M/s. Cane Development Council, Faizabad V. Dy. Commissioner of Income Tax, Faizabad

ITA 461/LKW/2012

• Counselvise Citation: 46123714 RSA 2012
• Duration Of Justice: 1 year(s) 9 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-05-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 20-05-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 17-08-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: ALOK MITRA
• Assessee Lawyers: J N SHUKLA
• Section: 143(3); 10

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH A , LUCKNOW BEFORE SHRI S UNIL KUMAR YADAV , JUDICIAL MEMBER AND SHRI. A. K. GARODIA , ACCOUNTANT MEMBER ITA NO. 461/LKW/2012 ASSESSMENT YEAR: 2008 - 09 M/S CANE DEVELOPMENT COUNCIL RAUZA GAON FAIZABA D V. DY. CIT CIRCLE FAIZABAD PAN: AAATC8843P (APP ELL ANT) (RESPONDENT) APP ELL ANT BY: SHRI. J. N. SHUKLA, ADVOCATE RESPONDENT BY: SHRI. ALOK MITRA, D.R. DATE OF HEARING: 20 05 2014 DATE OF PRONOUNCEMENT: 23 05 2014 O R D E R PER SUNIL KUMAR YADA V: THIS APPEAL IS PREFERRED BY THE ASSESSEE AGAINST THE ORDER OF THE LD. CIT(A), INTER ALIA, ON VARIOUS GROUNDS, WHICH ARE AS UNDER: - 1 . THAT THE COMMISSIONER OF INCOME TAX (APPEAL) - I LUCKNOW COMMITTED MANIFEST ERROR OF LAW IN REJECTING THE FIRST APPEAL OF THE APPELLANT WITHOUT APPRECIATING FACTS AND CIRCUMSTANCES OF THE CASE OF THE APPELLANT. 2 . THAT THE APPELLANT IS A CANE DEVELOPMENT COUNCIL GOVERN BY U.P. CANE DEVELOPMENT DEPARTMENT ESTABLISHED BY THE ORDER OF THE CANE COMMISSIONER UTTAR PRADESH IT WORKS UN DER THE GUIDE LINES LAID DOWN BY THE CANE COMMISSIONER. THE ASSESSEE IS THE MARKETING OF AGRICULTURAL PRODUCE AND DEVELOPMENT OF SUGAR CANE. 3 . THAT THE APPELLANT CANE DEVELOPMENT COUNCIL ENGAGED IN THE PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 2 - : BUSINESS OF CREDIT FACILITIES TO ITS MEMBERS. WHO ARE CA N E GROWERS (AGRICULTURISTS) TO ENSURE REGULAR SUPPLY OF CANE FROM THE MEMBERS TO SUGAR MILLS AND TO PROCURE THE PAYMENT FROM SUGAR MILLS FROM THE AGRICULTURIST THIS COUNCIL IS ALSO ENGAGED IN PROVIDING LOAN TO ITS MEMBERS FOR THE PURCHASE OF AGRICULTURAL I MPLEMENT, SEEDS, FERTILIZERS. CANE DEVELOPMENT COUNCIL ENGAGED IN BUSINESS OF CREDIT FACILITIES AND ALSO COVERED UNDER SUB CLAUSE (III) AND SUB CLAUSE (IV) OF CLAUSE (A) OF SUB SECTION (2) OF SECTION 80P . 