M/s. U.S. Nagar Dudgh Utpadak She Sangh Ltd., Uttrakhand V. ACIT, Uttrakhand

ITA 5241/DEL/2016

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 5217 (ITAT-DEHRADUN)
• Duration Of Justice: 4 year(s) 11 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-09-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2012-2013
• Appeal Filed On: 05-10-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N C UPADHYAY
• Assessee Lawyers: NARAYAN CHAND
• Keywords: Capital expenditure; TDS
• Section: 43B; 40(a)(ia); 80P; 22

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DEHRADUN BENCH, DEHRADUN BEFORE SH. AMIT SHUKLA, JUDICIAL MEMBER DR. B. R. R. KUMAR, ACCOUNTANT MEMBER (THROUGH VIDEO CONFERENCING) ITA NO. 5241/DEL/2016 : ASSTT. YEAR : 2012-13 U.S. NAGAR DUDGH UTPADAK SHE SANGH LTD., KASHIPUR ROAD, DUDRAPUR, U.S. NAGAR, UTTRAKHAND VS ACIT, UTTRAKHAND (APPELLANT) (RESPONDENT) PAN NO. A AALU0070G ASSESSEE BY : SH. NARAYAN CHAND, CA REVENUE BY : SH. N. C. UPADHYAY, SR. DR DATE OF HEAR ING: 15 . 09 .20 2 1 DATE OF PRONOUNCEMENT: 22 .09 .20 2 1 ORDER PER DR. B. R. R. KUMAR, ACCOUNTANT MEMBER: THE PRESENT APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LD. CIT(A), HALDWANI DATED 30.03.2 016. 2. FOLLOWING GROUNDS HAVE BEEN RAISED BY THE ASSESS EE: I. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS), ERRED IN CONFIRMING THE DISALLOWANCE OF PROVISION & CAPITAL EXPENDITURE RS.51,96,038.00, DISALLOWANCE U/S 43B & 36(1)(IV) OF THE I.T. ACT, 1961 RS.48,75,476.00 DISALLOWANCE OF PRIOR PERIOD EXPENSES RS.17,96,678.00, AND DISALLOWANCE U/S 40(A)(IA) RS.33,08,954.00. II. THE APPELLANT RESPECTFULLY, SUBMIT AS UNDER:- 1. LD CIT-A HAS SUSTAINED DISALLOWANCE OF RS.51,96,038.00 BEING CLAIMED AS PROVISION OF AAPDA ITA NO. 5241/DEL/2016 U.S. NAGAR DUDGH UTPADAK SHE SANGTH LTD. 2 RAHAT RS.5,00,000.00, PROVISION OF REPAIR RS.12,00,000.00, PROVISION OF VEHICLE RS.3,00,000.00, PROVISION OF LOAN FUND RS.25,00,000.00 AND EXPENDITURE ON PLANT & MACHINERY RS.6,96,038.00 OVERLOOKING THE FACT THAT EXPENDITURE INCURRED DURING RELEVANT PREVIOUS YEAR & WERE INCIDENTAL TO THE BUSINESS. 2. LD CIT-A HAS SUSTAINED DISALLOWANCE OF RS.48,75,476.00 U/S 43B & 36(1)(IV) CONTRARY TO FACTS AND LAW. 3. LD CIT-A HAS SUSTAINED DISALLOWANCE OF PRIOR PERIOD EXPENSES OF RS.17,96,678.00 CONTRARY TO FACT S AND LAW. 4. LD CIT-A HAS SUSTAINED DISALLOWANCE U/S 40(A)(IA ) RS.33,08,954.00 FOR NON-DEDUCTION OF TDS WITHOUT GOING INTO THE FACT OF THE CASE. 5. THAT THE ORDER IS BAD IN LAW, NOT IN AGREEMENT WITH THE FACTS AND IS AGAINST THE PRINCIPLES OF NAT URAL JUSTICE. 