AP Sheep & Goat Development Cooperative Federation Ltd., Hyd, Hyderabad V. ITO, Ward 7(1), Hyderabad, Hyderabad

ITA 514/HYD/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 6111 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 5 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-10-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 14-09-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 05-05-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A SITARAMA RAO
• Assessee Lawyers: V SIVA KUMAR
• Keywords: Share purchase agreement; Opportunity of being heard; Additional evidence

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A, HYDERABAD BEFORE SHRI D. MANMOHAN, VICE PRESIDENT AND SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA NO. 514/HYD/2015 ASSESSMENT YEAR: 2010-11 AP SHEEP & GOAT DEVELOPMENT COOPERATIVE FEDERATION LTD., HYDERABAD. PAN AAABA 4113A VS. INCOME-TAX OFFICER, WARD 7(1), HYDERABAD. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI V. SIVAKUMAR REVENUE BY : SHRI A. SITARAMA RAO DATE OF HEARING 14-09-2016 DATE OF PRONOUNCEMENT 26-10-2016 O R D E R PER S. RIFAUR RAHMAN, A.M.: THIS APPEAL IS PREFERRED BY THE ASSESSEE AGAINST T HE ORDER OF THE LEARNED COMMISSIONER OF INCOME-TAX(A) - 3, HYDE RABAD DATED 06/02/2015, FOR AY 2010-11. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. THE ORDER OF THE LEARNED COMMISSIONER OF INCOME- TAX (APPEALS) IS AGAINST LAW, WEIGHT OF EVIDENCE AND PR OBABILITIES OF THE CASE. 2.THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) [ C.I.T(A)] ERRED IN DISMISSING THE APPEAL FILED BY THE ASSESSE E DENYING ADMISSION OF THE ADDITIONAL GROUND FILED BY THE ASS ESSEE. 3. THE LEARNED CI.T (A) HAVING OBSERVED IN HER ORDE R THAT IT IS OPEN TO THE FIRST APPELLATE AUTHORITY TO GRANT RELI EF TO THE ASSESSEE ALTHOUGH SUCH RELIEF WAS NOT CLAIMED BEFOR E THE A.O OR IN THE APPEAL, GROSSLY ERRED IN HOLDING THAT THE AS SESSEE WOULD 2 ITA NO. 514/H/15 AP SHEEP & GOAT DEVELOPMENT COOPERATIVE FEDERATION LTD., HYD. BE ENTITLED TO SUCH RELIEF ONLY WHEN IT BECOMES DUE TO HIM DUE TO CHANGE IN LAW OR JUDGE-MADE LAW. 4. THE LEARNED CI.T (A) OUGHT TO HAVE APPRECIATED T HAT THE RELIEF SOUGHT BY THE ASSESSEE BEFORE HER WAS ALLOWABLE IN LAW AND THUS THE SAME OUGHT NOT TO HAVE BEEN THROWN OUT ON UNTEN ABLE AND TECHNICAL GROUNDS. 5. FOR THE ABOVE GROUNDS AND SUCH OTHER GROUNDS THA T MAY BE URGED AT THE TIME OF HEARING, THE APPELLANT PRAYS T HAT THE APPEAL BE ALLOWED. THE APPELLANT CRAVES LEAVE TO ADD TO, A MEND OR MODIFY THE ABOVE GROUNDS OF APPEAL EITHER BEFORE OR AT THE TIME OF HEARING OF THE APPEAL, IF IT IS CONSIDERED NECES SARY. 3. BRIEFLY THE FACTS OF THE CASE ARE THAT THE ASSES SEE FILED ITS RETURN OF INCOME ON 28/09/2010 ADMITTING A TOTAL IN COME OF NIL, CLAIMING DEDUCTION U/S 80P ON ITS ENTIRE INCOME. TH E AO DISALLOWED THE CLAIM OF DEDUCTION U/S 80P AND ASSESSED THE TOT AL INCOME AT RS. 46,71,230/-. 