Appeal details
Counselvise Citation
[2012] 119 COUNSELVISE.COM (IT) 9609 (ITAT-NAGPUR)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
1 year(s) 11 month(s) 1 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
23-11-2012
Appeal Filed By
Assessee
Order Result
Dismissed
Bench Allotted
DB
Assessment Year
2003-2004
Appeal Filed On
22-12-2010
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL NAGPUR BENCH, NAGPUR BEFORE SHRI P. K. BANSAL, HONBLE ACCOUNTANT MEMBER AND SHRI D. T. GARASIA, HONBLE JUDICIAL MEMBER I.T.A. NO S.189 & 190 / NAG /1 0 ASSESSMENT YEAR S : 03 - 04 & 04 - 05 HINDUSTAN LALPETH COLLIERY RAYATWARI VS. INCOME TAX OFFICER, SUB AREA COAL MINES EMPLOYEES WARD - 4, CO - OPERATIVE CREDIT SOCIETY LTD., CHANDRAPUR. CHANDRAPUR. PAN:AAABH0127L (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI A. S. DANI, C. A. RESPONDENT BY : DR. MILIND BHUS ANI, C.I.T. (D.R.) DATE OF HEARING :18/10/2012 DATE OF PRONOUNCEMENT : 23/1 1 /2012 ORDER PER P. K. BANSAL: THESE TWO APPEALS RELATE TO THE SAME ASSESSEE AND INVOLVED COMMON ISSUE, THEREFORE, THESE APPEALS ARE BEING DISPOSED OF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. IN BOTH THE YEARS, THE ASSESSEE HAS TAKEN THE FOLLOWING EFFECTIVE GROUNDS OF APPEAL E XCEPT CHANGE IN THE FIGURE. 1. THE LEARNED CIT(A) HAS ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER OF TAXING THE GROSS PROFIT OF THE APPELLANT AT RS.1,93,186/ - IN THE GAS AGENCY BUSINESS OF THE APPELLANT, IGNORING THE ALLOCATION OF EXPENSES IN TWO BUSINESSES OUT OF THE CONSOL IDATED PROFIT & LOSS ACCOUNT OF THE APPELLANT, WHICH IN FACT I.T.A. NO. 189 & 190/NAG/2010 2 RESULTS INTO A NET LOSS OF RS.84,173/ - IN THE GAS AGENCY BUSINESS. 2. THE LEARNED CIT(A) HAS ERRED IN CONFIRMING THE ADDITION OF RS.1,74,009/ - TO THE RETURNED INCOME OF RS. NI9L, FOR THE REASON THAT OUT OF R S.1,74,009/ - BEING EXPENSES DISALLOWED, RS.1,63,000/ - OBVIOUSLY PERTAIN TO THE BUSINESS OF PROVIDING CREDIT FACILITIES TO MEMBERS, THE WHOLE OF THE INCOME WHEREOF IS ULTIMATELY DEDUCTIBLE U/S 80P(2)(A)(I) OF THE ACT, AND RS.10,000/ - PERTAIN T O THE GAS AGENCY BUSINESS WHICH HAS THE CONSEQUENCE OF REDUCING THE NET LOSS INCURRED IN THE GAS AGENCY BUSINESS. 3. THE LEARNED CIT(A) HAS, THEREFORE, ERRED IN NOT APPRECIATING THE TOTALITY OF TAX ASSESSMENT OF THE APPELLANT WHICH HAS THE ULTIMATE EFFECT OF REDUCING ITS NET PROFIT FROM THE BUSINESS OF PROVIDING CREDIT FACILITIES TO ITS MEMBERS, BY A NET LOSS IN THE GAS AGENCY BUSINESS, WITH THE ULTIMATE NET PROFIT BEING REDUCED TO RS. NIL BY VIRTUE OF SECTION 80(P)(2)(A)(I) OF THE ACT. 2. IN ASSESSMENT YEAR 2004 - 2005, THE FIGURE IN GROUND NO. 1 IS RS.1,37,012/ - IN PLACE OF RS.1,93,186/ - AND RS.1,18,670/ - IN PLACE OF RS.84,173/ - . IN GROUND NO. 2, THE FIGURE IS RS.2,31,252/ - IN PLACE OF RS.1,74,009/ - , RS.1,85,652/ - IN PLACE OF RS.1,63,000/ - AND RS.15,000 / - IN PLACE OF RS.10,000/ - . 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A CO - OPERATIVE SOCIETY ENGAGED IN THE BUSINESS OF PROVIDING CREDIT FACILITIES TO ITS MEMBERS AND IS ALSO RUNNING A CONSUMER CO - OPERATIVE STORE SUPPLYING LPG DOMESTIC GAS T O ITS MEMBERS. THE ORIGINAL ASSESSMENT WAS COMPLETED U/S 143(3) AT A TOTAL INCOME OF RS.1,93,186/ - . IN THIS ASSESSMENT THE INCOME FROM GAS AGENCY BUSINESS WAS TAKEN AT RS.1,93,186/ - AND DEDUCTION 80(P)(2)(A)(I) OF THE ACT WAS ALLOWED FOR RS.50,000/ - IN R ESPECT OF INTEREST ON IVP. THE ASSESSEE SUBSEQUENTLY FILED AN APPLICATION FOR RECTIFICATION U/S 154 ON 20/02/2008 WHICH WAS REJECTED BY THE I.T.A. NO. 189 & 190/NAG/2010 3 ASSESSING OFFICER. AGAINST THIS REJECTION, THE ASSESSEE HAS NOT FILED ANY APPEAL. THE PROCEEDINGS U/S 147 WITH TH E APPROVAL OF THE JT. CIT WERE INITIATED AFTER RECORDING THE REASONS U/S 148(2). THE NOTICE U/S 148 WAS ISSUED ON 31/12/2007. IN REPLY THERETO, THE ASSESSEE SUBMITTED THE RETURN AT NIL. WHILE MAKING THE ASSESSMENT, WHEN THE ASSESSING OFFICER ASKED THE A SSESSEE TO PRODUCE THE DETAILS IN RESPECT OF GAS AGENCY BUSINESS, THE ASSESSEE SUBMITTED THAT IT HAS INCURRED LOSS OF RS.84,713/ - IN THE DOMESTIC GAS AGENCY BUSINESS. A MARGINAL DISALLOWANCE OF RS.10,000/ - ON ACCOUNT OF GRATUITY PROVISION WOULD ONLY REDUC E THE LOSS BY RS.10,000/ - . THE ASSESSING OFFICER TOOK THE INCOME FROM GAS AGENCY BUSINESS AT RS.1,93,186/ - AS ORIGINALLY ASSESSES AND ALSO MADE THE DISALLOWANCE OF RS.10,000/ - IN RESPECT OF PROVISIONS FOR GRATUITY AS ACCORDING TO THE ASSESSING OFFICER, TH E ISSUE REGARDING DETERMINATION OF THE INCOME OF GAS AGENCY HAS BECOME FINAL AND THE ASSESSEE CANNOT GET THE BENEFIT UNDER THE REASSESSMENT PROCEEDINGS. THE ASSESSMENT WAS COMPLETED AT AN INCOME OF RS.80,116/ - . 4. THE ASSESSEE WENT IN APPEAL BEFORE THE C IT(A) AND THE CIT(A) ALSO DISMISSED THE GROUND. THE CIT(A) ALLOWED THE DEDUCTION TO THE ASSESSEE U/S 80(P)(2)(A)(I) OF THE ACT IN RESPECT OF INTEREST EARNED ON STATUTORY RESERVE TO THE EXTENT OF RS.4,33,965/ - BUT DISMISSED THE OTHER GROUNDS. 5. THE GROUND NO. 1 RELATES TO THE DETERMINATION OF THE PROFIT OF THE GAS AGENCY BUSINESS. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULLY CONSIDERED THE SAME. IN OUR OPINION, THE ISSUE REGARDING THE DETERMINATION OF INCOME FROM I.T.A. NO. 189 & 190/NAG/2010 4 GAS AGENCY BUSINESS HAS BE COME FINAL AND THE INCOME ORIGINALLY HAS BEEN ASSESSED AT RS.1,93,186/ - . THE RECTIFICATION APPLICATION MOVED BY THE ASSESSEE WAS ALSO REJECTED. THE ASSESSEE, IN OUR OPINION, IN THE REASSESSMENT PROCEEDINGS CANNOT CLAIM ANY DEDUCTION IN RESPECT OF THE PRO FIT, WHICH HAS ALREADY BEEN DETERMINED IN THE ORIGINAL ASSESSMENT. AFORESAID VIEW IS DULY SUPPORTED BY THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF COMMISSIONER OF INCOME TAX V S . SUN ENGINEERING WORKS PVT. LIMITED 198 ITR 297 . THUS, THIS GROUND STANDS DISMISSED. 6. THE SECOND GROUND RELATES TO THE CLAIM OF DEDUCTION U/S 80(P)(2)(A)(I) OF THE ACT IN RESPECT OF R.1,63,009/ - DISALLOWED BY THE ASSESSING OFFICER. THE ASSESSEE CLAIMED THAT THESE EXPENSES RELATED TO THE BUSINESS OF PROVIDING THE CREDIT FACILITIES TO THE MEMBERS AND THEREFORE, THE ASSESSEE IS ENTITLED FOR DEDUCTION U/S 80(P)(2)(A)(I) OF THE ACT . THE ASSESSING OFFICER DID NOT AGREE. WHEN THE MATTER WENT BEFORE THE CIT(A), THE CIT(A) HELD AS UNDER: 7. REGARDING ADDITION OF RS.1,63,007/ - MADE ON ACCOUNT OF PROVISIONS, THE APPELLANT HAS STATED THAT THESE ADDITIONS ARE ULTIMATELY ATTRIBUTABLE TO THE BUSINESS OF PROVIDING CREDIT FACILITIES TO THE MEMBERS AND, THEREFORE, COVERED U/S 80(P)(2)(A)(I) OF THE ACT. HOWEVER, IT IS SEEN THAT APPELLANT ALSO CARRIED ON ANOTHER BUSINESS WHICH THAT OF GAS AGENCY AND THE AMOUNT DISALLOWED ARE PR OVISION OF GRATUITY, PROVISIONS FOR AUDIT FEE, PROVISION FOR BAD AND DOUBTFUL DEBTS ARE RELATABLE TO THE GAS AGENCY BUSINESS. DEDUCTION U/S 80(P)(2)(A)(I) IS ONLY ALLOWABLE ON INCOME ATTRIBUTABLE TO BUSINESS OF CREDIT FACILITIES. DISALLOWANCE EXPENSES W ILL NOT AUTOMATICALLY COME WITHIN THE PURVIEW OF DEDUCTION U/S 80(P)(2)(A)(I). THEREFORE, NO SUCH DEDUCTION IS ALLOWABLE ON THE DISALLOWANCE MADE. THIS GROUND IS DISMISSED. I.T.A. NO. 189 & 190/NAG/2010 5 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULLY CONSIDERED THE SAME. NO CO GENT MATERIAL OR EVIDENCE HAS BEEN BROUGHT TO OUR KNOWLEDGE OR FILED BEFORE US ON BEHALF OF THE ASSESSEE WHICH MAY PROVE THAT THE DISALLOWANCE OF THE EXPENSES RELATE TO THE BUSINESS OF PROVIDING CREDIT FACILITIES TO THE MEMBERS. UNDER THESE CIRCUMSTANCES, WE DO NOT FIND ANY INFIRMITY OR ILLEGALITY IN THE ORDER OF CIT(A). WE CONFIRM THE ORDER OF CIT(A) ON THIS GROUND. 8. LEARNED A.R. AGREED THAT GROUND NO. 3 IS GENERAL IN NATURE AND IS NET EFFECT OF GROUND NO. 1 AND 2, THEREFORE, THIS GROUND IS DISMISSED . 9. IN THE RESULT, BOTH THE APPEALS FILED BY THE ASSESSEE ARE DISMISSED. ( O RDER PRONOUNCED IN THE OPEN COURT ON 23/1 1 /2012 ) SD/. SD/. ( D. T. GARASIA ) ( P. K. BANSAL ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 23/1 1 /2012 * CL SINGH COPY FORWARDED TO THE: 1. APPELLANT. 2. RESPONDENT. 3. CIT (A) 4. CIT 5. DR. ASSISTANT REGISTRAR
