M/s Punjab State Coop Milk Producers Federation Ltd., Chandigarh V. ACIT, C-4(1), Chandigarh

ITA 1666/CHANDI/2017

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 7552 (ITAT-CHANDIGARH)
• Duration Of Justice: 7 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-07-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2013-2014
• Appeal Filed On: 15-12-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: D S KALYAN
• Keywords: Question of law
• Section: 14A; 10

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES, B, CHANDIGARH BEFORE MS. DIVA SINGH, JUDICIAL MEMBER AND MS. ANNAPURNA GUPTA, ACCOUNTANT MEMBER ITA NO 1666/CHD/2017 ASSESSMENT YEAR : 2013-14 M/S PUNJAB STATE COOP VS. THE ACIT, FEDERATION LTD., SCO 153-155, CIRCLE 4(1), SECTOR 34-A, CHANDIGARH. CHANDIGARH. PAN NO. AAAAP1208Q (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI M.R.SHARMA RESPONDENT BY : SHRI D.S.KALYAN, CIT-DR DATE OF HEARING : 28.06.2018 DATE OF PRONOUNCEMENT : 17.07. 2018 ORDER PER DIVA SINGH THE PRESENT APPEAL HAS BEEN FILED BY THE ASSESSEE ASSA ILING THE CORRECTNESS OF THE ORDER DATED 16.10.2017 OF CIT(A)-2 CH ANDIGARH PERTAINING TO 201314 ASSESSMENT YEAR ON THE FOLLOWING GROUNDS : 1. THAT THE ORDER OF THE ASSESSING 'OFFICER AS UPHELD BY THE COMMISSIONER OF INCOME TAX (APPEALS)-2, CHANDIGARH IS BAD IN LAW AND IS BEYOND ALL THE CANNONS OF LAW AND JUSTICE. 2. THAT THE ORDER OF THE ASSESSING OFFICER AS UPHELD B Y THE COMMISSIONER OF INCOME TAX (APPEALS)-2, CHANDIGARH ATTRIBUTING E XPENSES TO THE INCOME WHICH IS ENTITLE TO DEDUCTION U/S 80P(2)(D) AMOUNTING TO RS. 11,63,94,666/- AGAINST THE GROSS INTEREST INCOME OF RS. 14,85,23,410/-BY INCORRECTLY APPLYING THE PROVISIONS OF SECTION 14-A READ WITH RULE 8-D IS BAD IN LAW AND IS AGAINST THE JUDICIAL DECISIONS IN THIS BEHALF. 3. THAT THE APPELLANT CRAVES LEAVE TO ADD, AMEND OR DE LETE ANY OF THE GROUNDS OF APPEAL BEFORE THE SAME IS FINALLY HEARD. IT IS THEREFORE HUMBLY PRAYED THAT THE ORDER ALLOCA TING EXPENSES U/S 14A READ WITH RULE 8D AMOUNTING TO RS. 11,63,94,666/- TO THE EARNING O F INTEREST INCOME OF RS. 14,85,23,410/- MAY KINDLY BE SET-ASIDE IN VIEW OF T HE FACTS, CIRCUMSTANCES AND JUDICIAL DECISIONS IN THIS BEHALF. 2. THE LD. AR INVITING ATTENTION TO APPLICATION DATED 2 5 TH MAY,2013 U/S 158A BY THE MANAGING DIRECTOR OF THE ASSESSEE SOCIE TY MADE A PRAYER THAT IN ORDER TO AVOID MULTIPLICATION OF APPEALS, THE ASSESSEE REQUESTS THAT HE WOULD ABIDE BY THE DECISION OF APEX COU RT WHERE SLP OF THE ASSESSEE STOOD ADMITTED BY THE COURT ON SAME FACT S AND SIMILAR ISSUES AS IN THE PRESENT APPEAL. MR. D.S.KALYAN CIT -DR APPEARING ON ITA-1666/CHD/2017 A.Y. 2013-14 PAGE 2 OF 5 BEHALF OF THE REVENUE SOUGHT TIME TO PLACE ASSESSING OFFICE RS REPORT THEREON. IT WAS ALSO HIS SUBMISSION THAT CONSISTENTLY TH E ISSUE IS COVERED AGAINST THE ASSESSEE. TAKING NOTE OF THE SUBMIS SIONS, TIME WAS GRANTED. 