ACIT, CHENNAI V. M/s. Tamilnadu Cooperative Marketing Federation Ltd., CHENNAI

ITA 270/CHNY/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 57940 (ITAT-CHENNAI)
• Duration Of Justice: 11 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-02-2012
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 01-02-2012
• Assessment Year: 1996-1997
• Appeal Filed On: 18-02-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: T N PRAKASH
• Assessee Lawyers: M VISWANATHAN
• Keywords: Source of fund

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BENCH C CHENNAI BEFORE SHRI N. S. SAINI, ACCOUNTANT MEMBER AND SHRI GEORGE MATHAN, JUDICIAL MEMBER I.T.A. NOS. 270, 271 & 272/MDS/2011 ASSESSMENT YEARS : 1996-97, 1997-98 & 1998-99 THE ASSISTANT COMMISSIONER OF INCOME-TAX, CIRCLE-XV, CHENNAI. V. M/S. TAMILNADU CO-OPERATIVE MARKETING FEDERATION LTD., NO. 91, ST. MARYS ROAD, ALWARPET, CHENNAI-600 018. (PAN: AABCT0016H] (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI T.N. PRAKASH, JCIT RESPONDENT BY : SHRI M. VISWANATHAN, CA DATE OF HEARIN G : 01-02-2012 DATE OF PRONOUNCEMENT : 01-02-2012 O R D E R PER GEORGE MATHAN, JUDICIAL MEMBER : THESE ARE THREE APPEALS FILED BY THE REVENUE AGAINST THE ORDERS OF THE LEAR NED CIT(APPEALS)-XII, CHENNAI IN ITA NOS. 238/08-09, 239/08-09 AND 240/08-09 DATE D 29-11-2010 FOR THE ASSESSMENT YEARS 1996-97, 1997-98 AND 1998-99. 2. SHRI T.N. PRAKASH, LEARNED SR. DR REPRESENTED ON BEHALF OF THE REVENUE AND SHRI M. VISWANATHAN, CA REPRESENTED ON BEHALF O F THE ASSESSEE. 3. IT WAS SUBMITTED BY THE LEARNED DR THAT THERE WA S ONLY ONE ISSUE IN ALL THE THREE APPEALS WHICH WAS AGAINST THE ACTION OF T HE LEARNED CIT(A) IN HOLDING THAT THE DEDUCTION UNDER SECTION 80P(2) OF THE INCO ME-TAX ACT, 1961 (THE ACT FOR SHORT) WAS TO BE ALLOWED ON THE GROSS INCOME AN D NOT ON THE NET INCOME AFTER SET OFF OF LOSSES AMONG THE ELIGIBLE BUSINESS ES. IT WAS THE SUBMISSION THAT I.T.A. NOS. 270-272/MDS/2011 2 THE ASSESSEE HAD MULTIPLE SOURCES OF INCOME AND THE ASSESSEE BEING IN THE BUSINESS OF SEEDS & PESTICIDES, FERTILIZER GRANULAT ION, AGRICULTURE MARKETING AND MIXING UNIT, HAD PROFITS FROM THE ABOVE 4 UNITS AND THE ASSESSEE HAD LOSSES IN THE GENERAL FERTILIZER DIVISION, COLD STORAGE-I DIV ISION AND COLD STORAGE-II DIVISION. WHEN THE ASSESSEE HAD FILED ITS RETURN OF INCOME, T HE ASSESSEE HAD CLAIMED DEDUCTION U/S 80P(2) OF THE ACT ON THE GROSS TOTAL INCOME BEFORE THE SET OFF OF THE LOSS FROM THE OTHER DIVISIONS. IT WAS THE SUBM ISSION THAT IN THE COURSE OF ASSESSMENT THE ASSESSING OFFICER HAD ALLOWED THE AS SESSEE THE BENEFIT OF DEDUCTION U/S 80P(2) ON THE NET INCOME AFTER SETTIN G OFF THE LOSSES FROM THE LOSS MAKING UNITS. IT WAS THE SUBMISSION THAT ON APPEAL THE LEARNED CIT(A) HAD ALLOWED THE CLAIM BY HOLDING THAT THE DEDUCTION U/S 80P WAS OF BENEFICIAL PROVISION AND CONSEQUENTLY BY TAKING RELIANCE ON TH E DECISION OF THE HON'BLE ANDHRA PRADESH HIGH COURT IN THE CASE OF CIT V. VIS AKHA INDUSTRIES LTD., REPORTED IN 251 ITR 471 AND THE DECISION OF THE HON 'BLE SUPREME COURT IN THE CASE OF CIT V. CANARA WORKSHOPS PVT. LTD., REPORTED IN 161 ITR 320 AS ALSO THE DECISION OF THE CO-ORDINATE BENCH OF THIS TRIBUNAL IN THE ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 1983-84 IN ITA NO. 3150/MDS/198 8 DATED 15-07-1993 HAD DIRECTED THE ASSESSING OFFICER TO ALLOW THE DEDUCTI ON U/S 80P(2) OF THE ACT ON THE GROSS PROFIT. IT WAS THE SUBMISSION THAT THE LEARN ED CIT(A) FAILED TO APPRECIATE THAT THE HON'BLE SUPREME COURT, WHILE DECIDING THE ISSUE IN REGARD TO THE ALLOWABILITY OF DEDUCTION UNDER SECTION 80P BEFORE THE SET OFF OF THE UNABSORBED I.T.A. NOS. 270-272/MDS/2011 3 LOSSES OF THE EARLIER YEARS, HAD IN THE CASE OF KO TAGIRI INDUSTRIAL CO-OPERATIVE TEA FACTORY LTD. (91 TAXMAN 214) CATEGORICALLY HELD THAT THE DEDUCTION U/S 80P WAS LIABLE TO BE ALLOWED ONLY AFTER THE SET OFF OF THE UNABSORBED LOSSES OF THE EARLIER YEARS U/S 72 OF THE ACT. IT WAS THE SUBMIS SION THAT THE HON'BLE SUPREME COURT HAD CONSIDERED THE PROVISIONS OF SECTION 80B( 5) OF THE ACT WHEREIN THE EXPRESSION OF GROSS TOTAL INCOME WAS DEFINED FOR THE PURPOSE OF CHAPTER VI-A TO MEAN THE TOTAL INCOME COMPUTED IN ACCORDANCE WIT H THE PROVISIONS OF THE ACT BEFORE MAKING ANY DEDUCTION UNDER THE SAID CHAPTER. IT WAS THE SUBMISSION THAT WHEN ON IDENTICAL ISSUE THE HON'BLE SUPREME COURT H AS DECIDED THAT THE DEDUCTION U/S 80P IS TO BE ALLOWED AFTER THE SET OF F OF THE CARRY FORWARD LOSSES, THERE WAS NO ROOM FOR HOLDING THAT THE ASSESSEE WAS ENTITLED TO THE BENEFIT OF DEDUCTION U/S 80P ONLY AFTER THE SET OFF OF THE LOS SES. 4. IN REPLY, THE LEARNED AUTHORISED REPRESENTATIVE SUBMITTED THAT THE PROVISIONS OF SECTION 80P WERE BENEFICIAL AND WERE LIABLE TO BE INTERPRETED LIBERALLY. IT WAS THE FURTHER SUBMISSION THAT THE CO-ORDINATE BENCH OF THIS TRIBUNAL IN THE ASSESSEES OWN CASE FOR THE ASSESSM ENT YEAR 1983-84 HAD HELD THE ISSUE IN FAVOUR OF THE ASSESSEE. IT WAS THE SU BMISSION THAT THE ORDER OF THE LEARNED CIT(A) WAS LIABLE TO BE UPHELD. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. AT TH E OUTSET A PERUSAL OF THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE O F CIT V. KOTAGIRI INDUSTRIAL CO-OPERATIVE TEA FACTORY LTD, REFERRED TO SUPRA, CL EARLY SHOWS THAT THE HON'BLE I.T.A. NOS. 270-272/MDS/2011 4 SUPREME COURT HAS CATEGORICALLY HELD THAT THE CARRI ED FORWARD LOSSES AS PER THE PROVISIONS OF SECTION 72 ARE LIABLE TO BE SET OFF W HEN COMPUTING THE GROSS TOTAL INCOME FOR THE PURPOSE OF DEDUCTION UNDER SECTION 8 0P OF THE ACT. THE HON'BLE SUPREME COURT HAD TAKEN INTO CONSIDERATION THE PROV ISIONS OF SEC. 80B(5) OF THE ACT FOR THIS PURPOSE. A PERUSAL OF THE PROVISIONS OF SECTION 80B(5) CLEARLY SHOWS THAT THE TERM GROSS TOTAL INCOME HAS BEEN DEFINED TO MEAN THE TOTAL INCOME COMPUTED IN ACCORDANCE WITH THE PROVISIONS OF THIS ACT BEFORE MAKING ANY DEDUCTION UNDER THE CHAPTER. THE SCOPE OF TOTAL I NCOME IS PROVIDED IN SECTION 5(1) OF THE ACT TO INCLUDE ALL INCOME FROM WHATEVE R SOURCES DERIVED. THUS WHEN TAKING THE GROSS TOTAL INCOME ITSELF, ALL INCO MES FROM WHATEVER SOURCES DERIVED ARE LIABLE TO BE TAKEN INTO CONSIDERATION. IF THE ASSESSEE HAS MULTIPLE UNITS, THE NET EFFECT OF ALL THE UNITS WHETHER IT B E PROFITS OR LOSSES WOULD HAVE TO BE TAKEN INTO CONSIDERATION. HERE ONE MUST KEEP IN MIND THAT INCOME ALSO INCLUDES LOSSES. THUS A READING OF THE PROVISIONS OF SECTION 80P WITH SECTION 80B AND SECTION 5(1) OF THE ACT WOULD CLEARLY SHOW THAT THE GROSS TOTAL INCOME OF THE ASSESSEE FOR THE PURPOSE OF SECTION 80P WOULD BE TH E CUMULATIVE EFFECT OF ALL THE SOURCES OF INCOME FOR THE RELEVANT ASSESSMENT YEAR FROM WHATEVER SOURCES IT IS DERIVED. 6. NOW COMING TO THE DECISION RELIED UPON BY THE LE ARNED AUTHORISED REPRESENTATIVE THAT THE PROVISIONS OF SECTION 80P A RE BENEFICIAL PROVISIONS WHICH SHOULD BE INTERPRETED LIBERALLY, WE ARE UNABLE TO A CCEDE TO THIS CLAIM AS THE ISSUE I.T.A. NOS. 270-272/MDS/2011 5 HAS BEEN, IN PRINCIPLE, DECIDED BY THE HON'BLE SUPR EME COURT IN THE CASE OF KOTAGIRI INDUSTRIAL CO-OPERATIVE TEA FACTORY LTD., REFERRED TO SUPRA. IN REGARD TO THE DECISION OF THE CO-ORDINATE BENCH OF THIS TRIBU NAL IN THE ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 1983-84 WHICH HAS BEEN RELI ED UPON BY THE LEARNED AUTHORISED REPRESENTATIVE, IT IS NOTICED THAT THE S AID DECISION WAS RENDERED ON 15-07-1993. THE DECISION OF THE HON'BLE SUPREME CO URT IN THE CASE OF KOTAGIRI INDUSTRIAL CO-OPERATIVE TEA FACTORY LTD. IS DATED 0 5-03-1997, WHICH IS A LATER DECISION AND JUDICIAL DISCIPLINE DEMANDS THAT THE D ECISION OF THE HON'BLE SUPREME COURT MUST BE FOLLOWED. IN THE CIRCUMSTANCES, RESP ECTFULLY FOLLOWING THE PRINCIPLES AS LAID DOWN BY THE HON'BLE SUPREME COUR T IN THE CASE OF KOTAGIRI INDUSTRIAL CO-OPERATIVE TEA FACTORY LTD., REFERRED TO SUPRA, THE FINDING OF THE LEARNED CIT(A) ON THIS ISSUE STANDS REVERSED AND TH AT OF THE ASSESSING OFFICER RESTORED. IN THE CIRCUMSTANCES, THE APPEALS OF THE REVENUE ARE ALLOWED. 7. THE ORDER WAS PRONOUNCED IN THE COURT ON 01-02-2 012. SD/- SD/- (N. S. SAINI) (GEORGE MATHAN) ACCOUNTANT MEMBER JUDICIAL MEMBER CHENNAI, DATED THE 01 ST FEBRUARY, 2012. H. COPY TO: ASSESSEE/AO/CIT (A)/CIT/D.R./GUARD FILE