3. THE ASSESSE CO-OPERATIVE SOCIETY IS A DISTRICT L EVEL MILK UNION LOCATED AT KHATIMA, VILLAGE WITHIN THE AREA O F DISTRICT UDHAM SINGH NAGAR AND IS REGISTERED WITH THE REGIST RAR OF CO-OPERATIVE SOCIETIES UTTARAKHAND. ACCORDING TO IT S BYE-LAWS, THE ASSESSEE-SOCIETY'S MAIN OBJECTIVE IS TO CARRY O UT ACTIVITIES CONDUCIVE TO THE ECONOMIC AND SOCIO-ECONOMIC DEVELO PMENT OF THE MILK PRODUCERS FARMER BY ORGANIZING EFFECTIVE PRODUCTION, PROCESSING AND MARKETING OF COMMODITIES. THE ASSESS EE CLAIMED THAT ALL THE ACTIVITIES INVOLVED IN THE COLLECTION AND SUPPLY OF MILK TO THE FEDERATION/OTHER DIARY WERE CONTROLLED AS PER THE DIRECTION OF UTTARAKHAND COOPERATIVE DAIRY FEDERATI ON (UCDF). ACCORDINGLY, THE ASSESSEE CLAIMED DEDUCTION UNDER S ECTION 80P(2) (B). ITA NO. 5241/DEL/2016 U.S. NAGAR DUDGH UTPADAK SHE SANGTH LTD. 3 4. FURTHER, ACCORDING TO ITS BYE-LAWS, THE MANAGEM ENT OF THE SOCIETY IS VESTED ON A BOARD OF DIRECTORS CONSISTIN G OF NOMINEES FROM THE FARMERS OF THE VILLAGE SAMITIES ORGANIZED BY THE ASSESSE DURING THE YEAR AND ULTIMATE THE FARMER. 5. THE ORGANIZATION PROVIDES CATTLE FEED, FODDER S EEDS, AND LIVESTOCK TO ITS MILK- PRODUCER FARMERS THROUGH VIL LAGE-LEVEL SAMITIES AT REASONABLE PRICE. ANIMAL FACILITIES LIK E ANIMAL HEALTH SERVICES, EMERGENCY VETERINARY SERVICES, ARTIFICIAL INSEMINATION, NATURAL CONCEPTION, VACCINATION, DE-WARMING, ANIMAL FEEDING KNOWLEDGE, VETERINARY MEDICINES AND OTHER TYPES INV ESTMENT ARE BEING SERVED TO FARMER PRODUCERS DIRECTLY BY TH E ASSESSEE. 6. THE SOCIETY HAS BEEN SUCCESSFULLY WORKING FOR T HE BENEFIT OF PRODUCER FARMER IN THE DISTRICT OF U.S.NAGAR THR OUGH IMPLEMENTATION OF THE SCHEMES UNDER STATE AND CENTR AL GOVERNMENT LIKE IDDP, RKVY, NPDD AND OTHER SCHEMES LIKE BIG DAIRY, MINI DAIRY, WOMEN DAIRY DEVELOPMENT PROGRAMM E ETC. 7. THE ASSESSE SOCIETY FILED THE RETURN FOR THE ASS ESSMENT YEAR 2012-13 AND WAS SELECTED FOR THE SCRUTINY ASSE SSMENT. 8. THE ASSESSING OFFICER REJECTED THE CLAIM OF THE ASSESSEE FOR DEDUCTION U/S 80P (2)(B) ON THE GROUND THAT THE ASSESSEE IS NOT A PRIMARY CO-OPERATIVE SOCIETY, RATHER IT IS A FEDERAL CONSUMER CO-OPERATIVE SOCIETY ENGAGED IN BUSINESS ACTIVITIES AND THEREFORE THE SAME COULD NOT BE HELD ELIGIBLE F OR DEDUCTION UNDER SECTION 80P (2) (B). ITA NO. 5241/DEL/2016 U.S. NAGAR DUDGH UTPADAK SHE SANGTH LTD. 4 9. BEFORE US DURING THE ARGUMENTS, THE ASSESSEE ARG UED THAT, BEING A PRIMARY CO-OPERATIVE SOCIETY, THE ASSESSEE IS ELIGIBLE TO DEDUCTION 80P(2)(B). 10. SECTION 80P(2)(B) IS READS AS UNDER: 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 PRO VISIONS 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 B E THE FOLLOWING, NAMELY: (A) IN THE CASE OF A CO-OPERATIVE SOCIETY ENGAGED IN (I) CARRYING ON THE BUSINESS OF BANKING OR PROVIDIN G CREDIT FACILITIES TO ITS MEMBERS, OR (II) A COTTAGE INDUSTRY, OR (III) THE MARKETING OF AGRICULTURAL PRODUCE GROWN B Y ITS MEMBERS, OR] (IV) THE PURCHASE OF AGRICULTURAL IMPLEMENTS, SEEDS , LIVESTOCK OR OTHER ARTICLES INTENDED FOR AGRICULTUR E FOR THE PURPOSE OF SUPPLYING THEM TO ITS MEMBERS, OR (V) THE PROCESSING, WITHOUT THE AID OF POWER, OF TH E AGRICULTURAL PRODUCE OF ITS MEMBERS, [OR] (VI) THE COLLECTIVE DISPOSAL OF THE LABOUR OF ITS M EMBERS, OR (VII) FISHING OR ALLIED ACTIVITIES, THAT IS TO SAY, THE CATCHING, CURING, PROCESSING, PRESERVING, STORING O R MARKETING OF FISH OR THE PURCHASE OF MATERIALS AND EQUIPMENT IN CONNECTION THEREWITH FOR THE PURPOSE O F SUPPLYING THEM TO ITS MEMBERS,] ITA NO. 5241/DEL/2016 U.S. NAGAR DUDGH UTPADAK SHE SANGTH LTD. 5 THE WHOLE OF THE AMOUNT OF PROFITS AND GAINS OF BU SINESS 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 RUL ES 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 ACTIVIT IES; (2) THE CO-OPERATIVE CREDIT SOCIETIES WHICH PROVIDE FINANCIAL ASSISTANCE TO THE SOCIETY; (3) THE STATE GOVERNMENT;] (B) IN THE CASE OF A CO-OPERATIVE SOCIETY, BEING A PRIMARY SOCIETY ENGAGED IN SUPPLYING MILK, OILSEEDS, FRUITS OR VEGETABLES RAISED OR GROWN BY ITS MEMBERS TO (I) FEDERAL CO-OPERATIVE SOCIETY, BEING A SOCIETY E NGAGED IN THE BUSINESS OF SUPPLYING MILK, OILSEEDS, FRUITS, O R VEGETABLES, AS THE CASE MAY BE; OR (II) THE GOVERNMENT OR A LOCAL AUTHORITY; OR (III) A GOVERNMENT COMPANY AS DEFINED IN SECTION 61 7 OF THE COMPANIES ACT, 1956 (1 OF 1956), OR A CORPORATI ON ESTABLISHED BY OR UNDER A CENTRAL, STATE OR PROVINC IAL ACT (BEING A COMPANY OR CORPORATION ENGAGED IN SUPPLYIN G MILK, OILSEEDS, FRUITS OR VEGETABLES, AS THE CASE M AY BE, TO THE PUBLIC), THE WHOLE OF THE AMOUNT OF PROFITS AND GAINS OF SUC H BUSINESS;] (C) IN THE CASE OF A CO-OPERATIVE SOCIETY ENGAGED I N ACTIVITIES OTHER THAN THOSE SPECIFIED IN CLAUSE (A) OR CLAUSE (B) (EITHER INDEPENDENTLY OF, OR IN ADDITION TO, AL L OR ANY OF ITA NO. 5241/DEL/2016 U.S. NAGAR DUDGH UTPADAK SHE SANGTH LTD. 6 THE ACTIVITIES SO SPECIFIED), SO MUCH OF ITS PROFIT S AND GAINS ATTRIBUTABLE TO SUCH ACTIVITIES AS [DOES NOT EXCEED, (I) WHERE SUCH CO-OPERATIVE SOCIETY IS A CONSUMERS' CO- OPERATIVE SOCIETY, [ONE HUNDRED] THOUSAND RUPEES; A ND (II) IN ANY OTHER CASE, [FIFTY] THOUSAND RUPEES. EXPLANATION.IN THIS CLAUSE, 'CONSUMERS' CO-OPERATI VE SOCIETY' MEANS A SOCIETY FOR THE BENEFIT OF THE CONSUMERS;] (D) IN RESPECT OF ANY INCOME BY WAY OF INTEREST OR DIVIDENDS DERIVED BY THE CO-OPERATIVE SOCIETY FROM ITS INVESTMENTS WITH ANY OTHER CO-OPERATIVE SOCIETY, TH E WHOLE OF SUCH INCOME; (E) IN RESPECT OF ANY INCOME DERIVED BY THE CO-OPER ATIVE SOCIETY FROM THE LETTING OF GODOWNS OR WAREHOUSES86 FOR STORAGE, PROCESSING OR FACILITATING THE MARKETING O F COMMODITIES86, THE WHOLE OF SUCH INCOME; (F) IN THE CASE OF A CO-OPERATIVE SOCIETY, NOT BEIN G A HOUSING SOCIETY OR AN URBAN CONSUMERS' SOCIETY OR A SOCIETY CARRYING ON TRANSPORT BUSINESS OR A SOCIETY ENGAGED IN THE PERFORMANCE OF ANY MANUFACTURING OPERATIONS WITH THE AID OF POWER, WHERE THE GROSS T OTAL INCOME DOES NOT EXCEED TWENTY THOUSAND RUPEES, THE AMOUNT OF ANY INCOME BY WAY OF INTEREST ON SECURITI ES [***] OR ANY INCOME FROM HOUSE PROPERTY CHARGEABLE UNDER SECTION 22. EXPLANATION.FOR THE PURPOSES OF THIS SECTION, AN ' URBAN CONSUMERS' CO-OPERATIVE SOCIETY' MEANS A SOCIETY FO R THE BENEFIT OF THE CONSUMERS WITHIN THE LIMITS OF A MUN ICIPAL ITA NO. 5241/DEL/2016 U.S. NAGAR DUDGH UTPADAK SHE SANGTH LTD. 7 CORPORATION, MUNICIPALITY, MUNICIPAL COMMITTEE, NOT IFIED AREA COMMITTEE, TOWN AREA OR CANTONMENT. 11. ON GOING THROUGH THE ARGUMENTS OF BOTH THE PART IES AND FACTS ON RECORD, WE FIND THAT THE ASSESSEE IS A REG ISTERED CO- OPERATIVE SOCIETY REGISTERED ON 20.02.2008 HAVING 2 6,761 MEMBERS ENGAGED IN SUPPLYING MILK. THUS, THE ASSESS EE HAS FULFILLED THE REQUISITIONS AS PER THE PROVISIONS OF SECTION 80P(2) VIZ; A CO-OPERATIVE SOCIETY, PRIMARY SOCIETY, REGIS TERED UNDER THE CO-OPERATIVE SOCIETIES ACT, SUPPLYING MILK AND HENCE THE WHOLE OF THE AMOUNT OF THE PROFITS AND GAINS OF THE BUSINESS ARE ALLOWED TO BE DEDUCTED FROM THE GROSS TOTAL INCOME. 12. SINCE, WE HAVE HELD THAT THE WHOLE OF THE PROFI TS OF THE ASSESSEE ARE DEDUCTIBLE U/S 80P(2), ANY ADJUDICATIO N ON THE OTHER GROUNDS OF DISALLOWANCES TAKEN UP BY THE ASSE SSEE BECOMES INFRUCTUOUS AND HENCE, NOT RESORTED TO. 13. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 22/09/2021. SD/- SD/- (AMIT SHUKLA) ( DR. B. R. R. KUMAR) JUDICIAL MEMBER ACC OUNTANT MEMBER DATED: 22/09/2021 *SUBODH* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR