DCIT, Salem V. M/s. The Dharmapuri District Co-op Sugar Mills Limited, Dharmapuri

ITA 2281/CHNY/1995

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 58128 (ITAT-CHENNAI)
• Duration Of Justice: 16 year(s) 4 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-03-2012
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 21-03-2012
• Assessment Year: 1992-1993
• Appeal Filed On: 06-11-1995
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: R VIJAYARAGHAVAN
• Keywords: Assessment record

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : CHENNAI [BEFORE SHRI N.S. SAINI, ACCOUNTANT MEMBER AND SHRI GEORGE MATHAN, JUDICIAL MEMBER] I.T.A.NOS.2280 & 2281/MDS/1995 ASSESSMENT YEARS : 1987-88 AND 1992-93 THE DY. CIT SPECIAL RANGE SALEM VS M/S DHARMAPURI DISTRICT CO- OPERATIVE SUGAR MILLS LTD PALACODE DHARMAPURI DISTRICT (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SHAJI P. JACOB, ADDL. CIT RESPONDENT BY : SHRI R.VIJAYARAGHAVAN, ADVOCATE DATE OF HEARING : 21-3-2012 DATE OF PRONOUNCEMENT : 23-3-2012 O R D E R PER N.S. SAINI, ACCOUNTANT MEMBER THESE ARE APPEALS FILED BY THE REVEN UE AGAINST SEPARATE ORDERS OF THE LD.CIT(A), COIMBATORE, BOTH DATED 21 -08-1995, PASSED IN ASSESSMENT YEARS 1987-88 AND 1992-93. 2. AT THE TIME OF THE HEARING, THE LD. DR SUBMITTED THAT IN BOTH THESE APPEALS THE COMMON ISSUE INVOLVED IS THAT THE LD.CIT(A) ERRED IN DIRECTING THE ASSESSING OFFICER TO GRANT DEDUCTION U/S 80P(2)(A)(I) OF THE ACT IN RESPECT OF INTEREST RECEIVED BY THE ASS ESSEE FROM ITS I.T.A.NO. 2280 & 2281/95 :- 2 -: MEMBERS. THE LD. DR ALSO SUBMITTED THAT THE ISSUE WAS DECIDED BY THE CONSOLIDATED ORDER OF THE TRIBUNAL VIDE ORDER D ATED 11.6.2003 PASSED IN I.T.A.NOS.2280 & 2281/MDS/1995 AND THE AP PEALS OF THE REVENUE WERE DISMISSED FOR BOTH THE YEARS UNDER CO NSIDERATION. THE REVENUE FILED APPEALS BEFORE THE HON'BLE MADRAS HIG H COURT. THE HON'BLE MADRAS HIGH COURT HAS OBSERVED THAT THE ISS UE WAS COVERED BY THE DECISION OF THE HON'BLE SUPREME COURT IN THE CA SE OF CIT VS PONNI SUGARS AND CHEMICALS LTD [2009] 306 ITR 392 (SC) FO R WHICH THE ASSESSEE WAS ALSO A PARTY, WHEREIN THE APEX COURT R EMANDED THE MATTER BACK TO THE TRIBUNAL ON THE QUESTION WHETHER THE SOCIETY WAS ENTITLED TO EXEMPTION UNDER SECTION 80P(2)(A)(I) OF THE INCOME-TAX ACT, 1961, IN RESPECT OF THE INTEREST RECEIVED FROM THE MEMBERS OF THE SOCIETY, SINCE THE AUTHORITIES BELOW HAD NOT EXAMIN ED THE MEMORANDUM OF ASSOCIATION, ARTICLES OF ASSOCIATION, THE RETURN FILED BY THE ASSESSEE AND THE STATUS OF THE BUSINESS INDICA TED IN THE RETURN. THUS, THE APEX COURT REVERSING THE DECISION OF THE HON'BLE HIGH COURT HELD THAT THE ELIGIBILITY CONDITION IN THE SCHEMES HAS TO BE CONSIDERED. IN THE LIGHT OF THE ABOVE ORDER OF THE SUPREME COUR T, THE HON'BLE HIGH COURT REMITTED THE MATTER BACK IN THE PRESENT APPEA LS TO THE TRIBUNAL TO CONSIDER THE ISSUE IN THE LIGHT OF THE DIRECTION S OF THE HON'BLE SUPREME COURT. THE LD. DR SUBMITTED THAT THE HON'B LE SUPREME COURT DECIDED A BATCH OF APPEALS TOGETHER WITH THE APPEAL OF CIT VS PONNI I.T.A.NO. 2280 & 2281/95 :- 3 -: SUGARS AND CHEMICALS LTD. THE BATCH OF APPEALS INC LUDED THE PRESENT ASSESSEE AND ALSO M/S MODERN ENGINEERS CONSTRUCTION CO-OP. SOCIETY. ALL THE APPEALS WERE RESTORED BACK TO THE TRIBUNAL WITH SIMILAR DIRECTIONS ON THE ISSUE. HE FURTHER SUBMITTED THAT THE APPEAL OF THE REVENUE IN THE CASE OF M/S MODERN ENGINEERS CONSTRU CTION CO-OP. SOCIETY HAS BEEN THEREAFTER DECIDED BY THE TRIBUNAL IN FAVOUR OF THE REVENUE VIDE ORDER DATED 15.4.2010, REPORTED IN [20 11] 11 ITR (TRIB) 393 (CHENNAI). THEREFORE, HE PRAYED THAT FOLLOWIN G THE SAME, THE PRESENT APPEALS OF THE REVENUE SHOULD ALSO BE ALLOW ED. ON A QUERY FROM THE BENCH IN REGARD TO THE MEMORANDUM OF ASSOC IATION AND ARTICLES OF ASSOCIATION OF THE ASSESSEE AND ALSO T HE NATURE OF BUSINESS OF THE ASSESSEE AS PER THE RETURN, THE LD. DR SUBM ITTED THAT THE ISSUE NEEDS VERIFICATION BY THE ASSESSING OFFICER AS PER ASSESSMENT RECORDS. 3. THE LD. A.R OF THE ASSESSEE, ON THE OTHER HAND , SUBMITTED THAT THE MATTER WAS REMANDED BACK BY THE HON'BLE SU PREME COURT TO THE TRIBUNAL TO EXAMINE THE MEMORANDUM OF ASSOCIATI ON OF EACH CO- OPERATIVE SOCIETY TO PROVE THAT THE RESPECTIVE SOCI ETIES HAVE ENGAGED THEMSELVES IN CARRYING ON ANY OF THE SEVERAL BUSINE SSES REFERRED TO IN SUB-SECTION(2) OF SECTION 80P OF THE ACT. HE THERE FORE, PRAYED THAT THE MATTER SHOULD BE RESTORED BACK TO THE FILE OF THE A SSESSING OFFICER FOR VERIFICATION OF THE MEMORANDUM OF ASSOCIATION, ARTI CLES OF ASSOCIATION, I.T.A.NO. 2280 & 2281/95 :- 4 -: RETURN OF INCOME AND STATUS OF BUSINESS INDICATED I N THE RETURN OF INCOME OF THE ASSESSEE AS PER THE DIRECTION OF TH E HON'BLE SUPREME COURT. 4. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND PER USING THE MATERIALS AVAILABLE ON RECORD, WE FIND THAT THE HON 'BLE SUPREME COURT, IN THE CASE OF CIT VS PONNI SUGARS AND CHEMICALS LT D. REPORTED IN [2008] 306 ITR 392, HAS REMITTED THE MATTER BACK TO THE FILE OF THE TRIBUNAL FOR EXAMINING THE MEMORANDUM OF ASSOCIATIO N, ARTICLES OF ASSOCIATION, RETURN OF INCOME AND STATUS OF BUSINE SS INDICATED IN THE RETURN OF INCOME OF THE CO-OPERATIVE SOCIETY TO PRO VE THAT THE RESPECTIVE SOCIETIES HAVE ENGAGED THEMSELVES IN CAR RYING ON ANY OF THE SEVERAL BUSINESSES REFERRED TO IN SUB-SECTION (2) O F SECTION 80P OF THE ACT. IN THIS CASE, THE HON'BLE SUPREME COURT HAS H ELD AS UNDER: 18. COMING TO THE SECOND QUESTION, NAMELY, WHETHER THE ASSESSEE WAS ENTITLED TO EXEMPTION UNDER SECTION 80P(2) (A) (I) OF THE INCOME-TAX ACT, 1961 ('THE 1961 ACT'), IN RESPECT OF INTEREST RECEI VED FROM THE MEMBERS OF THE SOCIETY, WE FIND THAT NONE OF THE AUTHORITIES BELOW, INCLUDING THE HIGH COURT HAV E EXAMINED THE MEMORANDUM OF ASSOCIATION FILED BY SALE M CO-OPERATIVE SUGAR MILLS LTD., MADURANTAKAM CO-OPERATIVE SUGAR MILLS LTD., AMBUR CO-OPERATIVE SUGAR MILLS LTD., DHARMAPURI DISTRICT CO-OPERATIVE SUGAR MILLS LTD., VELLORE CO- OPERATIVE SUGAR MILLS LTD., ATTUR AGRICULTURAL PRODUCERS CO-OPERATIVE SOCIETY LTD. AND MODEM ENGINEERS CONSTRUCTION CO- OPERATIVE SOCIETY LTD. UNDER SECTION 80P(1), DEDUCTION IN RESPECT OF INCOME OF CO-OPERATIVE SOCIETIES IS PROVIDED FOR. UNDER SECTION 80P(1) WHE RE I.T.A.NO. 2280 & 2281/95 :- 5 -: THE GROSS TOTAL INCOME OF A CO-OPERATIVE SOCIETY INCLUDES ANY INCOME REFERRED TO IN SUB-SECTION (2) THEN THE SUMS SPECIFIED IN SUB-SECTION (2) SHALL BE DEDUCTED FROM THE GROSS TOTAL INCOME TO ARRIVE AT T HE TOTAL INCOME OF THE ASSESSEE-SOCIETY. IN ORDER TO E ARN EXEMPTION UNDER SECTION 80P(2) A CO-OPERATIVE SOCIETY MUST PROVE THAT IT HAD ENGAGED ITSELF IN CARRYING ON ANY OF THE SEVERAL BUSINESSES REFERRED TO IN SUB-SECTION (2). IN THAT CONNECTION, IT IS IMPO RTANT TO NOTE THAT UNDER SUB-SECTION (2), IN THE CONTEXT OF CO-OPERATIVE SOCIETY, PARLIAMENT HAS STIPULATED THA T THE SOCIETY MUST BE ENGAGED IN CARRYING ON THE BUSINESS OF BANKING OR PROVIDING CREDIT FACILITIES TO ITS MEMBERS. THEREFORE, IN EACH CASE, THE TRIBUNAL WAS REQUIRED TO EXAMINE THE MEMORANDUM OF ASSOCIATION, THE ARTICLES OF ASSOCIATION, THE RETURN OF INCOME F ILED WITH THE DEPARTMENT, THE STATUS OF BUSINESS INDICAT ED IN SUCH RETURNS, ETC. THIS EXERCISE HAD NOT BEEN UNDERTAKEN AT ALL. 19. FOR THE AFORESTATED REASONS, WE SET ASIDE T HE IMPUGNED JUDGMENTS OF THE HIGH COURT AND REMIT THE MATTERS TO THE TRIBUNAL FOR DE NOVO CONSIDERATION I N ACCORDANCE WITH LAW. ALL THE CONTENTIONS ON BOTH SI DES ARE EXPRESSLY KEPT OPEN.' 5. BEFORE US, THE APPEALS ARE FILED BY REVENUE. BOTH THE PARTIES BEFORE US HAS NOT BROUGHT ON RECORD COPY OF MEMORAN DUM OF ASSOCIATION AND ARTICLES OF ASSOCIATION OF THE ASS ESSEE-SOCIETY NOR PRODUCED COPY OF RETURNS AS FILED BY THE ASSESSEE NOR THE RELEVANT AUDIT REPORTS. IN THE ABSENCE OF THE ABOVE DOCUMEN TS, WE ARE NOT IN A POSITION TO ADJUDICATE THE ISSUE COMPLETELY. THE L D. DR PRAYED THAT THE ISSUE REQUIRES VERIFICATION OF RECORDS AND THEREFOR E, THE ISSUE SHOULD BE RESTORED TO THE FILE OF THE ASSESSING OFFICER FOR P ROPER VERIFICATION TO WHICH THE LD. A.R OF THE ASSESSEE SUBMITTED HIS NO OBJECTION. IN THE I.T.A.NO. 2280 & 2281/95 :- 6 -: ABOVE FACTS AND CIRCUMSTANCES, IN OUR CONSIDERED OP INION, IT SHALL BE FAIR AND IN THE INTEREST OF JUSTICE TO RESTORE THE ISSUE BACK TO THE FILE OF THE ASSESSING OFFICER FOR ADJUDICATION AFRESH AFTER EXAMINING THE MEMORANDUM OF ASSOCIATION, ARTICLES OF ASSOCIATION AND OTHER RELEVANT DOCUMENTS IN THE LIGHT OF THE OBSERVATION OF THE HO N'BLE SUPREME COURT IN THE CASE OF PONNI SUGARS AND CHEMICALS LTD (SUPRA) AND AFTER TAKING INTO CONSIDERATION THE DECISION OF THE TRIBU NAL IN THE CASE OF M/S MODERN ENGINEERS CONSTRUCTION CO-OP. SOCIETY (SUPRA ). NEEDLESS TO MENTION THAT THE ASSESSING OFFICER SHALL ALLOW REAS ONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE BEFORE ADJUDICATING THE ISSUE AFRESH. THUS, THE GROUNDS OF APPEALS OF THE REVENUE ARE ALLOWED F OR STATISTICAL PURPOSES. 6. IN THE RESULT, BOTH THE APPEALS OF THE REVENUE A RE ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 2 3-03-2012. SD/- SD/- (GEORGE MATHAN) JUDICIAL MEMBER (N.S.SAINI) ACCOUNTANT MEMBER DATED: 23 RD MARCH, 2012 RD COPY TO: APPELLANT/RESPONDENT/CIT(A)/CIT/DR