DCIT, Circle - 35, Kolkata, Kolkata V. Pioneer Co-operative Car Parking Servicing & Const. Society Ltd., Kolkata

ITA 1672/KOL/2009

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 54606 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-10-2011
• Appeal Filed By: Department
• Bench Allotted: C
• Assessment Year: 2004-2005
• Appeal Filed On: 24-09-2009
• Court: TRIBUNAL
• Department Lawyers: P K CHAKRABORTY
• Assessee Lawyers: M GHOSH
• Keywords: Competent authority; Assessment record
• Section: 131

Judgement Text

1 , C , , IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH- C, KOL KATA [ , . .. . ! ! ! !. .. . , , , , '# ] BEFORE SRI N.VIJAYAKUMARAN, JUDICIAL MEMBER & SRI C.D. RAO, AC COUNTANT MEMBER $ $ $ $ / ITA NO. 1672 (KOL) OF 2009 %& '( / ASSESSMENT YEAR 2004-05 DY.COMMISSIONER OF INCOME-TAX CIRCLE-35, KOLKATA. PIONEER CO-OPERATIVE CAR PARKING SERVICING & CONSTRUCTION SOCIETY LTD. (PAN-AADHP0932K) (+, / APPELLANT ) - - - VERSUS - (/0+,/ RESPONDENT ) +, 1 2 '/ FOR THE APPELLANT: / SRI P.K.CHAKRABORTY /0+, 1 2 ' / FOR THE RESPONDENT: / SRI M. GHOSH 3 1 !# / DATE OF HEARING : 14/09/2011 4' 1 !# / DATE OF PRONOUNCEMENT : 21/10/2011 '5 / ORDER ( . .. . ! ! ! !. .. . ), '# (C.D. RAO), ACCOUNTANT MEMBER : THE DEPARTMENT HAS FILED THIS APPEAL AGAINST THE ORDER DATED 29.07.2009 OF LD. C.I.T.(A)-XX, KOLKATA PERTAINING TO ASSESSMENT YEAR 2004-05. THE ONLY GROUND RAISED IN THIS APPEAL BY THE DEPARTMENT READS AS UNDER :- LD. CIT(A) ERRED BOTH IN FACT AND IN LAW IN ALLOWIN G THE DEDUCTION U/S 80(P)(2)(A)(VI) AND DIRECTING TO ASSESS THE ASSESSEE AS A CO-OPERAT IVE SOCIETY WITHOUT PROPER APPRECIATION OF OBSERVATION OF AO AND THE MATERIALS BROUGHT ON RECORD BY THE AO DURING THE COURSE OF ASSESSMENT AS WELL AS NOT CONS IDERING THE REMAND REPORT DATED 20.03.2008 CONTAINING THE DECISION OF HONBLE ITAT AMRITSAR BENCH IN THE CASE OF ASSESSING OFFICER VS. GANESH CO-OPERATIVE (L&C) (19 98) 67 ITD 436. 2. THE ASSESSEE IS REGISTERED UNDER THE WEST BENGA L CO-OPERATIVE SOCIETIES ACT AND RUN BY AN ELECTED GOVERNING BODY. IT IS ENGAGED IN THE BUSINESS OF CAR PARKING SERVICE. PARKING SPACES IN KOLKATA AND OTHER ADJACENT AREAS ARE TAKEN ON LEASE FROM DIFFERENT AUTHORITIES AND THE ASSESSEE REALIZES CAR PARKING F EES FROM CAR OWNERS FROM THESE PARKING SPACES. THERE ARE TWO TYPES OF CLIENTS FROM WHOM THE ASSESSEE COLLECTS CAR PARKING FEES. ONE IS FIXED CUSTOMERS WHO PAY MONTH LY RENTAL NORMALLY BY CHEQUE FOR 2 THEIR USE OF CAR PARKING SPACE AND THE OTHERS ARE F LYING CUSTOMERS WHO PAY PARKING FEES IN CASH. THE ASSESSEE PAYS A FIXED AMOUNT FOR A SPE CIFIC PERIOD OF TIME TO THE LESSORS AS PER RATES, TERMS & CONDITIONS WITH THE RESPECTIVE L ESSORS. IN ADDITION, THE ASSESSEE ALSO MAINTAINS/RUNS A PAY AND USE TOILET IN ENTALLY. THE ASSESSEE FOLLOWS MERCANTILE SYSTEM OF ACCOUNTING. FOR THE ASSESSMENT YEAR UNDER APPEA L, RETURN WAS FILED SHOWING TOTAL INCOME NIL AFTER CLAIMING DEDUCTION OF RS. 18,72,76 1/- U/S. 80P(2)(A)(VI) OF THE ACT. THE A.O. OBSERVED THAT THE ASSESSEES TURNOVER FROM DAILY COLLECTION OF PARKING FEES WAS RS.1,80,14,486 (IN CASH) AND MONTHLY COLLECTION OF PARKING FEES FROM ITS FIXED CLIENTS OF RS.1,15,41,803/- (MAINLY BY CHEQUE). DU RING THE COURSE OF ASSESSMENT PROCEEDINGS, THE A.O. COLLECTED FROM THE OFFICE OF DY. DIRECTOR OF CO-OPERATIVE SOCIETIES A COPY OF THE CO-OPERATIVE SOCIETYS AUDI T REPORT IN RESPECT OF THE SYSTEM OF MAINTENANCE OF BOOKS OF ACCOUNT FOLLOWED BY THE ASS ESSEE AND