The Purshottam Farmers Co.Op.Cotton Ginning & Pressing Soc.,Ltd., Surat V. The ACIT.,Circle-9, Surat

ITA 1395/AHD/2009

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 0351 (ITAT-AHMEDABAD)
• Duration Of Justice: 7 year(s) 5 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-10-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 20-06-2016
• Assessment Year: 2006-2007
• Appeal Filed On: 01-05-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: JAGDISH
• Assessee Lawyers: M K PATEL
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Business income; Depreciation; Earning of tax free income; Cost of acquisition; Fair market value; Valuation report; Assessment record; Unabsorbed depreciation
• Section: 143(3); 50C; 142(1); 14A; 32; 37

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD B BENCH AHMEDABAD BEFORE SHRI S. S. GODARA, JM, & SHRI MANISH BORA D, AM. ITA NO.1395/AHD/2009 ASST. YEAR: 2006-07 THE PURSHOTTAM FARMERS CO- OP. COTTON GINNING & PRESSING SOC. LTD., KHAND BAZAR, VARACHA ROAD, SURAT. VS. ACIT, CIRCLE-9, SURAT. APPELLANT RESPONDENT PAN AAAAT 3000E AND ITA NO.1789/AHD/2009 ASST. YEAR: 2006-07 ACIT, CIRCLE-9, SURAT. VS. THE PURSHOTTAM FARMERS CO-OP. COTTON GINNING & PRESSING SOC. LTD., KHAND BAZAR, VARACHA ROAD, SURAT. APPELLANT RESPONDENT APPELLANT BY SHRI M. K. PATEL, AR RESPONDENT BY SHRI JAGDISH, CIT, DR DATE OF HEARING: 29.7.2016 DATE OF PRONOUNCEMENT: 14/10/2016 O R D E R PER MANISH BORAD, ACCOUNTANT MEMBER . THESE CROSS APPEALS BY THE ASSESSEE AND THE THE RE VENUE FOR ASST. YEAR 2006-07 ARE DIRECTED AGAINST THE ORDER O F LD. CIT(A)-V, SURAT, DATED 13.02.2009 IN APPEAL NO.CAS-V/143/2008 -09 PASSED ITA NO. 1395 & 1789/AHD/2009 ASST. YEAR 2006-07 2 AGAINST ORDER U/S 143(3) OF THE IT ACT, 1961 (IN SH ORT THE ACT) FOR ASST. YEAR 2006-07 ON 11.12.2008 BY ACIT, CIRCLE-9, SURAT . 2. BRIEFLY STATED FACTS OF THE CASE AS CULLED OUT F ROM THE ASSESSMENT RECORD ARE THAT ASSESSEE IS A FARMERS CO -OPERATIVE GINNING AND PRESSING SOCIETY AND INVOLVED IN THE AC TIVITIES OF MARKETING OF AGRICULTURAL PRODUCE OF MEMBERS & SUPP LYING THE SEED FERTILIZERS, INSECTICIDES TO MEMBERS. RETURN OF INC OME WAS FILED ON 31.12.2006 DECLARING TOTAL INCOME AT RS.26,73,820/- WHICH CONSTITUTED INCOME FROM HOUSE PROPERTY AND LOSS UND ER THE HEAD BUSINESS & PROFESSION AND INCOME FROM OTHER SOURCES AFTER CLAIMING DEDUCTION OF RS.60,70,436/- U/S 80P(2)(D) OF THE IT ACT. THE CASE WAS SELECTED FOR SCRUTINY AND NOTICE U/S 143(2) OF THE ACT WAS ISSUED ON 24.12.2007 FOLLOWED BY NOTICE U/S 142(1) ALONG WITH QUESTIONNAIRE WAS DULY SERVED UPON THE ASSESSEE. DURING THE COURS E OF ASSESSMENT PROCEEDINGS, IT CAME TO THE NOTICE OF AS SESSING OFFICER THAT ASSESSEE HAS SOLD LAND OF THE CO-OPERATIVE SOC IETY AND BUILDING ASSOCIATED WITH IT AND GOT INCOME AND NO SUCH INCOM E FIGURED UNDER THE HEAD INCOME FROM CAPITAL GAIN. ON FURTHER VERIF ICATION IT WAS OBSERVED THAT DURING ASST. YEAR 2005-06 A DEPOSIT O F RS.25.47 CRORES WAS SHOWN AS ADVANCE AND IN ASST. YEAR 2006-07 THE SAME WAS ADJUSTED AGAINST SALE CONSIDERATION. IN ASST. YEAR 2006-07 A DEPOSIT OF RS.12,47,20,000/- IN THE BONDS OF NATIONAL BANK FOR AGRICULTURAL AND RURAL DEVELOPMENT (NABARD) AND ALSO RS.6,17,30, 000/- AS DEPOSIT IN THE NATIONAL HOUSING BANK HAVE BEEN SHOW N. ON FURTHER GATHERING OF RELEVANT DOCUMENTS AND DETAILS IT WAS OBSERVED BY ASSESSING OFFICER THAT DURING THE YEAR UNDER APPEAL ASSESSEE HAS ITA NO. 1395 & 1789/AHD/2009 ASST. YEAR 2006-07 3 SOLD 35,336 SQ.M. LAND FOR RS.25,47,49,129/- AND EX EMPTION U/S 54EC OF THE ACT CLAIMED FOR INVESTMENT IN SPECIFIE D ASSETS I.E NABARD AND NATIONAL HOUSING BANK OF RS.18,64,50,00 0/-. THESE INFORMATION WERE FURNISHED THROUGH REVISED COMPUTAT ION OF INCOME FILED ON 6.11.2008 I.E. DURING THE COURSE OF ASSESS MENT PROCEEDINGS. ON FURTHER EXAMINATION OF DETAILS OF CAPITAL GAIN L D. AOS MAIN FOCUS WAS ON SALE CONSIDERATION. AS PER THE REGISTERED VA LUERS REPORT FAIR MARKET VALUE OF IMPUGNED LAND WAS RS.5,800/- PER S Q.M. IN THE YEAR 2003. JANTRI RATE AS PER STAMP DUTY AUTHORITY DURIN G F.Y. 2005-06 WAS AT RS.8000/- PER SQ.M.. MARKET VALUE OF THE LAN D AS ESTIMATED BY LD. ASSESSING OFFICER ON THE BASIS OF COMPARATIVE S ALE INSTANCES WAS RS.10,000/- PER SQ.M. AS REGARDS DEPARTMENTAL VALUA TION REPORT, REFERENCE WAS MADE TO DVO VIDE LETTER DATED 7.11.20 08 BUT REPORT WAS AWAITED TILL FINALIZATION OF THE ASSESSMENT. LD . ASSESSING OFFICER WENT AHEAD TO CALCULATE CAPITAL GAIN BY APPLYING TH E RATE OF RS.10,000/- PER SQ.M. ON 33,817/- SQ.M. LAND AND AS REGARDS REMAINING PART OF 1519 SQ.M. LAND OCCUPIED BY TENAN TS SALE CONSIDERATION SHOWN BY ASSESSEE WAS ACCEPTED. ACCOR DINGLY ADDITION TOWARDS LONG TERM CAPITAL GAIN WAS CALCULATED AT RS .8,34,45,225/-. 3. THE ASSESSING OFFICER ALSO DISALLOWED THE DEDUCT ION OF UNABSORBED DEPRECIATION OF RS.53,90,948/- AND CURRE NT DEPRECIATION OF RS.4,58,320/- TAKING INTO CONSIDERATION THE PROV ISIONS OF SECTION 14A OF THE ACT AND OBSERVED THAT ASSESSEE IS NOT EL IGIBLE FOR DEDUCTION AS WELL AS CARRY FORWARD TO FUTURE YEARS FOR SETTING OFF AGAINST OTHER HEADS OF INCOME WHICH ARE TAXABLE IN THE CASE OF ASSESSEE. THE ASSESSING OFFICER ALSO DENIED DEDUCTI ON OF ITA NO. 1395 & 1789/AHD/2009 ASST. YEAR 2006-07 4 RS.20,16,663/- U/S 80P OF THE ACT AS THERE WAS NO P OSITIVE INCOME UNDER THE HEAD BUSINESS OR PROFESSION. AFTER MAKI NG AFORESAID ADDITIONS AND DISALLOWANCE OF DEPRECIATION AND DEDU CTION U/S 80P(2)(D) OF THE ACT INCOME WAS ASSESSED AT RS.9,44 ,55,900/-. 4. AGGRIEVED, ASSESSEE WENT IN APPEAL BEFORE LD. CI T(A) AND PARTLY SUCCEEDED, 5. ASSESSEE AND REVENUE BOTH ARE NOW IN APPEAL BEFO RE THE TRIBUNAL. 6. FIRST WE TAKE UP ASSESSEE S APPEAL IN ITA NO.13 95/AHD/2009. GROUND NO.1 READS AS UNDER :- 1. THE LD. CIT(A(-V, SURAT HAS GRIEVOUSLY ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN ADOPTING THE SAL E RATE OF RS.10,000/- PER SQ. METRE AS AGAINST THE SALE RATE OF RS.7301/- PER SQ. METRE SHOWN BY THE ASSESSEE IN RESPECT OF L AND SOLD AND THEREBY CONFIRMING THE ADDITION TO CAPITAL GAIN S INCOME. 7. IN THE APPEAL AGAINST THE IMPUGNED ADDITION BY W AY OF APPLYING SALE PRICE AT RS.10,000/- PER SQ.M. ON THE LAND MEA SURING 33817 SQ.M. MADE BY ASSESSING OFFICER, AND LD. CIT(A) SUS TAINED THE IMPUGNED ADDITION BY OBSERVING AS UNDER :- I HAVE CONSIDERED THE SUBMISSIONS MADE BY THE ASSES SEE, THE FINDINGS OF THE AO AS CONTAINED IN THE ASSESSMENT ORDER AS ALSO THE MATERIALS AND EVIDENCES ON RECORD HOWEVER, THE ARGUMENTS OF THE A SSESSEE ARE NOT ACCEPTABLE SINCE- IN THE VALUATION REPORT OF THE GOVT. APPROVED VALUE R FOR THE COST OF ACQUISITION OF THE LAND AS ON 01-04-1931 THE VALUE ADOPTED IS RS. 450/- PER SQ. MTR I.E. 3.28 TIMES OF THE COMPARABLE SALE INST ANCE OF RS. 136/- PER SQ. ITA NO. 1395 & 1789/AHD/2009 ASST. YEAR 2006-07 5 MTR. WHEREAS IN THE VALUATION REPORT OF THE SAME VA LUER THE SALE RATE AS ON 2-12-2003 HAS BEEN ADOPTED AT RS. 5800/- PER SQ. MT R. I.E. ONLY 1.37 TIMES OF THE COMPARABLE SALE INSTANCE OF RS. 4238/- PER S Q. MTR., WHICH IS ABSOLUTELY INCONSISTENT AND ADOPTING THE BASIS OF V ALUATION AS PER THE REPORT GIVING THE COST AS ON 1-4-81, I.E. 3.28 TIME S OF THE COMPARABLE SALE INSTANCE THE MARKET RATE WOULD WORK OUT TO RS. 1390 0/- PER SQ. MTR. (I.E RS. 4238 X 3.28 TIMES), AS AGAINST WHICH THE AO HAS ADO PTED A RATE OF RS. 10,000/- PER SQ. MTR. WHICH IS MOST FAIR AND REASON ABLE AND DOES NOT CALL FOR ANY INTERFERENCE. OUT OF THE TOTAL LAND OF 35,336 SQ. MTRS, SOLD DURI NG THE YEAR ONLY 1,519 SQ. MTRS OF LAND WAS OCCUPIED BY THE TENANTS WHICH IS V ERY NEGLIGIBLE AND THE AO HAS ACCEPTED THE SALE PRICE AS SHOWN BY THE ASSE SSEE IN RESPECT OF THE SAID 1,519 SQ. MTRS. OF LAND AND ONLY FOR THE B ALANCE NON TENATED LAND OF 33817 SQ. MTRS. THE SALE RATE OF RS. 10,000- PER . SQ. MT. HAS BEEN ADOPTED BY HIM. FURTHER, IT IS ALSO SENT THAT THE PROPERTY OF THE A SSESSEE IS SITUATED IN A VERY COMMANDING LOCATION AT VARACHHA MAIN ROAD AND IS VERY CLOSE TO SURAT RAILWAY STATION WHICH IS A VERY PROMINENT COM MERCIAL AND INDUSTRIAL AREA OF SURAT AS STATED BY THE VALUER IN HIS VALUAT ION REPORT AVAILED FOR THE PURPOSE OF COST OF ACQUISITION AS ON 01-04-1981. MOREOVER, IT IS PERTINENT TO NOTE THAT THE SAME VAL UER HAS VALUED THE LAND OF SURAT DISTRICT SPINNING MILLS LOCATED AT RS. 5,948/ - PER SQ. MT. WHICH IS IN FACT 4 KM. AWAY ON THE INTERIOR SIDE FROM THE LAND OF THE ASSESSEE THAT TOO IN THE YEAR 2000 I.E. SIX YEARS BACK. HENCE, CONSID ERING THIS FACTOR THE VALUATION OF THE LAND OF THE ASSESSEE WHICH IS ON T HE MAIN VARACHHA ROAD AND MUCH NEARER TO THE RAILWAY STATION AT RS. 5,800 /- PER SQ. MT. THAT TOO AFTER THREE YEARS IN THE YEAR 2003 CANNOT BE ACCEPT ED. FURTHER, THE AO HAS ALSO GIVEN ANOTHER COMPARABLE INSTANCE OF SALE RATE OF AROUND RS. 40,000/- PER SQ, MT. IN THE CASE OF MANGUKIA BROTHERS OF LAN D IN NEARBY VICINITY WHICH ALSO THE ASSESSEE NOT BEEN ABLE TO REBUT. ANOTHER IMPORTANT FACT IS THAT THE VALUATION OF RS. 5,800/- PER SQ. MT. HAS BEEN MADE FOR THE YEAR 2003 WHEN THE LAND IS SOLD I N THE YEAR 2006 AND THE JANTRY RATE (STAMP DUTY VALUATION) FOR THE YEAR 2006 IS RS. 8,000/- PER SQ, MT. WHEREAS THE MARKET VALUE OF THE LAND IS RS. 20,000/- TO RS. 30,000/- PER SQ. MT. IN THIS REGARD, ! AGREE WITH T HE AO THAT IN THE CITY OF SURAT, THE JANTRY RATE WAS NOT REVISED SINCE LAST M ANY YEARS AND THUS, THERE WAS HUGE DIFFERENCE IN THE ACTUAL MARKET RATE AND T HE JANTRY, WHICH HAS BEEN ULTIMATELY BEEN REVISED TO RS. 14,000/- PER SQ . MT. W.E.F. 01-04-2008 ITA NO. 1395 & 1789/AHD/2009 ASST. YEAR 2006-07 6 AND ACCORDINGLY, I AM OF THE OPINION THAT THE AO HA S BEEN QUITE FAIR AND REASONABLE IN ADOPTING THE BARE MINIMUM VALUE OF RS . 1Q,000/- PER SQ. MT. THE ASSESSEE'S ARGUMENT THAT IT HAS NOT RECEIVED AN Y NOTICE OF ADDITIONAL STAMP DUTY AND HENCE THE VALUE AS PER THE SALE DEED HAS TO BE ACCEPTED IS ALSO NOT ACCEPTABLE SINCE THE STAMP DUTY VALUE O F ALL THE LANDS IN THE STATE OF GUJARAT HAS BEEN REVISED WITH EFFECT FROM 01-04-2008 AND AS PER THE REVISED STAMP DUTY VALUATION THE SALES RATE OF THE SAID LAND IS RS. 14,500/- PER SQ. MT. THIS INCREASE IN THE STAMP DUT Y VALUATION CLEARLY INDICATES THAT OVERNIGHT THE VALUE OF LAND CANNOT I NCREASE BY 2 TO 3 TIMES I.E. FROM RS. 5,800 PER SQ. MT. TO RS. 14,500/- PER SQ. MT. AND THUS, IT GETS ESTABLISHED THAT THE ACTUAL VALUE OF LAND PRIOR TO 01-04-2008 WAS ALSO MUCH HIGHER. AS REGARDS THE ASSESSEE'S ARGUMENT THAT THE REVENUE HAS NOT DISCHARGED THE ONUS OF PROVING THE UNDER STATEMENT AND ITS REL IANCE ON THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF K.P. VARGH ESE (SUPRA), I AM OF THE OPINION THAT THE AO HAS FULLY DISCHARGED THE ON US OF PROVING UNDERSTATEMENT NOT ONLY FROM THE VALUATION REPORTS SUBMITTED BY THE ASSESSEE, ADOPTING DIFFERENT BASIS BUT ALSO FROM OT HER COMPARABLE INSTANCES AND EVEN THE STAMP DUTY VALUATION AND THU S, THE DECISION AS RELIED UPON BY THE ASSESSEE IS NOT APPLICABLE TO TH E FACTS OF THE CASE. HENCE, I HOLD THAT THE AO HAS BEEN FAIR AND REASONA BLE IN ADOPTING THE SALES RATE AT RS. 10,000/- PER SQ. MT. AND COMPUTIN G LONG TERM CAPITAL GAIN ON THE SAID BASIS AND THEREFORE, THE GROUNDS OF THE ASSESSEE REGARDING ADOPTION OF SALE RATE OF RS. 10,000/- PER SQ. MT. A ND COMPUTING LONG TERM CAPITAL GAIN ON THE SAID BASIS ARE HEREBY DISMISSED . 8. LD. AR SUBMITTED THAT AS PER VALUATION REPORT OF REGISTERED VALUER THE VALUE OF THE LAND HAS BEEN VALUED AT RS. 5,800/- PER SQ. M. WHEREAS THE SALE PRICE SHOWN BY ASSESSEE IS RS.7301 /- PER SQ.M.. FURTHER NO NOTICE ON ADDITIONAL STAMP DUTY HAS BEEN RECEIVED FROM THE STAMP DUTY AUTHORITIES WHICH STRENGTHENS THE CA SE OF ASSESSEE THAT VALUE AS PER SALE DEED HAS TO BE ACCEPTED. FUR THER NO REPORT OF THE DEPARTMENTAL VALUATION OFFICER HAS BEEN RECEIVE D TILL DATE WHICH ITA NO. 1395 & 1789/AHD/2009 ASST. YEAR 2006-07 7 MIGHT HAVE JUSTIFIED THE IMPUGNED ADDITION MADE BY THE ASSESSING OFFICER. 9. LD. AR FURTHER SUBMITTED THAT ADVERTISEMENT FOR SALE OF THE LAND WAS GIVEN IN DIFFERENT LOCAL NEWS PAPERS IN SURAT A LONG WITH CLARIFICATION THAT SOME PORTION OF THE LAND I.E. 15 19 SQ.M. IS OCCUPIED BY THE TENANTS OUT OF TOTAL 35336 SQ.M. NECESSARY T ENDERS WERE CALLED FOR AND NEGOTIATIONS WERE MADE WITH THE PROS PECTIVE BUYERS SO THAT BETTER SALE PRICE CAN BE ACHIEVED. IN THIS PRO CESS RATNATAL REALTY SERVICES PVT. LTD. OFFER OF RS.7,301/- PER. SQ.M. WAS ACCEPTED. FURTHER WHEN THE ASSESSING OFFICER REFERRED THE MAT TER TO THE DEPARTMENTAL VALUATION OFFICER (DVO) NOTHING WAS DO NE BY DVO. THEREAFTER LD. ASSESSING OFFICER APPLIED ESTIMATED RATE OF RS.10,000/- PER SQ.M. FOR 33817 SQ.M. WHICH WAS NOT HAVING ANY BASIS. IN THESE CIRCUMSTANCES SALE CONSIDERATION OF RS.7301/- PER S Q.M. SHOULD HAVE BEEN ACCEPTED BY THE LOWER AUTHORITIES. LD. AR REFE RRED AND RELIED ON THE DECISION OF THE CO-ORDINATE BENCH IN THE CASE O F SURAT DIST. CO- OP. SPINNING MILLS LTD. VS. ACIT IN ITA NO.3381/AHD /2008 DATED 17.2.2009 AND ANOTHER DECISION OF THE CO-ORDINATE B ENCH IN THE CASE OF DCIT VS. SURAT DIST. CO-OP. SPINNING MILLS LTD. IN ITA NO.3384 & 1612/AHD/2010 WITH CO. NO.41/AHD/2011 FOR ASST. YEA RS 2003-04 & 2004-05 VIDE ORDER DATED 10.5.2013. 10. ON THE OTHER HAND LD. DR RELIED ON THE ORDERS O F LOWER AUTHORITIES AND ALSO SUBMITTED THAT THE VALUATION R EPORT WHICH HAS BEEN HEAVILY RELIED UPON BY THE ASSESSEE HAS BEEN M ADE BY THE SAME REGISTERED VALUER WHO HAS VALUED THE LAND AT R S.5,948/- PER ITA NO. 1395 & 1789/AHD/2009 ASST. YEAR 2006-07 8 SQ.M. IN THE YEAR 2000 IN THE CASE OF SURAT DISTRIC T CO-OP. SPINNING MILLS LOCATED ON THE SAME VARACHHA ROAD 4-5 KMS. A WAY FROM ASSESSEES LAND. ON THE OTHER HAND, ASSESSEES LAN D WHICH IS SITUATED JUST 200 METRES FROM THE RAILWAY STATION A ND HAVING A PRIME LOCATION HAS BEEN VALUED BY THE SAME REGISTERED VAL UER AT RS.5,800/- PER SQ.M. IN THE YEAR 2003. THIS ITSELF SHOWS THAT IN THREE YEARS THERE HAS BEEN NO INCREASE IN THE LAND PRICE. 11. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD AND ALSO GONE THROUGH THE DECIONS/JUDGMEN TS REFERRED AND RELIED ON BY THE ASSESSEE. THROUGH THIS GROUND ASSE SSEE HAS CHALLENGED THE ORDER OF LD. CIT(A) SUSTAINING THE A DDITION TOWARDS LONG TERM CAPITAL GAIN BY WAY OF APPLYING SALE PRI CE AT RS.10,000/- PER SQ.M. AS AGAINST RS.7,301/- PER SQ.M. SHOWN BY THE ASSESSEE. WE FIND THAT DURING THE YEAR UNDER APPEAL ASSESSEE HAS SOLD 35,336 SQ.M. OF LAND SITUATED AT VARACHHA ROAD, SURAT OUT OF WHICH1519 SQ.M. LAND WAS OCCUPIED BY TENANTS. THE SALE CONSI DERATION OF 1519 SQ.M. OF LAND HAS BEEN ACCEPTED BY THE REVENUE AS S HOWN BY THE ASSESSEE SO THERE IS NO DISPUTE WITH REGARD THERETO . AS FAR AS REMAINING LAND PORTION OF LAND 33817 SQ.M. ASSESSEE HAS SHOWN SALE PRICE OF RS.7,301/- PER SQ.M. JANTRI PRICE AS PER THE STAMP DUTY AUTHORITIES RS.8,000/- PER SQ. M. AS PER REGISTERED VALUERS REPORT DATED 2.12.2003 THE FAIR MARKET VALUE RATE HAS BEEN SHOWN AT RS.5,800/- PER SQ. M. DVO WHO WAS REQUESTED BY ASS ESSING OFFICER TO PROVIDE THE VALUATION REPORT VIDE LETTER DATED 7 .11.2008 IS STILL PENDING FOR ACTION AS NO REPORT HAS BEEN RECEIVED T ILL DATE. LD. ASSESSING OFFICER ON THE BASIS OF COMPARATIVE SALE PRICE IN THE ITA NO. 1395 & 1789/AHD/2009 ASST. YEAR 2006-07 9 IMMEDIATELY VICINITY ESTIMATED THE FAIR MARKET VALU E BY WAY OF APPLYING RS.10,000/- PER SQ.M. 12. APART FROM THE ABOVE FACTS, ONE MORE CRUCIAL PO INT WHICH CAME UP DURING THE ASSESSMENT PROCEEDINGS WHICH RELATES TO THE SALE OF LAND AT VARACHHA ROAD 4-5 KMS. AWAY FROM ASSESSEES LAND OWNED BY SURAT DISTRICT CO-OP.SPINNING MILLS WHICH HAPPENED IN THE YEAR 2000 AND VALUED AT RS.5948/- PER SQ.M. BY THE SAME REGIS TERED VALUER WHO HAS VALUED THE LAND OF ASSESSEE IN THE YEAR 200 3 AT RS.5,800/- PER SQ.M. EVEN WHEN IT WAS HAVING LOCATIONAL ADVANT AGE IN COMPARISON OF THE LAND OWNED BY SURAT DISTRICT SPIN NING MILLS PVT. LTD. AS THE LAND WAS VERY CLOSE TO THE RAILWAY STAT ION. THESE TWO REPORTS OF THE SAME REGISTERED VALUER IN THE YEAR 2 000 AND 2003 INDICATE THAT THERE HAS BEEN NO INCREASE IN THE FAI R MARKET VALUE OF LAND AND THEREFORE THE REGISTERED VALUERS REPORT I S NOT CONVINCING. 13. SIMILARLY ADOPTION OF ESTIMATED RATE OF RS.10,0 00/- PER SQ.M. BY LD. ASSESSING OFFICER WAS NOT HAVING ANY AUTHENTIC BASIS EXCEPT COMPARATIVE SALE INSTANCES AND EVEN THE REFERENCE M ADE TO THE DVO VIDE LETTER DATED 7.11.2008 ISSUED BY ASSESSING OF FICER HAD NO ACTION AND AS A RESULT LD. ASSESSING OFFICER ESTIMA TED THE RATE OF RS.10,000/- PER SQ.M. FOR 33817 SQ.M. HOWEVER, JAN TRI RATE OF RS.8,000/- PER SQ.M. FOR THE F.Y.2005-06 AS OBSERVE D IN THE ASSESSMENT ORDER SEEMS TO FULFILL THE CONDITIONS EN VISAGED U/S 50C OF THE ACT WHICH READS AS BELOW :- ITA NO. 1395 & 1789/AHD/2009 ASST. YEAR 2006-07 10 50C. (1) WHERE THE CONSIDERATION RECEIVED OR ACCRUING A S A RESULT OF THE TRANSFER BY AN ASSESSEE OF A CAPITAL ASSET, BEING LAND OR BUILDING OR BOTH, IS LESS THAN THE VALUE ADOPTED OR ASSESSED [OR ASSESSABLE] BY ANY AUTHORITY OF A STAT E GOVERNMENT (HEREAFTER IN THIS SECTION REFERRED TO AS THE 'STAMP VALUATION AUTHORITY' ) FO R THE PURPOSE OF PAYMENT OF STAMP DUTY IN RESPECT OF SUCH TRANSFER, THE VALUE SO ADOPTED O R ASSESSED [OR ASSESSABLE] SHALL, FOR THE PURPOSES OF SECTION 48 , BE DEEMED TO BE THE FULL VALUE OF THE CONSIDERATI ON RECEIVED OR ACCRUING AS A RESULT OF SUCH TRANSFER. (2) WITHOUT PREJUDICE TO THE PROVISIONS OF SUB-SECT ION (1), WHERE ( A ) THE ASSESSEE CLAIMS BEFORE ANY ASSESSING OFFICER THAT THE VALUE ADOPTED OR ASSESSED 16 [OR ASSESSABLE] BY THE STAMP VALUATION AUTHORITY UN DER SUB-SECTION (1) EXCEEDS THE FAIR MARKET VALUE OF THE PROPERTY AS ON THE DATE OF TRANSFER; ( B ) THE VALUE SO ADOPTED OR ASSESSED [OR ASSESSABLE] BY THE STAMP VALUATION AUTHORITY UNDER SUB-SECTION (1) HAS NOT BEEN DISPUTED IN ANY APPEAL OR REVISION OR NO REFERENCE HAS BEEN MADE BEFORE ANY OTHER AUTHORITY, COURT OR THE HIGH COURT, THE ASSESSING OFFICER MAY REFER THE VALUATION OF TH E CAPITAL ASSET TO A VALUATION OFFICER AND WHERE ANY SUCH REFERENCE IS MADE, THE PROVISION S OF SUB-SECTIONS (2), (3), (4), (5) AND (6) OF SECTION 16A, CLAUSE ( I ) OF SUB-SECTION (1) AND SUB-SECTIONS (6) AND (7) O F SECTION 23A, SUB-SECTION (5) OF SECTION 24, SECTION 34AA, S ECTION 35 AND SECTION 37 OF THE WEALTH-TAX ACT, 1957 (27 OF 1957), SHALL, WITH NECE SSARY MODIFICATIONS, APPLY IN RELATION TO SUCH REFERENCE AS THEY APPLY IN RELATION TO A RE FERENCE MADE BY THE ASSESSING OFFICER UNDER SUB-SECTION (1) OF SECTION 16A OF THAT ACT. [ EXPLANATION 1 ]. FOR THE PURPOSES OF THIS SECTION, 'VALUATION OFFICE R' SHALL HAVE THE SAME MEANING AS IN CLAUSE ( R ) OF SECTION 2 OF THE WEALTH-TAX ACT, 1957 (27 OF 1 957). [ EXPLANATION 2. FOR THE PURPOSES OF THIS SECTION, THE EXPRESSION 'A SSESSABLE' MEANS THE PRICE WHICH THE STAMP VALUATION AUTHORITY WOULD HAV E, NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN ANY OTHER LAW FOR THE TIME BE ING IN FORCE, ADOPTED OR ASSESSED, IF IT WERE REFERRED TO SUCH AUTHORITY FOR THE PURPOSES OF THE PAYMENT OF STAMP DUTY.] (3) SUBJECT TO THE PROVISIONS CONTAINED IN SUB-SECT ION (2), WHERE THE VALUE ASCERTAINED UNDER SUB-SECTION (2) EXCEEDS THE VALUE ADOPTED OR ASSESSED [OR ASSESSABLE] BY THE STAMP VALUATION AUTHORITY REFERRED TO IN SUB-SECTION (1), THE VALUE SO ADOPTED OR ASSESSED [OR ASSESSABLE] BY SUCH AUTHORITY SHALL BE TAKEN AS THE FULL VALUE OF THE CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF THE TRANSFER.] 14. ON ANALYZING THE FACTS WITH REFERENCE TO THE AB OVE PROVISIONS OF THE ACT IT CONTEMPLATES THAT FOR THE PURPOSE OF CAL CULATION OF CAPITAL GAIN IF THE SALE CONSIDERATION IS LESS THAN THE VAL UE ASSESSABLE BY ANY AUTHORITY OF A STATE GOVERNMENT I.E. JANTRI RATE TH EN THE SAID JANTRI RATE SHALL BE DEEMED TO BE THE FULL VALUATION OF CONSIDE RATION RECEIVED OR ACCRUING AS A RESULT OF TRANSFER. AS PER THE PROVIS IONS OF SEC.50C(2) OF ITA NO. 1395 & 1789/AHD/2009 ASST. YEAR 2006-07 11 THE ACT THE ASSESSING OFFICER IF NOT SATISFIED WITH THE VALUE SO ADOPTED THEN HE MAY REFER THE VALUATION OF THE CAPITAL ASSE T TO VALUATION OFFICER, WHICH IN THIS CASE IS THE IMPUGNED LAND FO R WHICH REFERENCE WAS MADE TO THE DVO BUT NO REPORT HAS BEEN RECEIVED . 14.1 WE FURTHER OBSERVE THAT THE CO-ORDINATE BENCH IN THE CASE OF DCIT VS. SURAT DIST. CO-OP. SPINNING MILLS LTD. IN ITA NOS.3384 AND 1612/AHD/2010 FOR ASST. YEARS 2003-04 & 2004-05 VID E ORDER DATED 10.5.2013 DEALT WITH SUCH ISSUE BY OBSERVING AS BEL OW :- 5. WE HAVE CONSIDERED RIVAL SUBMISSIONS CAREFULLY A ND HAVE GONE THROUGH THE ORDERS OF THE AO AND THE CIT(A). WE FIND THAT EVEN AFTER THE DELETION OF PROVISION OF SECTION 52(1) FROM THE STATUTE, THE ONUS LIES WITH THE REVENUE T O PROVE BY BRINGING SOME EVIDENCE ON RECORD THAT THE ASSESSEE HAS TAKEN SOME AMOUNT, OVER AND ABOVE, THE STATED SALE CONSIDERATI ON IN THE REGISTERED DOCUMENTS, EVIDENCING THE SALE OF IMMOVABLE PROPERT Y. NO SUCH EVIDENCE COULD BE BROUGHT ON RECORD BY THE REVENUE. THE DVO HAS NO T FILED VALUATION REPORT TILL DATE. IT IS NOT A DISPUTED FACT THAT THE ASSESSEE H AS CLOSED ITS BUSINESS IN THE YEAR 1999 AND HAS NOT DONE ANY OTHER BUSINESS TILLITA NO .3384 AND 1612/AHD/2010 WITH CO NO.41/AHD/2011 THE YEAR 2007-2008. IT IS AL SO UNDISPUTED FACT THAT DURING THE PERIOD FROM 1999 TO 2007, THE ASSESSEE H AS SOLD OUT ITS MACHINERY AND HAS ALSO DEMOLISHED ALL THE FACTORY BUILDING, A ND CLEARED THE LAND. THE ASSESSEE WAS UNDER HEAVY LIABILITY OF PAYMENT OF DU ES TO ITS EX-EMPLOYEES. THE MATTER HAS TRAVELLED TILL THE LEVEL OF THE HON'BLE HIGH COURT, WHICH HAS DIRECTED AND EMPOWERED THE PRESIDENT OF THE EMPLOYEES' UNION TO SELL THE LAND IN QUESTION. IN THE FACTS OF THE CASE, THERE SEEMS TO BE NO JUSTIFICATION FOR SUBSTITUTING THE APPARENT SALE CONSIDERATION OF THE LAND IN QUESTION WITH AN ESTIMATE OF THE FAIR MARKET VALUE OF THE LAND IN QU ESTION, AND PARTICULARLY SO, IN VIEW OF ABSENCE OF ANY MATERIAL BROUGHT ON RECORD T O SUGGEST THE UNDERSTATEMENT OF THE SALE CONSIDERATION OR CHARGIN G OF ANY ON-MONEY BY THE ASSESSEE. POWER OF ATTORNEY, AS PER THE DIRECTION O F THE HON'BLE HIGH COURT WAS GIVEN IN FAVOUR OF THE CHAIRMAN OF LABOUR UNION, SH RI N.B. DESAI, TO SELL THE LAND AND UNDER THAT POWER OF ATTORNEY, THE LAND WAS SOLD BY PLOTTING THE SAID LAND THE ISSUE BEFORE US IS COVERED IN FAVOUR OF TH E ASSESSEE WITH THE DECISION OF THE ITAT, AHMEDABAD IN ASSESSEE'S OWN CASE FOR A.Y. 2005-2006 (SUPRA) AND 2006-2007 (SUPRA) WHEREIN IN IDENTICAL FACTS, THE I SSUE WAS DECIDED IN FAVOUR OF THE ASSESSEE, AND THE ADDITION MADE BY SUBSTITUTING THE SALE CONSIDERATION WAS DELETED. WE BEING IN AGREEMENT WITH THE DECISION OF THE CO-ORDINATE BENCH OF THE TRIBUNAL IN ASSESSEE'S OWN CASE FOR A.Y.2005-20 06 (SUPRA) AND 2006-2007 ITA NO. 1395 & 1789/AHD/2009 ASST. YEAR 2006-07 12 (SUPRA), DECIDE THE ISSUE IN FAVOUR OF THE ASSESSEE AND THE GROUNDS OF THE APPEAL OF THE REVENUE IN BOTH THE YEARS ARE DISMISSED. 15. HOWEVER, THE FACTS OF THE PRESENT CASE DO NOT F IT COMPLETELY TO THE ABOVE SAID DECISION AS IN THE ABOVE CITED CASE BY THE LD. AR THE MATTER TRAVELLED UPTO THE HON. GUJARAT HIGH COURT W HICH HAS DIRECTED AND EMPOWERED THE PRESIDENT OF THE EMPLOYEES UNION TO SALE THE LAND IN QUESTION. 15.1 WE FURTHER OBSERVE THAT IN THE CASE OF SURAT D ISTRICT CO-OP. SPINNING MILLS LTD. VS. ACIT IN ITA NO.3381/AHD/200 8 FOR ASST. YEAR 2005-06 VIDE ITS ORDER DATED 17.02.2009 THE CO-ORDI NATE BENCH HAS DECIDED SIMILAR ISSUE RELATING TO ADOPTING SALE RAT E FOR LAND LOCATED AT VARACHHA ROAD (THE SAME AS THAT OF THE ASSESSEE) AN D ALLOWED ASSESSEES APPEAL FOR THE RELATED GROUND BY OBSERVI NG AS UNDER :- 7. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSI ONS AND, PERUSED THE MATERIAL ON RECORD. WE HAVE ALSO GONE THROUGH THE D ECISION OF THE HON. SUPREME COURT IN THE CASE OF K.P. VARGHESE V. ITO (1981) 13 1 ITR 597(SC) WHEREIN IT HAS BEEN HELD AS UNDER: WHICH IS IN FACT NEVER ACCRUED OR WAS NEVER RECEIV ED CANNOT BE COMPUTED AS CAPITAL GAIN UNDER S.48. SUB-SECTION 52 (1) DOES NOT DEEM INCOME TO ACCRUE O R TO BE RECEIVED WHICH IN FACT NEVER ACCRUED OR WAS NEVER RECEIVED. IT SEE KS TO BRING WITHIN THE NET OF TAXATION ONLY THAT INCOME WHICH HAS ACCRUED OR IS RECEIVED BY THE ASSESSEE AS A RESULT OF THE CAPITAL ASSET. BUT SINC E IT WOULD NOT BE POSSIBLE FOR THE INCOME-TAX OFFICER TO DETERMINE PRECISELY H OW MUCH MORE CONSIDERATION IS RECEIVED BY THE ASSESSEE THAN THAT DECLARED BY HIM, SUB- SECTION (1) PROVIDES THAT THE FAIR MARKET VALUE OF THE PROPERTY AS ON THE DATE OF THE TRANSFER SHALL BE TAKEN TO BE THE FULL VALUE OF THE CONSIDERATION FOR THE TRANSFER WHICH HAS ACCRUED TO OR IS RECEIVE D BY THE ASSESSEE. THE NET EFFECT OF THIS PROVISION IS AS IF A STATUTORY B EST JUDGMENT ASSESSMENT OF THE ACTUAL CONSIDERATION RECEIVED BY THE ASSESSEE I S MADE, IN THE ABSENCE OF RELIABLE MATERIALS. ITA NO. 1395 & 1789/AHD/2009 ASST. YEAR 2006-07 13 THE ONUS OF ESTABLISHING THAT THE CONDITIONS OF TAX ABILITY ARE FULFILLED IS ALWAYS ON THE REVENUE. IN VIEW OF THE ABOVE, RESPECTFULLY FOLLOWING THE AF ORESAID DECISION OF HON. SUPREME COURT, WE ALLOW THE CLAIM OF THE ASSESSEE. THUS, THIS GROUND RAISED BY THE ASSESSEE IS ALLOWED. 16. IN THE ABOVE REFERRED DECISION OF THE CO-ORDINA TE BENCH IN THE CASE OF SURAT DISTRICT. CO-OP. SPINNING MILLS RELIA NCE WAS PLACED ON THE JUDGMENT OF HON. SUPREME COURT IN THE CASE OF K .P. VARGHESE VS. ITO (SUPRA) AND RELEVANT PROVISIONS OF SECTION 52 O F THE ACT. WE FIND THAT SECTION 52 OF THE ACT WAS DELETED BY FINANCE A CT, 1987 W.E.F. 1.4.1988 AND CERTAINLY WILL NOT SQUARELY APPLY TO T HE CASE OF ASSESSEE. 16.1 HOWEVER, DRAWING INFERENCE FROM THE ABOVE CITE D DECISION OF THE CO-ORDINATE BENCH AND IN VIEW OF THE PROVISIONS OF SECTION 50C OF THE ACT, WE ARE OF THE CONSIDERED VIEW THAT IN THE GIVEN FACTS AND CIRCUMSTANCES OF THE CASE WHEREIN ASSESSEE HAS SHOW N SALE CONSIDERATION @ RS.7,301/- PER SQ.M., REGISTERED VA LUER VALUED IT AT RS.5,800/- PER SQ.M., LD. ASSESSING OFFICER ESTIMAT ED RATE AT RS.10,000/- PER SQ.M. NO REPORT FROM THE DVO AND JA NTRI PRICE OF RS.8,000/- PER SQ.M., WE ARE OF THE VIEW THAT IN OR DER TO MEET THE ENDS OF JUSTICE, IT WILL BE JUSTIFIED TO ADOPT THE JANTRI PRICE OF RS.8,000/- PER SQ.M. FOR THE SALE CONSIDERATION TOWARDS THE SA LE OF 33817 SQ.M. OF LAND. WE ACCORDINGLY DO SO. GROUND NO.1 OF ASSES SEES APPEAL IS PARTLY ALLOWED. 