3.1 THE ASSESSEE HAD AN INCOME OF RS. 47,00,000 FRO M LEASE RENT AND RS. 1,29,35,133/- FROM INTEREST ON FDS. AS PER THE BYE-LAWS OF THE ASSESSEE, THE MAIN OBJECTS OF THE ASSESSEE WERE TO ASSIST THE MEMBERS IN CARRYING OUT ACTIVITIES FOR SHEEP AND GO AT DEVELOPMENT, IN CARRYING OUT THE BUSINESS IN SHEEP AND GOATS, THEI R BYE-PRODUCTS AND IN ALL RELATED ACTIVITIES. THE ASSESSEE HAD CLAIMED DEDUCTION U/S 80P(2)(A)(IV). 3.2 THE AO NOTED THAT THE PROVISION APPLIES TO A CO OPERATIVE SOCIETY ENGAGED IN (IV) THE PURCHASE OF AGRICULTUR AL IMPLEMENTS, SEEDS, LIVESTOCK OR OTHER ARTICLES INTENDED FOR AGR ICULTURE FOR THE PURPOSE OF SUPPLYING THEM TO ITS MEMBERS. 3.3 THE AO HELD THAT THE SHEEP AND GOAT WOULD NOT C OME UNDER THE DEFINITION OF LIVESTOCK IN THE SECTION AND THAT E VEN AS PER THE ASSESSEE, NO PURCHASES IF LIVESTOCK FOR THE PURPOSE OF AGRICULTURE HAD BEEN MADE DURING THE YEAR. THE AO, THEREFORE, DISAL LOWED THE ASSESSEES CLAIM OF DEDUCTION U/S 80P. 3 ITA NO. 514/H/15 AP SHEEP & GOAT DEVELOPMENT COOPERATIVE FEDERATION LTD., HYD. 4. THE ASSESSEE CARRIED THE MATTER BEFORE THE CIT(A ). 5. BEFORE THE CIT(A), THE ASSESSEE HAS RAISED AN AD DITIONAL GROUND, WHICH IS AS UNDER: THE AO OUGHT TO HAVE APPRECIATED THAT INTEREST INCO ME OF RS. 1,29,35,133/- EARNED ON DEPOSITS IS NOT ASSESSABLE AS INCOME IN THE HANDS OF THE ASSESSEE FOR THE REASON THAT TH E OWNERSHIP OF THE RELEVANT DEPOSITS VESTED WITH THE GOVT. OF AP A ND CONSEQUENTLY THE INTEREST EARNED THEREON ALSO ACCRU ED AND AROSE TO THE GOVT. OF AP. 6. THE AR OF THE ASSESSEE SUBMITTED THAT VIDE LETTE R DATED 22/02/2013, IT HAD BEEN SUBMITTED BEFORE THE AO, TH E ASSESSEE HAD RECEIVED CERTAIN ASSETS FROM THE ERSTWHILE AP MEAT AND POULTRY DEVELOPMENT CORPORATION LTD. (AMPD), THAT SUCH ASSE TS INCLUDED 29.55 ACRES OF LAND, THAT THIS LAND WAS HANDED OVER TO HUDA AS PER GO MS. NO. 24, DATED 21/03/1998 BY THE AMPD, THAT A MPD RECEIVED RS. 53.26 CRORES UPTO 2008 FOR THIS LAND. THE AR SU BMITTED THAT THE ENTIRE AMOUNT TRANSFERRED TO THE ASSESSEE BY APMD W AS LEGALLY OWNED BY GOVT OF AP THAT THE INTEREST EARNED BY DEP OSITING THE MONIES ALSO BELONGED TO THE GOVT. OF AP, THAT THE I NCLUSION OF THE INTEREST ON FDS IN THE RETURNED INCOME OF THE ASSES SEE WAS A MISTAKE AND THAT THE AO SHOULD HAVE EXCLUDED THIS SUM FROM THE INCOME OF THE ASSESSEE IN VIEW OF THE CBDT CIRCULAR NO. 14 (X I-35), DATED 11/04/1995. THE ASSESSEE ALSO RELIED ON THE DECISIO NS IN THE CASES OF GUJARAT POWER CORPORATION LTD. VS. ITO, 25 TAXMAN 1 4 (GUJ) AND ADIT(E) VS. NATRIP IMPLEMENTATION SOCIETY [2013] TA XMANN.COM 119 (DEL.) 6.1 THE AR SUBMITTED THAT THE ASSESSEE HAD FAILED T O MAKE THIS CLAIM BEFORE THE AO SINCE IT WAS NOT AWARE OF THE L EGAL POSITION AND RELIED ON THE FOLLOWING DOCUMENTS, FILED ON 22/09/1 4, SOME OF WHICH CONSTITUTED ADDITIONAL EVIDENCE, IN SUPPORT OF THIS CLAIM: 1. GO MS. NO. 113, DATED 11/03/1981 2. GOMS. NO. 24, DATED 