Khandoba Panan Sahakari Sanstha Maryadit, Osmanabad V. Income-tax Officer, Ward - 3, Latur

ITA 2431/PUN/2017

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 3363 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 4 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-02-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 02-01-2019
• Assessment Year: 2014-2015
• Appeal Filed On: 17-10-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: P S SHINGTE
• Section: 143(3); 80P

Judgement Text

- IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH SMC , PUNE , , BEFORE MS. SUSHMA CHOWLA, JM AND SHRI ANIL CHATURVEDI , AM . / ITA NO. 2431 /P U N/201 7 / ASSESSMENT YEAR : 20 1 4 - 1 5 KHANDOBA PANAN SAHAKARI SANSTHA MARYADIT, CHAVAN BUILDING, MAIN ROAD, ANDUR, TALUKA TULJAPUR, DIST OSMANABAD . / APPELLANT PAN: A AAAK1421A VS. THE INCOME TAX OFFICER, WAD 3 , LATUR . / RESPONDENT / APPELLANT BY : SHRI P.S. SHINGTE / RESPONDENT BY : SHRI RAJESH GAWALI / DATE OF HEARING : 02 . 0 1 .201 9 / DATE OF PRONOUNCEMENT: 19 . 0 2 .201 9 / ORDER PER SUSHMA CHOWLA, J M : THE APPEAL FILED BY ASSESSEE IS AGAINST ORDER OF CIT (A) - 2, AURANGABAD , DATED 22 . 08 .201 7 RELATING TO ASSESSMENT YEAR 20 1 4 - 1 5 AGAINST ORDER PASSED UNDER SECTION 143(3) OF THE I NCOME - TAX ACT , 1961 (IN SHORT THE ACT) . 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUND OF APPEAL: - 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LOWER AUTHORITIES ERRED IN NOT GRANTING THE DEDUCTION U/S 80P OF THE INCOME TAX ACT, 1961 FOR SUM OF RS.10,44,088/ - BY DISREGARDING APPELLANTS CONTENTION. ITA NO. 2431 /P U N/201 7 2 3. THE ONLY ISSUE RAISED IN THE PRESENT APPEAL IS AGAINST THE CLAIM OF DEDUCTION UNDER SECTION 80P OF THE ACT. 4. BRIEFLY, IN THE FACTS OF THE CASE, THE ASSESSEE WAS CO - OPERATIVE SOCI ETY AND HAD FURNISHED THE RETURN OF INCOME DECLARING NIL INCOME AFTER CLAIMING THE DEDUCTION UNDER SECTION 80P OF THE ACT. THE ASSESSEE SOCIETY WAS FORMED FOR PURCHASE AND SALE OF FERTILIZERS, SEED S AND PESTICIDES. THE SAID ITEMS WERE THEN SUPPLIED TO FA RMERS. THE ASSESSEE CLAIMED THAT IT HAD COLD STORAGE FACILITY BUT DURING THE YEAR, THE SAME WAS CLOSED. THE ASSESSING OFFICER ON VERIFICATION OF PROFIT AND LOSS ACCOUNT NOTED THAT THE ASSESSEE HAD RECEIVED HAMALI OF 5,71,378/ - AND COMMISSION INCOME OF 4,72,710/ - . HE FURTHER OBSERVED THAT THE AIMS AND OBJECTS OF ASSESSEES SOCIETY WERE NOT TO EARN HAMALI AND COMMISSION INCOME AND HENCE, THE SAME WERE HELD TO BE NOT DEDUCTIBLE UNDER SECTION 80P OF THE ACT. THE ASS ESSING OFFICER THUS, HELD THAT SUM OF 10,44,088/ - WAS NOT ELIGIBLE FOR DEDUCTION UNDER SECTION 80P OF THE ACT. 5. BEFORE THE CIT(A), IT WAS EXPLAINED THAT DURING THE YEAR UNDER CONSIDERATION THE DISTRICT MARKETING OFFICER, OSMANABAD HAS APPOINTED THE AS SESSEE TO WORK AS SUB - AGENT TO PURCHASE PULSES AND SOYA BE A N AT THE PRESCRIBED BASE RATES. THE SAID PURCHASES WERE MADE ON BEHALF OF THE CENTRAL GOVERNMENT THROUGH NAFED AND THE ASSESSEE WAS ENTITLED TO COMMISSION AND HAMALI CHARGES. IT WAS THUS, CLAIMED THAT THE SAID COMMISSION AND HAMALI CHARGES WOULD BE ENTITLED FOR DEDUCTION UNDER SECTION 80P(2)(E) OF THE ACT. FURTHER EXPLANATION WAS THAT MAHARASHTRA STATE CO - OPERATIVE MARKETING FEDERATION HAD ISSUED A CIRCULAR IN THIS REGARD AND DIRECTIONS WERE GIVE N TO ITA NO. 2431 /P U N/201 7 3 PURCHASE PULSES AND SOYA BE A N UNDER THE CENTRAL GOVERNMENT SCHEME FOR NAFED. THE ASSESSEE THUS, EXPLAINED THAT ACCORDING TO CIRCULAR ORDERING THE ASSESSEE TO START THE PURCHASE FOR THE SEASON 2013 - 14, HAMALI AND OTHER RECEIPTS SUCH AS COMMISSION WERE INCIDENTAL TO THE ACTIVITY OF PURCHASE OF PULSES AND SOYA BE A N, HENCE THE ENTIRE RECEIPTS WERE ENTITLED TO THE DEDUCTION UNDER SECTION 80P(2)(E) OF THE ACT. THE CIT(A) VIDE PARA 12 HELD AS UNDER: - 12. THUS, IT IS EVIDENT THAT THE DEDUCTION U/S. 80P(2)(E ) IS AVAILABLE TO AN ASSESSEE IN RESPECT OF INCOME DERIVED FROM THE LETTING OF GODOWNS OR WAREHOUSES, ONLY WHERE THE PURPOSE OF LETTING IS STORAGE, PROCESSING OR FACILITATING THE MARKETING OF COMMODITIES. IT IS INTRINSIC IN THE PROVISIONS OF SECTION 80P(2 )(E) ITSELF THAT INCOME SHOULD BE DERIVED FROM THE ACTIVITY OF LETTING OUT OR THE USE OF ITS GODOWNS OR WAREHOUSES. ANY INCOME DERIVED BY A SOCIETY UNCONNECTED WITH SUCH LETTING OUT OR USE OF THE GODOWNS OR WAREHOUSES WILL NOT FALL UNDER CLAUSE (E). ADVE RTING TO THE FACTS OF THE CASE, IT IS SEEN THAT THE ASSESSEE HAS DERIVED INCOME FROM PROCURING OF PULSES AND SOYA BEAN FOR WHICH IT HAS BEEN PAID COMMISSION AND HAMALI CHARGES. THESE ACTIVITIES DO NOT EVEN REMOTELY CONNECT WITH THE ACTIVITY OF LETTING OUT OF GODOWN OR WAREHOUSE FOR WHICH THE DEDUCTION IS ALLOWED U/S. 80P(2)(E). THE ACTIVITY OF THE APPELLANT OF PROCURING PULSES AND SOYA BEAN DOES NOT TANTAMOUNT TO ACTIVITY OF LETTING OUT OF WAREHOUSE OR GODOWN. HENCE, THE ACTION OF ASSESSING OFFICER IN TR EATING THE IMPUGNED AMOUNTS AS INCOME OF THE APPELLANT CANNOT BE FAULTED WITH AND THE SAME IS UPHELD. 6. THE ASSESSEE IS IN APPEAL AGAINST THE ORDER OF CIT(A). 7. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT THE ASSESSEE WAS E NGAGED IN COLLECTION AND DISTRIBUTION OF AGRICULTURAL PRODUCTS I.E. PULSES ONLY AND IT WAS COLLECTING THE SAME FROM ITS MEMBERS AND SELLING ON THEIR BEHALF, THE PROFITS THEREON WERE ELIGIBLE FOR DEDUCTION UNDER SECTION 80P(2)(E) OF THE ACT. DURING THE YEA R, THE GOVERNMENT HAD DECIDED THAT THE ASSESSEE AT RATES SPECIFIED WOULD PURCHASE PULSES AND STORE THEM AND SELL TO SPECIFIED PARTIES. SUCH STORING OF PULSES WAS IN THE NATURE OF BUSINESS CARRIED ON BY THE ASSESSEE AND THE CHARGES RECEIVED BY ASSESSEE IN THE FORM OF HAMALI AND COMMISSION W ERE ELIGIBLE FOR DEDUCTION UNDER SECTION 80P(2)(E) OF THE ACT. IN THIS REGARD, HE PLACED RELIANCE ON THE DECISION OF THE HONBLE ITA NO. 2431 /P U N/201 7 4 BOMBAY HIGH COURT IN CIT VS. BHANDARA ZILLA SAHAKARI KHAREDI VIKRI SANGH LTD. (1995) 212 IT R 124 (BOM). 8. THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE PLACED RELIANCE ON THE ORDERS OF AUTHORITIES BELOW. 9. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ISSUE WHICH ARISES IN THE PRESENT APPEAL IS THE CLAIM OF DEDUC TION UNDER SECTION 80P(2)(E) OF THE ACT ON HAMALI AND COMMISSION INCOME EARNED BY THE ASSESSEE. IN ORDER TO ADJUDICATE THE AFORESAID ISSUE, FIRST REFERENCE IS MADE TO SECTION 80P(2)(E) OF THE ACT , WHEREIN IT IS CLEARLY PROVIDED THAT WHERE THE INCOME IS DE RIVED BY CO - OPERATIVE SOCIETY FROM LETTING OF GODOWNS AND WAREHOUSES FOR STORAGE / PROCESSING OR FACILITATING THE MARKETING OF COMMODITIES, THEN WHOLE OF SUCH INCOME IS EXEMPT UNDER SECTION 80P(2)(E) OF THE ACT. THE INTERPRETATION OF THE CIT(A) IN THIS RE GARD WA S THAT THE WORDS USED IN THE SAID SUB CLAUSE ARE FOR INCOME DERIVED FROM LETTING OF GODOWNS OR WAREHOUSES FOR DIFFERENT PURPOSES I.E. STORAGE, PROCESSING AND ALSO FACILITATING THE MARKETING OF COMMODITIES. THERE IS NO MERIT IN THE OBSERVATIONS OF C IT(A) IN THIS REGARD. THE ASSESSEE HAS CLEARLY POINTED OUT THAT IT WAS SOLELY ENGAGED IN THE PURCHASE AND SALE OF FERTILIZERS, SEED S AND PESTICIDES. IT WAS ALSO POINTED OUT THAT DURING THE YEAR , THE STORAGE PLANT OF ASSESSEE WAS CLOSED. HOWEVER, THE PRO FITS EARNED ON PURCHASE AND SALE OF FERTI LIZERS , SEEDS , I.E. FROM ITS MEMBERS TO ITS MEMBERS WAS CLAIMED AS EXEMPT UNDER SECTION 80P(2)(E) OF THE ACT AND THE SAME WAS ALLOWED IN THE HANDS OF ASSESSEE. HOWEVER, THE RECEIPTS ON ACCOUNT OF HAMALI OF 5,71,378/ - AND COMMISSION INCOME OF 4,72,710/ - WAS HELD TO BE NOT ELIGIBLE FOR THE AFORESAID DEDUCTION UNDER SECTION 80P(2)(E) OF THE ACT. ITA NO. 2431 /P U N/201 7 5 10. WITH REGARD TO SAID CHARGES RECEIVED DURING THE YEAR, IT MAY BE POINTED OUT THAT THE CENTRAL GOVERNMENT HAD APPOINTED THE ASSESSEE AS SUB - AGENT AND HAD DIRECTED IT TO PURCHASE PULSES FROM NAFED AND SUPPLY IT TO THE FARMERS, AGAINST WHICH IT HAS RECEIVED THE AFORESAID HAMALI AND COMMISSION. THE ACTIVITY UNDERTAKEN BY THE ASSESSEE WAS IN LINE WITH THE ACTIVITY CA RRIED ON BY IT VIS - - VIS ITS MEMBERS I.E. PROCUREMENT OF PULSES AND SELLING THE SAME TO ITS MEMBERS. HERE, THE PROCUREMENT WAS AT THE DIRECTIVE OF THE CENTRAL GOVERNMENT AND FOR SUCH SERVICES, THE ASSESSEE RECEIVED HAMALI AND COMMISSION INCOME. THE SAID RECEIPTS IN THE HANDS OF ASSESSEE ARE IN LINE WITH THE BUSINESS ACTIVITY CARRIED ON BY IT AND HENCE, ELIGIBLE FOR DEDUCTION UNDER SECTION 80P(2)(E) OF THE ACT. 11. THE HONBLE BOMBAY HIGH COURT IN CIT VS. BHANDARA ZILLA SAHAKARI KHAREDI VIKRI SANGH LTD. ( SUPRA) WHILE DECIDING THE ISSUE OF CO - OPERATIVE SOCIETY OBSERVED THAT UNDER THE FERTILIZER AGREEMENT, WHERE THE ASSESSEE WAS REQUIRED TO STORE FERTILIZERS IN ITS GODOWN AND GET THE COMMISSION ON ITS SALE, THEN WHOLE OF THE COMMISSION SHOULD BE TAKEN FROM LETTING OF GODOWN AND HENCE, EXEMPT. IT WAS FURTHER HELD THAT HOWEVER UNDER THE PADDY AGREEMENT, THE ASSESSEE WAS NOT ONLY TO STORE PADDY BUT ALSO TO MILL IT AND SO FAR AS MILLING IS CONCERNED, IT WAS NOT ENTITLED TO THE BENEFIT UNDER SECTION 80P(2) (E) OF THE ACT . 12. THE ISSUE RAISED IN THE PRESENT APPEAL IS COVERED BY THE DICTATE OF THE HONBLE BOMBAY HIGH COURT IN CIT VS. BHANDARA ZILLA SAHAKARI KHAREDI VIKRI SANGH LTD. (SUPRA) , I N THE FIRST INSTANCE, WHEREIN IT HAS BEEN HELD THAT COMMISSION ON SALE OF FERTILIZER S IS PART OF WAREHOUSING ACTIVITY AND EXEMPT IN THE HANDS OF CO - OPERATIVE SOCIETY. APPLYING THE SAID RATIO TO THE FACTS OF ITA NO. 2431 /P U N/201 7 6 PRESENT CASE, WE HOLD THAT THE ASSESSEE IS ENTITLED TO THE DEDUCTION UNDER SECTION 80P(2)(E) OF THE ACT ON THE AF ORESAID HAMALI AND COMMISSION INCOME EARNED BY IT. THE GROUND OF APPEAL RAISED BY ASSESSEE IS THUS, ALLOWED. 13 . IN THE RESULT, THE APPEAL OF ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON THIS 19 TH DAY OF FEBR UARY , 201 9 . SD/ - SD/ - (ANIL CHATURVEDI) (SUSHMA CHOWLA ) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE ; DATED : 19 TH FEBR UARY , 201 9 . GCVSR / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT ; 2. / THE RESPONDENT; 3. ( ) / THE CIT(A) - 2 , AURANGABAD ; 4. THE PR. CIT - 2 , AURANGABAD ; 5. 6. , , , - / DR SMC , ITAT, PUNE; / GUARD FILE . / BY ORDER , // TRUE COPY // / SR. PRIVATE SECRETARY , / ITAT, PUNE