4 . THAT THE APPELLANT IS A SEMI GOVERNMENT BODY AND I TS SECRETARY ALSO A GOVERNMENT OFFICER AND AS SUCH IS A GOVERNMENT DEPARTMENT AND LEVY OF SUCH PENALTY UPON THE APPELLANT WHO IS INCOME IS 100% DEDUCTABLE UNDER SECTION 80 - P CANNOT BE DONE BY ONE GOVERNMENT DEPARTMENT TO THE OTHER DEPARTMENT OF THE GOVERNM ENT WHICH IS ALSO AN INSTRUMENT AUTHORITY OF THE STATE UNDER ARTICLE 12 OF THE CONSTITUTION AND THE ACT WHICH IS DONE IN GOOD FAITH HENCE THE SAME SHALL DESERVES TO BE SET ASIDE. 5 . THAT THE ORDER OF COMMISSIONER INCOME TAX (APPEAL) - I LUCKNOW DATED 04.04.2012 PASSED IN APPEAL NO. CIT(A) - I/LKO/10 - 11 /164 IS LIABLE TO BE QUASHED AND FURTHER DEMAND OF RS. 7,73,645/ - UNDER SECTION 143(3) ISSUED BY DCIT CIRCLE, FAIZABAD MAY ALSO BE QUASHED OTHERWISE THE APPELLANT SHALL SUFFER IRREPARABLE LOSS AND INJURY. 6 . THAT THE OR DER OF CIT (APPEAL ) - I LUCKNOW DATED 04.04.2011 WAS SERVED ON THE APPELLANT ON 17.06.2012 AND AS SUCH THE PRESENT APPEAL IS WELL WITHIN TIME. 2 . THOUGH VARIOUS GROUNDS ARE RAISED, BUT THEY ALL RELATE TO THE DENIAL OF DEDUCTION UNDER SECTION 80P(2)(A)(III) OF THE INCOME - TAX ACT, 1961 PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 3 - : (HEREINAFTER CALLED IN SHORT THE ACT') BY THE ASSESSING OFFICER AS WELL AS THE LD. CIT(A) ON THE GROUND THAT THE ASSESSEE IS NOT REGISTERED UNDER THE CO - OPERATIVE SOCIETYS REGISTRATION ACT AND IS THEREFORE NOT A CO - OPERATIVE SOC IETY WHICH ALONE IS ELIGIBLE FOR DEDUCTION UNDER SECTION 80P(2)(A)(III) OF THE ACT AND SECONDLY BECAUSE THE ASSESSEE WAS NOT ENGAGED IN THE MARKETING OF AGRICULTURE PRODUCE GROWN BY ITS MEMBERS. 3 . THE FACTS IN BRIEF BORNE OUT FROM THE RECORD ARE THAT THE ASS ESSEE HAS CLAIMED DEDUCTION UNDER SECTION 80P(2)(A)(III) OF THE ACT, WHICH WAS DISALLOWED BY THE ASSESSING OFFICER BY MAKING FOLLOWING OBSERVATIONS: - 5. THE ASSESSEE, COUNCIL HAS CLAIMED DEDUCTION U/S 80P(2)(A)(III) OF THE INCOME TAX ACT, 1961. SEC. 80P(2 )(A).(III) OF THE I.T. ACT, 1961 IS BEING REPRODUCED HEREUNDER: - '80P(1) WHERE, IN THE CASE OF AN ASSESSEE BEING A CO - OPERATIVE SOCIETY, THE GROSS TOTAL INCOME INCLUDES ANY INCOME REFERRED TO IN SUB - SECTION (2), THERE SHALL BE DEDUCTED, IN ACCORDANCE WITH AND SUBJECT TO THE PROVISIONS OF THIS SECTION, THE SUMS SPECIFIED IN SUB - SECTION (2), IN COMPUTING THE TOTAL INCOME OF THE ASSESSEE. (2) THE SUMS REFERRED TO IN SUB - SECTION SHALL BE THE FOLLOWING, NAMELY: - (A) IN THE CASE OF A CO - OPERATIVE SOCIETY ENGAGED IN (III) THE MARKETING OF AGRICULTURAL PRODUCE GROWN BY ITS MEMBERS, ' FROM THE ABOVE, IT IS AMPLY CLEAR THAT ONLY THOSE CO - OPERATIVE SOCIETIES WHICH ARE ENGAGED IN MARKETING OF AGRICULTURAL PRODUCE GROWN BY ITS MEMBERS, QUALIFY FOR