17. GROUND NO.2 WHICH READS AS UNDER :- ITA NO. 1395 & 1789/AHD/2009 ASST. YEAR 2006-07 14 2. THAT THE CIT(A) HAS GRIEVOUSLY ERRED IN HOLDING THAT THE ASSESSEE IS NOT ENTITLED TO SET OFF THE UNABSORBED BUSINESS LOSS OF RS.8,60,125/- OF EARLIER YEAR AGAINST THE INCOME FROM OTHER SOURCES OF CURRENT YEAR. 18. AT THE OUTSET LD. DR SUBMITTED THAT SIMILAR TYP E OF GROUND HAS BEEN ALLOWED IN FAVOUR OF REVENUE BY THE CO-ORDINAT E BENCH IN THE CASE OF ASSESSEE IN ITA NO.3381/AHD/2008 (SUPRA). 19. LD. AR COULD NOT CONTROVERT THE SUBMISSIONS OF LD. DR. 20. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD. THROUGH THIS GROUND ASSESSEE HAS CHALLEN GED THE ACTION OF LD. CIT(A) SUSTAINING THE ACTION OF ASSESSING OF FICER IN NOT ALLOWING THE SET OFF OF THE UNABSORBED BUSINESS LOSS OF RS.8 ,60,125/- OF EARLIER YEAR AGAINST THE INCOME FROM OTHER SOURCES OF CURRE NT YEAR. WE FIND THAT LD. CIT(A) HAS SUSTAINED THE ACTION OF ASSESSI NG OFFICER BY OBSERVING AS UNDER :- THE SECOND ISSUE IS THE ASSESSEE'S ELIGIBILITY TO S ET OFF THE BUSINESS LOSS OF EARLIER YEARS AGAINST THE INCOME FROM OTHER SOURCES OF CURRENT YEAR. IN THE PRESENT CASE, THE ASSESSEE HAS CLAIMED SET O FF OF BUSINESS LOSS OF RS. 8,60,125/- OF EARLIER YEARS AGAINST THE INCOME FROM OTHER SOURCES OF THE CURRENT YEAR. THE ISSUE OF CARRIED FORWARD AND SET OFF OF BUSINESS LOSSES IS GOVERNED BY THE PROVISIONS OF SECTION 72 OF THE INCOME TAX ACT. AS PER THE PROVISIONS OF SUB-SECTION (1) OF SECTION 72, BUSINESS LOSS OTHER THAN LOSS FROM SPECULATION BUSINESS CAN BE SET OFF AGAINST ANY HEAD OF INCOME IN THE YEAR IN WHICH IT IS INCURRED AND THE AMOUNT OF SUCH BUSINESS LOSS WHICH CANNOT BE SET OFF, CAN BE CARRIED FORWAR D FOR BEING SET OFF IN THE SUBSEQUENT YEARS. HOWEVER, IN THE SUBSEQUENT YEAR, SUCH CARRIED FORWARD BUSINESS LOSS IS ALLOWED TO BE SET OFF ONLY AGAINST BUSINESS INCOME OF THE ITA NO. 1395 & 1789/AHD/2009 ASST. YEAR 2006-07 15 SAME BUSINESS OR OF ANY OTHER BUSINESS BUT NOT AGAI NST INCOME UNDER ANY OTHER HEAD. HENCE, IN VIEW OF THE CLEAR PROVISIONS OF SECTION 7 2(1) OF THE I.T. ACT, IT IS HELD THAT THE CLAIM OF THE ASSESSEE IN SETTING OFF BUSINESS LOSS OF EARLIER YEARS AGAINST CURRENT YEARS INCOME FROM OTHER SOUR CES IS ILLEGAL AND NOT ALLOWABLE AS PER LAW AND THE ASSESSEES GROUND OF A PPEAL ON THIS ISSUE IS DISMISSED. 21. WE FURTHER OBSERVE THAT IN THE CASE OF SURAT DI ST. CO-OP. SPINNING MILLS VS. ACIT FOR ASST. YEAR 2005-06 (SUP RA) SIMILAR ISSUE WAS ADJUDICATED AND DECIDED AGAINST THE ASSESSEE BY OBSERVING AS UNDER :- 3. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PE RUSED THE MATERIAL ON RECORD. WE AGREE WITH THE FINDINGS GIVEN BY THE CIT(A) THAT AS PER THE PROVISIONS OF SECTION 72(1), BUSINESS LOSS OTHER THAN LOSS SPECULATION BU SINESS CAN BE SET OFF AGAINST ANY HEAD OF INCOME IN THE YEAR IN WHICH IT IS INCURRED AND THE AMOUNT OF SUCH BUSINESS LOSS WHICH CANNOT BE SET OFF, CAN BE CARRIED FORWAR D FOR BEING SET OFF IN THE SUBSEQUENT YEARS. HOWEVER, IN THE SUBSEQUENT YEAR, SUCH CARRIED FORWARD BUSINESS LOSS IS ALLOWED TO BE SET OFF ONLY AGAINST BUSINESS INCOME OF THE SAME BUSINESS OR OF ANY OTHER BUSINESS BUT NOT AGAINST INCOME UNDER ANY OTHER HEAD. WE, THEREFORE, DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE CIT(A ) AND UPHOLD HIS ORDER IN THIS REGARD. THUS, THE GROUND RAISED BY THE ASSESSEE STA NDS DISMISSED. 22. AS THE ISSUE BEFORE US IN THIS GROUND IS SQUARE LY COVERED AGAINST THE ASSESSEE BY THE DECISION OF THE CO-ORDI NATE BENCH CITED ABOVE, RESPECTFULLY FOLLOWING THE SAME WE FIND NO R EASON TO INTERFERE WITH THE ORDER OF LD. CIT(A). WE UPHOLD THE SAME AN D DISMISS THE GROUND NO.2 OF THE ASSESSEES APPEAL. 23. GROUND NO.3 READS AS UNDER :- 3. THAT THE LD. CIT(A) HAS GRIEVOUSLY ERRED IN PART IALLY CONFIRMING THE DISALLOWANCE OF CLAIM OF DEDUCTION UNDER SECTIO N 80P OF THE ACT OF RS.19,16,663/- IN RESPECT OF BUSINESS INCOME UNDER ITA NO. 1395 & 1789/AHD/2009 ASST. YEAR 2006-07 16 SECTION 80P(2)(A)(III), RS.10,800/- UNDER SEC.80P(2 )(E) IN RESPECT OF GODOWN RENT. 24. DURING THE COURSE OF ASSESSMENT PROCEEDINGS WHI LE EXAMINING THE ALLOWABILITY OF DEDUCTION U/S 80P OF THE ACT, L D. ASSESSING OFFICER OBSERVED THAT INSPITE OF HAVING NEGATIVE INCOME UND ER THE HEAD BUSINESS OR PROFESSION DEDUCTION U/S 80P OF THE A CT HAS BEEN CLAIMED EXCESS BY RS.20,27,463/-. WHEN THE MATTER C AME UP BEFORE THE FIRST APPELLATE AUTHORITY, CLAIM OF RS.1 LACS W AS ALLOWED UNDER SECTION 80P(2)(C)(I) OF THE ACT OUT OF THE TOTAL DI SALLOWANCE OF RS.20,27,463/-. 25. LD. AR REITERATED THE SUBMISSIONS MADE BEFORE L D. CIT(A) AND LD. DR SUPPORTED THE ORDERS OF LOWER AUTHORITIES. 26. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD PLACED BEFORE US. THROUGH THIS GROUND ASS ESSEE HAS URGED FOR ALLOWABILITY OF DEDUCTION U/S 80P OF THE ACT AT RS. 19,16,663/- IN RESPECT OF BUSINESS INCOME UNDER SECTION 80P(2)(A)( III), RS.10,800/- UNDER SEC.80P(2)(E) IN RESPECT OF GODOWN RENT. 26.1 WE FIND THAT AS PER THE RETURN OF INCOME ASSES SEE HAS SHOWN NET BUSINESS LOSS IS OF RS.85,27,214/- NET INCOME F ROM OTHER SOURCES AT RS.1,72,54,361/- AND HOUSE PROPERTY INCOME AT RS .17107/-. THESE FIGURES SHOW THAT ASSESSEE INCURRED LOSSES OUT OF B USINESS ACTIVITIES INCOME OF WHICH IS DEDUCTIBLE U/S 80P. AFTER CLAIMI NG THE LOSS FROM OTHER HEADS OF INCOME GROSS TOTAL INCOME OF RS.87,4 4,254/- WAS SHOWN. OUT OF THIS GROSS TOTAL INCOME APART FROM DE DUCTION OF ITA NO. 1395 & 1789/AHD/2009 ASST. YEAR 2006-07 17 RS.40,42,973/-, CLAIM TOWARDS INCOME BY WAY OF DIVI DEND/INTEREST DERIVED BY THE ASSESSEE SOCIETY FROM ITS INVESTMENT WITH OTHER CO-OP. SOCIETIES AS PER PROVISIONS OF SECTION 80P(2)(D) OF THE ACT, FURTHER DEDUCTION OF RS.20,16,663/- WAS ALSO CLAIMED TOWARD S INCOME FROM MARKETING AGRICULTURAL PRODUCE GROWN BY ITS MEMBERS U/S 80P(2)(A)(III) OF THE ACT AND RS.10,800/- CLAIMED U /S 80P(2)(III) FOR INCOME EARNED OUT OF GODOWN/WAREHOUSE RENT MARKETIN G OF COMMODITIES. 26.2 WE FURTHER OBSERVE THAT LD. CIT(A) ONLY GRANTE D RELIEF FOR RS.1 LACS U/S 80P(2)(C)(I) OF THE ACT AND HELD THE ACTIO N OF LD. ASSESSING OFFICER TO BE CORRECT FOR NOT ALLOWING DEDUCTION OF RS.19,16,663/- U/S 80P(2)(III) OF THE ACT AND RS.10,800/- BY OBSERVING AS UNDER :- I HAVE CONSIDERED THE FACTS OF THE CASE, THE SUBMIS SIONS MADE BY THE ASSESSEE AND THE FINDINGS OF THE AO AS CONTAINED IN THE ASSESSMENT ORDER. THE CONTENTION OF THE ASSESSEE THAT THE BUSI NESS INCOME OF RS. 19,16,663/-IS ELIGIBLE FOR DEDUCTION U/S. 80P(2)(A) (III) IS NOT ACCEPTABLE SINCE, THE DEDUCTION U/S. 80P UNDER CHAPTER VIA IS ALLOWABLE ON NET INCOME AND NOT ON GROSS INCOME AS PER THE CLEAR PROVISIONS OF SEC. 80AB OF THE ACT. IT IS SEEN THAT THE INCOME OF RS. 19,16,663/- UNDER THE HEAD BUSINESS INCOME GETS SET OFF UNDER OTHER CURRENT YEAR'S BUSI NESS LOSS AND IN THE EVENT OF THERE BEING NO INCOME UNDER THE HEAD BUSIN ESS INCOME, THERE IS NO QUESTION OF CLAIMING DEDUCTION IN RESPECT OF THE AMOUNT OF RS. 19,16,663/- /S. 80P(2)(A)(III). AS REGARDS THE CLAI M OF RS. 1,00,000/- U/S. 80P(2)(C)(I) IT IS SEEN THAT THE ASSESSEE IS A CONS UMER CO-OP, SOCIETY IS HENCE ELIGIBLE FOR THE SAME. AS REGARDS, DEDUCTION OF RS. 10,800/- U/S. 80P(2)(E) IN RESPECT OF GODOWN RENT IT IS HELD THAT IF THE SAME IS OFFERED UNDER THE HEAD BUSINESS INCOME AND IS SET OFF AGAIN ST CURRENT YEAR'S LOSS THEN THE SAME IS NOT ALLOWABLE. HOWEVER IF THE SAME IS OFFERED UNDER THE HEAD 'INCOME FROM HOUSE PROPERTY' THEN THE SAME IS ALLOWABLE U/S. 80P(2)(E) OF THE ACT FOR. WHICH THE AO WILL DO THE NECESSARY VERIFICATION AT HIS END. ITA NO. 1395 & 1789/AHD/2009 ASST. YEAR 2006-07 18 HENCE, IT IS HELD THAT THE ASSESSEE'S CLAIM FOR DED UCTION OF RS. 19,16,663/- U/S. 80P(2)(A)(III) OF THE ACT IS REJECTED, THE ASS ESSEE'S CLAIM FOR DEDUCTION OF RS. 1,00,000/- U/S. 80P(2)(C)(I) IS ALLOWED AND IN RESPECT OF THE ASSESSEE'S CLAIM FOR DEDUCTION OF RS. 10,800/- U/S. 80P(2)(E), THE AO IS ASKED TO VERIFY AS TO WHETHER THE SAME IS OFFERED U NDER THE HEAD 'INCOME FROM HOUSE PROPERTY 7 AND IF SO, THE SAME IS TO BE ALLOWED AND IF IT IS OFFERED UNDER THE HEAD 'BUSINESS INCOME' THE SAME IS TO BE REJECTED. 27. IN THE GIVEN FACTS AND CIRCUMSTANCES OF THE CAS E AND THE OBSERVATIONS OF LD. CIT(A), WE ARE OF THE VIEW THAT AS THERE IS LOSS DURING THE YEAR FROM THE BUSINESS ACTIVITIES OF THE SOCIETY WHICH INCLUDES ALL TYPES OF INCOME RELATING TO MARKETING OF AGRICULTURAL PRODUCE GROWN BY ITS MEMBERS AS WELL AS INCOME FROM LETTING OUT GODOWN/WAREHOUSE, ASSESSEE IS NOT ELIGIBLE FOR ANY DEDUCTION U/S 80P(2)(III) AND 80P(2)(E) OF THE ACT FOR THE LACK O F POSITIVE INCOME. THEREFORE, WE FIND NO REASON TO INTERFERE WITH THE ORDER OF LD. CIT(A) AND UPHOLD THE SAME. THIS GROUND OF ASSESSEE IS DIS MISSED. 28. GROUND NOS. 4 & 5 ARE OF GENERAL NATURE, WHICH NEED NO ADJUDICATION. 29. NOW WE TAKE UP REVENUES APPEAL IN ITA NO.1789/ AHD/2009 WHEREIN FOLLOWING GROUNDS HAVE BEEN RAISED :- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION O F RS.58,49,268/- MADE BY THE AO ON ACCOUNT OF DISALLO WANCE OF DEPRECIATION LOSS OF EARLIER YEAR AND CURRENT YEAR, WITHOUT APPRECIATING THE FACTS OF THE CASE. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD. CIT(A) HAS ERRED IN GRANTING THE RELIEF OF RS.1,00,000/- ITA NO. 1395 & 1789/AHD/2009 ASST. YEAR 2006-07 19 ON ACCOUNT OF DISALLOWANCE OF DEDUCTION WHICH IS AV AILABLE FOR CONSUMER CO-OP. SOCIETY U/S 80P(2)(C)(I), WITHOUT A PPRECIATING THE FACTS OF THE CASE AND INTENT OF THE LAW. IT IS, THEREFORE, PRAYED THAT THE ORDER OF THE CIT( A) BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE RESTORED. 30. LD. ASSESSING OFFICER DENIED DEDUCTION OF CLAIM OF ASSESSEE OF RS.53,90,948/- AS UNABSORBED DEPRECIATION AND ALSO CLAIM OF RS.458320/- OF THE CURRENT DEPRECIATION BY APPLYING THE PROVISIONS OF SECTION 14A OF THE ACT FOR THE PURPOSE OF COMPUTING TOTAL INCOME UNDER THIS CHAPTER AND TAKING A VIEW THAT NO DEDUCT ION SHALL BE ALLOWED IN RESPECT OF EXPENDITURE INCURRED BY THE A SSESSEE IN RELATION TO INCOME WHICH DOES NOT FORM PART OF THE TOTAL INC OME UNDER THIS ACT. THE LD. CIT(A) DELETED THE DISALLOWANCE. 31. REVENUE IS NOW IN APPEAL BEFORE THE TRIBUNAL. 32. LD. DR SUPPORTED THE ORDER OF ASSESSING OFFICER . 33. LD. AR RELIED ON THE ORDER OF LD. CIT(A). 34. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL PLACED BEFORE US. THROUGH THIS GROUND REVENUE HAS C HALLENGED THE ORDER OF LD. CIT(A) ALLOWING THE DEPRECIATION CLAIM OF RS.58,49,268/- WHICH INCLUDES RS.53,90,948/- AS UNABSORBED DEPRECI ATION AND RS.458320 OF CURRENT DEPRECIATION. REASON FOR THE SAID DISALLOWANCE BY ASSESSING OFFICER WAS MAINLY FOCUSED ON HIS VIEW OF APPLICATION OF PROVISIONS OF SECTION 14A OF THE ACT ON THE BASIS O F WHICH INFERENCE ITA NO. 1395 & 1789/AHD/2009 ASST. YEAR 2006-07 20 WAS DRAWN THAT NO DEDUCTION SHOULD BE ALLOWED FOR E XPENDITURE INCURRED BY ASSESSEE IN RELATION TO INCOME WHICH DO ES NOT FORM PART OF THE TOTAL INCOME UNDER THE ACT AS THE ASSESSEE I S ELIGIBLE FOR 100% DEDUCTION U/S 80P OF THE ACT FOR THE BUSINESS INCOM E EARNED FROM THE ACTIVITIES UNDERTAKEN BY ASSESSEE SOCIETY. 35. WE FURTHER OBSERVE THAT LD. CIT(A) HAS ALLOWED THE CLAIM OF ASSESSEE OF UNABSORBED DEPRECIATION OF EARLIER YEAR S AND CURRENT YEAR TOTALING TO RS.58,49,268/- BY OBSERVING AS UND ER :- AS REGARDS THE ASSESSEE'S ELIGIBILITY TO SET OFF TH E DEPRECIATION LOSS OF EARLIER YEARS AND CURRENT YEAR'S DEPRECIATION AGAINST THE I NCOME FROM OTHER SOURCES OF THE CURRENT YEAR, THE AO HAS CONTENDED THAT THE UNA BSORBED DEPRECIATION OF RS.53,90,948/- CLAIMED BY THE ASSESSEE PERTAIN S TO THE EXPENSES INCURRED FOR EARNING INCOME WHICH IS DEDUCTIBLE U/S. 80P OF THE ACT AND WHICH IS NOT INCLUDED IN THE TOTAL INCOME. THE AO FURTHER ARGUED THAT EVE N AS PER SECTION 14A, NO DEDUCTION SHALL BE ALLOWED IN RESPECT OF EXPENDITUR E INCURRED BY THE ASSESSEE IN RELATION TO INCOME WHICH DOES NOT FROM PART OF THE TOTAL INCOME UNDER THIS ACT, HOWEVER I DO NOT AGREE WITH THE AO ON THIS COUNT SINCE AS PER THE PROVISIONS OF SUB SECTION (2) OF SECTION 32, IT IS SEEN THA T WHERE IN THE ASSESSMENT OF THE ASSESSEE FULL EFFECT CANNOT BE GIVEN TO ANY ALLOWAN CE UNDER SUB SECTION (L) OF SECTION 32 IN ANY PERVIOUS YEAR ON ACCOUNT OF T HERE BEING NO BUSINESS INCOME OR BUSINESS INCOME BEING LESS THEN THE DEPRECIATION ALLOWANCE, THEN THE DEPRECIATION ALLOWANCE OR THE PART THERE OF WHICH COULD NOT BE SET OFF SHALL BE ADDED TO THE AMOUNT OF DEPRECIATION ALLOWA NCE FOR THE FOLLOWING PREVIOUS YEAR AND DEEMED TO BE A PART OF THAT ALLOWANCE, AND IF THERE WAS NO SUCH ALLOWANCE FOR THAT PREVIOUS YEAR, IT SHALL BE DEEME D TO BE ALLOWANCE FOR THAT PREVIOUS YEAR AND SO ON FOR THE SUCCEEDING PREVIOUS YEARS. ACCORDINGLY, AS PER THE SUB SECTION (2) OF SECTION 32 THE BROUGHT FORWARD UNABSORBED DEPRECIATION LOSS PERTAINING TO THE EARL IER YEARS SHALL BE ADDED TO THE DEPRECIATION ALLOWANCE OF THE A.Y. 2006-07 AND THEN SHALL BE DEEMED TO BE A PART OF THE CURRENT YEAR'S DEPRECIATION AND THIS PR OCESS WILL CONTINUOUSLY GO ON FOR THE SUCCEEDING YEARS AND AS PER THE PROVISIONS OF S ECTION 71 THE ASSESSEE WOULD BE ENTITLED TO SET OFF THE SAID DEPRECIATION LOSS A GAINST INCOME UNDER THE HEAD INCOME FROM OTHER SOURCES AND LONG TERM CAPITAL GAI N. ITA NO. 1395 & 1789/AHD/2009 ASST. YEAR 2006-07 21 HENCE, IN VIEW OF THE CLEAR PROVISIONS OF SECTION 3 2(2) OF THE I.T. ACT, IT IS HELD THAT THE CLAIM OF THE ASSESSEE IN SETTING OFF DEPRE CIATION LOSS OF EARLIER YEARS AS ALSO CURRENT YEAR'S DEPRECIATION AGAINST CURRENT YE AR'S INCOME FROM OTHER SOURCES AND LONG TERM CAPITAL GAIN IS IN ORDER AND IS ALLOW ABLE AS PER LAW AND THE ASSESSEE'S GROUND OF APPEAL ON THIS ISSUE IS ALLOWE D. 36. WE OBSERVE THAT DEPRECIATION IS CLAIMED AS PER THE PROVISIONS OF SECTION 32 OF THE ACT AND SUB-SECTION (2) OF SEC TION 32 ALLOWS THE ASSESSEE TO CLAIM UNABSORBED DEPRECIATION OF EARLIE R YEARS. FURTHER IN ORDER TO COMPUTE THE BUSINESS INCOME OF THE ASSE SSEE SOCIETY THE COMPUTATION OF INCOME HAS TO PASS THROUGH THE PROVI SIONS OF SECTION 32 OF THE ACT SO AS TO ARRIVE AT THE CORRECT BUSINE SS INCOME. SEC. 14A OF THE ACT REFERS TO INCOME WHICH ARE NOT INCLUDED IN TOTAL INCOME I.E. EXEMPT INCOME DIVIDEND, FOR EXAMPLE TAX FREE INTERE ST ETC. WHEREAS IN THE CASE OF ASSESSEE DEDUCTION HAS TO BE CLAIMED U/S 80P OF THE ACT. FURTHER AS PER SECTION 80P(2)(A)(III) OF THE A CT, THE DEDUCTION IS ALLOWABLE FOR THE AMOUNT OF PROFITS AND GAIN OF BUS INESS ATTRIBUTABLE TO MARKETING OF AGRICULTURAL PRODUCE GROWN BY THE MEMB ERS OF THE SOCIETY AND IN ORDER TO CALCULATE PROFITS AND GAINS OF BUSINESS ASSESSEE NEEDS TO CALCULATE BUSINESS INCOME AFTER CLAIMING DEPRECIATION AS PER PROVISIONS OF SEC. 32 OF THE AC T. THEREFORE, LD. CIT(A) HAS RIGHTLY ALLOWED THE CLAIM U/S 32 OF THE ACT TOWARDS DEDUCTION OF UNABSORBED DEPRECIATION OF EARLIER YEA RS AT RS. 53,90,948/- AND DEDUCTION OF CURRENT YEAR DEPRECIAT ION AT RS.458320/- AND THEREFORE, WE FIND NO REASON TO INT ERFERE WITH THE ORDER OF LD. CIT(A). WE UPHOLD THE SAME. THIS GROUN D OF REVENUE IS DISMISSED. ITA NO. 1395 & 1789/AHD/2009 ASST. YEAR 2006-07 22 37. IN THE RESULT, APPEAL OF ASSESSEE IS PARTLY ALL OWED AND THE APPEAL OF REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 14 TH OCTOBER, 2016 SD/- SD/- (S. S. GODARA) JUDICIAL MEMBER (MANISH BORAD) ACCOUNTANT MEMBER DATED 14/10/2016 MAHATA/- COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER ASST. REGISTRAR, ITAT, AHMEDABAD 1. DATE OF DICTATION: 13/10/2016 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE T HE DICTATING MEMBER: 14/10/2016 OTHER MEMBER: 3. DATE ON WHICH APPROVED DRAFT COMES TO THE SR. P. S./P.S.: 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE TH E DICTATING MEMBER FOR PRONOUNCEMENT: __________ 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE S R. P.S./P.S.: 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK: 17/10/2016 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK: 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER: 9. DATE OF DESPATCH OF THE ORDER: