M/s. Sriganganagar Zila Dugdh Utpadak Sahakari Sangh Ltd., HANUMANGARH TOWN V. ACIT, BIKANER

ITA 297/JODH/2006

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 4749 (ITAT-JODHPUR)
• Duration Of Justice: 10 year(s) 7 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-12-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 20-12-2016
• Assessment Year: 2003-2004
• Appeal Filed On: 18-05-2006
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: A K DAS
• Assessee Lawyers: P K KOCHAR SH JINENDRA KOCHAR

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, JODHPUR BEFORE SHRI B.P JAIN ACCOUNTANT MEMBER AND SHRI PARTHA SARATHI CHAUDHURY JUDICIAL MEMBER ITA NO. 297 /JODH/20 0 6 ASSESSMENT YEAR:20 03 - 04 M/S SRIGANGANAGAR ZILA DUGTH VS. THE ACIT UTPADAK SAHAKARI SANGH LTD. CIRCLE - 2 C/O PK KOCHAR& CO. BIKANER 521 - GENERAL MARKET,HOSPITAL ROAD HANUMANGARH TOWN (RAJ) PAN NO. AAAAS3423N (APPELLANT) (RESPONDENT) APPELLANT BY : SH. P.K. KOCHAR SH. JINENDRA KOCHAR RESPONDENT BY : SH. A.K. DAS DATE OF HEARING : 20 /1 2 /2016 DATE OF PRONOUNCEMENT : 21/12/2016 ORDER PER PARTHA SARATHI CHAUDHURY , JM THIS APPEAL IS PREFERRED BY THE ASSESSEE AGAINST THE ORDER OF THE LD. CIT(A) - II, BIKANER DT. 03/03/2006 , ON THE FOLLOWING GROUND: THAT ON FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A) ERRED IN HOLDING THAT THE APPELLANT COOPERATIVE SOCIETY IS A FEDERAL COOPERATIVE SOCIETY AND IS NOT A PRIMARY COOPERATIVE SOCIETY [ALTHOUGH AS PER RAJASTHAN COOPERATIVE SOCIETIES ACT, 1965 IT IS A CENTRAL SOCIETY AND FEDERAL (APEX) COOPERATIVE SOCIETY IN THE STATE IS ONLY ONE WHICH IS RAJASTHAN COOPERATIVE DAIRY FEDERATION LTD.] THAT ON FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT(APPEALS) ERRED IN HOLDING THAT 2 THE DEDUCTION U/S 80P(2)(B) IS N OT AVAILABLE TO ASSESSEE SOCIETY BECAUSE IT IS AVAILABLE ONLY TO A PRIMARY COOPERATIVE SOCIETY ALTHOUGH THE SUPREME COURT IN THE CASE OF ASSAM COOPERATIVE APEX MARKETING SOCIETY LTD. VS. ACIT (1193) 201 ITR 338 (SC) AND ITAT, PUNE BENCH IN THE CASE OF PIMP ALGAON BASWANT VIBHAG SAHAKARI BAGAITDAR KHAREDI VIKRI SANGH LTD. VS. ITO (1191) 41 TTJ (PUNE) 285 HOLDS THAT THESE TYPE OF SOCIETIES ARE CATEGORIES AS PRIMARY COOPERATIVE SOCIETIES AND THE DEDUCTION U/S 80P(2)(B) IS AVAILABLE. THE CRUX OF THE RELIEF CLAIMED IN GROUND OF APPEAL IS WHETHER DEDUCTION UNDER SECTION 80P(2)(B) OF THE ACT IS ALLOWABLE TO THE ASSESSEE. 2. THE BRIEF FACTS APPEARING IN THIS CASE ARE THE ASSESSEE FILED RETURN OF INCOME SHOWING TOTAL INCOME AS NIL AFTER S ETTING OFF PAST UNABSORBED DEFICIENCY OF RS. 1,54,04,477/ - AND AFTER CLAIMING DEDUCTION UNDER SECTION 80P(2)(B) OF THE ACT AT RS. 60,04,888/ - FOR THE A.Y. 2003 - 04 ON 28/11/2003. THE ASSESSEE IS A PRIMARY SOCIETY CALLED AS A SANGH OF PRIMARY SOCIETY OF THE GANGANAGAR AND HANUMANGARH DISTRICT REFER OTHER SANGH OR PRIMARY SOCIETY OF THE OTHER DISTRICT. FEDERAL SOCIETY OF ALL THE S E SANGH IS RAJASTHAN COOPERATIVE DAIRY FEDERATION LIMITED . THE OBJECT OF THE ASSESSEE SOCIETY IS TO COLLECTING, PRODUCE AND SUPPLY OF MILK AND OTHER PRODUCTS TO ITS MEMBERS AND TO PROVIDE THE MEMBERS NECESSARY MEDICINE / EDUCATION PROVIDING BASIC INFRASTRUCTURE AND EQUIPMENT IN ORDER TO ENABLE THEM TO MUCH MORE MILK FROM THEIR CATTLE. 3. IN ASSESSMENT ORDER THE AO HAS MENTIONED THAT TH OUGH THE APPELLANT SUBMITTED THE WRITTEN SUBMISSION THAT HE APPELLANT SOCIETY IS A PRIMARY SOCIETY BUT NO DOCUMENTARY EVIDENCE IN SUPPORT OF ITS CLAIM IS FILED. HOWEVER, HE FURTHER OBSERVED THAT ON PERUSAL OF CONSTITUTION OF THE APPELLANT SOCIETY AND DE FINITION OF PRIMARY SOCIETY UNDER THE RAJASTHAN COOPERATIVE SOCIETIES ACT, 1965, HE 3 FOUND THAT THE APPELLANT IS A FEDERATION OF PRIMARY COOPERATIVE SOCIETY AS ITS NAME SANGH MEANS FEDERATION . FURTHER, HE OBSERVED, THAT THE APPELLANT IS NOT DIRECTLY COLLECTING MILK FROM THE PERSONS WHO RAISES MILK FROM CATTLE. THE APPELLANT PROCURED MILK FROM THE PRIMARY DUGADH UTPADAK COOPERATIVE SOCIETY, WHOSE MEMBERS RAISES MILK FROM THEIR CATTLES. THESE PRIMARY DUGADH UTPADAK COOPERATIVE SOCIETIES ARE MEMBER OF THE APPELLANT. HE FURTHER, OBSERVED THAT ACCORDING TO THE DEFINITION OF PRIMARY SOCIETY, THEIR AREA OF WORKS ARE AT VILLAGE LEVEL AND THEY DEAL DIRECTLY WITH CATTLE OWNERS FOR COLLECTION OF MILK AND SUPPLY IT TO THE FEDERAL COOPERATIVE SOCIETY. IN THE AP PELLANTS CASE ACCORDING TO THE ASSESSING OFFICER, THE APPELLANT DEALS WITH THE PRIMARY DUGADH UTPADAK COOPERATIVE SOCIETIES AND NOT DIRECTLY TO THE CATTLE OWNERS WHO RAISE THE MILK. HE FURTHER, OBSERVED THAT THE APPELLANT IS A FEDERAL COOPERATIVE SOCIETY AS ITS BOARD OF DIRECTORS ARE BEING ELECTED BY THE PRIMARY DUGADH UTPADAK COOPERATIVE SOCIETIES AND NOT BY THE PERSON WHO RAISE MILK AT VILLAGE LEVEL. HE FURTHER, OBSERVED THAT THE APPELLANT ALSO PURCHASED MILK FROM THE COLLECTION CENTRE AT VILLAGES THAT ARE NOT A PRIMARY COOPERATIVE SOCIETY AND ALSO ARE NOT MEMBERS OF THE APPELLANT. HE FURTHER, OBSERVED THAT HE PRIMARY DUGADH UTPADAK COOPERATIVE SOCIETIES ARE THE MEMBERS OF THE APPELLANT BUT THESE SOCIETIES DO NOT RAISE MILK BUT THEY PURCHASE MILK AGAIN FROM THEIR MEMBERS. HE THEREFORE, MENTIONED THAT THE APPELLANT AHS NOT FULFILLED A PRIMARY CONDITION FOR ELIGIBILITY OF DEDUCTION U/S 4 80P(2)(B). ONE OF THE CONDITIONS OF THE SECTION IS THAT MILK SHOULD BE RAISED BY THE MEMBERS OF A PRIMARY SOCIETY, IN TURN , IT SUPPLIES TO THE FEDERAL COOPERATIVE SOCIETY. IN THE APPELLANTS CASE ACCORDING TO THE ASSESSING OFFICER, IT HAS NOT FULFILLED THE PRIMARY CONDITION THEREFORE, IT IS NOT ELIGIBLE FOR DEDUCTION U/S 80P(2)(B). HE FURTHER, OBSERVED THAT THE APPELLANT DOE S NOT MAINTAIN PROPER RECORD OF SUPPLY OF MILK AS HOW MUCH IT HAS SUPPLIED TO RAJASTHAN COOPERATIVE DAIRY FEDERATION OR GOVERNMENT OR LOCAL AUTHORITY ETC. HE WAS ALSO OF THE OPINION THAT THE APPELLANT UTILIZED MILK FOR PREPARATION OF GHEE, PANIR AND DRY PO WDER AND THE SAME WERE SOLD TO DIFFERENT SOCIETIES AND ALSO IN THE LOCAL MARKET. HE WAS THEREFORE, OF THE OPINION THAT THE APPELLANT HAS NOT FULFILLED CONDITIONS LET DOWN IN THE PROVISIONS OF SECTION 80P(2)(B). THE ASSESSING OFFICER ALSO MENTIONED THAT THE APPELLANT MADE TRADING IN CATTLE FEED, MEDICINES, SEEDS, GHEE ETC. THE PROFIT EARNED ON ACCOUNT OF THIS ACTIVITY IS NOT ENTITLED FOR DEDUCTION UNDER SECTION 80P(2)(B). THE ASSESSEE HAS ALSO SUBMITTED WRITTEN SUBMISSIONS WHICH ARE ALSO ON RECORD. THE A SSESSEE IN THE WRITTEN SUBMISSIONS BEFORE THE LD. CIT(A) RELIED ON THE DECISION OF THE HONBLE APEX COURT IN THE CASE OF ASSAM COOPERATIVE APEX MARKETING SOCIETY LTD. VS. ACIT(1993) 201 ITR 338(SC). 5 4. THAT THE LD. CIT ON CONSIDERING THE FACTS AND CIRCUM STANCES OF THE CASE AND THE SUBMISSIONS OF THE ASSESSEE OPINED AND HELD AS FOLLOWS: 10. I HAVE GONE THROUGH FACTS OF THE CASE AND DECISION OF THE HONBLE SUPREME COURT AND IT IS OBSERVED THAT THE APPELLANT IS NOT A PRIMARY SOCIETY ACCORDING TO THE DEFINI TION GIVEN IN THE SECTION 2(R) OF THE RAJASTHAN COOPERATIVE SOCIETIES ACT, 1965. ACCORDING TO THE DEFINITION U/S 2(D) OF THE RAJASTHAN COOPERATIVE SOCIETIES ACT, 1965, THE APPELLANT IS A CENTRAL SOCIETY WHOSE ARE OF OPERATION IS CONFINED TO SRIGANGANAGR AND HANUMANGARH DISTRICTS. ITS MAIN OBJECTIVE IS TO PROMOTE OR FACILITATE OPERATION OF MILK SUPPLY AND ALSO RAISING OF MILK THROUGH PRIMARY DUGADH UTPADAK SAHAKARI SAMITI WHO ARE MEMBERS OF THE APPELLANT. IN THE CASE OF ASSAM COOPERATIVE APEX MARKETING SOC IETY LIMITED, 201 ITR PAGES 338 , THE HONBLE SUPREME COURT HAS CONSIDERED FACTS AND CIRCUMSTANCES OF THE CASE THAT THE VILLAGE SERVICE COOPERATIVE SOCIETIES ARE AT THE BASE OF THE PYRAMID. THESE VILLAGE SOCIETIES ARE THE MEMBERS OF THE PRIMARY MARKETING S OCIETIES AND THE PRIMARY MARKETING SOCIETIES IN TURN RE THE MEMBERS OF THE APEX SOCIETIES. HOWEVER, IN THE PRESENT CASE, THE FACTS ARE DIFFERENT AS AT THE VILLAGE LEVEL, THE PRIMARY DUGADH UTPADAKK SAHAKARI SAMITIES ARE AT THE BASE OF THE PYRAMID AND THEIR MEMBERS RAISE MILK FROM THEIR CATTLE. THESE PRIMARY DUGADH UTAPADAK SAHAKARI SAMITIES ARE MEMBERS OF THE APPELLANT SOCIETY AND THE APPELLANT SOCIETY IS MEMBER OF APEX SOCIETY I.E. RAJASTHAN DAIRY COOPERATIVE FEDERATION, JAIPUR. THUS, THE FACTS OF THE CITE D CASE ARE TOTALLY DIFFERENT TO THE APPELLANTS CASE THEREFORE; THE PROPOSITION GIVEN BY THE HONBLE SUPREME COURT IS NOT APPLICABLE IN THE APPELLANTS CASE. 11. THE ASSESSING OFFICER MENTIONED THAT THE APPELLANT IS NOT MAINTAINING PROPER RECORD TO ASCERT AIN AS HOW MUCH MILK SUPPLIED TO THE GOVERNMENT OR A LOCAL AUTHORITY OR OTHER CONCERNS AS SPECIFIED IN THE PROVISIONS OF SECTION U/S 80P(2)(B) AND THE APPELLANT SUBMITTED THAT IT HAS BEEN MAINTAINING DAY T DAY STOCK REGISTER AND PRODUCTION REGISTER AND ABO UT 85% OF THE TOTAL MILK ARE SUPPLIED TO MOTHER DAIRY, DELHI, ARMY ACCORDING TO THE DIRECTION OF RCPF. THE APPELLANT ALSO EXPLAINED REGARDING COLLECTION OF MILK FROM THE COLLECTION CENTER AND LATER ON THERE REGISTRATION AS A PRIMARY SOCIETY ETC. IN RESPECT OF THE ABOVE, IT IS OBSERVED THAT THE APPELLANTS SUBMISSION APPEARS TO BE CORRECT AS REGARDS MAINTAINING OF DAY TO DAY STOCK REGISTER AND SUPPLY OF MILK ACCORDING TO THE DIRECTION OF RCDF. HOWEVER, IT IS OBSERVED THAT IN THE RAJASTHAN COOPERATIVE SOCIETI ES ACT, 1965, THE PRIMARY SOCIETY IS DEFINED AS MENTIONED IN ABOVE PARA AND ACCORDING TO WHICH, THE APPELLANT IS NOT A PRIMARY SOCIETY. THE MAIN CONDITIONS FOR ELIGIBILITY OF DEDUCTION U/S 80P(2)(B) ARE THAT SOCIETY SHOULD BE A COOPERATIVE SOCIETY, IT SHOU LD BE A PRIMARY SOCIETY, IT SHOULD BE ENGAGED IN SUPPLYING OF MILKS AND THE MILK SHOULD BE RAISED BY ITS MEMBERS. 12. FROM THE ABOVE DISCUSSION AND CONDITIONS LISTED AS ABOVE, IT WOULD BE CLEAR THAT THE APPELLANT SOCIETY IS NOT A PRIMARY SOCIETY THOUGH IT IS A COOPERATIVE 6 SOCIETY; IT DOES NOT SALE MILK RAISED BY ITS MEMBERS. THE MEMBERS OF THE APPELLANT SOCIETY ARE PRIMARY DUGADH UTPADAK COOPERATIVE SOCIETIES THAT DO NOT RAISE MILK. THESE PRIMARY SOCIETIES ARE SIMPLY COLLECTING MILK FROM THEIR MEMBERS AND IN TURN SUPPLY TO THE APPELLANT FOR FURTHER SUPPLYING AS PER THE DIRECTION OF RAJASTHAN DAIRY COOPERATIVE FDEDERATION. 