11/03/1998 4 ITA NO. 514/H/15 AP SHEEP & GOAT DEVELOPMENT COOPERATIVE FEDERATION LTD., HYD. 3. LETTER DATED 25.02.2009, FROM HMDA TO MD, AMDC 4. MOU DATED 01/12/2009 BETWEEN ASSESSEE AND APMD 5. GO MS. NO. 36, DATED 05/05/2010 6. GO MS. NO. 42, DATED 15/06/2010 7. LETTER DATED 30/03/2011 FROM THE APPELLANT TO T HE SPL. CHIEF SECRETARY, GOVERNMENT OF AP. 8. LETTER DATED 08/10/2012 FROM THE APPELLANT TO T HE SPL. CHIEF SECRETARY, GOVT. OF AP. 9. AUDITED FINANCIAL STATEMENTS OF THE APPELLANT F OR YEAR ENDING 31/03/2010. 6.2 THE ASSESSEE ALSO FILED A PETITION ON 05/02/201 5 FOR ADMISSION OF COPIES OF THE FOLLOWING DOCUMENTS AS ADDITIONAL EVIDENCE: 1. DETAILS OF ASSETS HANDED OVER TO APMD VIDE GO M S. NO. 113, DATED 11/03/1981. 2. GO MS. NOL. 146, DATED 27/03/1981 3. DO LETTER NO. 79933/PE.II/A1/98, DATED 11/02/19 99 ISSUED BY THE COMMISSIONER OF PUBLIC ENTERPRISES, GOVT. OF A P TO THE MD, APMD. 4. CERTIFICATE OF INCORPORATION CONSEQUENT TO CHAN GE OF NAME ISSUED TO AMDC. 5. CERTIFICATE DATED 07/12/2009 OF CA, FORMING PAR T OF GO MS. NO. 42. 6.3 THE LD. AR OF THE ASSESSEE RELIED ON VARIOUS JU DGMENTS INCLUDING NTPC CO. LTD., VS. CIT, 229 ITR 383 (SC) AND JUTE CORPORATION OF INDIA LTD. VS. CIT 187 ITR 688 (SC) FOR ADMISSION OF THE ADDITIONAL GROUND AND ADDITIONAL EVIDENCES. 7. THE CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND ANALYZING THE ISSUE WITH FEW CASE LAWS REFUSED TO ADMIT THE ADDITIONAL GROUND AND ADDITIONAL EVIDENCES FILED BY THE ASSESSEE RELYING ON THE DECISION OF THE AP HIGH COURT IN THE CASE OF CWT VS. AV REDDY TRUST AND OTHERS, 180 ITR 263 AND ON THE M AIN ISSUE, THE CIT(A) UPHELD THE ACTION OF THE AO BY OBSERVING AS UNDER: 5.4 IT WAS ADMITTED BY THE APPELLANT BEFORE THE A SSESSING OFFICER THAT NO PURCHASES WERE ACTUALLY MADE DURING THE YEAR, THOUGH A TENDER WAS CALLED FOR PURCHASE OF SHEEP AN D GOATS. HOWEVER, SUCH SHEEP AND GOATS, EVEN IF THEY HAD BEE N PURCHASED, WERE NOT INTENDED FOR AGRICULTURE, AS RE QUIRED U/S 80P(2)(A)(IV). FURTHER, THE DEDUCTION U/S 80P(2)(A) IS AVAILABLE FOR 'THE WHOLE OF THE AMOUNT OF PROFITS AND GAINS O F BUSINESS 5 ITA NO. 514/H/15 AP SHEEP & GOAT DEVELOPMENT COOPERATIVE FEDERATION LTD., HYD. ATTRIBUTABLE TO' THE ACTIVITY SPECIFIED IN CLAUSE ( IV). THE INCOME OF THE APPELLANT, CONSISTING OF LEASE RENT AND INTERES T ON FDS IS NOT ATTRIBUTABLE TO SUCH ACTIVITIES. THE DISALLOWANCE O F THE DEDUCTION U/S 8OP IS, THEREFORE, UPHELD. 8. AGGRIEVED BY THE ORDER OF THE CIT(A), THE ASSESS EE IS IN APPEAL BEFORE US. 9. BEFORE US, THE LD. AR FILED A PETITION SEEKING A DMISSION OF THE FOLLOWING ADDITIONAL EVIDENCES: 1. COPY OF LR. NO. 725/A.II(1)/2015-4 DATED 30/12/ 2015 ISSUED BY PRINCIPAL SECRETARY TO GOVT., AH, DD&F DEPARTME NT, AP SECRETARIAT, HYDERABAD ADDRESSED TO MD, AP SHEEP & GOAT DEVELOPMENT COOPERATIVE FEDERATION LTD., HYD. 2. COPY OF ITEM NO. 5 AGENDA BEFORE THE GENERAL BO DY OF THE APPELLANT FEDERATION AT THE GENERAL BODY MEET ING HELD ON 29/01/2016. 