The Haryana State Cooperative Supply and Marketing Federation Ltd., Panchkula V. Addl. CIT, Panchkula

ITA 205/CHANDI/2013

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 2410 (ITAT-CHANDIGARH)
• Duration Of Justice: 4 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-06-2013
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 21-02-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: JYOTI KUMARI
• Assessee Lawyers: HARISH NAYYAR
• Keywords: Business income; Opportunity of being heard
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES ACHANDIGARH BEFORE SHRI T.R.SOOD, ACCOUNTANT MEMBER AND MS SUSHMA CHOWLA, JUDICIAL MEMBER ITA NO. 205/CHD/2013 ASSESSMENT YEAR:2009-10 THE HARYANA STATE COOP.SUPPLY V ADDL.CIT, RAN GE & MARKETING FEDERATION LTD., PANCHKULA. PANCHKULA. PAN NO. AAAJH-0022R (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI HARISH NAYYAR DEPARTMENT BY: SMT. JYOTI KUMARI DATE OF HEARING : 13.06.2013 DATE OF PRONOUNCEMENT : 21.06.2013 O R D E R PER SUSHMA CHOWLA, JM THE ASSESSEE HAS FILED THE APPEAL AGAINST THE ORDER OF CIT(A), DATED 06.12.2012 RELATING TO ASSESSMENT YEAR 2009-1 0 AGAINST THE ORDER PASSED UNDER SECTION 143(3) OF THE I.T. ACT, 1961. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL : 1] THAT THE ORDER PASSED BY THE CIT(A) IN DISMIS SING THE APPEAL AND CONFIRMING ACTION OF THE ASSESSING OFFICER ARE ILLE GAL, ARBITRARY, HAVE BEEN PASSED IN A HASTE AND HAVE IGNORED BASIC ASPEC TS AND FACTS THUS CAUSING UNDUE HARDSHIP TO THE APPELLANT. 2] THAT THE CIT (A) HAS ERRED BOTH ON FACTS AND L AW IN CONFIRMING THE ADDITION CLAIMED IN RESPECT OF STORAGE CHARGES BY D ISALLOWING DEDUCTIONS CLAIMED UNDER SECTION 8OP(2)(E)OF THE IN COME TAX ACT AT RS.76818542.THE DEDUCTION HAS BEEN DISALLOWED ON TH E GROUND THAT SIMILAR ISSUE HAS BEEN DECIDED BY THE HON'BLE PUNJA B AND HARYANA HIGH COURT AGAINST THE APPELLANT. THE ADDITION HAS BEEN MADE WITHOUT CONSIDERING AND DISCUSSING THE FACTS OF THE CASE COMPLETELY AND OVERLOOKING THE PA ST HISTORY. THE ADDITION IS THUS ILLEGAL AND DESERVES TO BE QUASHED . 2 IT IS PRAYED THAT THE ADDITION OF RS.76818542 MAY BE ORDERED TO BE DELETED. 3] THAT THE CIT (A) HAS ERRED BOTH ON FACTS AND LAW IN CONFIRMING THE ADDITION OF RS.60305206 BY DISALLOWING DEDUCTIONS C LAIMED UNDER SECTION SOP(2)(D)OF THE INCOME TAX ACT. THE DEDUCTI ON HAS BEEN DISALLOWED WITHOUT MAKING REFERENCE TO THE RELEVANT PROVISIONS OF LAW AND CONSIDERING THE DIRECTIONS OF HONBLE ITAT IN R ESPECT OF SIMILAR ISSUES MADE IN THE PAST YEARS. SINCE THE ADDITION HAS BEEN MADE WITHOUT CONSIDERIN G THE FACTS OF THE CASE AND WITHOUT DISCUSSING THE FACTS OF THE CASE, THE SAME IS ILLEGAL AND DESERVES TO BE QUASHED. IT IS PRAYED THAT THE ADDITION OF RS. 60305206 MAY KINDL Y BE ORDERED TO BE DELETED. 4] THAT THE APPELLANT CRAVES TO ADD, DELETE, CON CEDE, AND MODIFY ANY OR ALL THE GROUNDS OF APPEAL AT THE TIME OF HEARING OF APPEAL. 3. THE GROUND NO.1 RAISED BY THE ASSESSEE IS GENERA L IN NATURE AND HENCE THE SAME IS DISMISSED. 4. THE ISSUE IN GROUND NO.2 RAISED BY THE ASSESSEE WAS IN RELATION TO CLAIM OF DEDUCTION U/S 80P(2)(E) OF THE ACT. 5. THE BRIEF FACTS RELATING TO THE ISSUE ARE THAT T HE ASSESSEE IS IN RECEIPT OF CHARGES FROM GODOWNS AND WAREHOUSES FROM IFFCO, KRIBHCO, FCI ETC. DURING THE YEAR UNDER CONSIDERAT ION, THE ASSESSEE HAD SHOWN STORAGE INCOME OF RS.32,46,21,49 0/-. THE AO NOTED THAT THE ISSUE IS COVERED AGAINST THE ASSESSE E, IN VIEW OF THE JUDGEMENT OF THE HON'BLE HIGH COURT IN ASSESSEE'S O WN CASE, WHERE IT WAS HELD THAT THE ASSESSEE DERIVES NO INCOME FRO M LETTING OF GODOWNS/WAREHOUSES AND THE TRUE INCOME WAS FROM THE BUSINESS ACTIVITY OF THE PURCHASE/SALE OF FOODGRAINS, TRANSP ORTATION, HANDLING, STORAGE, MILLING ETC. THE ASSESSEE HAD CLAIMED DEDU CTION U/S 80P(2)(E) OF THE ACT UNDER THE HEAD INCOME FROM ST ORAGE BY BIFURCATING ITS RECEIPTS BETWEEN RENTAL INCOME FROM STORAGE AND OTHER ACTIVITIES CARRIED ON BY THE ASSESSEE. THE H ON'BLE PUNJAB & 3 HARYANA HIGH COURT HAD DENIED THE SAID DEDUCTION U/ S 80P(2)(E) OF THE ACT TO THE ASSESSEE ON THE SO CALLED INCOME FRO M STORAGE AS THE ASSESSEE WAS FOUND TO BE MAINLY USING THE SAID GODO WN/WAREHOUSE FOR ITS OWN USE. FOLLOWING THE ABOVESAID PARITY OF REASONING, DEDUCTION U/S 80P(2)(E) CLAIMED BY THE ASSESSEE AT RS.7,68,18,542/- WAS NOT ALLOWED TO THE ASSESSEE BY THE AO. THE SEC OND PLEA OF THE ASSESSEE THAT RECEIPTS OF RS.1.21 CRORES WERE DERIV ED FROM LETTING OUT THE GODOWNS AT DELHI AND MUMBAI WAS ALSO DENIED TO THE ASSESSEE IN THE ABSENCE OF ANY EVIDENCE BEING FILED BY THE ASSESSEE. 6. THE CIT(APPEALS) NOTED THAT SIMILAR ISSUE AROSE IN ASSESSEE'S OWN CASE FOR ASSESSMENT YEAR 2008-09 BEFORE THE CIT (APPEALS) AND THE FINDINGS OF THE CIT(APPEALS) ARE INCORPORATED U NDER PARA 4.2 AT PAGE 2 & 3 OF THE APPELLATE ORDER. HOWEVER, THE DI SALLOWANCE OF DEDUCTION U/S 80P(2)(E) WAS CONFIRMED BY THE CIT(AP PEALS), THOUGH IN THE PRECEDING YEAR THE ISSUE OF EARNING INCOME O F LETTING OUT THE GODOWN DIRECTLY TO FARMERS AT GURGAON AND MUMBAI WA S REMITTED BACK TO THE AO. 7. THE ASSESSEE IS AGGRIEVED BY THE CONCLUSION OF T HE CIT(APPEALS) IN DISMISSING THE GROUND OF APPEAL RAI SED BY THE ASSESSEE, THOUGH THE ISSUE IS IDENTICAL TO THE ISSU E RAISED IN THE PRECEDING YEAR WHEREIN THE ISSUE WAS SET ASIDE TO T HE FILE OF AO FOR VERIFICATION. 8. THE LD. DR FOR THE REVENUE PLACED RELIANCE ON TH E ORDERS OF THE AUTHORITIES BELOW. 9. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. 4 THE ISSUE OF ALLOWABILITY OF DEDUCTION U/S 80P(2)(E ) OF THE ACT ON THE INCOME FROM SO CALLED WAREHOUSES IN THE HANDS O F THE ASSESSEE AROSE BEFORE THE HON'BLE PUNJAB & HARYANA HIGH COUR T IN ASSESSEE'S OWN CASE IN ITA NO. 157 OF 2005 DATED 8.9.2010. TH E SAID ISSUE WAS DECIDED AGAINST THE ASSESSEE AND THE ASSESSEE W AS HELD TO BE NOT ELIGIBLE TO THE CLAIM OF U/S 80P(2)(E) OF THE ACT O N THE ALLEGED STORAGE CHARGES RECEIVED BY THE ASSESSEE. THE COUR TS HELD THAT THE ASSESSEE WAS UTILIZING ITS STORAGE PLACE FOR ITS OW N BUSINESS OF DEALING IN FOODGRAINS AND AS SUCH THERE WAS NO MERI T IN BIFURCATING THE STORAGE CHARGES AND CLAIMED THE SAID DEDUCTION U/S 80P(2)(E) OF THE ACT. 10. THE LD. AR FOR THE ASSESSEE BEFORE US HAS FAIRL Y ADMITTED THAT THE ISSUE HAS BEEN DECIDED AGAINST THE ASSESSEE BY THE HON'BLE PUNJAB & HARYANA HIGH COURT. HOWEVER, THERE WAS SE COND LIMB TO THE ISSUE RAISED IN RELATION TO THE CLAIM OF DEDUCT ION U/S 80P(2)(E) OF THE ACT I.E. THE GODOWNS AT DELHI AND MUMBAI, WH ICH HAVE BEEN HIRED OUT TO THE OUTSIDERS AND ARE NOT BEING USED B Y THE ASSESSEE FOR ITS OWN BUSINESS. WE FIND THAT SIMILAR ISSUE IN RE SPECT OF THE GODOWNS AT GURGAON AND MUMBAI BEING LET OUT TO THE FARMERS, AROSE IN ASSESSEE'S OWN CASE RELATING TO THE ASSESSMENT Y EAR 2008-09. THE CIT(APPEALS) VIDE ORDER DATED 11.01.2012 IN THE APP EAL RELATING TO ASSESSMENT YEAR 2008-09 HELD AS UNDER : '4.3 THE FACTS OF THE CASE AS WELL AS THE SUBMISSIO NS OF THE APPELLANT AND THE AO HAVE BEEN CONSIDERED BY THE UNDERSIGNED. THE DED UCTION CLAIMED U/S 80P(2)(E) HAS BEEN WITHDRAWN BY THE LD. AO ON ACCOU NT OF STORAGE CHARGES TO GIVE EFFECT TO THE ORDER OF THE HON'BLE PUNJAB & HA RYANA HIGH COURT IN APPELLANT'S OWN CASE IN ITA NO. 157 OF 2005 VIDE OR DER DATED 08.09.2010. THE HON'BLE PUNJAB & HARYANA HIGH COURT VIDE PA RA 14 PAGE 10-11 OF THE 5 ORDER HELD AS UNDER :- 'IN THE PRESENT CASE, IT HAS BEEN CLEARLY HELD THAT THE ASSESSEE WAS PURCHASING THE GOODS AND THEN SELLING THE GOODS TO FCI AND IN SUCH A SITUATION, STORING WAS PART OF BUSINE SS OF THE ASSESSEE AND DID NOT AMOUNT TO LETTING OUT OF STORA GE CAPACITY AS TILL THE GOODS WERE SOLD TO FCI, GOOD BELONGED T O THE ASSESSEE ITSELF AND NOT TO THE FCI. THIS BEING THE FACTUAL SITUATION, THE MATTER IS FULLY COVERED BY JUDGMENT OF THE HON'BLE SUPREME COURT IN SURAT VENKAR SAHKARI SANGH AND A VENTAKA SUBBARAO AS REITERATED IN UDAIPUR SAHKARI U PBHOKTA. THE INCOME OF THE ASSESSEE FOR STORAGE COULD NOT BE TREATED AT PAR WITH HIRE CHARGES. QUESTIONS ARE ANSWERED IN F AVOUR OF THE REVENUE AND AGAINST THE ASSESSEE. 11. THE FACTS OF THE PRESENT CASE ARE IDENTICAL TO THE FACTS ARISING IN ASSESSMENT YEAR 2008-09 AND FOLLOWING THE SAME P ARITY OF REASONING, WE ARE OF THE VIEW THAT THE ISSUE OF LET TING OUT OF GODOWNS AT DELHI AND MUMBAI TO OUTSIDERS NEEDS TO BE VERIFI ED BY THE AO. ACCORDINGLY, WE REMIT THIS ISSUE OF VERIFICATION OF LETTING OUT OF GODOWNS AT DELHI AND MUMBAI BACK TO THE FILE OF AO WHO IN TURN SHALL VERIFY THE CLAIM OF THE ASSESSEE AND DECIDE T HE ISSUE IN VIEW OF THE RATIO LAID DOWN BY THE HON'BLE PUNJAB & HARYANA HIGH COURT IN ASSESSEE'S OWN CASE AND CONCLUDE THE DEDUCTION U/S 80P(2)(E) OF THE ACT ON RECEIPTS OF RS.1.21 CRORES IN ACCORDANCE WIT H LAW. HOWEVER, AS HELD BY US IN PARAS HEREIN ABOVE, THE ASSESSEE I S NOT ENTITLED TO CLAIM OF DEDUCTION U/S 80P(2)(E) OF THE ACT ON THE BALANCE STORAGE PLACE BEING UTILIZED BY ITSELF FOR CARRYING ON ITS BUSINESS IN FOODGRAINS. THE GROUND NO.2 RAISED BY THE ASSESSEE IS THUS, PARTLY ALLOWED. 12. THE ISSUE IN GROUND NO.3 IS IN RELATION TO THE DEDUCTION CLAIMED U/S 80P(2)(D) OF THE ACT. THE LD. AR FOR T HE ASSESSEE, AT THE 6 OUTSET POINTED OUT THAT THE ISSUE IS COVERED IN FAV OUR OF THE ASSESSEE BY THE ORDERS OF THE TRIBUNAL IN ASSESSEE'S OWN CAS E RELATING TO ASSESSMENT YEAR 2004-05 AND 2005-06. 13. THE LD. DR PLACED RELIANCE ON THE ORDERS OF THE AUTHORITIES BELOW. 14. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION, H AD CLAIMED DEDUCTION U/S 80P(2)(D) OF THE ACT ON DIVIDEND INCO ME OF RS.5.92 CRORES AND INTEREST INCOME OF RS.11.91 LACS. THE A O HAD OBSERVED THAT THE INVESTMENTS WERE PART AND PARCEL OF THE CA RRYING ON OF THE BUSINESS ACTIVITY BY THE ASSESSEE AND OUT OF COMMON FUNDS INCLUDING INTEREST BEARING FUNDS, PURCHASES WERE MADE, EXPENS ES WERE MET AND THE INVESTMENTS WERE MADE. THE PLEA OF THE ASSESSE E THAT NO COST WAS ATTACHED TO THE SAID INVESTMENT WAS THUS REJECT ED AND THE EXPENDITURE RELATABLE TO THE EARNING OF THE SAID DI VIDEND AND INTEREST INCOME WAS WORKED OUT AT RS.36.82 CRORES. THE DEDU CTION U/S 80P(2)(D) WAS THUS, RESTRICTED TO NIL AS THE INCO ME FROM DIVIDEND AND INTEREST WAS RS.6.03 CRORES AND THE EXPENDITURE RELATABLE TO THE SAME WAS RS.36.82 CRORES. 15. THE CIT(APPEALS) HAD NOTED THE FACT THAT IN THE APPEAL RELATING TO ASSESSMENT YEAR 2008-09, THE ISSUE HAS BEEN SET ASIDE TO THE FILE OF AO FOR RE-COMPUTATION OF THE DISALLOWANCE AS PER RU LE 8D IN VIEW OF THE DECISION OF THE TRIBUNAL. THOUGH THE CIT(APPEA LS) ACCEPTED THE FACTS BEING SAME AND THE SAID DIRECTION WAS ALSO GI VEN TO THE AO BUT THE GROUND OF APPEAL WAS DISMISSED BY THE CIT(APPEA LS). 16. THE ASSESSEE IS AGGRIEVED BY THE FINDING OF THE CIT(APPEALS) IN THIS REGARD. 7 17. WE FIND THAT SIMILAR ISSUE OF CLAIM OF DEDUCTIO N U/S 80P(2)(D) OF THE ACT AROSE BEFORE THE TRIBUNAL IN ASSESSEE'S OWN CASE IN ITA NOS.522/CHD/2008 AND CROSS APPEAL IN ITA NO.575/CHD /2008 RELATING TO A.Y. 2004-05 AND ITA NO. 721/CHD/2008 AND CROSS APPEAL IN ITA NO.722/CHD/2008 RELATING TO A.Y. 2005-06, WHEREIN V IDE ORDER DATED 31.10.2008, IT WAS HELD AS UNDER : 5. THE NEXT GROUND I.E. GROUND NO. 3 IS THAT THE LEARNED FIRST APPELLATE AUTHORITY IS NOT JUSTIFIED IN REDUCING TH E DEDUCTION CLAIMED U/S 80-P(2) (D) AFTER DEDUCTING 5% EXPENSES WHICH IS AG AINST THE LAW AND HAS TO BE COMPUTED UNDER THE PROPER HEAD. DURING ARGUM ENTS, THE CLAIM OF THE ASSESSEE IS THAT THE ASSESSEE CLAIMED DEDUCTION ON ACCOUNT OF DIVIDENDS RECEIVED FROM COOPERATIVE SOCIETIES AMOUN TING TO RS.2,39,42,070/- AND THE ASSESSEE CLAIMED 100% DEDU CTION ON ACCOUNT OF DIVIDEND. ON QUESTIONING BY THE DEPARTMENT THE ASSE SSEE CLAIMED THAT SINCE IT IS A BUSINESS INCOME, THEREFORE, EXPENSES CANNOT BE APPORTIONED. THE LEARNED ASSESSING OFFICER DISALLOWED 20% OF THE EXPENSES, WHICH COMES TO RS. 47,88,414/-. THE ARGUMENT ON BEHALF O F THE ASSESSEE IS THAT NEITHER THE ASSESSEE HAS TAKEN ANY LOAN, THEREFORE, THERE IS NO QUESTION OF ANY DIRECT EXPENSES TO THIS ACTIVITY, SO NO INDIREC T EXPENSES ARE TO BE ADJUSTED. RELIANCE WAS PLACED IN 189 ITR 89(P&H). ON THE OTHER HAND, THE LEARNED DR CONTENDED THAT IT REQUIRES-EXAMINATI ON PURSUANCE TO RULE 8-D OF THE RULES. RELIANCE WAS ALSO PLACED IN THE CASE OF ACIT VS. CITICORP FINANCE INDIA LTD (108 ITD 457)(MUM). BOT H THE LEARNED REPRESENTATIVES AGREED THAT THIS ISSUE MAY BE SENT TO THE FILE OF THE LEARNED ASSESSING OFFICER FOR FRESH ADJUDICATION IN ACCORDA NCE WITH LAW. IN VIEW OF THESE FACTS, THIS GROUND IS SENT TO THE FILE OF THE LEARNED ASSESSING OFFICER TO EXAMINE THE CLAIM OF THE ASSESSEE/REVENU E AND THEN DECIDE IN ACCORDANCE WITH LAW. THIS WILL ALSO COVER GROUND N O.3 OF THE APPEAL OF THE REVENUE (ITA NO. 575/CHD/2008). NEEDLESS TO M ENTION HERE THAT DUE OPPORTUNITY OF BEING HEARD BE PROVIDED TO THE ASSES SEE. THE ASSESSEE IS ALSO AT LIBERTY TO FURNISH EVIDENCE, IF ANY, TO SUB STANTIATE ITS CLAIM, THEREFORE, THESE GROUNDS OF THE ASSESSEE / REVENUE ARE ALLOWED FOR STATISTICAL PURPOSES ONLY. 8 18. THE FACTS OF THE PRESENT CASE ARE IDENTICAL TO THE FACTS BEFORE THE TRIBUNAL IN THE EARLIER YEARS AND FOLLOWING THE PAR ITY OF REASONING, WE REMIT THE ISSUE BACK TO THE FILE OF AO FOR FRESH AD JUDICATION IN LINE WITH THE DIRECTIONS OF THE TRIBUNAL VIDE ORDER DATED 31. 10.2008. ACCORDINGLY, THE GROUND OF APPEAL RAISED BY THE ASSESSEE IS ALLO WED FOR STATISTICAL PURPOSES. 19. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 21 ST DAY OF JUNE, 2013. SD/- SD/- (T.R.SOOD) (SUSHMA CHOWLA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 21 ST JUNE,2013 POONAM COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR BY ORDER ASSISTANT REGISTRAR, ITAT, CHANDIGARH