DEDUCTION. AS DISCUSS ED IN PARA 3, THE ASSESSEE COUNCIL IS NOT A CO - OPERATIVE SOCIETY. THE OBJECTS AND ACTIVITIES OF THE ASSESSEE COUNCIL, AS DISCUSSED IN PARA 4, DOES NOT FALL WITHIN THE AMBIT OF 'MARKETING'. THEREFORE, THE ASSESSEE IS NOT ELIGIBLE FOR DEDUCTION U/S 80P(2)(A) (III) OF THE ACT IN EITHER WAY. HENCE, ITS INCOME IN THE SHAPE OF COMMISSION FROM SUGAR MILL AMOUNTING RS.18,42,269/ - NOT TREATED AS EXEMPT. FURTHER, ASSESSEE HAS SHOWN INCOME FROM INTEREST AMOUNTING TO RS.2,24,560.29. THIS INCOME IS ALSO NOT EXEMPT U/S 80 P. PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 4 - : 4 . AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A), BUT DID NOT FIND FAVOUR WITH HIM AND THE DISALLOWANCE OF DEDUCTION WAS CONFIRMED BY THE LD. CIT(A) . 5 . NOW THE ASSESSEE IS BEFORE US WITH THE SUBMISSION THAT THE ASSESSEE C OUNCIL IS A BOD Y ESTABLISHED BY THE ORDER OF THE CANE COMMISSIONER, UTTAR PRADESH. IT WORKS UNDER THE GUIDELINES LAID DOWN BY THE CANE COMMISSIONER, UTTAR PRADESH. IT HELPS GANNA GROVER (KISSAN) IN THE PRODUCTION AND DEVELOPMENT OF SUGARCANE AND TO GIVE ADVICE TO MILL O WNERS AS WELL AS THE GOVERNMENT REGARDING DEVELOPMENT OF CANE PRODUCTIVITY, QUALITY AND QUANTITY OF PRODUCE. IT ALSO ADVISES SUGAR MILLS ABOUT THE TOTAL PRODUCTIVITY OF THE AREA AND THE REQUIREMENTS OF THE MILL, FOR WHICH THE ASSESSEE COUNCIL RECEIVES COM MISSION FROM TH E SUGAR MILLS AS PER RULES LAID DOWN BY THE GOVERNMENT. THE SUGAR MILLS ALSO PAY COMMISSION TO THE CO - OPERATIVE CANE DEVELOPMENT UNION ON A FIXED PERCENTAGE AND OUT OF THE ABOVE COMMISSION, 1/4 TH PART IS THE SHARE OF THE ASSESSEE C OUNCIL. IN SUPPORT OF HIS CONTENTIONS, T HE LD. COUNSEL FOR THE ASSESSEE HAS ALSO PLACED RELIANCE UPON THE FOLLOWING CASE LAWS: - ( I ) INCOME TAX OFFICER, LAKHIMPUR VS. CO - OPERATIVE CANE DEVELOPMENT UNION LIMITED, PALLIA KALAN, LAKHIMPUR KHERI IN ITA NO.512/LUC/2008. ( II ) IN COME TAX OFFICER VS. M/S CO - OPERATIVE CANE DEVELOPMENT UNION LTD., BALRAMPUR IN ITA NO.352/LKW/2011. ( III ) UTTARAKHAND HIGH COURT IN THE CASE OF CIT VS. IQBALPUR CO - OPERATIVE CANE DEVELOPMENT UNION LTD., STATION ROAD, ROORKEE IN INCOME TAX APPEAL NO.135 OF 2007 . 6 . IT WAS FURTHER CONTENDED THAT IN THE AFORESAID CASES , DEDUCTION UNDER SECTION 80P(2)(A)(III) OF THE ACT WAS ALLOWED TO THE ASSESSEE S . 