3. COPY OF MINUTES IN RESPECT OF ITEM NO. 5 OF THE AGENDA AT THE GENERAL BODY OF THE APPELLANT FEDERATION AT THE GE NERAL BODY MEETING HELD ON 29/01/2016. 4. COPY OF EQUITY SHARE CERTIFICATE DATED 16/05/20 16 ISSUED BY THE APPELLANT FEDERATION IN FAVOUR OF GOVERNOR OF AP SHOWING ALLOTMENT OF 1,82,692 SHARES OF FACE VALUE OF RS. 1,000/- EACH. 9.1 THE LD. AR SUBMITTED THAT THE SAID DOCUMENTS CO ULD NOT BE FILED BEFORE THE CIT(A) BECAUSE THEY WERE ISSUED AFTER TH E DATE OF THE ORDER OF THE CIT(A). HE PRAYED THAT THE BENCH MAY K INDLY ADMIT THE SAID DOCUMENTS BY WAY OF ADDITIONAL EVIDENCE IN PEN DING AND TAKE THE SAME INTO ACCOUNT WHILE ADJUDICATING THE APPEAL. 9.2 THE LD. AR INVITED OUR ATTENTION TO THE DECISIO N OF THE HONBLE SUPREME COURT IN THE CASE OF AV REDDY TRUST VS. CIT , 107 TAXMAN 84 (SC), TO SUBMIT THAT THE HONBLE SUPREME COURT R EVERSED THE DECISION OF THE HONBLE AP HIGH COURT IN THE SAID C ASE, ON WHICH RELIANCE PLACED BY THE CIT(A). HENCE, THE LD. AR SU BMITTED THAT THE MATTER MAY BE REMITTED BACK TO THE FILE OF THE CIT( A) WITH A DIRECTION TO ADMIT THE ADDITIONAL GROUND RAISED BEFORE HIM AN D THE ADDITIONAL 6 ITA NO. 514/H/15 AP SHEEP & GOAT DEVELOPMENT COOPERATIVE FEDERATION LTD., HYD. EVIDENCES FILED. A COPY OF THE SAID DECISION IS AVA ILABLE ON RECORD AT PAGES 20 TO 21 OF THE ASSESSEES PAPER BOOK. 10. LD. DR, ON THE OTHER HAND, RELIED UPON THE ORDE RS OF THE REVENUE AUTHORITIES. 11. CONSIDERED THE SUBMISSIONS OF BOTH THE COUNSELS AND PERUSED THE MATERIAL FACTS ON RECORD. THE ADDITIONAL EVIDEN CES SUBMITTED BY THE ASSESSEE BEFORE US MAY BE VITAL TO DECIDE THE I SSUE IN DISPUTE, HENCE, THE SAME ARE ADMITTED. AS SUBMITTED BY THE L D. AR, THE HONBLE SUPREME COURT HAS REVERSED THE DECISION OF THE AP H IGH COURT IN CASE OF CWT VS. AV REDDY TRUST AND OTHERS (SUPRA). THE CIT(A) HAD ADJUDICATED SOLELY RELYING ON THE DECISION IN THE C ASE OF CWT VS. AV REDDY TRUST (AP) (SUPRA). THEREFORE, WE REMIT THE M ATTER BACK TO THE FILE OF THE CIT(A) WITH A DIRECTION TO ADMIT THE AD DITIONAL GROUND RAISED BY THE ASSESSEE BEFORE US AND THE ADDITIONAL EVIDEN CES SUBMITTED BEFORE HIM AND DECIDE THE ISSUE IN ACCORDANCE WITH LAW, AFTER PROVIDING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE AND AO. 12. IN THE RESULT, APPEAL OF THE ASSESSEE IS TREATE D AS ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON 26 TH OCTOBER, 2016. SD/- SD/- (D. MANMOHAN) (S. RIFAUR RAHMAN ) VICE PRESIDENT ACCOUNTANT MEMBER HYDERABAD, DATED: 26 TH OCTOBER, 2016 KV 7 ITA NO. 514/H/15 AP SHEEP & GOAT DEVELOPMENT COOPERATIVE FEDERATION LTD., HYD. COPY TO:- 1) AP SHEEP & GOAT DEVELOPMENT COOPERATIVE FEDERAT ION LTD., 10-2-289/127, SHANTI NAGAR, HYDERABAD. 2)ITO, WARD 7(1), IT TOWERS, AC GUARDS, HYDERABAD. 3) CIT(A) 3, HYDERABAD 4 CIT - 3 HYDERABAD 5) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYDE RABAD. 6) GUARD FILE