M/s.Sreekandapuram Agricultural products & Toddy Tappers Co-op Society Ltd, Kannur V. The ACIT, Kannur

ITA 360/COCH/2019

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 5751 (ITAT-COCHIN)
• Duration Of Justice: 4 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-10-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 25-09-2019
• Assessment Year: 2014-2015
• Appeal Filed On: 08-05-2019
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SHANTAM BOSE
• Assessee Lawyers: T M SREEDHARAN
• Keywords: Set aside
• Section: 143(3); 201; 263

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFOR E S/ SHRI CHANDRA POOJARI , AM & GEORGE GEORGE K., J M I .T . A. NO. 360 / COCH/ 201 9 ASSESSMENT YEAR : 201 4 - 15 M/S.SREEKANDAPURAM AGRICULTURAL PRODUCTS & TODDY TAPPER CO - OP SOCIETY LTD., P.O. MAYYIL, KANNUR - 670 602. [PAN: AAHAS 3010J] VS. THE INCOME - TAX OFFICER, WARD - 4, KANNUR. ( ASSESSEE - APPELLANT) ( REV E NU E - RESPONDENT) ASSESSEE BY S HRI T.M. SREEDHARAN, SR. ADV. REVENUE BY SHRI SHANTAM BOSE, CIT(DR) D ATE OF HEARING 2 5 /09/2019 DATE OF PRONOUNCEMENT 01 ST /10/ 2019 O R D E R PER GEORGE GEORGE K. JM : THIS APPEAL AT THE INSTANCE OF THE ASSESSEE IS DIRECTED AGAINST THE OR DER OF THE PCIT, KOZHIKODE DATED 27/03/2019 PASSED UNDER SECTION 263 OF THE ACT . THE RELEVANT ASSESSMENT YEAR IS 201 4 - 15 . 2. THE GROUNDS RAISED READS AS FOLLOWS : 1. THE ORDE R OF THE LEARNED PRINCIPAL COMMISSIONER OF INCOME TAX, KOZHIKODE IN C. NO. TECH 601/263 P RCIT/CLT 1018 - 19 DATED 27 TH MARCH, 2019, SETTING ASIDE THE ASSESSMENT ORDER OF THE APPELLANT FOR ASSESSMENT YEAR 2014 - 15 FOR THE LIMITED PURPOSE OF CONSIDERING THE M ATTER REGARDING THE ELIGIBILITY OF THE APPELLANT FOR DEDUCTION U/S.80P(2)(D) AFRESH BY THE ASSESSING OFFICER IS INFIRM IN LAW AND CONTRARY TO FACTS AND CIRCUMSTANCES OF THE CASE. I.T.A. NO . 360 /COCH/201 9 2 2 . THE LEARNED PRINCIPAL COMMISSIONER OF INCOME TAX OUGHT TO HAVE FOUND THAT THE ASSESSING OFFICER AFTER VERIFYING THE ACCOUNTS HAS ALLOWED THE DEDUCTION AND THEREFORE, THERE IS NO JUSTIFICATION TO SET ASIDE THE ORDER U/S. 263 OF THE I .T. ACT, 1961. 3. THE LEARNED PRINCIPAL COMMISSIONER OF INCOME TAX OUGHT TO HAVE FOUND THAT THE A PPELLANT HAD CLAIMED DEDUCTION U/S.80P(2)(D) IN RESPECT OF INTEREST RECEIVED ON INVESTMENTS MADE WITH CO - OPERATIVE SOCIETIES AND AS SUCH, THERE IS NO ERROR IN THE ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER AND HE OUGHT NOT TO HAVE INVOKED SEC . 263 OF THE ACT. 4. A COPY OF THE GROUNDS OF SUBMISSION FILED BEFORE THE PRINCIPAL COMMISSIONER OF INCOME TAX IS ENCLOSED. THE CONTENTIONS RAISED THEREIN TO THE EXTENT IT IS APPLICABLE TO THE MATTERS IMPUGNED ABOVE MAY ALSO BE TREATED AS PART OF THIS GROUNDS OF APPEAL AS WELL. 5 . FOR THE ABOVE AND OTHER GROUNDS THAT MAY BE URGED AT THE TIME OF HEARING, THE APPELLANT HUMBLY PRAYS THAT THE HON'BLE INCOME TAX APPELLATE TRIBUNAL, COCHIN BENCH, COCHIN - 16, MAY BE PLEASED TO CANCEL THE ORDER U/S.263 OF THE I.T. ACT, 19 61, AND RENDER JUSTICE TO THE APPELLANT AND ALLOW THIS APPEAL. 3. THE BRIEF FACTS OF THE CASE ARE AS FOLLOWS: THE ASSESSEE IS A CO - OPERATIVE SOCIETY WHICH IS ENGAGED IN RUNNING TODDY SHOP AND PROVIDING CREDIT FACILITIES TO ITS MEMBERS. FOR THE ASSE SSMENT YEAR 2014 - 15, THE RETURN OF INCOME WAS FILED ON 28/11/2014 DECLARING NIL INCOME. THE ASSESSMENT WAS TAKEN UP FOR SCRUTINY AND ORDER U/S. 143(3) OF THE ACT WAS PASSED VIDE ORDER DATED 23/04/2016. 4. THE P CIT ISSUED SHOW CAUSE NOTICE U/S. 263 OF T HE ACT PROPOSING TO REVISE THE ASSESSMENT ORDER PASSED U/S. 143(3) OF THE ACT DATED 23/11/2016. THE REASONS FOR ISSUING NOTICE U/S. 263 OF THE ACT READS AS FOLLOWS: I.T.A. NO . 360 /COCH/201 9 3 ASSESSEE HAD CLAIMED AMOUNT OF RS.71,77,427/ - BEING THE INTEREST RECEIVED ON DEPOSITS WIT H VARIOUS SOCIETIES, CO - OPERATIVE BANKS AND OTHER FINANCIAL INSTITUTIONS AS DEDUCTION U/S. 80P(2)(D) AND WAS ALLOWED DURING THE ASSESSMENT . AS PER SECTION 80P(2)9D), DEDUCTION IS ALLOWED ONLY IN RESPECT OF INCOME DERIVED BY WAY OF INTEREST OR DIVIDENDS BY THE CO - OPERATIVE SOCIETY FROM ITS INVESTMENTS WITH ANY OTHER CO - OPERATIVE SOCIETY AND NOT FROM ANY CO - OPERATIVE BANK OR OTHER FINANCIAL INSTITUTIONS. ON VERIFICATION, IT IS SEEN THAT THE DEDUCTION U/S. 80P(2)(D) IS ALLOWABLE ONLY TO THE CERTAIN EXTEND CL AIMED BY THE ASSESSEE. HOWEVER, THE ASSESSING OFFICER HAS ALLOWED AN AMOUNT OF RS.71,77,427/ - CLAIMED BY THE ASSESSEE AS DEDUCTION U/S.80P(2)(D) OUT OF THE TOTAL INTEREST INCOME OF RS.81,15,842/ - RECEIVED BY THE ASSESSEE. 5. IN RESPONSE TO THE NOTICE IS SUED U/S. 263 OF THE ACT, THE ASSESSEE VIDE ITS LETTER DATED 31/01/2019 RAISED OBJECTIONS . THE OBJECTIONS RAISED BY ASSESSEE READS AS FOLLOWS: THE ASSESSMENT IS COMPLETED BY THE ASSESSING OFFICER AFTER VERIFYING THE ACCOUNTS IN DETAIL AND IT CANNOT BE S AID THAT THERE WAS LACK OF ENQUIRY ON THE PART OF THE ASSESSING OFFICER. THE DECISION OF THE APEX COURT IN THE CASE OF M/S. TOTGARS CO - OPERATIVE SALE SOCIETY IS NOT APPLICABLE TO THE FACTS OF THE INSTANT CASE AS THE DECISION IS DEALING WITH DEDUCTION U/S. 80P(2)(A)(I). THE ASSESSEE HAS ALSO ENCLOSED DECISIONS OF THE SUPREME COURT WHEREIN THE HONBLE SUPREME COURT HAS HELD THAT SATISFACTION OF THE TWIN CONDITIONS IS A PRE - REQUISITE FOR INVOKING S. 263. 6. THE SUBMISSIO N S/OBJECTIONS OF THE ASSESSEE WERE REJECTED BY THE P CIT AND HE PASSED AN ORDER U/S. 263 OF THE ACT, SETTING ASIDE THE ASSESSMENT ORDER DATED 23/11/2016 . THE PCIT DIRECTED THE ASSESSING OFFICER TO EXAMINE AFRESH THE CLAIM I.T.A. NO . 360 /COCH/201 9 4 OF DEDUCTION U / S. 80P(2)(D) OF THE I.T. ACT . THE RELEVANT FINDINGS OF THE PCIT READ AS FOLLOWS: THE A C T IS VERY DEAR REGARDING THE PROVISIONS DISCUSSED ABOVE. SECTION 80P(2)(D) STATES THAT THE ASSESSEE BEING A CO - OPERATIVE SOCIETY, THERE SHALL BE DEDUCTED FROM THE GROSS TOTAL INCOME BY WAY OF INTEREST OR DIVIDEND ANY INCO ME DERIVED BY THE SOCIETY FROM INVESTMENTS WITH ANY OTHER CO - OPERATIVE SOCIETY. THE ASSESSEE I S SEEN TO HAVE MADE INVESTMENTS WITH FINANCIAL INSTITUTIONS OTHER THAN CO - OPERATIVE SOCIETIES. AS SUCH, THE ASSESSEE IS NOT ELIGIBLE FOR DEDUCTION N/S, 8 0 P(2) ( D) . HOWEVER, THE ASSESSING OFFICER WITHOUT APPLYING HIS MIND HAS GRANTED DEDUCTION ON THE WHOLE AMOUNT CLAIMED BY THE ASSESSEE EVEN THOUGH THE ASSESSEE QUALIFIED ONLY FOR A LESSER AMOUNT OF DEDUCTION U/S. 80P(2) ( D) AS THE ASSESSEE IS SEEN TO HAVE TO MADE INVE STMENTS IN FINANCIAL INSTITUTIONS OTHER THAN CO - OPERATIVE SOCIETIES. AS SUCH THE ASSESSMENT IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. THE ISSUE IS THAT THE A O HAS NOT CONSIDERED OR HAD APPLIED HIS MIND TO THE F ACTS OF THE CASE AND WITH RELATION TO THE PROVISION OF THE ACT, THEREFORE, THE ASSESSMENT F OR THE AY 2014 - 15 IS HEREBY SET ASIDE FOR THE LIMITED PURPOSE OF CONSIDERING THE MATTER REGARDING THE ELIGIBILITY OF THE ASSESSEE FOR DEDUCTION U/S, 8 0P (2 ) (D) AFRESH BY THE AO, AFTER GOING T HROUGH RELEVANT CIRCULARS AND CASE LAWS, AS NECESSARY EXAMINATION/VERIFICATION HAS NOT BEEN MADE DURING THE ASSESSMENT . 7 . AGGRIEVED BY THE ORDER PASSED U/S. 263 OF THE ACT, THE ASSESSEE HAS FILED THE PRESENT APPEAL BEFORE THE TRIBUNAL. THE LD. AR RE ITERATED THE SUBMISSION S MADE BEFORE THE CIT(A). 8 . THE LD. DR ON THE OTHER HAND RELIED ON THE ORDER OF THE CIT(A). I.T.A. NO . 360 /COCH/201 9 5 9 . WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RECORD. SECTION 80P(2)(D) OF THE ACT STATES THAT DEDUCTION IS ALLOWED FOR INTE RES T /DIVIDEND INCOME RECEIVE D BY A CO - OPERATIVE SOCIETY FROM INVESTMENT MADE WITH O THER CO - OPERATIVE SOCIET IES. IN THE INSTANT CASE, THE ASSESSEE HAS NOT PROVED THAT INTEREST INCOME ALLOWED AS DEDUCTION U/S. 80P(2)(D) OF THE I.T. ACT BY THE ASSESSING OFFI CER WAS RECEIVED FROM INVESTMENTS WITH CO - OPERATIVE SOCIET IES . EVEN BEFORE THE TRIBUNAL, THE ASSESSEE HAS NOT PROVIDED NECESSARY PROOF TO SHOW THAT THE CLAIM OF DEDUCTION U/S.80P(2)(D) IS WITH REGARD TO INTEREST/DIVIDEND INCOME RECEIVED FROM INVESTMENT WI TH OTHER CO - OPERATIVE SOCIET IES . THE PCIT HA D SET ASIDE THE ASSESSMENT FOR THE LIMITED PURPOSE OF CONSIDERING THE ELIGIBILITY OF DEDUCTION U/S. 80P(2)(D) OF THE I.T. ACT. ACCORDING TO US THE PCIT HAS CORRECTLY DIRECTED THE AO TO RE - EXAMINE THE ABOVE ISSUE . THEREFORE, WE SEE NO REASON TO INTERFERE WITH THE ORDER PASSED BY THE P CIT U/S. 263 OF THE ACT AND WE UPHOLD THE SAME AS CORRECT AND IN ACCORDANCE WITH LAW . IT IS ORDERED ACCORDINGLY. 10. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS DISMISSED . ORDER PRONOUNCED IN THE OPEN COURT ON THIS 1 ST OCTOBER, 2019 SD/ - SD/ - ( CHANDRA POOJARI ) ( GEORGE GEORGE K. ) ACCOUNTANT MEMBER JUDICIAL MEMBER PLACE: KOCHI DATED: 1/10/ 2019 GJ COPY TO: I.T.A. NO . 360 /COCH/201 9 6 1 . M/S.SREE KANDAPURAM AGRICULTURAL PRODUCTS & TODDY TAPPER CO - OP SOCIETY LTD., P.O. MAYYIL, KANNUR - 670 602. 2. THE INCOME TAX OFFICER, WARD - 4 , KANNUR. 3. THE PR. COMMISSIONER OF INCOME - TAX, KO Z HI KODE . 4 . D. R., I.T.A.T., COCHIN BENCH, COCHIN. 5 . GUARD FILE. BY ORDER (ASSISTANT REGISTRAR) I.T.A.T., COCHIN