ON PERUSAL OF THE SAME, HE FOUND THAT THE ASSESSEE WAS NOT MAINTAINING ITS BOOKS OF ACCOUNT IN PROPER, FAIR AND IN TRANSPARENT MANNER. THE A.O. CONSIDERED THE OBSE RVATION/ REMARKS OF THE AUDITOR OF REGISTRAR OF CO-OPERATIVE SOCIETY IN RESPECT OF MAI NTENANCE OF THE ACCOUNTS BY THE CO- OPERATIVE SOCIETIES, WHICH ARE GIVEN ON PAGE-4 OF T HE ASSESSMENT ORDER AS UNDER :- GENERAL REMARKS. OBSERVATIONS AND SUGGESTIONS 1. FROM THE PREVIOUS YEAR THE SOCIETY HAS INTRODUCE D COMPUTERIZED SYSTEM FOR KEEPING ACCOUNTS AND SUBMITTED COMPUTERIZED CASH BOOK, GENE RAL LEDGER AND BANK TRANSACTIONS. BUT THE SOCIETY HAS NOT WRITTEN THE CASH BOOK UP TO DATE. THE SOCIETY AUTHORITY IS ADVISED TO WRITE THE CASH BOOK REGULARLY AND DAILY CLOSING CASH BALANCE SHOULD AUTHENTICATED BY THE COMPETENT AUTHORITY OF THE SOC IETY. AT THE SAME TIME, IT IS ALSO ADVISED TO PREPARE MONTHLY CASH ACCOUNT. 2. THE SOCIETY IS SUGGESTED TO MAINTAIN A PARTY-WIS E LEDGER FOR DETAILS RECORDS OF MONTHLY PARKING FEES COLLECTION. 3. THE SOCIETY IS ADVISED TO MAINTAIN A REGISTER OF COLLECTORS AS PER CONTRACT MONEY AND ACCORDING TO AREA; SPOT AND AGREEMENT-WISE. CEILING OF CASH HOLDING IS TO BE FIXED UP. INSURANCE COVERAGE FOR RETAINING/CASH IN TRANSIT SH OULD BE MADE. 4. IN VIEW OF THE HUGE VOLUME OF TRANSACTIONS THE S OCIETY AUTHORITY IS SUGGESTED TO INTRODUCE INTERNAL CONTROL AND CHECKING SYSTEM. 5. ALL THE ABOVE MENTIONED OBSERVATIONS HAD ALREA DY BEEN MADE IN THE LAST YEARS AUDIT REPORT BUT PROPER STEPS YET TO BE TAKEN BY TH E BOARD IN THIS RESPECT. THE BOARD SHOULD IMMEDIATELY FOLLOW THESE SUGGESTIONS FOR THE BENEFIT OF THE SOCIETY. 3 ON THE BASIS OF THE ABOVE ADVICE/REMARKS OF THE AUD ITOR OF REGISTRAR OF CO-OPERATIVE SOCIETY, THE A.O. OBSERVED THAT THE ASSESSEES SYST EM OF MAINTENANCE OF BOOKS OF ACCOUNTS WAS NOT PROPER AND TRANSPARENT SO AS TO EN ABLE IT TO CLAIM DEDUCTION U/S. 80P OF THE ACT. HE FURTHER OBSERVED THAT THERE WAS NO INT ERNAL CONTROL SYSTEM FOR MONITORING OF CAR PARKING FEES COLLECTED IN CASH. HE, THEREFORE, REJECTED THE BOOKS OF ACCOUNT OF THE ASSESSEE AS UNRELIABLE. THE A.O. FURTHER REJECTED THE ASSESSEES CONTENTION THAT IT EMPLOYED 43 PERSONS FOR MANAGING ITS FIVE OFFICES A ND PROPERTY BY EXPRESSING DOUBT THAT IT WAS NOT UNDERSTANDABLE TO HIM AS TO HOW THE SE EMPLOYEES WERE UTILIZED IN ASSESSEES TWO SMALL OFFICES AND THEIR NATURE OF DU TIES IN SO FAR AS CAR PARKING SERVICES ARE CONCERNED. THE A.O. ALSO RECORDED STATEMENT U/S . 131 OF THE ACT FROM THE SECRETARY OF THE ASSESSEE-SOCIETY AND WORKED OUT THE AVERAGE DAILY MAN POWER REQUIREMENT FOR CARRYING OUT ITS CORE ACTIVITY AT 214. HE HAS ALSO STATED THAT THE FOUNDER MEMBERS OF THE SOCIETY, WHICH WAS FORMED IN 1977, ARE IN THE AGE G ROUP OF 50 OR ABOVE AND SOME OF THEM HAVE EITHER RETIRED OR DIED. ACCORDING TO HIM FURTHER, REST OF THE MEMBERS IS NOT PHYSICALLY FIT FOR PERFORMING OUTDOOR DUTIES. HE, THEREFORE, PRESUMED THAT AT LEAST 1/3 RD OF THE MEMBERS ARE NOT IN A POSITION TO PERFORM OUT DOOR WORKS AND ON THIS ANALYSIS HE PRESUMED THE NUMBER OF WORKABLE MEMBERS TO BE NOT M ORE THAN 100 IN NUMBER. ON THE ABOVE PRESUMPTION OF FACTS, THE A.O. WAS OF THE OPI NION THAT THE SOCIETY DID NOT HAVE SUFFICIENT STRENGTH OF ITS MEMBERS AND WAS, THEREFO RE, LARGELY DEPENDENT ON THE OUTSIDERS FOR CARRYING OUT ITS CORE ACTIVITY. HE STATED THAT FOR CLAIMING DEDUCTION U/S. 80P(2)(A)(VI) OF THE ACT, THE INCOME MUST BE EARNED FROM COLLECTIVE DISPOSAL OF THE LABOUR OF ITS MEMBERS. IN THE ABOVE CIRCUMSTANCES, THE A.O. TREATED THE ASSESSEE AS AN A.O.P. AND RELYING ON THE DECISION IN THE CASE OF N ILGIRI ENGINEERING CO-OPERATIVE SOCIETY LTD. VS. CIT [208 ITR 326 (ORI)] HELD THAT THE ASSESSEE WAS NOT ENTITLED TO DEDUCTION U/S. 80P(2)(A)(VI) OF THE ACT. 3. THE ASSESSEE CAME IN APPEAL BEFORE THE LD. C.I. T.(A). THE ASSESSEE FILED A WRITTEN SUBMISSION WITH EVIDENCES THEREOF BEFORE HI M COUNTERING ALL THE ALLEGATIONS OF THE A.O., WHO HAS DENIED DEDUCTION U/S. 80P(2)(A)(V I) OF THE ACT, WHICH ARE ELABORATELY DISCUSSED ON PAGES 6 TO 8 OF THE APPELLATE ORDER. T HE LD. C.I.T.(A) DISAPPROVED THE 4 REJECTION OF BOOKS OF ACCOUNT AND DENIAL OF DEDUCTI ON U/S. 80P(2)(A)(VI) OF THE ACT MADE BY THE A.O. THE OBSERVATIONS/ FINDINGS OF THE LD. C .I.T.(A) ARE SUMMARIZED AS UNDER:- A) THE A.O. HAS NOT POINTED OUT ANY SPECIFIC D EFECT IN THE AUDITED BOOKS OF ACCOUNT OF THE ASSESSEE-SOCIETY. THE A.O. RAISED DOUBTS ABO UT INTERNAL CONTROL SYSTEM FOLLOWED BY THE ASSESSEE IN PREPARING THE ACCOUNTS FOR THE C ASH RECEIPTS FROM CAR PARKING WITHOUT POINTING OUT A SINGLE INSTANCE TO SUBSTANTIATE HIS DOUBT, MORE SO WHEN HE HIMSELF HAS ACCEPTED THE RECEIPTS SHOWN BY THE ASSESSEE. B) THE LD. C.I.T.(A) FOUND FORCE IN THE ASSESS EES SUBMISSION THAT THE OBSERVATIONS/ REMARKS MADE BY THE REGISTRAR OF CO-OPERATIVE SOCIE TIES IN RESPECT OF THE AUDIT REPORT REFERRED TO BY THE A.O. ARE MERE SUGGESTIONS AIMED AT IMPROVING THE SYSTEM OF MAINTENANCE OF BOOKS OF ACCOUNTS FOLLOWED BY THE AS SESSEE, BUT THE SAME DOES NOT INDICATE ANY DEFECT IN THE ASSESSEES BOOKS AND THE A.O. HIMSELF RELYING ON THE ASSESSEES BOOKS OF ACCOUNTS DETERMINED THE TOTAL I NCOME OF THE ASSESSEE. C) THE A.O. DID NOT DENY THE FACTS THAT THE A SSESSEE EMPLOYED 43 PERSONS DURING THE YEAR FOR THE PURPOSE OF MANAGING ITS OFFICES ETC. A ND THE VOTING RIGHTS ARE RESTRICTED TO THE MEMBERS ONLY. THE ASSESSEE FILED DETAILS OF 43 PERSONS WITH THEIR NATURE DUTIES EMPLOYED IN ITS FIVE OFFICES. THE A.O. FAILED TO ES TABLISH THAT DEPLOYMENT OF THESE 43 PERSONS WAS EXCESSIVE. THE LD. C.I.T.(A) REJECTED T HE A.O.S FINDING THAT THE ASSESSEE WAS HAVING ONLY TWO OFFICES. HE STATED THAT DETAIL S OF FIVE OFFICES ALONG WITH ONE USE AND PAY TOILET WERE FILED BEFORE THE A.O. ACCORDING TO HIM, THE A.O. ACTED MORE ON SUSPICION THAN THE ACTUAL FACTS. D) THE A.O. COULD NOT BRING ON RECORD TO SHOW THAT SOME OF THE MEMBERS ARE NOT CAPABLE OF PERFORMING OUTDOOR DUTIES OR THEY ARE NO T ACTUALLY ENGAGED IN CAR PARKING ACTIVITIES OF THE ASSESSEE. HE, THEREFORE, HELD THA T THE A.O. WAS NOT JUSTIFIED IN HOLDING THAT THE ASSESSEE-SOCIETY DID NOT HAVE THE STRENGTH OF ITS MEMBERS TO CARRY OUT ITS CORE ACTIVITIES. E) THE LD. C.I.T.(A) HAS STATED THAT THE A.O. HAS MISINTERPRETED THE STATEMENT RECORDED U/S. 131 FROM THE SECRETARY OF THE ASSESSE E-SOCIETY. REFERRING TO THE QUESTION POSED BY THE A.O. AND REPLY THEREON BY THE SECRETAR Y, THE LD. C.I.T.(A) POINTED OUT THAT THERE WAS NO MENTION IN THE STATEMENT TO THE EFFECT THAT IN CASE OF SHORTAGE, OUTSIDERS ARE 5 ENGAGED, RATHER IT WAS STATED BY THE SECRETARY THAT IN THAT SITUATION ASSESSEE TAKES HELP FROM ITS MEMBERS WHO WORKS FOR THE SOCIETY. F) THE LD. C.I.T.(A) FURTHER POINTED OUT THAT THE SCRUTINY ASSESSMENT OF THE ASSESSEE FOR ASSESSMENT YEAR 2001-02 WAS COMPLETED TAKING TH E STATUS OF THE ASSESSEE AS THAT OF CO-OPERATIVE SOCIETY. IN VIEW OF THE ABOVE OBSERVATIONS/ANALYSIS OF FAC TS, THE LD. C.I.T.(A) DIRECTED THE A.O. TO ASSESS THE ASSESSEE AS A CO-OPERATIVE SOCIE TY AND ALLOW THE DEDUCTION U/S. 80P(2)(A)(VI) OF THE ACT BY CONCLUDING AS UNDER :- 6.3.7. IN VIEW OF THE ABOVE DISCUSSIONS, I AM OF THE OPINION THAT THERE WAS NO BASIS OR MATERIAL ON RECORD FOR THE AO TO HOLD THAT THE A PPELLANT SOCIETY DID NOT HAVE SUFFICIENT STRENGTH OF ITS MEMBERS AND WAS THEREFOR E LARGELY DEPENDENT ON THE OUTSIDERS FOR CARRYING OUT ITS CORE ACTIVITY. THE A O WAS NOT JUSTIFIED IN CHANGING THE STATUS OF THE APPELLANT AND IN DENYING IT THE BENEF ITS OF SECTION 80P(2)(A)(VI). THE CASE LAW RELIED UPON BY THE AO IS DISTINGUISHABLE O N FACTS AND IS THEREFORE NOT APPLICABLE IN THE CASE OF THE APPELLANT. THE AO IS DIRECTED TO ASSESS THE APPELLANT AS A CO-OPERATIVE SOCIETY AND ALLOW THE CLAIM OF DEDUC TION U/S 80P(2)(A)(VI). THE GROUNDS RAISED BY THE APPELLANT ARE ALLOWED. HENCE THIS APPEAL BY THE DEPARTMENT. 4. AT THE TIME OF HEARING BEFORE US, THE LD. DEPAR TMENTAL REPRESENTATIVE REITERATED THE OBSERVATIONS/FINDINGS OF THE A.O. MADE IN THE I MPUGNED ASSESSMENT ORDER. HE HAS POINTED OUT THE SHORTFALLS IN MAINTAINING THE BOOKS OF ACCOUNT BY THE ASSESSEE, WHICH ARE ALREADY REFERRED TO IN THE IMPUGNED ASSESSMENT ORDE R AND SUBMITTED THAT IN SUCH CIRCUMSTANCES THE LD. C.I.T.(A) ERRED IN DIRECTING THE A.O. TO TREAT THE STATUS OF THE ASSESSEE AS THAT OF CO-OPERATIVE SOCIETY INSTEAD OF AOP JUSTIFIABLY TAKEN BY THE A.O. AND CONSEQUENTIALLY DIRECTING TO ALLOW DEDUCTION AS CLAIMED BY THE ASSESSEE U/S. 80P(2)(A)(VI) OF THE ACT. HE, THEREFORE, SUBMITTED THAT THE ORDER OF THE LD. C.I.T.(A) SHOULD BE REVERSED AND THAT OF A.O. BE UPHELD. 5. THE LEARNED COUNSEL FOR THE ASSESSEE, ON THE OT HER HAND, RELIED ON THE ORDER OF THE LD. C.I.T.(A) AND REITERATED THE SUBMISSIONS MADE B EFORE HIM. HE HAS ALSO FILED A PAPER BOOK COMPILING THEREIN VARIOUS PAPERS IN SUPPORT OF THE CLAIM THAT THE STATUS OF THE ASSESSEE, AS IN THE PAST YEARS, IS THAT OF A CO-OPE RATIVE SOCIETY AND, THEREFORE, DEDUCTION U/S. 80P(2)(A)(VI) OF THE ACT HAS BEEN RIGHTLY CLAI MED BY THE ASSESSEE AND ALLOWED BY THE 6 LD. C.I.T.(A). HE FURTHER SUBMITTED THAT THE LD. C .I.T.(A) HAS DISCUSSED ALL THE DEFECTS AND/OR DOUBTS RAISED BY THE A.O. FOR DISALLOWING TH E CLAIM OF THE ASSESSEE AND COUNTERED THE SAME WITH REASONS. REFERRING TO THE LETTER DAT ED 13/1/2009 (ANNEXURE A-6 OF THE PAPER BOOK), WHICH WAS A LETTER OF THE LD. C.I.T.(A ) TO THE A.O., THE LEARNED COUNSEL SUBMITTED THAT THE LD. C.I.T.(A) CALLED FOR ASSESSM ENT RECORD FOR THE ASSESSMENT YEAR UNDER CONSIDERATION FROM THE A.O. AND AFTER VERIFYI NG ALL THESE RECORDS, HE HAS ARRIVED AT A RIGHTFUL CONCLUSION DIRECTING THE A.O. TO TREAT T HE STATUS OF THE ASSESSEE AS A CO- OPERATIVE SOCIETY AND TO ALLOW DEDUCTION U/S. 80P(2 )(A)(VI) OF THE ACT AND, THEREFORE, HIS ORDER SHOULD BE UPHELD. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS OF THE PART IES AND CAREFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AS WELL AS OTHE R EVIDENCES PLACED ON RECORD. THE ISSUE IN QUESTION IS AS TO WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE ASSESSEE AS A CO-OPERATIVE SOCIETY FULFILLED THE CO NDITIONS TO GET DEDUCTION U/S. 80P(2)(A)(VI) OF THE ACT OR THE ASSESSEE DID NOT SA TISFY THE CONDITION CONTAINED IN CLAUSE (VI) OF SEC. 80P(2)(A) OF THE ACT AND IT IS TO BE T REATED AS AN AOP IN STATUS NOT ENTITLED TO CLAIM DEDUCTION UNDER THE SAID SECTION. SEC. 80P(2) (A)(VI) OF THE ACT READS 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-SECTI ON (2), THERE SHALL BE DEDUCTED, IN ACCORDANCE WITH AND SUBJECT TO THE PROVISIONS OF TH IS SECTION, THE SUMS SPECIFIED IN SUB- SECTION (2), IN COMPUTING THE TOTAL INCOME OF THE A SSESSEE. (2) THE SUMS REFERRED TO IN SUB-SECTION (1) SHALL BE THE FOLLOWING, NAMELY :- (A) IN THE CASE OF A CO-OPERATIVE SOCIETY E NGAGED IN - (I) .. (VI) THE COLLECTIVE DISPOSAL OF THE LABO UR OF ITS MEMBERS, ACCORDING TO THE AFORESAID SUB-CLAUSE (VI) TO SEC. 80P(2)(A), AN ASSESSEE-COOPERATIVE SOCIETY IS ENTITLED TO 100% DEDUCTION UNDER THE SAI D SECTION IF THE MEMBERS OF THE SOCIETY EARN SOME INCOME BY GIVING THEIR COLLECTIVE LABOUR TO THEIR SOCIETY. THE A.O. WAS NOT IMPRESSED UPON THE CONTENTION OF THE ASSESS EE THAT IT EMPLOYED 43 PERSONS ONLY TO MANAGE ITS FIVE OFFICES AND ITS 206 MEMBERS WORK ED FOR THE CORE ACTIVITY OF THE SOCIETY AND THEY DID NOT WORK IN THE OFFICES OF THE SOCIETY. THE A.O. FURTHER ALLEGED THAT MOST OF THE MEMBERS WERE OF THE AGE GROUP OF 50 YEA RS OR ABOVE AND THEY WERE 7 PHYSICALLY UNFIT TO PERFORM THE OUTDOOR DUTIES OF T HE SOCIETY. ACCORDING TO HIM FURTHER, FOR CARRYING OUT THE CORE ACTIVITY, THE SOCIETY WAS REQUIRED TO ENGAGE AT LEAST 214 PERSONS AND HE THUS SUSPECTED DEPLOYMENT OF OUTSIDERS TO PE RFORM THE SOCIETYS CORE ACTIVITY. IN SUPPORT OF HIS PRESUMPTION, THE A.O. REFERRED TO TH E STATEMENT OF THE SECRETARY OF THE ASSESSEE-SOCIETY DATED 27/12/2006 ALLEGEDLY STATING THAT THE SOCIETY TAKES HELP OF THE OTHER MEMBERS OF OTHER CO-OPERATIVES WHO ARE WORKIN G BESIDES THEM IN ADJACENT AREAS. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE A. O. OBTAINED SPECIMEN OF AUDIT REPORT IN RESPECT OF THE SYSTEM OF MAINTENANCE OF B OOKS OF ACCOUNT FROM THE DY. DIRECTOR OF CO-OPERATIVE SOCIETIES AND ALLEGED THAT THE ASSESSEE WAS NOT MAINTAINING ITS BOOKS OF ACCOUNT ACCORDING TO THE SPECIFICATION ENU MERATED BY THE SAID AUTHORITY. HE, THEREFORE, REJECTED THE BOOKS OF ACCOUNT OF THE ASS ESSEE AND TREATED THE ASSESSEE AS AN AOP. 6.1. WE OBSERVE THAT THE A.O. HAS ALLEGED THAT THE ASSESSEE EMPLOYED 43 PERSONS TO CARRY OUT THE CORE ACTIVITIES OF THE ASSESSEE AND T HEY WERE NOT WORKING IN THE OFFICES OF THE ASSESSEE, WHICH ACCORDING TO HIM WAS ONLY TWO. THE ASSESSEE BEFORE THE AUTHORITIES HAS FILED A LIST OF 43 PERSONS INDICATING THE NATUR E OF DUTIES ASSIGNED TO THEM OFFICE-WISE AND PAYMENTS MADE TO EACH OF THEM AND THESE EVIDENC ES ARE ALSO FILED IN THE PAPER BOOK BEFORE US. THE SAME IS ALSO APPEARING ON PAGE-7 OF THE APPELLATE ORDER. FURTHER, WE OBSERVE THAT THE ASSESSEE MAINTAINS FIVE OFFICES AN D ONE PAY AND USE TOILET IN THE CITY (AND NOT TWO OFFICES AS ALLEGED BY THE A.O.), THE D ETAILS OF WHICH ARE GIVEN IN A-11 OF THE PAPER BOOK. IT IS NOT DENIED TO THE FACT THAT FOR RUNNING THE ESTABLISHMENTS, THE ASSESSEE IS REQUIRED TO EMPLOY PERSONS. IN THE LIS T THE ASSESSEE HAS GIVEN OFFICE-WISE DEPLOYMENT OF EMPLOYEES WITH THEIR ALLOTMENT OF VAR IOUS NATURE OF DUTIES. THE A.O. COULD NOT DENY THIS FACTUAL POSITION BY BRINGING ON RECORD ANY CONTRARY EVIDENCE TO ESTABLISH HIS SUSPICION THAT THESE 43 EMPLOYEES WER E ALSO USED FOR CORE ACTIVITIES OF THE ASSESSEE-SOCIETY. HE RATHER EXPRESSED SURPRISE OVER EMPLOYMENT OF 43 EMPLOYEES IN TWO OFFICES, WHEREAS AS PER DETAILS AVAILABLE WITH HIM AS ALSO BEFORE THE LD. C.I.T.(A) AND FILED BEFORE US AS WELL, THE ASSESSEE MAINTAINS FIV E OFFICES. IN THESE CIRCUMSTANCES, THE A.O.S DOUBT ABOUT EXCESS STRENGTH OF EMPLOYEES AND THEIR DEPLOYMENT IN CORE ACTIVITIES OF THE ASSESSEE-SOCIETY IS FACTUALLY AND LOGICALLY INCORRECT. IN OUR CONSIDERED OPINION, 8 THE LD. C.I.T.(A) HAS RIGHTLY STATED THAT IT WAS FO R THE A.O. TO ESTABLISH THAT EMPLOYMENT OF 43 PERSONS BY THE ASSESSEE WAS EXCESSIVE, WHICH THE A.O. FAILED TO DISCHARGE. THEREFORE, FOR RUNNING/MAINTAINING THE CAR PARKING SPACES AND REALIZATION OF THE FEES THEREFROM, IT CAN BE SAID THAT THE ASSESSEE HAS DEP LOYED ITS MEMBERS TO DO SUCH DUTIES, MORE SO WHEN THE A.O. HIMSELF HAS STATED THAT FOR S UCH JOB APPROXIMATELY 214 MAN POWER IS REQUIRED, WHEREAS ADMITTEDLY THE ASSESSEE S MEMBERS STRENGTH DURING THE YEAR UNDER CONSIDERATION WAS 206. IN OUR CONSIDERED OPIN ION FURTHER, THE A.O. HAS DRAWN A GENERAL CONCLUSION WITHOUT ANY PROOF/POSITIVE EVIDE NCE THAT MOST OF THE MEMBERS OF ABOVE 50 YEARS OF AGE WERE UNFIT FOR PROVIDING OUTD OOR SERVICES TO THE ASSESSEE-SOCIETY. THIS OBSERVATION OF THE A.O. BASED ON SUSPICION AND IN ABSENCE OF ANY CONCRETE EVIDENCE, IN OUR OPINION, CANNOT BE ACCEPTED. WE FU RTHER OBSERVE THAT THE A.O. TOOK THE STATEMENT OF THE SECRETARY OF THE ASSESSEE-SOCIETY DATED 27/12/2006 IN PROOF OF HIS OBSERVATION THAT THE ASSESSEE-SOCIETY IN CASE OF SH ORTAGE TAKES HELP OF OTHER MEMBERS OF OTHER CO-OPERATIVES OF ADJACENT AREAS. ON THE BASIS OF THIS ALLEGED ASSERTION, THE A.O. HELD THAT THE ASSESSEE EMPLOYED OUTSIDERS AND HENCE NOT ENTITLED TO DEDUCTION U/S. 80P(2)(A)(VI) OF THE ACT. THE RELEVANT QUESTION AND REPLY OF THE SECRETARY IS APPEARING ON PAGES 10 & 11, PARA 6.3.5 OF THE APPELLATE ORDER , WHICH READ AS UNDER :- IN QUESTION NO. 11, THE AO ASKED IN CASE OF S HORTFALL IN MEMBERS IN A DAY, HOW YOU MANAGE YOUR PARKING LOTS WITH REDUCED MANPO WER? THE SECRETARY REPLIED WE DO NOT DEPLOY OUTSIDERS BUT IN CASE O F SHORTAGE, WE TAKE HELP FROM OUR SOCIETY MEMBERS WHO WORKS BESIDE US. THE LD. C.I.T.(A) ON PLAIN READING OF THE AFORESAID QUESTION AND REPLY THEREOF FOUND THAT THE SECRETARY WAS REFERRING TO HIS OWN MEMBERS AND NOT TO MEMBERS OF OTHER CO- OPERATIVE SOCIETIES, AS INTERPRETED BY THE A.O. ON THE ABOVE QUESTION PUT BY THE A.O. AND REPLY OF THE SECRETARY, WE ARE OF THE CONSIDERE D OPINION THAT THE LD. C.I.T.(A) HAS CORRECTLY CONSIDERED/INTERPRETED THE CONTENTS OF TH AT STATEMENT OF THE SECRETARY, WHICH, IN FACT, SUPPORTS THE CONTENTION OF THE ASSESSEE. 6.2. THE A.O. OBTAINED COPY OF THE CO-OPERATIVE SO CIETYS AUDIT REPORT IN RESPECT OF THE SYSTEM OF MAINTENANCE OF BOOKS OF ACCOUNT FROM THE OFFICE OF DY. DIRECTOR OF CO- OPERATIVE SOCIETIES. ON THE BASIS OF THE CONTENTS T HEREIN, THE A.O. ALLEGED THAT THE ASSESSEE WAS NOT MAINTAINING ITS BOOKS OF ACCOUNT I N PROPER, FAIR AND IN TRANSPARENT 9 MANNER, WHICH HAS RESULTED IN REJECTION OF BOOKS OF ACCOUNT OF THE ASSESSEE. WE OBSERVE THAT THE REGISTRAR OF CO-OPERATIVE SOCIETY ON INTRODUCTION OF COMPUTERIZED SYSTEM OF KEEPING THE ACCOUNTS, HAS MADE SOME REMAR KS, OBSERVATIONS AND SUGGESTIONS AND THE A.O. HIMSELF HAS QUOTED THE SAME UNDER THE HEADING GENERAL REMARKS, OBSERVATIONS AND SUGGESTIONS. VIDE ITEM 4 REPRODUC ED ABOVE, IT IS STATED THAT IN VIEW OF THE HUGE VOLUME OF TRANSACTIONS THE SOCIETY AUTH ORITY IS SUGGESTED TO INTRODUCE INTERNAL CONTROL AND CHECKING SYSTEM. THE LEARNED COUNSEL HAS STATED THAT THE BOOKS OF ACCOUNT OF THE ASSESSEE-SOCIETY ARE DULY AUDITED BY GOVT. AUDITORS AS PER CO-OPERATIVE SOCIETIES RULES & REGULATIONS AND THE A.O. DID NOT DISPUTE THE SAME. WE ALSO FIND SUBSTANTIAL FORCE IN THE CONTENTION OF THE ASSESSEE S LEARNED COUNSEL