7 . THE LD. D.R., ON THE OTHER HAND, HAS SUBMITTED THAT ADMITTEDLY THE ASSESSEE IS NOT A REGISTERED CO - OPERATIVE SOCIETY, WH EREAS DEDUCTION UNDER PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 5 - : SECTION 80P(2)(A)(III) OF THE ACT IS TO BE ALLOWED ONLY TO THE CO - OPERATIVE SOCIETIES AND NOT TO ANY OTHER COUNCIL OR UNION. IN ALL THE CASES REFERRED TO BY THE LD. COUNSEL FOR THE ASSESSEE, THE ASSESSE E S WERE CO - OPERATIVE SOCIETIE S AND WERE ALSO ENGAGED IN THE AGRICULTURAL CREDIT ACTIVITIES WITH ITS MEMBERS. THEREFORE, THE FACTS IN THOSE CASES ARE NOT SIMILAR TO THE FACTS INVOLVED IN THE INSTANT CASE AND NO ASSISTANCE CAN BE DRAWN FROM THOSE CASES IN FAVOUR OF THE ASSESSEE. 8 . HAVING GIVEN A THOUGHTFUL CONSIDERATION TO THE RIVAL SUBMISSIONS AND FROM A CAREFUL PERUSAL OF THE ORDERS OF THE AUTHORITIES BELOW, WE FIND THAT DEDUCTION UNDER SECTION 80P(2)(A)(III) OF THE ACT WAS DENIED BY THE ASSESSING OFFICER AS WELL AS THE LD. CIT(A) SOLEL Y FOR THE REASON THAT THE ASSESSEE WAS NOT REGISTERED UNDER THE CO - OPERATIVE SOCIETYS REGISTRATION ACT. BESIDES, THE ASSESSEE IS ALSO NOT ENGAGED IN THE MARKETING OF AGRICULTURAL PRODUCE GROWN BY ITS MEMBERS. THEREFORE, THE ACTIVITIES OF THE ASSESSEE DI D NOT FALL WITHIN THE AMBIT OF MARKETING. 9 . DURING THE COURSE OF HEARING, THE LD. COUNSEL FOR THE ASSESSEE HAS SIMPLY PLACED RELIANCE UPON THE JUDGMENT OF THE HON'BLE UTTARAKHAND HIGH COURT AND THE ORDERS OF THE TRIBUNAL. WE HAVE CAREFULLY PERUSED THE AFORE SAID JUDGMENT OF THE HON'BLE UTTARAKHAND HIGH COURT AND THE ORDERS OF THE TRIBUNAL AND WE FIND THAT IN ALL THOSE CASES , THE ASSESSE E S WERE CO - OPERATIVE SOCIETIES REGISTERED UNDER THE CO - OPERATIVE SOCIETYS REGISTRATION ACT AND WERE ALSO ENGAGED IN PROVIDIN G CREDIT FACILITIES TO ITS MEMBERS. BUT IN THE INSTANT CASE, NOTHING IS PLACED ON RECORD TO SHOW THAT THE ASSESSEE IS EVER REGISTERED UNDER THE CO - OPERATIVE SOCIETYS REGISTRATION ACT. THEREFORE, THE ASSESSEE IS NOT A CO - OPERATIVE SOCIETY REGISTERED UNDER THE CO - OPERATIVE SOCIETYS REGISTRATION ACT AND IS ALSO NOT ENGAGED EITHER IN MARKETING OF AGRICULTURAL PRODUCE OR PROVIDING CREDIT FACILITIES TO ITS MEMBERS. 10 . UNDER SECTION 80P OF THE ACT, DEDUCTION CAN ONLY BE ALLOWED TO THE CO - OPERATIVE SOCIETIES AND NO T TO ANY OTHER SOCIETY OR UNION OR COUNCIL. PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 6 - : FOR THE SAKE OF REFERENCE, WE EXTRACT THE PROVISIONS OF SECTION 80P AS UNDER: - 80P. DEDUCTION IN RESPECT OF INCOME OF CO - OPERATIVE SOCIETIES. -- (1) WHERE, IN THE CASE OF AN ASSESSEE BEING A CO - OPERATIVE SOCIETY, THE GROSS TOTAL INCOME INCLUDES ANY INCOME REFERRED TO IN SUB - SECTION (2), THERE SHALL BE DEDUCTED, IN ACCORDANCE WITH AND SUBJECT TO THE PROVISIONS OF THIS SECTION, THE SUMS SPECIFIED IN SUB - SECTION (2), IN COMPUTING THE TOTAL INCOME OF THE ASSESSEE. (2 ) THE SUMS REFERRED TO IN SUB - SECTION (1) SHALL BE THE FOLLOWING, NAMELY: -- (A) IN THE CASE OF A CO - OPERATIVE SOCIETY ENGAGED IN -- (I) CARRYING ON THE BUSINESS OF BANKING OR PROVIDING CREDIT FACILITIES TO ITS MEMBERS, OR (II) A COTTAGE INDUSTRY, OR (III) THE MARKETING OF AGRICULTURAL PRODUCE GROWN BY ITS MEMBERS, OR (IV) THE PURCHASE OF AGRICULTURAL IMPLEMENTS, SEEDS, LIVESTOCK OR OTHER ARTICLES INTENDED FOR AGRICULTURE FOR THE PURPOSE OF SUPPLYING THEM TO ITS MEMBERS, OR (V) THE PROCESSING, WITHOUT THE AID OF POWER, OF THE AGRICULTURAL PRODUCE OF ITS MEMBERS, OR (VI) THE COLLECTIVE DISPOSAL OF THE LABOUR OF ITS MEMBERS, OR (VII) FISHING OR ALLIED ACTIVITIES, THAT IS TO SAY, THE CATCHING, CURING, PROCESSING, PRESERVING, STORING OR MARKETING OF FISH O R THE PURCHASE OF MATERIALS AND EQUIPMENT IN CONNECTION THEREWITH FOR THE PURPOSE OF SUPPLYING THEM TO ITS MEMBERS, THE WHOLE OF THE AMOUNT OF PROFITS AND GAINS OF BUSINESS ATTRIBUTABLE TO ANY ONE OR MORE OF SUCH ACTIVITIES: PROVIDED THAT IN THE CASE OF A CO - OPERATIVE SOCIETY FALLING UNDER SUB - CLAUSE (VI) OR SUB - CLAUSE (VII) THE RULES AND BYE - LAWS OF THE SOCIETY RESTRICT THE VOTING RIGHTS TO THE FOLLOWING CLASSES OF ITS MEMBERS, NAMELY: -- (1) THE INDIVIDUALS WHO CONTRIBUTE THEIR LABOUR OR, AS THE CASE MAY BE, CARRY ON THE FISHING OR ALLIED ACTIVITIES ; (2) THE CO - OPERATIVE CREDIT SOCIETIES WHICH PROVIDE FINANCIAL ASSISTANCE TO THE SOCIETY: (3) THE STATE GOVERNMENT PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 7 - : 11 . UNDISPUTEDLY, THE ASSESSEE IS NOT A CO - OPERATIVE SOCIETY AND IS ALSO NOT ENGAGED EITHER IN M ARKETING OF AGRICULTURAL PRODUCE OR PROVIDING CREDIT FACILITIES TO ITS MEMBERS. THEREFORE, THE ASSESSEE IS NOT ENTITLED FOR DEDUCTION UNDER SECTION 80P(2)(A)(III) OF THE ACT. SINCE THE LD. CIT(A) HAS PROPERLY ADJUDICATED THE ISSUE IN THE LIGHT OF RELEVAN T PROVISIONS OF THE ACT, WE FIND NO INFIRMITY THEREIN. ACCORDINGLY, WE CONFIRM HIS ORDER. 12 . IN THE RESULT, APPEAL OF THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 23.5.2014. SD/ - SD/ - [ A. K. GARODIA ] [ S UNIL KUMAR Y ADAV ] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 23 RD MAY , 2014 JJ: 2105 COPY FORWARDED TO: 1 . APPELLANT 2 . RESPONDENT 3 . CIT(A) 4 . CIT 5 . DR ASSISTANT REGISTRAR PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ )