Dhandhuka Taluka Co, Op. Cotton Sales Ginning & Pressing Society Ltd., Ahmedabad V. The Income tax Officer,Ward-6(3), Ahmedabad

ITA 2819/AHD/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 80276 (ITAT-AHMEDABAD)
• Duration Of Justice: 8 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-08-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 19-08-2014
• Assessment Year: 2010-2011
• Appeal Filed On: 02-12-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: S N DIVATIA

Judgement Text

, , , , , , , , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD .., ! ! ! ! ' #$, BEFORE SHRI N.S. SAINI, ACCOUNTANT MEMBER AND SHRI KUL BHARAT, JUDICIAL MEMBER !./ I.T.A. NO.2819/AHD/2013 ( & '& & '& & '& & '& / / / / ASSESSMENT YEAR : 2010-11) DHANDUKA TALUKA CO- OP.COTTON SALES GINNING AND PRESSING SOCIETY LTD. 215, BHAVNAGAR ROAD OPP.VAISHNAV SOC. DHANDHUKA 382 460 AHMEDABAD / VS. THE ITO WARD-6(3) AHMEDABAD ( !./)* !./ PAN/GIR NO. : AAAAD 6391 C ( (+ / // / APPELLANT ) .. ( ,-(+ / RESPONDENT ) (+ . / APPELLANT BY : SHRI S.N.DIVATIA, AR ,-(+ / . / RESPONDENT BY : SHRI BHUVNESH KULSHRESTHA, SR.DR ' 0 / $1 / / / / DATE OF HEARING 19/08/2014 23' / $1 / DATE OF PRONOUNCEMENT 22/08/2014 4 / O R D E R PER SHRI KUL BHARAT, JUDICIAL MEMBER : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST T HE ORDER OF THE LD.COMMISSIONER OF INCOME TAX(APPEALS)-XI, AHMEDABA D ('CIT(A)' IN SHORT) DATED 02/09/2013 PERTAINING TO ASSESSMENT YE AR (AY) 2010-11. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF AP PEAL :- 1 THE ORDER PASSED U/S.250 ON 2-9-2013 FOR A.Y.2010-1 1 BY C1T(A)-XI, ABAD, PARTLY UPHOLDING THE ADDITIONS/DISALLOWANCES MADE BY AO IS WHOLLY ILLEGAL, UNLAWFUL AND AGAINST THE PRINCIPLES OF NAT URAL JUSTICE. ITA NO.2819/AHD /2013 DHANDUKA TALUKA CO-OP.COTTON SALES GINNING & PRESSING SOCIETY LTD. VS. ITO ASST.YEAR 2010-11 - 2 - 1.2 THE LD. CIT(A) HAS GRIEVOUSLY ERRED IN LAW AND OR ON FACTS IN NOT CONSIDERING FULLY AND PROPERLY THE SUBMISSIONS MADE AND EVIDENCE PRODUCED BY THE APPELLANT WITH REGARD TO THE IMPUGNED ADDITI ONS/ DISALLOWANCES. 2.1. THE LD.CLT(A) HAS GRIEVOUSLY ERRED IN LAW AND ON FACTS IN CONFIRMING THE FOLLOWING ADDITIONS /DISALLOWANCES: (A) DEDUCTION UNDER 80P(2)(A)(III) RS. 643,53 0 (B) INTEREST INCOME U/S.80P(2)(A)(I) RS. 8,89, 614 (C) GODOWN RENT U/S. 80PC2) (E) RS.1,20,510 2.2 THAT IN THE FACTS AND CIRCUMSTANCES OF THE CA SE AS WELL AS IN LAW, THE LD.CIT(A) OUGHT NOT TO HAVE UPHELD THE ABOVE SAID A DDITIONS / DISALLOWANCES. 3.1 THE LD.CIT(A) HAS ERRED IN UPHOLDING THAT T HE APPELLANT SOCIETY WAS NOT ENGAGED IN 'PROVIDING CREDIT FACILITIES' TO ITS MEM BERS WITHIN THE MEANING OF SECTION 80P(2) SO THAT THE INTEREST INCOME ON ADVAN CES MADE TO ITS MEMBERS WAS NOT EXEMPT. 3.2 THAT IN THE FACTS AND CIRCUMSTANCES OF TH E CASE, THE ID. C1T(A) HAS ERRED IN CONSTRUING SECTION 80P(2), ESPECIALLY THE EXPRESSION 'PROVIDING CREDIT FACILITIES' AND THEREBY DISALLOWING THE CLAIM OF EX EMPTION OF INTEREST INCOME 1,20,510 WAS RECEIVED FROM NON MEMBERS AND THE APPE LLANT HAD FAILED TO PROVE THAT THE SAME WERE USED FOR STORAGE OR FACILITATING THE MARKETING COMMODITIES. NEITHER THE A O HAD CHALLENGED THE SAID FACT NOR TH E APPELLANT WAS CALLED UPON BY CIT(A) TO PROVE IT. IT IS, THEREFORE, PRAYED THAT THE ADDITIONS/DISALLO WANCES UPHELD BY THE CIT(A) MAY KINDLY BE DELETED. 2 . BRIEFLY STATED FACTS ARE THAT THE CASE OF THE ASSES SEE WAS PICKED UP FOR SCRUTINY ASSESSMENT AND THE ASSESSMENT U/S.143(3) O F THE INCOME TAX ACT,1961 (HEREINAFTER REFERRED TO AS 'THE ACT') WAS FRAMED VIDE ORDER DATED 31/01/2013, THEREBY THE ASSESSING OFFICER (AO IN SHORT) MADE ADDITION(S) AMOUNTING TO RS.6,43,530/- IN RESPECT O F DISALLOWANCE OF DEDUCTION U/S.80P(2)(A)(III) OF THE ACT, DISAL LOWANCE OF INTEREST FROM ITA NO.2819/AHD /2013 DHANDUKA TALUKA CO-OP.COTTON SALES GINNING & PRESSING SOCIETY LTD. VS. ITO ASST.YEAR 2010-11 - 3 - MEMBERS FOR PROVIDING CREDIT FACILITIES AMOUNTING T O RS.8,89,614/- U/S.80P(2)(A)(I) OF THE ACT, DISALLOWANCE OF INTERE ST RECEIVED FROM CO- OPERATIVE BANKS AMOUNTING TO RS.33,12,147/- U/S.80P (2)(D) OF THE ACT AND DISALLOWANCE OF INCOME FROM LETTING OF GODOWN A MOUNTING TO RS.1,20,510/- U/S.80P(2)(E) OF THE ACT. AGAINST TH IS, THE ASSESSEE FILED AN APPEAL BEFORE THE ID.CIT(A), WHO AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, PARTLY ALLOWED THE APPEAL. WHILE PART LY ALLOWING THE APPEAL, THE ID.CIT(A) HAS FOLLOWED THE ORDER PASSED BY HIM IN THE ASST.YEAR 2008-09. 3. THE ID.COUNSEL FOR THE ASSESSEE SUBMITTED THA T THE IDENTICAL ISSUES IN RESPECT OF THE ASSESSMENT YEARS 2008-09 AND 2009-10 TRAVELLED UPTO THE HON'BLE TRIBUNAL AND THESE ISSUES HAVE BEEN DECIDED BY THE HON'BLE TRIBUNAL (ITAT 'A' BENCH AHMEDABAD) IN ITA NO.3147/ AHD/2011 FOR AY 2008-09 AND ITA NO.2814/AHD/2012 FOR AY 2009-10 (ASSESSEE'S OWN CASE) VIDE ORDER DATED 14/05/2013. THE ID.COUNS EL FOR THE ASSESSEE SUBMITTED THAT THE ISSUE IN RESPECT OF DISALLOWANCE OF DEDUCTION U/S.80P(2)(A)(III) OF THE ACT HAS BEEN CONFIRMED BY THE HON'BLE TRIBUNAL IN AY 2008-09. IN THIS REGARD, HE DREW OUR ATTENTIO N TOWARDS PARA-16 (PAGE-12) OF THE TRIBUNAL ORDER DATED 14/05/2013 PA SSED IN ITA NO.3147/AHD/201L(SUPRA). HE SUBMITTED THAT THE ISSU E IN RESPECT OF DISALLOWANCE OF INTEREST INCOME U/S.80P(2)(A)(I) OF THE ACT, THE TRIBUNAL IN AY 2008-09 SUCH ADDITION HAS BEEN DELETED AND HE DREW OUR ATTENTION TOWARDS PARA-18 (PAGE-14) OF TRIBUNAL ORDER DATED 1 4/05/2013 IN ITA NO.3147/AHD/2011(SUPRA). WITH REGARD TO THE ADDIT ION IN RESPECT OF GODOWN RENT MADE U/S.80P(2)(E) OF THE ACT AMOUNTI NG TO RS.1,20,510/-, ITA NO.2819/AHD /2013 DHANDUKA TALUKA CO-OP.COTTON SALES GINNING & PRESSING SOCIETY LTD. VS. ITO ASST.YEAR 2010-11 - 4 - THE ID.COUNSEL FOR THE ASSESSEE SUBMITTED THAT SUCH IDENTICAL DISALLOWANCE HAS BEEN DELETED BY THE TRIBUNAL IN 1TA NO.2814/AHD /2011 FOR AY 2009-10 VIDE ORDER DATED 14/05/2013. 3.1. THE LD.SR.DR DID NOT CONTROVERT THE ASSESSEE 'S SUBMISSION AND PLACED RELIANCE ON THE ORDERS OF THE AUTHORITIES BE LOW. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSE D THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. WE FIND THAT THE IDENTICAL ISSUES HAVE BEEN DECIDED BY THE RESPECTED COORDINATE BENCH (ITAT 'A' BENCH AHMEDABAD) IN ITA NOS.3147/AHD/2011 AND 2814/AHD/2012 FOR AYS 2008-09 & 2009-10 RESPECTIVELY IN ASSESSEE'S OWN CASE VIDE ORDER DATE D 14/05/2013 BY OBSERVING AS UNDER:- '16. CIT(A) WHILE UPHOLDING THE ORDER OF AO HAS GIV EN A FINDING THAT THE ASSESSEE DURING THE ASSESSMENT PROCEEDINGS AS W ELL AS DURING APPELLATE PROCEEDINGS HAS NOT FILED ANY EVIDENCES T O IN ITS SUPPORT THAT THE ASSESSEE WAS ENGAGED IN GINNING AND PRESSING OF COTTON FOR ONLY MEMBERS. BEFORE US ALSO NOTHING HAS BEEN, PLACED ON RECORD TO SUPPORT THE ASSESSEE'S CONTENTION. FURTHER, THERE IS NOTHIN G ON RECORD TO SUPPORT THE CONTENTION OF THE ASSESSEE THAT THE NOM INAL MEMBERS FOR WHOM THE ASSESSEE HAS DONE THE WORK IS A SOCIETY AN D THEY HAD BROUGHT KALA KAPAS BELONGING TO THEIR FARMER MEMBERS CONTIN UOUSLY FOR THREE YEARS SO AS TO BE CALLED AS NOMINAL MEMBER OF THE A SSESSEE. FURTHER CLAUSE 80P(2)(III) READS AS 'THE MARKETING OF AGRIC ULTURAL PRODUCE GROW BY ITS MEMBERS; OR ... '. THE CASE LAW RELIED BY THE ASSESSEE IS DISTINGUISHABLE ON FACTS. THUS, CONSIDERING THE TOT ALITY OF AFORESAID FACTS WE FIND NO REASON TO INTERFERE WITH THE ORDER OF AO ON THE ISSUE OF DISALLOWANCE OF RS.48,207/-. 17. WITH RESPECT TO INTEREST OF RS.16,01,985/ - IT IS AN UNDISPUTED FACT THAT THE INTEREST HAS BEEN EARNED FROM MEMBER S OF THE SOCIETY ON THE ITA NO.2819/AHD /2013 DHANDUKA TALUKA CO-OP.COTTON SALES GINNING & PRESSING SOCIETY LTD. VS. ITO ASST.YEAR 2010-11 - 5 - ADVANCE GRANTED TO THE MEMBERS. IT IS ALSO AN UNDIS PUTED FACT THAT THE GRANTING OF ADVANCE TO MEMBERS IS AS PER THE BYE-LA WS OF THE ASSESSEE. THE AO HAD DISALLOWED THE ASSESSEE'S CLAIM FOR THE REASON THAT THE PRIMARY OBJECT OF THE ASSESSEE WAS NOT PROVIDING CR EDIT FACILITY BUT TO FACILITATE THE MARKETING OF PRODUCTS OF ITS MEMBERS . 18. IN THE CASE OF COMMISSIONER OF INCOME-TAX V . SALEM CO- OPERATIVE SUGAR MILLS LTD. [2006] 286 ITR 635 (MAD. ) IT HAS BEEN HELD AS UNDER: 'SECTION 80P OF THE INCOME-TAX ACT, 1961 - DEDUCTIO NS - INCOME OF CO-OPERATIVE SOCIETIES - ASSESSMENT YEAR 1986-87 - ASSESSEE- COMPANY WAS CREATED WITH ONE OF OBJECTS OF GRANTING LOANS/ADVANCES TO MEMBERS WHETHER IN RESPECT OF I NTEREST RECEIVED FROM MEMBERS, ASSESSEE WOULD BE ENTITLED T O EXEMPTION UNDER SECTION 80P(2)(A)(I) - HELD, YES IN THE CASE OF COMMISSIONER OF INCOME-TAX VS. KRISH AK SAHKARI GANNA SAMITI LTD. (2002) 258 ITR 594 (ALL) THE H'BL E H.C HAS HELD AS UNDER: SECTION 80P OF THE INCOME-TAX. ACT, 1961 - DEDUCTIO NS - INCOME OF CO-OPERATIVE SOCIETIES - ASSESSMENT YEARS 1975-76 AND 1976- 77 - ASSESSEE A CO-OPERATIVE SOCIETY WAS FORMED WIT H MAIN OBJECT OF ORGANIZING INCREASE IN SUGARCANE CULTIVAT ION AND PURCHASE AND SALE OF SUGARCANE CROPS AT PROFITABLE PRICE, EXPEDITIOUS SUPPLY OF SUGARCANE TO MILLS AND ENSURI NG PROMPT PAYMENT TO FARMERS FROM MILLS - FOR FULFILLMENT OF THESE OBJECTS, ASSESSEE WAS TO LEND OR TO ARRANGE FINANCE FOR ITS MEMBERS AND INTEREST WAS TO BE REALIZED FROM MEMBERS ON SUCH LE NDINGS - WHETHER EXPRESSION 'ATTRIBUTABLE TO' USED IN CLAUSE S (A) AND (C) OF SECTION 80P(2) SUGGESTS HAT LEGISLATURE INTENDED LO COVER RECEIPTS FROM SOURCES OTHER THAN ACTUAL CONDUCT OF BUSINESS OF ASSESSEE HELD, YES WHETHER, THEREFORE, INTEREST EARNED BY ASSESSEE-CO-OPERATIVE SOCIETY FROM ITS MEMBERS COUL D BE SAID TO BE COVERED BY PROVISIONS OF SECTION 80P(2)(A)(I) AN D AS SUCH EXEMPT FROM TAX - HELD, YES WORDS AND PHRASES - 'ATTRIBUTABLE TO 1 AS OCCURRING IN CLAUSES (A) AND (C) OF SECTION 80P(2) OF THE INCOME-TAX ACT, 19 61. ITA NO.2819/AHD /2013 DHANDUKA TALUKA CO-OP.COTTON SALES GINNING & PRESSING SOCIETY LTD. VS. ITO ASST.YEAR 2010-11 - 6 - 18. RESPECTFULLY FOLLOWING THE AFORESAID DECISIONS OF H'BLE HIGH COURTS, WE ARE OF THE VIEW THAT ASSESSEE IS EN TITLED TO DEDUCTION OF RS.16,01,985/- U/S.80P(2)(A)(I). 19.... 20. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERU SED THE MATERIAL ON RECORD. THE REASON FOR DENIAL OF DEDUCTION BY THE A O WAS THAT THE RENT WAS RECEIVED FROM NON-MEMBERS OF THE SOCIETY, AND T HEREFORE, THE ASSESSEE WAS NOT ENTITLED FOR DEDUCTION U/S.80P(2) OF THE ACT. BEFORE US, THE LD.A.R. HAS SUBMITTED THAT THE RENT WAS RECEIVE D FROM NOMINAL MEMBERS OF THE SOCIETY. THIS SUBMISSION OF THE ASSE SSEE HAS NOT BEEN CONTROVERTED BY THE REVENUE BY BRINGING ANY CONTRAR Y MATERIAL ON RECORD. IN VIEW OF THESE FACTS WE ARE OF THE VIEW T HAT THE ASSESSEE IS ENTITLED TO DEDUCTION ON THE RENT RECEIPTS '. 4.1. IN VIEW OF THE AFORESAID DECISION, WE DO NOT FIND ANY REASON TO TAKE A DIFFERENT VIEW THAN TAKEN BY THE RESPECTED COORDI NATE BENCH. HENCE, RESPECTFULLY FOLLOWING THE DECISION OF THE COORDINA TE BENCH, WE CONFIRM THE DISALLOWANCE OF DEDUCTION AMOUNTING TO RS.6,43, 530/- AND IN RESPECT OF THE OTHER DISALLOWANCES, THE AO IS HEREBY DIRECT ED TO DELETE THE SAME. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED. ORDER PRONOUNCED IN COURT ON THE DATE MENTIONED HER EINABOVE AT CAPTION PAGE SD/- SD/- ( .. ) (' #$) ( N.S. SAINI ) ( KUL BHARAT ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 22 /08/2014 71.., .../ T.C. NAIR, SR. PS ITA NO.2819/AHD /2013 DHANDUKA TALUKA CO-OP.COTTON SALES GINNING & PRESSING SOCIETY LTD. VS. ITO ASST.YEAR 2010-11 - 7 - 4 / ,$8 98'$ 4 / ,$8 98'$ 4 / ,$8 98'$ 4 / ,$8 98'$/ COPY OF THE ORDER FORWARDED TO : 1. (+ / THE APPELLANT 2. ,-(+ / THE RESPONDENT. 3. !! $ ': / CONCERNED CIT 4. ':() / THE CIT(A)-XI, AHMEDABAD 5. 8 #; ,$ , , / DR, ITAT, AHMEDABAD 6. ;<& =0 / GUARD FILE. 4' 4' 4' 4' / BY ORDER, -8$ ,$ //TRUE COPY// > >> >/ // / !) !) !) !) ( DY./ASSTT.REGISTRAR) , , , , / ITAT, AHMEDABAD 1. DATE OF DICTATION .. 19.8.14(DICTATION-PAD 6-PAG ES ATTACHED AT THE END OF THIS FILE) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER ..20.8.14 OTHER MEMBER... 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 5. DATE ON WHICH THE FAIR ORDER COMES BAC K TO THE SR.P.S./P.S. 20.8.14 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 20.8.14 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 9. DATE OF DESPATCH OF THE ORDER