3. ON THE NEXT DATE, LD. CIT-DR FILING REPORT OF THE AO DA TED 27.06.2018 STATED THAT THE AO HAS NO OBJECTION TO BE B OUND BY THE DECISION OF THE APEX COURT ON SIMILAR FACTS IN THE CASE OF THE ASSESSEE ITSELF. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. WE FIND THAT THE ASSESSEE IS AN APEX COOPERATIVE SOCIETY DULY REGISTERED UNDER THE PUNJAB COOP SOCIETIES ACT, 196 1. THE MAIN ACTIVITY OF THE ASSESSEE SOCIETY AS NOTED IS TO ASS IST ITS MEMBER CO- OPERATIVE SOCIETIES IN PROMOTING PRODUCTION, PROCUR EMENT, PROCESSING AND MARKETING OF MILK AND MILK PRODUCTS. THE ASSESS EE IS ALSO STATED TO BE PROVIDING FOR THE ECONOMIC DEVELOPMENT OF DAI RY FARMERS WHO ARE THE MEMBERS OF THE SOCIETIES WHO ARE FURTHER MEMBER S OF THE ASSESSEE SOCIETY. THE ASSESSEE IS ALSO ASSISTING IT S MEMBERS IN ARRANGING CITY SUPPLY OF MILK, MILK PRODUCTS I.E. G HEE, PANEER, CURD, KHEER AND OTHER MILK PRODUCTS. THE ASSESSEE IS ALSO ASSISTING THE FARMERS THROUGH THEIR MEMBERS SOCIETIES IN PROVIDIN G QUALITY CATTLE FEED THROUGH ITS TWO CATTLE FEED PLANTS IN THE STATE OF PUNJAB. CONSIDERING THE VIEW TAKEN IN 2002-03 ASSESSMENT YEA RS, ADDITIONS BY WAY OF DISALLOWANCES WERE MADE IN THE YEAR UNDER CONS IDERATION BY THE AO. 4.1. IN APPEAL BEFORE CIT(A), THE FOLLOWING SUBMISSIONS W ERE MADE ON BEHALF OF THE ASSESSEE ASSAILING THE ACTION OF THE AO : 6.1 DURING THE COURSE OF APPELLATE PROCEEDINGS THE APPELLANT MADE THE FOLLOWING SUBMISSIONS :- '4. THAT THE APPELLANT DURING THE YEAR UNDER CONSID ERATION WHILE FILING ITS RETURN OF INCOME COMPUTED THE INCOME AND PREPARED A COMPUT ATION CHART. THE APPELLANT FILED COMPUTATION CHART ALONG WITH THE ANNUAL ACCOU NTS AND THE AUDIT REPORTS IN RESPONSE TO NOTICE OF THE ASSESSING OFFICER. THE PE RUSAL OF THE COMPUTATION CHART REVEALS THAT THE ASSESSES HAD COMPUTED BUSINESS LOS S TO THE EXTENT OF RS 11,63, 94, 666/- AS COMPUTED IN THE COMPUTATION CHA RT. FURTHER THE ASSESSEE HAD INTEREST INCOME FROM OTHER MEMBER COOPERATIVE SOCIE TIES AMOUNTING TO RS 14,85,23,410/-INCOME FROM THE SALE OF SEED AMOUNTIN G TO RS 2,65,89,053/-DIVIDEND INCOME RS 4,01,460/- INTEREST INCOME ON FDR RS 7,42 ,777/- AND INTEREST INCOME RS 3,86,682/- AS PER SCHEDULE-M BESIDES NET AGRICULTUR AL INCOME AT RS 57,37,775/-. THE BALANCE INCOME WORKS OUT TO RS 5,96,48,727/- AS MEN TIONED ABOVE. THE APPELLANT AS PER THE CHART OF COMPUTATION FILED ALONG WITH THE R ETURN OF INCOME WAS ELIGIBLE FOR RS 77,57,62,468/- AS DEDUCTION U/S 80P OF THE INCOME T AX ACT. THE SAID CLAIM HAS BEEN ITA-1666/CHD/2017 A.Y. 2013-14 PAGE 3 OF 5 DULY MADE IN THE RETURN OF INCOME AND THE RETURNED INCOME HAS BEEN DECLARED BY THE ASSESSEE AT NIL, WHICH FACT IS EVIDENT FROM THE PER USAL OF THE COMPUTATION CHART. 