ITO, Erode V. M/s. The Erode Agriultural Producers co-operative Marketing Society Limited, Erode

ITA 2053/CHNY/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 0866 (ITAT-CHENNAI)
• Duration Of Justice: 3 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-02-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 07-02-2013
• Assessment Year: 2009-2010
• Appeal Filed On: 12-11-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR S MOHARANA
• Assessee Lawyers: S SRIDHAR
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH CHENNAI BEFORE SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER AND SHRI V. DURGA RAO, JUDICIAL MEMBER ------- ITA NO. 2053/MDS/2012 ASSESSMENT YEAR : 2009-10 THE INCOME TAX OFFICER, WARD-I(1), ERODE. V. THE ERODE AGRICULTURAL PRODUCERS CO-OPERATIVE MARKETING SOCIETY LTD., 295, CAUVERY ROAD, KARUNGALPALAYAM, ERODE-638 003. (PAN : AAAAT8556D) (APPELLANT) (RESPONDENT) APPELLANT BY : DR. S. MOHARANA, CIT RESPONDENT BY : SHRI S. SRIDHAR, ADVOCATE DATE OF HEARING : 07.0 2.2013 DATE OF PRONOUNCEMENT : 22.02.201 3 O R D E R PER V. DURGA RAO, JUDICIAL MEMBER : THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST TH E ORDER OF THE CIT(APPEALS)-I, COIMBATORE DATED 29-08-2012 FOR THE ASSESSMENT YEAR 2009-10. ITA NO.2053/MDS /2012 : 2 : 2. BRIEF FACTS ARE THAT THE ASSESSEE IS A CO-OPERATI VE SOCIETY AND HAS FILED RETURN DECLARING TOTAL INCOME OF ` 4,45,790/-. THE RETURN WAS PROCESSED UNDER SECTION 143(1) OF TH E INCOME TAX ACT, 1961 ('THE ACT' FOR SHORT), INITIALLY. S UBSEQUENTLY, THE ASSESSMENT WAS COMPLETED BY FOLLOWING DUE PROCESS U /S 143(3) OF THE ACT. DURING THE COURSE OF THE ASSESS MENT PROCEEDINGS, THE ASSESSING OFFICER OBSERVED THAT TH E ASSESSEE HAD CLAIMED DEDUCTION UNDER THE PROVISIONS OF SECTI ON 80P(2)(A) OF THE ACT AMOUNTING TO ` 46,05,048/-. THE ASSESSEE HAD NOT PRODUCED RELEVANT MATERIAL AND HAD NOT SATISFIED THAT THE ASSESSEE WAS ENTITLED TO THE DED UCTION AS CLAIMED BY IT SINCE THE ONUS WAS ON THE ASSESSEE. THE ASSESSING OFFICER FURTHER OBSERVED THAT MOREOVER IT IS A SETTLED LAW THAT A PROVISION CONFERRING EXEMPTION FROM TAX MUST BE CONSTRUED IN A STRICT MANNER AND PERSON SO CLAIMING MUST FALL WITHIN THE FOUR CORNERS OF THE EXEMPTION PROVISION. THE ASSESSING OFFICER HELD THAT SINCE THE ASSESSEE HAS NOT SHOWN WITH MATERIAL EVIDENCE THAT IT HAD DONE MARKETING O F AGRICULTURAL PRODUCE GROWN BY ITS MEMBERS FOR DEDUC TION U/S 80P(2)(A)(III) OF THE ACT AND WHEN LETTERS HAD BEEN ISSUED TO ITA NO.2053/MDS /2012 : 3 : THE SO-CALLED MEMBERS OF THE SOCIETY, IT WAS GATHER ED THAT MANY PERSONS REFUSED TO RECEIVE THE LETTERS AND SOM E PERSONS IN TURN HAD STATED THAT THEY DID NOT HOLD ANY AGRIC ULTURAL LANDS EXCEPT FOR LEASE HOLD LAND SUCH AS 1 OR 2 ACRES WIT HOUT ANY EVIDENCED ADDUCED TO IT. IN ADDITION, IT WAS RELIA BLY LEARNT THAT THESE REPLIES WERE PREPARED BY THE ASSESSEE SOCIETY ITSELF. INSOFAR AS THE INTEREST AND DIVIDEND ARE CONCERNED, THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAS FA ILED TO FILE CLEAR PROOF AND THEREFORE HE DISALLOWED THE SAME AL SO. 3. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER BEFORE THE CIT(APPEALS). IT WAS SUBMITTED BEFORE THE CIT( APPEALS) THAT THE ADDRESSES OF ALL THE MEMBERS WERE GIVEN TO THE ASSESSING OFFICER DURING THE COURSE OF THE ASSESSME NT PROCEEDINGS AND THE ASSESSING OFFICER AFTER CONSIDE RING THE SAME ISSUED NOTICES TO ALL THE MEMBERS OF THE SOCIE TY AND SOME OF THE MEMBERS REFUSED TO RECEIVE THE NOTICES AND SOME OF THE MEMBERS RECEIVED THE NOTICES AND SUBMITTED T HAT THEY WERE SMALL FARMERS AND THEY HAD TAKEN ONE OR TWO A CRES OF LAND ON LEASE. THE ASSESSING OFFICER CAME TO THE C ONCLUSION THAT THEY WERE NOT MEMBERS OF THE SOCIETY AND REJEC TED THE CLAIM. THE CIT(APPEALS) AFTER CONSIDERING THE DETAI LED ITA NO.2053/MDS /2012 : 4 : SUBMISSIONS OF THE ASSESSEE OBSERVED THAT THE BYE-L AWS OF THE SOCIETY DID NOT STATE THAT THE MEMBER SHOULD COMPUL SORILY OWN AGRICULTURAL LAND AND EVEN A PERSON DOING AGRICULTU RE ON LEASED LAND CAN BE A MEMBER OF THE AGRICULTURAL MARKETING SOCIETY. WITH THE ABOVE OBSERVATION, THE CIT(APPEALS) ALLOWE D THE CLAIM OF THE ASSESSEE FOR DEDUCTION U/S 80P(2)(A)(I II) OF THE ACT. 4. ON BEING AGGRIEVED, THE ASSESSEE HAS CARRIED THE MATTER BEFORE THE TRIBUNAL. THE LEARNED DR STRONGLY SUPPO RTED THE ORDER PASSED BY THE ASSESSING OFFICER. 5. ON THE OTHER HAND, THE LEARNED COUNSEL FOR THE A SSESSEE SUBMITTED THAT THE ASSESSEE IS A SOCIETY AND IS ELI GIBLE FOR THE DEDUCTION UNDER SECTION 80P(2)(A)(III) OF THE ACT A ND STRONGLY SUPPORTED THE ORDER PASSED BY THE CIT(APPEALS). 6. THE LEARNED COUNSEL FOR THE ASSESSEE FURTHER SUB MITTED THAT GROUND NO.4 RAISED BY THE REVENUE WAS NOT AT A LL DECIDED BY THE CIT(APPEALS) AND THE ISSUE WAS NOT RAISED BE FORE THE CIT(APPEALS). HE FURTHER SUBMITTED THAT THIS GROUN D WAS MISTAKENLY RAISED AND ALSO THAT GROUND NO.5 IS CONN ECTED TO GROUND NO.4 AND THEREFORE BOTH THE GROUNDS HAVE TO BE DISMISSED. THE LEARNED DR ON THE OTHER HAND FAIRLY CONCEDED ITA NO.2053/MDS /2012 : 5 : WITH REGARD TO THE SUBMISSIONS OF THE LEARNED COUNS EL FOR THE ASSESSEE IN THIS RESPECT. 7. WE HAVE HEARD BOTH THE SIDES, PERUSED THE RECORD S AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. FIRST OF ALL WE FIND THAT THE GROUNDS 4 AND 5 RAISED BY THE REVE NUE IN ITS APPEAL ARE INFRUCTUOUS AND AS NO ADJUDICATION IS RE QUIRED, THESE GROUNDS OF APPEAL FILED BY THE REVENUE ARE DI SMISSED AS INFRUCTUOUS. 8. THE ONLY ISSUE FOR OUR CONSIDERATION IS WHETHER THE ASSESSEE IS ELIGIBLE FOR THE DEDUCTION UNDER SECTIO N 80P(2)(A)(III) OF THE ACT OR NOT. THE ASSESSEE SO CIETY AFTER RECEIVING THE PRODUCTS GROWN BY THE MEMBERS WAS SEL LING THE SAME IN THE MARKET THROUGH OUT THE YEAR EXCEPT ON H OLIDAYS. THE MAIN OBJECTION RAISED BY THE ASSESSING OFFICER WITH REGARD TO THE CLAIM OF THE ASSESSEE WAS THAT SOME OF THE M EMBERS OF THE SOCIETY REFUSED TO RECEIVE NOTICES AND SOME OF THE MEMBERS OF THE SOCIETY WERE NOT HAVING AGRICULTURAL LAND AND THEREFORE THE ASSESSEE IS NOT ELIGIBLE FOR THE DEDU CTION U/S 80P(2)(A)(III) OF THE ACT. IN FACT, THE ASSESSING OFFICER HAS NOT DISPUTED THAT THE ASSESSEE SOCIETY IS CONDUCTING SA LE IN AN OPEN MARKET IN RESPECT OF THE GOODS PRODUCED BY THE ITA NO.2053/MDS /2012 : 6 : MEMBERS OF THE SOCIETY. THE CIT(APPEALS) GAVE A C ATEGORICAL FINDING THAT THE BYE-LAWS OF THE SOCIETY HAD NOT PR OHIBITED THE MEMBERS TO TAKE AGRICULTURAL LAND ON LEASE FOR CARR YING OUT AGRICULTURAL OPERATIONS. WHETHER THE ASSESSEE IS C ARRYING ON THE OPERATIONS ACCORDING TO THE OBJECTIVE OF THE SO CIETY IS NOT IMPORTANT TO GET EXEMPTION AS PROVIDED U/S 80P(2)(A )(III) OF THE ACT. NOWHERE THE ASSESSING OFFICER HAS STATED THAT THE ASSESSEE IS NOT CARRYING ON THE ACTIVITIES AS PROVI DED UNDER THE OBJECTIVES OF THE SOCIETY. IT IS NOT THE CASE OF T HE ASSESSING OFFICER THAT THE MEMBERS OF THE SOCIETY ARE ADMITTE D CONTRARY TO THE BYE-LAWS OF THE SOCIETY. SOME OF THE MEMBER S MIGHT HAVE REFUSED TO TAKE THE NOTICES BECAUSE THEY WERE NOT AWARE OF THE INCOME-TAX PROCEEDINGS. THEY MIGHT HAVE AFR AID TO RECEIVE A NOTICE FROM THE INCOME-TAX OFFICER. THERE FORE, SIMPLY NOTICE HAS BEEN REJECTED BY A MEMBER ON AN APPREHENSION CANNOT BE CONSIDERED THAT HE IS NOT A MEMBER OF THE SOCIETY. A MEMBER OF THE SOCIETY WOULD HAVE TA KEN LAND ON LEASE AND CARRIED OUT THE AGRICULTURAL OPERATION S. THEREFORE IT CANNOT BE SAID THAT HE IS NOT ELIGIBLE FOR THE M EMBERSHIP AND ON THAT GROUND EXEMPTION AS CLAIMED BY THE ASSESSEE CANNOT BE REJECTED. WE FIND THAT THE CIT(APPEALS) HAS RIG HTLY GRANTED ITA NO.2053/MDS /2012 : 7 : THE EXEMPTION TO THE SOCIETY UNDER SECTION 80P(2)(A )(III) OF THE ACT. 9. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. ORDER PRONOUNCED ON FRIDAY, THE 22 ND OF FEBRUARY, 2013, AT CHENNAI. SD/- SD/- (ABRAHAM P. GEORGE) (V.DURGA RAO) ACCOUNTANT MEMBER JUDICIAL MEMBER CHENNAI, DATED THE 22 ND FEBRUARY, 2013. H. COPY TO: ASSESSEE/AO/CIT(A)/CIT/D.R./GUARD FILE