE ORDER OF THE LD.CIT(A). THE RESPONDENT SUBMITS THAT WITHOUT PREJUDICE TO ITS C LAIM THAT ITS INCOME IS ELIGIBLE FOR DEDUCTION U/S.80P(2)(A)(II) AS A COTTAGE INDUSTRY, IT IS SUBMITTED THAT THE ASSESSEE SOCIETY IS ENGAGED IN THE ACTIVITY OR COLLECTIVE DISPOSAL OF LABOUR OF ITS MEMBERS AND HENCE, ITS ENTIRE INCOME IS ELIGIBLE FOR DEDUCTION U/S.80P(2)(A)(VI) OF THE ACT. 5 5.1 REFERRING TO THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF B.R. BAMASI VS. CIT REPORTED IN 83 ITR 223 HE SUBMITTED THAT THE HONBLE HIGH COURT HAS HELD THAT THE TRIBU NAL CAN PERMIT THE ASSESSEE TO TAKE A NEW GROUND BEFORE THE TRIBUNAL D URING ARGUMENT IN ANSWER TO AN APPEAL FILED BY THE REVENUE. HE SUBMI TTED THAT IT IS ONLY A LEGAL GROUND AND NO NEW FACTS ARE REQUIRED TO BE INVESTIGATED. THEREFORE, THE ALTERNATE PLEA IN SUPPORT OF THE ORD ER OF THE LD.CIT(A) SHOULD BE ALLOWED. 5.2 THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE LD.CIT(A) HAS DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE BY HOLDING THAT THE INCOME OF THE ASSESSEE IS ELIGIBLE FOR DEDUCTION U/ S.80P(2)(A)(II) OF THE I.T. ACT TREATING THE ASSESSEE AS A COTTAGE INDUST RY. HOWEVER, THE CLAIM OF THE ASSESSEE IS ALLOWABLE U/S.80P(2)(A)(VI ) OF THE I.T. ACT. HE ACCORDINGLY SUBMITTED THAT HE HAS NO OBJECTION IF T HE MATTER IS RESTORED TO THE FILE OF THE AO FOR DECIDING THE ISSUE AFRESH . 6. THE LD. DEPARTMENTAL REPRESENTATIVE ON THE OTHER HAND STRONGLY RELIED ON THE ORDER OF THE AO. 7. AFTER HEARING BOTH THE SIDES, THE ALTERNATE PLEA OF THE LD. COUNSEL FOR THE ASSESSEE IN SUPPORT OF THE ORDER OF THE LD.CIT(A) IS ACCEPTED IN VIEW OF THE DECISION OF THE HONBLE BOM BAY HIGH COURT IN THE CASE OF B.R. BAMASI (SUPRA). SINCE IT IS TH E SUBMISSION OF THE LD. COUNSEL FOR THE ASSESSEE THAT THE ASSESSEE SOCI ETY, WHICH IS ENGAGED IN THE ACTIVITY OF COLLECTIVE DISPOSAL OF L ABOUR OF ITS MEMBERS AND THE ENTIRE INCOME IS ELIGIBLE FOR DEDUCTION U/S .80P(2)(A)(VI) OF THE I.T. ACT, THEREFORE, WE, IN THE INTEREST OF JUSTICE , RESTORE THE ISSUE TO THE 6 FILE OF THE AO WITH A DIRECTION TO EXAMINE THE CLAI M OF THE ASSESSEE AND DECIDE THE ISSUE OF ALLOWABILITY OF CLAIM OF DE DUCTION U/S.80P(2)(A)(VI) OF THE I.T. ACT, 1961. SINCE WE ARE RESTORING THE MATTER TO THE FILE OF THE AO ON THIS PRELIMINARY IS SUE, THEREFORE, WE REFRAIN OURSELVES FROM ADJUDICATING THE OTHER ISSUE S RAISED BY THE REVENUE IN THE GROUNDS OF APPEAL. 8. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON 09-12-2014. SD/- SD/- (R.S.PADVEKAR) (R .K. PANDA) JUDICIAL MEMBER ACCOUNTANT M EMBER PUNE DATED: 09 TH DECEMBER, 2014 SATISH COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE 2. DEPARTMENT 3. THE CIT(A)-I, NASHIK 4. THE CIT-I, NASHIK 5. THE D.R, B PUNE BENCH 6. GUARD FILE BY ORDER // TRUE COPY // ASSISTANT REGISTRAR ITAT, PUNE BENCHES, PUNE