5. THAT DURING THE COURSE OF HEARING THE APPELLANT WAS ASKED TO FILE VARIOUS DETAILS BY THE ASSESSING OFFICERS, WHICH WERE DULY FILED AS IS EVIDENT FROM THE PERUSAL OF THE ORDER OF ASSESSMENT. THE ASSESSING O FFICER ALSO DESIRED TO EXAMINE THE BOOKS OF ACCOUNT WHICH WERE ALSO PRODUCED BEFORE TH E ASSESSING OFFICER AS ADMITTED N THE ORDER OF ASSESSMENT PASSED IN THIS CASE. 6. THAT DURING THE COURSE OF THE ASSESSMENT PROCEEDING S THE APPELLANT ALSO BROUGHT TO THE NOTICE OF THE ASSESSING OFFICER THAT WHILE ALLOWING DEDUCTION U/S 80P(2)(D) IT IS THE GROSS TOTAL INCOME WHICH AN ASS ESSEE /S ENTITLE TO DEDUCTION AND NOT THE NET INCOME. THIS VIEW HAS BEEN EXPRESSED BY THE PUNJAB AND HARYANA HIGH COURT IN THE CASE OF COMMISSIONER OF INCOME TAX VS. DOABA COOPERATIVE SUGAR MILLS LTD. 230 ITR PAGE 774 IT WAS ALSO BROUGHT TO THE NOTICE OF THE ASSESSING OFFICER THAT THE SLP FILED AGAINST THIS ORDER HAS ALSO BEEN DISM ISSED BY THE HON'BLE SUPREME COURT OF INDIA AND AS SUCH THIS ORDER HAS ATTAINED FINALITY. THE ASSESSING OFFICER HAS ALTHOUGH REFERRED TO THE SUBMISSIONS MADE BY THE AP PELLANT BUT HAS NOT FOLLOWED THE SAME WITHOUT ASSIGNING ANY REASON OR CONTRARY DECISION I N THIS BEHALF. 7. THAT THE ASSESSING OFFICER WHILE COMPLETING THE ASSESSMENT HAS ADMITTED THAT AN AMOUNT OF RS 14,85,23,410/- HAS BEEN RECEIV ED BY THE APPELLANT AS INTEREST ON THE LOANS ADVANCED TO THE MEMBER COOPERATIVE SO CIETIES AS PER ITS BYE LAWS. THE ASSESSING OFFICER WHILE COMPLETING THE ASSESSME NT HAS ON THE BASIS OF RULE 8D WORKED OUT RS 77,63,94,666/- AS EXPENSES ATTRIBUTAB LE TO THE EARNING OF INCOME BY WAY OF INTEREST FROM THE MEMBER COOPERATIVE SOCIETI ES AT RS 14,85,23,470/- BY APPLYING THE RATIO OF THE DECISION IN THE CASE OF T HE ASSESSEE WITH REGARD TO THE DISALLOWANCE OF EXPENSES IN VIEW OF THE PROVISION A S CONTAINED U/S 14-A OF THE INCOME TAX ACT. THUS IT IS EVIDENT FROM THE PERUSAL OF THE ORDER OF ASSESSMENT THAT THE ASSESSING OFFICER HAS DETERMINED RS 77,63,94,66 6/- AS EXPENSES TO EARN THE INCOME BY WAY OF INTEREST AMOUNTING TO RS 14,85,23, 470/-. 8. THAT THE HON'BLE P&H HIGH COURT IN THE CASE OF C IT VS. KINGS EXPORT 378 ITR PAGE 100 HAS HELD THAT THE PROVISION OF SECTION 14A RELATES TO THE EXEMPTION AND NOT DEDUCTION. SINCE IN THE PRESENT CASE THE DE DUCTION U/S HAS BEEN CLAIMED UNDER CHAPTER VI TO THE INCOME TAX ACT AS SUCH NO E XPENSES CAN BE ATTRIBUTED IN VIEW OF THE SAID JUDICIAL DECISION OF THE JURISDICT IONAL HIGH COURT. 9. THAT SUBSEQUENTLY THE HON'BLE DELHI COURT IN THE CASE OF CIT VS. KRIBHCO 349 ITR PAGE 618 AS HELD AS UNDER: THAT THE TRIBUNAL WAS CORRECT IN LAW IN HOLDING THA T NO DISALLOWANCE COULD BE MADE AGAINST INCOME WHICH WAS NOT SPECIFICALLY EXEMPT UN DER THE ACT. THUS THE PROVISION OF SECTION 14-A ARE NOT APPLICABLE TO THE PRESENT C ASE AS IT IS A CASE OF SPECIAL DEDUCTION U/S 80P AND AS SUCH THE DISALLOWANCE MADE NEEDS TO BE DELETED. 10. THAT THE COMMISSIONER OF INCOME TAX FILED SLP AGAIN ST THE ORDER OF THE DELHI HIGH COURT REFERRED TO ABOVE BEFORE THE HON'B LE SUPREME COURT OF INDIA. THE SAID SLP HAS BEEN DISMISSED. ACCORDINGLY IN VIEW OF THESE FACTS AND CIRCUMSTANCES AND THE LEGAL POSITION IN THIS BEHALF THE DISALLOWANCE U/S 14A IS NOT CALLED FOR. THUS THE DISALLOWANCE MADE AMOUNTING TO RS 77,63,94,666/ - BY THE ASSESSING OFFICER IS BAD IN LAW AND NEEDS TO BE DELETED. 11. THAT THE HON'BLE DELHI HIGH COURT IN ITA NO 548/201 5 VIDE ORDER DATED 23.02.2017 UPHELD THE ORDER OF THE IT AT WITH REGAR D TO THE APPLICABILITY OF RULE 8-D OF THE INCOME TAX ACT. 12. THAT THE APPELLANT ASSESSEE HAS FILED SLP NO 9585 O F 2076 BEFORE THE HON'BLE SUPREME COURT ON INDIA WHERE THE LEAVE HAS BEEN GRANTED TO THE ABOVE NOTED ASSESSEE. A COPY OF THE SAME IS BEING ENCLOSE D FOR YOUR PERUSAL AND RECORD.' 4.2 THE CIT(A) CONSIDERING THE SAME, CAME TO THE FOLLOWING CONC LUSION: '6.2 THE ASSESSMENT ORDER AND THE SUBMISSIONS MADE DURING THE COURSE OF APPELLATE PROCEEDINGS ARE PERUSED. IT IS SEEN THAT THIS ISSUE IS COVERED AGAINST THE ASSESSEE BY THE ORDER DATED 10.04.2015 OF ITAT CHANDIGARH BENCH ' A 1 IN THE CASE OF THE APPELLANT FOR A.Y. 211-12 IN ITA NO. 97/CHD/2015. RESPECTFULLY FOLLOWI NG THE DECISION OF HON'BLE ITA-1666/CHD/2017 A.Y. 2013-14 PAGE 4 OF 5 ITAT, THE DISALLOWANCE MADE BY THE A.O OF RS. 11,63 ,94,666/- UNDER SECTION 14A AS PER RULE 8D IS CONFIRMED. GROUND OF APPEAL NO. 2 IS DISMISSE D. 4.3 THE ABOVE CONCLUSION ON FACTS AS PER POSITION OF LAW APPLICABLE TO THE ASSESSEE ON FACTS, WE NOTICE HAS CONSISTENTLY BEEN FOLLOWED WHICH TILL DATE HAS NOT BEEN UPSET BY ANY HIGHER FORUM. IT IS F URTHER SEEN THAT THE FOLLOWING QUESTIONS OF LAW HAVE BEEN RAISED BY THE ASSESSEE BEFORE THE APEX COURT : A. WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE CA SE THE HON'BLE HIGH COURT WAS CORRECT IN LAW IN UPHOLDING THE ORDERS OF THE ITAT TO THE EFFECT THAT DISALLOWANCE U/S 14A CAN BE MADE AGAINS T THE INCOME WHICH IS NOT SPECIFICALLY EXEMPT U/S 10 OF THE INCO ME TAX ACT, 1961? B. WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE CA SE THE HON'BLE HIGH COURT WAS CORRECT IN LAW IN UPHOLDING THE DECISION OF THE ITAT WITH REGARD TO THE APPLICABILITY OF PROVISION OF SECTION 14A OF THE INCOME TAX ACT EVEN IN RESPECT OF INCOME WHICH HAS BEEN CLAIMED AS A DEDUCTION UNDER CHAPTER VI-A AND MORE SPECIFICALLY U/S 80P(2)(D) OF THE INCOME TAX ACT, 1961? C. WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE CA SE THE HON'BLE HIGH COURT WAS CORRECT IN LAW IN UPHOLDING THE DECISION OF THE ITAT WITH REGARD TO THE APPLICABILITY OF SECTION 14A TO THE D EDUCTION WHICH FORMED PART OF TOTAL INCOME AS DEFINED IN SECTION 2 (45) OF THE INCOME TAX ACT 1961 PRIOR TO THE DEDUCTIONS CLAIMED U/S 80P(2)(D) ARE LEGALLY SUSTAINABLE IN LAW MORE SO WHEN THERE IS A DECISION OF THE HON'BLE DELHI HIGH COURT IN THE CASE OF COMMISSIONE R OF INCOME TAX VS. KRIBHCO IN ITA NO. 444 OF 2011 IN FAVOUR OF THE APPELLANT AGAINST WHICH THE SLP FILED HAS ALSO BEEN DISMISSED BY THIS HON'BLE COURT? D. WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE CA SE THE HON'BLE HIGH COURT WAS CORRECT IN LAW IN NOT PLACING RELIANCE ON THE JUDGMENT OF DELHI HIGH COURT IN THE CASE OF COMMISSIONER OF INC OME TAX VS. KRIBHCO IN ITA NO.444 OF 2011, MORE SO WHEN SLP FIL ED BY THE REVENUE IN THIS HON'BLE COURT WAS ALSO DISMISSED IN LIMINE? E. WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE CA SE THE HON'BLE HIGH COURT WAS CORRECT IN LAW IN FOLLOWING ITS OWN DECIS ION ENUNCIATED IN ITA NO. 530 OF 2006 DATED 28.03.2011 AGAINST THE PE TITIONER SINCE THE JUDGMENT OF THE HON'BLE HIGH COURT OF DELH I IN THE CASE OF COMMISSIONER OF INCOME TAX VS. KRIBHCO IN ITA NO. 4 44 OF 2011 DATED 18.07.2012 WAS PASSED LATER IN TIME AND WAS NOT AVA ILABLE THEN? F. WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE CA SE THE JUDGMENT AND FINAL ORDER OF THE HON'BLE DELHI IN THE CASE OF COM MISSIONER OF INCOME TAX VS. KRIBHCO IN ITA NO. 444 OF 2011 WHEREIN THE APPEAL FILED BY THE RESPONDENT DEPARTMENT HAS BEEN DISMISSED BY REF ERRING TO VARIOUS JUDGMENTS OF THIS HON'BLE COURT, IS EXHAUST IVE AND SETTLES THE LAW CORRECTLY ON THE ISSUE EXACTLY THE SAME AS RAIS ED IN THE PRESENT PETITION. THE JUDGMENT OF THE PUNJAB & HARYANA HIGH COURT ON WHICH RELIANCE IS PLACED DOES NOT LAY THE CORRECT LAW ON THE ISSUE IN HAND? 5. ACCORDINGLY, CONSIDERING THE DECLARATION MADE BY THE ASSESSEE U/S 158A(1) OF THE ACT IN RESPONSE TO WHICH THE REPORT OF THE AO UNDER SUB- SECTION (2) OF SECTION 158A IS AVAILABLE, WE CONFIR M THE ORDER OF THE CIT(A) RELYING ON PAST PRECEDENT SUBJECT TO THE OUTCOME OF THE DECISION OF THE APEX COURT. THE AO, ACCORDINGLY IS DIRECTED TO PAS S AN APPROPRIATE ORDER ITA-1666/CHD/2017 A.Y. 2013-14 PAGE 5 OF 5 IN TERMS OF SUB-SECTION (5) OF SECTION 158A WHEN TH E DECISION ON THE QUESTION OF LAW BECOMES FINAL. WITH THE ABOVE OBSE RVATIONS, THE APPEAL OF THE ASSESSEE IS DISMISSED. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DIS MISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 17.07. 2018. SD/- SD/- (ANNAPURNA GUPTA) (DIVA SING H) ACCOUNTANT MEMBER JUDICIAL MEMBER POONAM COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR ASSTT. REGISTRAR ITAT,CHANDIGARH.