THAT OBSERVATIONS MADE IN THE REGISTRAR OF CO-OPERATIVE SOCIETYS AUD IT REPORT ARE ONLY IN THE NATURE OF SUGGESTIONS GIVEN WITH A VIEW TO BRING ABOUT IMPROV EMENTS IN THE SYSTEM OF MAINTENANCE OF BOOKS OF ACCOUNT, CASH BOOK UPTODATE ETC. BUT BY THESE SUGGESTIONS/ OBSERVATIONS IT CANNOT BE SAID THAT THE REGISTRAR O F CO-OPERATIVE SOCIETY HAS SPECIFIED OR POINTED OUT ANY MISTAKE OR IRREGULARITY IN THE BOOK S OF ACCOUNT OF THE ASSESSEE, WHICH ARE DULY AUDITED BY THE GOVT. AUDITORS. THEREFORE, THE ACTION OF THE A.O. IN HAVING REJECTED THE ASSESSEES BOOKS OF ACCOUNT SOLELY ON THE BASIS OF ABOVE OBSERVATIONS/ SUGGESTIONS AND TREATING THE ASSESSEES STATUS AS T HAT OF AOP, IN OUR CONSIDERED OPINION, WAS NOT JUSTIFIED AND WE FIND NO INFIRMITY IN THE O RDER OF THE LD. C.I.T.(A) IN REJECTING SUCH ACTION OF THE A.O. OUR ABOVE CONCLUSION IS AL SO BACKED BY THE FACT THAT FOR ASSESSMENT YEAR 2001-02, THE A.O. HAS TREATED THE S TATUS OF THIS VERY ASSESSEE AS CO- OPERATIVE SOCIETY AND AS THERE WAS LOSS IN THAT YE AR, NO DEDUCTION U/S. 80P(2)(A)(VI) OF THE ACT WAS CLAIMED OR CONSIDERED. A COPY OF THE SA ID ASSESSMENT ORDER DATED 29.8.2003 IN PLACED IN THE PAPER BOOK AT A-5. FURTHER, DURING THE COURSE OF HEARING, THE LEARNED COUNSEL FOR THE ASSESSEE HAS ALSO FILED A COPY OF A SSESSMENT ORDER DATED 30/12/2009 FOR ASSESSMENT YEAR 2007-08 WHICH WAS PASSED BY THE SAM E D.C.I.T., WHO FILED THE APPEAL BEFORE THE TRIBUNAL. WE OBSERVE THAT THE A.O. IN TH IS ASSESSMENT YEAR AFTER TAKING THE STATUS OF THE ASSESSEE AS CO-OPERATIVE SOCIETY HAS ALLOWED THE DEDUCTION OF RS.18,83,815/- U/S. 80P(2)(A)(VI) OF THE ACT FROM T HE NET PROFIT AS PER P/L ACCOUNT, ASSESSING THE TOTAL INCOME AT NIL. THE LD. DEPARTME NTAL REPRESENTATIVE COULD NOT BRING 10 ON RECORD ANY INCIDENCE OR EVIDENCE ON RECORD TO ES TABLISH THAT THE NATURE OF ACTIVITIES IN THOSE TWO ASSESSMENT YEARS, I.E. A.YS 2001-02 & 200 7-08, WERE DIFFERENT THAN THOSE OF THE ASSESSMENT YEAR UNDER CONSIDERATION. IT IS PERT INENT TO MENTION HERE THAT THE A.O. IN THE ASSESSMENT ORDER FOR A.Y. 2007-08 HAS ALLOWED T HE CLAIM OF THE ASSESSEE BY STATING AS UNDER :- IN VIEW OF ABOVE, AS THE ISSUES INVOLVED ARE SAM E, FOLLOWING THE ORDER OF CIT(A) FOR A.Y. 2004-05, ASSESSEES STATUS IS CONSI DERED AS A CO-OPERATIVE SOCIETY AND DEDUCTION U/S. 80P(2)(A)(VI). IN VIEW OF THE ABOVE, ONCE THE DEPARTMENT HAS ACCEP TED IN A.Y. 2007-08 THAT THE FACTS OF THIS YEAR ARE IDENTICAL TO THOSE OF ASSESSMENT YEAR UNDER CONSIDERATION, IN OUR CONSIDERED OPINION, THERE REMAINS NO CASE FOR THE DEPARTMENT T O TAKE THE STATUS OF THE ASSESSEE AS AN AOP AND CONSEQUENTIALLY DENY THE DEDUCTION U/S. 80P (2)(A)(VI) OF THE ACT. 6.3. WE FURTHER OBSERVE THAT THE A.O. WHILE DENYIN G THE DEDUCTION U/S. 80P(2)(A)(VI) OF THE ACT RELIED ON THE DECISION IN THE CASE OF NI LGIRI ENGINEERING CO-OP. SOCIETY LTD. VS. CIT (SUPRA). HOWEVER, WE FIND THAT THE FACTS A ND CIRCUMSTANCES IN THE ABOVE CASE ARE TOTALLY DIFFERENT THAN THOSE OF THE ASSESSEES CASE. IN THE SAID CASE THE ASSESSEE, WHICH WAS FORMED BY GRADUATE ENGINEERS, UNDERTOOK L ABOUR CONTRACT AND CLAIMED BENEFIT OF SEC. 80P(2)(A)(VI) OF THE ACT. THE CONTRIBUTION OF THE MEMBER-ENGINEERS WAS CONFINED ONLY TO OVERALL SUPERVISION IN THE OFFICE AND THE A CTUAL SUPERVISION OF THE WORKS IN THE FIELD WAS DONE BY THE PAID EMPLOYEES OF THE SOCIETY . THE INCOME DECLARED BY THE SOCIETY WAS EARNED BY UNDERTAKING CONTRACT WORKS AN D GETTING THEM EXECUTED THROUGH ENGAGEMENT OF SUB-CONTRACTORS AND BY DEPLOYMENT OF OUTSIDE LABOUR. ON THE ABOVE FACTS, IT WAS HELD THAT NO LABOUR WAS EXERCISED BY THE MEMBERS AND THAT THEY HAD ACTED LIKE ANY OTHER BUSINESSMEN. HOWEVER, IN THE CASE B EFORE US, AS ALREADY STATED ABOVE, THE FACTS ARE DIFFERENT. THERE WAS NO SUB-CONTRACT OF T HE ASSIGNED JOB AND ACTUAL LABOUR IS EXERCISED BY THE MEMBERS OF THE SOCIETY. THEREFORE , THE AFORESAID DECISION OF HONBLE ORISSA HIGH COURT IS NOT APPLICABLE TO THE CASE OF THE ASSESSEE. 6.4. BEFORE PARTING, WE MAY STATE THAT THOUGH IT I S MENTIONED IN THE GROUNDS OF APPEAL THAT THE REMAND REPORT CONTAINING THE DECISION OF I TAT, AMRITSAR BENCH IN THE CASE OF ASSESSING OFFICER VS. GANESH CO-OPERATIVE (L&C) SOC IETY LTD. [67 ITR 436] HAS NOT 11 BEEN CONSIDERED BY THE LD. C.I.T.(A), BUT HOWEVER T HE LD. DEPARTMENTAL REPRESENTATIVE HAS NOT FILED ANY REMAND REPORT BEFORE US ON WHICH THE REVENUE IS PLACING RELIANCE. ON THE OTHER HAND, WE OBSERVE FROM THE PAPERS PLACED I N THE PAPER BOOK UNDER A-6 THAT THE LD. C.I.T.(A) VIDE HIS LETTER DATED 13/1/2009 SOUGH T FROM THE A.O. ASSESSMENT RECORD IN THE CASE OF THE ASSESSEE FOR THE ASSESSMENT YEAR UN DER CONSIDERATION AND THE A.O. VIDE HIS REPLY DATED 21/1/2009 HAS COMPLIED WITH THE REQ UIREMENT AS MADE BY THE LD. C.I.T.(A). THEREFORE, WE ARE OF THE OPINION THAT TH IS ASSERTION OF THE DEPARTMENT IN THE GROUNDS OF APPEAL IS MISPLACED AND OUT OF THE CONTE XT. EVEN OTHERWISE ALSO, THE DECISION OF THE TRIBUNAL IN THE CASE OF ASSESSING OFFICER VS . GANESH CO-OPERATIVE (L&C) SOCIETY LTD. (SUPRA) IS NOT APPLICABLE TO THE FACTS AND CIR CUMSTANCES OF THE ASSESSEES CASE. IN THAT CASE THE TRIBUNAL HELD THE DEDUCTION U/S. 80P( 2)(A)(VI) NOT ALLOWABLE ON THE REASONINGS THAT THE BYE-LAWS OF THE CO-OPERATIVE SO CIETY LAYING DOWN RULES FOR MEMBERSHIP AND VOTING RIGHTS VIOLATED PROVISO TO SE C. 80P(2)(A)(VI) AND FURTHER THE MAJOR CONTRIBUTION OF INDIVIDUAL LABOUR TO CONTRACT WORK UNDERTAKEN BY THE SOCIETY WAS FROM NON-MEMBERS. BUT SO FAR AS THE CASE OF THE ASS ESSEE IS CONCERNED, THE DEPARTMENT COULD NOT ESTABLISH ANY VIOLATION OF BYE-LAWS AND F URTHER WE HAVE ALREADY HELD THAT CORE ACTIVITY OF THE ASSESSEE-SOCIETY HAS BEEN PERFORMED BY THE MEMBERS OF THE SOCIETY WITHOUT ENGAGEMENT OF OUTSIDERS. IN THAT VIEW OF T HE MATTER THE AFORESAID DECISION OF THE TRIBUNAL IS ALSO NOT APPLICABLE TO THE FACTS OF THE ASSESSEES CASE. 6.5. IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE OF THE CONSIDERED OPINION THAT THE LD. C.I.T.(A) HAS DEALT WITH EACH AND EVERY OBJECTION RAISED BY THE A.O. AND THUS CORRECTLY DIRECTED HIM TO TAKE THE STATUS OF THE ASSESSEE AS CO- OPERATIVE SOCIETY AND TO ALLOW DEDUCTION U/S. 80P(2 )(A)(VI) OF THE ACT, AS CLAIMED BY THE ASSESSEE. WE UPHOLD HIS ORDER ON THIS ISSUE AND TH E GROUND OF APPEAL OF THE DEPARTMENT IS DISMISSED. 7. IN THE RESULT, THE APPEAL OF THE DEPARTMENT IS DISMISSED. SD/- SD/- ( ) ( . .. . ! ! ! !. .. . ) '# (N.VIJAYAKUMARAN) JUDICIAL MEMBER (C.D. RAO), ACCOUNTANT MEMBER ( (( (!# !# !# !#) )) ) DATE: 21-10-2011 12 $ $ $ $ / ITA NO. 1672 (KOL) OF 2009 '5 1 /%% 6''7- COPY OF THE ORDER FORWARDED TO : 1. +, / THE APPELLANT : D.C.I.T., CIRCLE-35, KOLKATA. 2 /0+, / THE RESPONDENT : PIONEER CO-OPERATIVE CAR PARKING SERVICING & CONST. SOCIETY LTD. , 33/1, N.S. ROAD, KOLKATA-700 001. 3. %5 () : THE CIT(A)-XX, KOLKATA. 4. %5/ THE CIT, KOL- 5 . ;%< /% / DR, ITAT, KOLKATA BENCHES, KOLKATA 6 . GUARD FILE . 0 /%/ TRUE COPY, '5/ BY ORDER, (DKP) ASSTT. REGISTRAR .