13. THE ITAT, BENCH NAGPUR IN CASE OF NAGPUR ZILA NUTAN DUGDH UTPADAK SAHARKARI SANGH LIMITED VS. ITO, 13 ITD PAGE 680 FOR ASSESSMENT YEA R 1981 - 82, IN ORDER DATED 09/04/1985 HAS HELD THAT THE ASSESSEE IS NOT ENTITLED TO DEDUCTION EITHER U/S 80P(2)(A)(III) OR U/S 80P(2)(B). FURTHER, OBSERVED THAT ESSENTIAL INGREDIENTS FOR ALLOWING THE DEDUCTION UNDER THIS SECTION ARE ABSENT IN THE CASE. THE PRIMARY REQUIREMENT AS SEEN FROM THE SECTION IS THAT IT SHOULD BE A PRIMARY SOCIETY ENGAGED IN SUPPLYING MILK RAISED BY ITS EMBER TO A FEDERAL MILK COOPERATIVE SOCIETY. IN THE SAID CASE, IT WAS FURTHER OBSERVED THAT THE ASSESSEE IS NOT A PRIMARY SOCIETY. IT WAS A FEDERATION OF A NUMBER OF PRIMARY SOCIETIES WHICH PURCHASES THE MILK OF THE PRIMARY SOCIETIES AND IN TURN SELLS THE SAME TO THE NAGPUR MILS SCHEME. THE DEDUCTION UNDER THIS CLAUS E IS APPLICABLE ONLY TO PRIMARY SOCIETIES ENGAGED IN THE SUPPLY OF MILK TO FEDERAL MILK CO - OPERATIVE SOCIETIES. IT IS, THEREFORE, QUITE OBVIOUS THAT THE CLAIM FOR DEDUCTION UNDER THIS CLAUSE HAS ABSOLUTELY NO LEGS TO STAND UPON. THERE CAN BE NO EXTENSION O F A PRIMARY SOCIETY SO AS TO INCLUDE WITHIN ITS FOLD A FEDERAL MILK SOCIETY. THE VERY CLAUSE RULES OUT SUCH A POSSIBILITY IN AS MUCH AS, THE STIPULATION ARE THAT, THE INCOME SHOULD BE THAT OF A PRIMARY SOCIETY ARISING ON THE SALE OF MILK OF ITS MEMBERS TO THE FEDERAL SOCIETY. CONSIDERING THESE FACT AND THE FACT THAT THE ASSESSEE WAS A FEDERAL SOCIETY ENGAGED IN THE BUSINESS OF SUPPLY OF MILK OF ITS MEMBER SOCIETIES TO THE GOVERNMENT MILK SCHEME, NAGPUR, THE HONBLE MEMBERS HELD THAT THIS CLAUSE HAS NO APPL ICATION TO THE FACTS OF THIS CASE. THE FACTS OF THE PRESENT CASE ARE IDENTICAL TO THE CASE OF NAGPUR ZILA NUTAN DUGDH UTPADAK SAHAKARI SANGH LIMITED, NAGPUR AND THEREFORE, THE DECISION OF THE HONBLE ITAT IS SQUARELY APPLICABLE. 14. KEEPING IN VIEW THE AB OVE FACTS AND CIRCUMSTANCES OF THE CASE, I AM OF THE OPINION THAT THE ASSESSING OFFICER WAS JUSTIFIED IN REJECTING CLAIM OF DEDUCTION MADE U/S 80P(2)(B). 5. WE HAVE PERUSED THE CASE RECORDS AND WE OBSERVE AND ARRIVE AT OUR CONSIDERED VIEW THAT THE FACTS IN THE PRESENT CASE ARE SUBSTANTIALLY DIFFERENT FROM THAT OF THE CASE OF ASSAM COOPERATIVE APEX MARKETING SOCIETY LTD. VS. ACIT (SUPRA). THAT ALSO THE ASSESSEE IS NOT A PRIMARY SOCIETY ACCORDING TO THE DEFINITION GIVEN IN SECTION 2(R) OF THE RAJASTHAN COOPER ATIVE SOCIETIES ACT 1965. THAT FURTHER AS PER DEFINITION UNDER SECTION 2D OF THE RAJASTHAN COOPERATIVE 7 SOCIETIES ACT 1965 THE ASSESSEE IS A CENTRAL SOCIETY WHOSE AREA OF OPERATION IS CONFINED TO SRIGANGANAGAR AND HANUMANGARH DISTRICT. ITS MAIN OBJECTIVE IS TO PROMOTE OR FACILITATE OPERATION OF MILK SUPPLY AND ALSO RAISING OF MILK THROUGH PRIMARY DUGADH UTPADAK WHO ARE MEMBER OF THE ASSESSEE. 6. THAT WE OBSERVE THAT THE DECISION OF THE APEX COURT ON RECORD AS REFERRED BY THE ASSESSEE WHEREIN THE VILLAGE SER VICE COOPERATIVE SOCIETY AT THE BASE OF THE PYRAMID. THESE VILLAGE SOCIETIES ARE THE MEMBERS OF THE PRIMARY MARKETING SOCIETIES IN TURN ARE THE MEMBERS OF THE APEX SOCIETIES. HOWEVER IN THE CASE OF THE ASSESSEE AT THE VILLAGE LEVEL, THE PRIMARY DUGADH UTPA DAK SAHAKARI SAMITIES ARE AT THE BASE OF THE PYRAMID AND THEIR MEMBERS RAISE MILK FROM THEIR CATTLE. THESE PRIMARY DUGADH UTPADAK SAHAKARI SAMITIES ARE MEMBERS OF THE ASSESSEE SOCIETY AND THE ASSESSEE SOCIETIES IS MEMBERS OF APEX SOCIETY I.E; RAJASTHAN DAI RY COOPERATIVE FEDERATION, JAIPUR. 7. THAT FROM THE FACTS ON RECORD IT IS CLEAR THAT THE ASSESSEE IS NOT A PRIMARY SOCIETY AND IN ORDER TO ALLOW DEDUCTION UNDER THE RELEVANT PROVISION ONE HAS TO BE A PRIMARY SOCIETY. 8. THAT WE HAVE OBSERVE FROM THE RECOR DS FURTHER THAT IN THE RAJASTHAN COOPERATIVE SOCIETIES ACT1965 THE PRIMARY SOCIETY IS DEFINED, AND ACCORDING TO WHICH THE ASSESSEE IS NOT A PRIMARY SOCIETY. THE MAIN CONDITION FOR ELIGIBILITY OF DEDUCTION UNDER SECTION 80P(2)(B) OF THE ACT ARE THAT THE ASS ESSEE SHOULD COOPERATIVE SOCIETY IT SHOULD BE A PRIMARY SOCIETY IT SHOULD BE ENGAGED IN 8 SUPPLYING THE MILK AND MILK SHOULD BE RAISED BY ITS MEMBERS. THE ASSESSEE SOCIETY THOUGH A COOPERATIVE SOCIETY BUT IS NOT A PRIMARY SOCIETY SINCE IT DOES NOT SALE MILK RAISED BY ITS MEMBERS. THE MEMBERS OF THE ASSESSEE SOCIETY ARE PRIMARY DUGADH UTPADAN COOPERATIVE SOCIETY THAT DO NOT RAISE MILK. THESE PRIMARY SOCIETY ARE SIMPLY COLLECTING MILK FROM THERE MEMBERS AND IN TURN SUPPLYING TO THE ASSESSEE FOR FURTHER SUPPLY A S PER THE DIRECTION OF RAJASTHAN DAIRY COOPERATIVE FEDERATION. 9. THAT ON THESE OBSERVATIONS WE ARRIVE AT OUR CONSIDERED VIEW THAT THE LD. CIT(A) WAS JUSTIFIED IN REJECTING THE CLAIM OF DEDUCTION MADE UNDER SECTION 80P(2)(B) OF THE ACT. 10. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT. SD/ - SD/ - (B.P. JAIN) ( PARTHA SARATHI CHAUDHURY ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 21/12/2016 AG COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR