Bhavnagar Sahkari Haat Madhyasth Bhandar Ltd, Bhavnagar V. The ITO, ward-1(2), Bhavnagar

ITA 240/AHD/2020

AI Insights

The case involves Bhavnagar Sahkari Haat Madhyasth Bhandar Limited, a cooperative society, which appealed against the order of the CIT(A) that upheld the disallowance of a tax deduction claimed under Chapter-VIA of the Income Tax Act, 1961. The society argued that it was exempt from income tax as per the Part-B States (Taxation Concessions) Order, 1950, due to its registration before the cut-off date of 13.11.1956. The Assessing Officer had disallowed the deduction, considering the society's business activities and the provisions of Sections 80P and 80JJAA of the Act. However, the Tribunal found that the society's income was indeed exempt under the specific tax concessions applicable to cooperative societies, thus allowing the appeal.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 129318 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 3 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-06-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 12-06-2023
• Assessment Year: 2016-2017
• Appeal Filed On: 10-03-2020
• Other Referred Cases: ITO vs. Shri Gopal Gram Seva Sahakari Mandli Limited (1991) 37 ITD 476
• Laws Referred To: Income Tax Act, 1961, Co-operative Societies Act, Part-B States (Taxation Concessions) Order, 1950
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Revised return
• Section: 80P; 143(2)

Judgement Text

ITA No.240/Ahd/2020 Assessment Year: 2016-17 Page 1 of 4 IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD “SMC” BENCH, AHMEDABAD BEFORE Ms. SUCHITRA KAMBLE, JUDICIAL MEMBER ITA No.240/Ahd/2020 Assessment Year: 2016-17 Bhavnagar Sahkari Haat Madhyasth Bhandar Limited, Atabhai Road, Bhavnagar – 364 001. [PAN – AAALB 0019 L] Vs. Income Tax Officer, Ward-1(2), Bhavnagar. (Appellant) (Respondent) Assessee by Shri M.K. Patel, Advocate Revenue by Shri Suraj Bhan Garwal, Sr. DR Da te o f He a r in g 13.06.2023 Da te o f P ro n o u n ce m e n t 28.06.2023 O R D E R This appeal is filed by the Assessee against order dated 25.09.2019 passed by the CIT(A)-6, Ahmedabad for the Assessment Year 2016-17. 2. The Assessee has raised the following ground of appeal:- “1. The learned ITO, Ward-1(2), Bhavnagar is erred in law and on facts by making disallowance of Rs.28,18,109/- even though the profit earning or arising by local authority is not liable to tax under the I.T. Act, 1961 as per notification No.S.R.O.998 dated 27.12.1950.” 3. The assessee has filed original return of income declaring total income of Rs.1,560/- after claiming deduction under Chapter-VIA of Rs.28,16,554/-. Thereafter, the assessee revised his return of income on 16.10.2017 after issuance of notice under Section 143(2) of the Income Tax Act, 1961 on 04.07.2017. In the revised return of income, the assessee has shown total income as Rs.nil after claiming deduction under Chapter-VIA of Rs.28,18,109/-. The case of the assessee was selected for scrutiny under Section 143(2) of the Act and statutory notices were issued to the assessee. The assessee furnished submissions and details. After taking cognisance of the submissions of the assessee, the Assessing Officer observed that considering the nature of business activities of the assessee and a plain reading of Section 80P and 80JJAA of the Act, the assessee’s claim under Chapter-VIA does not qualify for deduction. Therefore, the Assessing Officer ITA No.240/Ahd/2020 Assessment Year: 2016-17 Page 2 of 4 disallowed the deduction claimed as 100% profit of the business activity by the assessee and made addition of Rs.28,18,109/-. 4. Being aggrieved by the Assessment Order, the assessee filed appeal before the CIT(A). The CIT(A) dismissed the appeal of the assessee. 5. The Ld. AR submitted that the assessee is local authority/Sahkari Mandali under Co-operative Societies Act and has been granted exemption specifically as per Part-B States (Taxation Concessions) Order, 1950, Notification No.S.R.0. 998 dated 02.12.1950. As per the said notification the total income of the society registered prior to 13.11.1956 in Part-B state is totally exempt from tax under Clause 15(iv) of the same order and the assessee society was registered on 05.11.1948 which is prior to 13.11.1956. The Ld. AR further submitted that subsequent notification in consonance with 1961 Act was issued vide Notification No.SRO 1800 dated 14.11.1951 thereby Section 297 of the Act was corresponding to Section 60 of the Indian Income Tax Act, 1922 and exemption to co-operative society under Part-B State (Taxation Concession) Order 1950 was in exercise of powers conferred by Section 60A of Indian Income Tax Act, 1922. The Ld. AR submitted that the assessee society’s exemption was continued thereafter as well. The Ld. AR submitted that the Assessing Officer as well as the CIT(A) has totally ignored the consistency in assessee’s own case for A.Y. 2004-05 which was continuously granting exemption by Revenue Authorities. The Ld. AR relied upon the decision of Ahmedabad Tribunal in the case of ITO vs. Shri Gopal Gram Seva Sahakari Mandli Limited (1991) 37 ITD 476 wherein the said notification was considered in favour of the assessee. 6. The Ld. DR submitted that the CIT(A) has rightly held that the assessee while revising the return by mistake selected/claimed deduction under Section 80JJAA of the Act instead of actual deduction to be claimed under Section 80P of the Act. Thus, the assessee society is not entitled for deduction as the business activities of the assessee and a plain reading of Section 80P and 80JJAA of the Act under Chapter VIA does not qualify the assessee society for deduction claimed as 100% profit of business activity. Ld. DR relied upon the Order of the Assessing Officer and the order of the CIT(A). ITA No.240/Ahd/2020 Assessment Year: 2016-17 Page 3 of 4 7. Heard both the parties and perused all the relevant material available on record. There is a delay of 36 days in filing the present appeal for which the assessee has filed condonation of delay application thereby stating that due to unavoidable circumstances the assessee could not send the papers within the stipulated time to its Advocate and, therefore, the delay was occurred. It appears that the delay is genuine and hence the delay is condoned. 8. As regards to the assessee’s case on merit, the Revenue Authorities at no point of time stated that the assessee society is not registered under the Societies Act. In fact the assessee society is having distributorship of LPG and distributes the Gas Cylinder to its customers and derived income under the head business and the society was registered on 05.11.1948 vide No.18/1948 as per Part-B State (Taxation Concession) Order 1950 Notification No.SRO 998 dated 02.12.1950 and SRO 1800 dated 14.11.1951, the total income of the society registered prior to 13.11.1996 in Part-B state is totally exempt from tax under Clause 15 (IV). As per Income Tax Act, 1961 also the profits of any co-operative society registered under any Act in force or any other payment received by any such society out of such profit, these societies will be granted exemption. The CIT(A) as well as the Assessing Officer has not taken cognisance of the said notifications and the effective amendment clarification through notification and the same has not been dealt with. The decision of the Ahmedabad Tribunal in case of Shri Gopal Gram Seva Sahakari Mandli Limited (supra) which is apt in the present case as the assessee is a co-operative society and is exempted under Section 80P provisions. Observations of the CIT(A) that the assessee has claimed exemption under Section 80JJAA is not justifiable as the assessee society has clearly mentioned notification and there is no such column while submitting the revised return related to specially exempted society. Therefore, appeal of the assessee is allowed. 9. In the result, appeal filed by the assessee is allowed. Order pronounced in the open Court on this 28 th June, 2023. Sd/- (SUCHITRA KAMBLE) Judicial Member Ahmedabad, the 28 th day of June, 2023 PBN/* ITA No.240/Ahd/2020 Assessment Year: 2016-17 Page 4 of 4 Copies to: (1) The appellant (2) The respondent (3) CIT (4) CIT(A) (5) Departmental Representative (6) Guard File By order UE COPY Assistant Registrar Income Tax Appellate Tribunal Ahmedabad benches, Ahmedabad