The Dangri Co-operative Agricultural Service Society Ltd., Hamirpur V. ITO, HAMIRPUR

ITA 648/CHANDI/2019

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 7815 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 10 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-03-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 18-03-2021
• Assessment Year: 2012-2013
• Appeal Filed On: 06-05-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ASHOK KHANNA
• Keywords: Earning of tax free income; Set aside
• Section: 80P

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENCH SMC CHANDIGARH !', # BEFORE: SMT. DIVA SINGH, JM ./ ITA NO. 648/CHD/2019 / ASSESSMENT YEAR : 2012-13 THE DANGRI CO-OPERATIVE AGRICULTURAL SERVICE SOCIETY LTD., DANGRI, TEHSIL NADAUN, HAMIRPUR. THE ITO, HAMIRPUR (HP). ./ PAN NO: AABAT1365R / APPELLANT / RESPONDENT / ASSESSEE BY : SHRI ALOK KRISHAN, C.A. ! / REVENUE BY : SHRI ASHOK KHANNA, ADDL. CIT ' # $/ DATE OF HEARING : 18.03.2021 %&'( $/ D ATE OF PRONOUNCEMENT : 26.03.2021 HEARING CONDUCTED VIA WEBEX $%/ ORDER THE PRESENT APPEAL HAS BEEN FILED BY THE ASSESSEE WHEREIN THE CORRECTNESS OF THE ORDER DATED 20.02.2019 OF CI T(A), PALAMPUR PERTAINING TO 2012-13 ASSESSMENT YEAR IS A SSAILED ON THE FOLLOWING GROUNDS : 1. THAT THE COMMISSIONER OF INCOME TAX (APPEAL) HAS ER RED IN LAW AND FACTS BY DISALLOWING THE DEDUCTION UNDER SECTIO N 80P(4) OF THE INCOME TAX ACT, 1961 BY DEFINING IT AS A PRIMARY CO -OPERATIVE BANK. 2. THAT THE CO-OPERATIVE SOCIETY IS ENGAGED IN 'CARRYI NG ON THE BUSINESS OF BANKING OR PROVIDING CREDIT FACILITIES TO ITS MEMBERS' WHICH QUALIFIES THE PROVISION FOR DEDUCTION UNDER S ECTION 80P(2)(A)(I) AND 80P(2)(D). ITA 648/CHD/2019 A.Y. 2012-13 PAGE 2 OF 5 3. THAT THE COMMISSIONER OF INCOME TAX (APPEAL) IS NOT JUSTIFIED IN DISALLOWING THE AMOUNT OF RS. 2,92,749/- BY IGNORIN G THE PROVISIONS OF 80P. 4. THAT THE IMPUGNED DEMAND AND ORDER IS VOID-AB-INITI O, IS LIABLE TO BE QUASHED AND SHOULD NOT BE INSISTED UPON. 5. THAT THE APPELLANT CRAVES TO ADD, AMEND, ALTER OR W ITHDRAW ANY GROUND OR GROUND OF APPEAL. 6. THAT STAY SHOULD BE GRANTED FOR RECOVERY DURING PEN DENCY OF APPEAL. 2. THE LD. AR INVITING ATTENTION TO THE ASSESSMENT ORDER PASSED U/S 147/143(3) AND THE IMPUGNED ORDER SUBMITTED THA T THERE ARE CERTAIN FACTUAL INACCURACIES WHICH HAVE CREPT INTO THE ORDERS OF THE TAX AUTHORITIES. INVITING ATTENTION TO PAGE 2 OF THE ASSESSMENT ORDER PARA 3 IT WAS HIS SUBMISSION THAT THE LINE OF QUERY TAKEN BY THE AO WOULD SHOW THAT THE TAX AUTHO RITIES HAVE PROCEEDED ON THE FOOTING THAT THE ASSESSEE IS A CO- OPERATIVE BANKING SOCIETY AND THUS APPLIED THE CASE LAWS WHIC H WERE NOT RELEVANT OR APPLICABLE TO THE FACTS OF THE ASSESSEE 'S CASE. IN THE FACTS OF THE PRESENT CASE, IT WAS HIS SUBMISSION TH AT NO LICENCE UNDER THE RBI FOR BANKING ACTIVITY HAS BEEN OBTAINE D BY THE ASSESSEE AND IN CASE THE ASSESSEE WAS TO BE TREATED AS A BANKING SOCIETY, THEN THE NECESSARY LICENCE FOR CARRYING OU T THE BANKING ACTIVITIES SHOULD BE AVAILABLE. THE ASSESSEE IS AN AGRICULTURAL CO-OPERATIVE SOCIETY ALSO TASKED WITH PDS ACTIVITIE S. REFERRING TO THE ORDERS PASSED, IT WAS HIS SUBMISSION THAT THE A SSESSEE SOCIETYS CASE WAS HANDLED BY SOME OTHER COUNSEL WH O WAS NOT FULLY CONVERSANT WITH THE FACTUAL INTRICACIES OF TH E CASE INVOLVED ITA 648/CHD/2019 A.Y. 2012-13 PAGE 3 OF 5 AND THEY FAILED TO BRING THESE TO THE NOTICE OF THE LD. CIT(A). IN THE SITUATION, IT WAS HIS LIMITED PRAYER THAT THE M ATTER MAY BE REMANDED BACK TO THE FILE OF THE CIT(A) IN ORDER TO PERMIT THE ASSESSEE AN OPPORTUNITY TO ADDRESS THE CORRECT FACT S. 3. THE LD. SR.DR CONSIDERING THE SUBMISSIONS DID NO T OBJECT TO THE SAID PRAYER. 4. I HAVE HEARD THE SUBMISSIONS AND PERUSED THE MAT ERIAL ON RECORD. IN THE FACTS OF THE PRESENT CASE, IT IS SE EN THAT THE CIT(A) HAS PASSED THE FOLLOWING ORDER ON FACTS : 4.7 I HAVE CAREFULLY CONSIDERED THE CONTENTIONS O F THE APPELLANT ALONGWITH JUDICIAL DECISIONS CITED ON THIS ISSUE AND FIND THA T APPELLANT SOCIETY IS PRIMARILY A AGRICULTURAL CO-OPERATIVE SERVICE SOCIE TY AND ENGAGED IN SALE OF PDS AND NON-PDS ITEMS. HOWEVER, IT IS NOT DENIED BY THE APPELLANT SOCIETY THAT IT IS ACCEPTING DEPOSITS FROM NOMINAL AS WELL AS NON-MEMBERS AND GIVING FUNDS TO THEM ON INTEREST BASIS. THIS FACT HAS ALSO BEEN ACCEPTED BY THE SOCIETY BOTH AT THE STAGE OF ASSESSMENT AS WELL AS IN THE C OURSE OF PRESENT PROCEEDINGS. THEREFORE, I HOLD THAT APPELLANT IS NOT ENTITLED TO THE CLAIM OF DEDUCTION UNDER SECTION 80 P(2)(A)(I) OF THE IT ACT ON THIS INCOME. 4.8 FURTHER, I FIND THAT HON'BLE SUPREME COURT HAS RECE NTLY IN THE CASE OF CITIZEN COOPERATIVE SOCIETY LTD IN CIVIL APPEAL NUM BER 10245 OF 2017 HAS HELD THAT WHERE INTEREST HAS BEEN EARNED ON INVESTM ENTS MADE BY THE SOCIETY THEN THE CLAIM OF EXEMPTION UNDER SECTION 80 P CANN OT BE ALLOWED TO THE COOPERATIVE SOCIETY, WHICH IS MEANT ONLY FOR ITS ME MBERS AND PROVIDING CREDIT FACILITIES TO ITS MEMBERS. THE CONTENTION OF THE AP PELLANT THAT FUNDS WERE RECEIVED FROM THE MEMBERS HAS BEEN CONSIDERED BUT T HE FACT THAT INTEREST INCOME HAS BEEN EARNED ON ACCOUNT OF INVESTMENTS MA DE WITH OTHER PERSONS HAS NOT BEEN DENIED. 4.9 THUS, IN VIEW OF THE ABOVE MENTIONED FACTS AND JUDI CIAL DECISIONS, I HOLD THAT APPELLANT IS NOT ENTITLED TO THE CLAIM OF DEDUCTION UNDER SECTION 80 P(2)(A)(I) OF THE IT ACT. AS REGARDS THE CLAIM OF D EDUCTION UNDER SECTION 80 P(2)(D) OF THE IT ACT IS CONCERNED AND ALSO THE SET OFF OF COST OF FUNDS AGAINST THE INTEREST INCOME EARNED IS CONCERNED, I AGREE WI TH THE REASONS GIVEN BY THE AO IN THE ASSESSMENT ORDER, IN THE ABSENCE OF ANY C ONTROVERTING FACTS BEING BROUGHT ON RECORD BY THE APPELLANT. ACCORDINGLY, I CONFIRM THE ADDITION OF RS. 2,92,749 MADE BY THE AO ON THIS ACCOUNT. ITA 648/CHD/2019 A.Y. 2012-13 PAGE 4 OF 5 4.10 FURTHER, 1 FIND THAT AN ADDITION OF RS. 63,048 HAS BEEN MADE BY THE AO ON ACCOUNT OF PROVISIONS MADE BY THE APPELLANT O N ACCOUNT OF NPAS. THE ADDITION WAS MADE ON THE GROUND THAT THIS PROVISION IS A CONTIGENT LIABILITY WHICH IS NOT ALLOWABLE UNDER THE IT ACT. THE APPELL ANT HAS SUBMITTED IN THE COURSE OF PRESENT PROCEEDINGS THAT NPA PROVISION MA DE IN THE ACCOUNTS WHICH DOES NOT CHANGE THE CHARACTER OF INCOME. IT IS SUBM ITTED THAT THE PROVISION MADE ON ACCOUNT OF SAID NPAS HAS REDUCED THE EXEMPT INCOME. IT IS ALSO STATED THAT INCOME OF THE CO-OPERATIVE SOCIETY IS D EDUCTIBLE U/S 80P(2)(A)(I) AND 80P(2)(A)(D) SO IF THE CLAIM OF DEDUCTION OF RS .63,048 IS ALLOWED THEN DEDUCTION U/S 80P WILL AUTOMATICALLY BE INCREASED B Y THIS AMOUNT. 4.11 HAVING CONSIDERED THE MATERIAL AVAILABLE ON RECORD, I FIND THAT AO WAS JUSTIFIED IN DISALLOWING THE CLAIM OF NPA PROVI SION AS SAME IS NOT ALLOWABLE AS DEDUCTION. HOWEVER, I FIND FORCE IN TH E CONTENTIONS OF THE APPELLANT THAT DISALLOWANCE OF PROVISION MADE ON AC COUNT OF NPAS WILL ENHANCE THE CLAIM OF DEDUCTION U/S 80P (2)(A) OF TH E IT ACT. THE AO IS BEING DIRECTED TO RE-COMPUTE THE INCOME OF THE APPELLANT AFTER ALLOWING THE DEDUCTION U/S 80 P (2)(A) OF THE IT ACT. 4.1 I FIND THAT THE ABOVE FINDING IN THE ABSENCE OF ANY DISCUSSION ON WHAT ARGUMENTS, IF ANY WERE ADVANCED BEFORE THE CIT(A) IS NOT OF MUCH HELP. THE LD. AR HAS ARGUED THAT THE ORDERS HAVE BEEN PASSED ON ACCOUNT OF MISTAKE OF TH E COUNSEL IN NOT ADDRESSING THE INACCURATE AND IRRELEVANT FACTS WHICH HAVE CREPT IN. ACCORDINGLY, AFTER HEARING THE PARTIES I N THE PECULIAR FACTS AND CIRCUMSTANCES, AS THEY STAND, THE IMPUGNE D ORDER IS SET ASIDE RESTORING THE ISSUE BACK TO THE FILE OF T HE CIT(A) WITH THE DIRECTION TO THE ASSESSEE TO PLACE FULL AND COM PLETE FACTS BEFORE THE FIRST APPELLATE AUTHORITY IN ORDER TO FA CILITATE A PROPER REASONED ORDER ON MERITS. IT IS MADE CLEAR THAT THE OPPORTUNITY SO PROVIDED TO THE ASSESSEE SHOULD NOT BE ABUSED AND F ULL AND PROPER COMPLIANCE BE MADE BEFORE THE SAID AUTHORITY . SAID ORDER ITA 648/CHD/2019 A.Y. 2012-13 PAGE 5 OF 5 WAS PRONOUNCED AT THE TIME OF VIRTUAL HEARING ITSEL F IN THE PRESENCE OF THE PARTIES VIA WEBEX. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON 26 TH MARCH,2021. SD/- ( !' ) (DIVA SINGH) # / JUDICIAL MEMBER ' ( / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. / CIT 4. ( )/ THE CIT(A) 5. , , / DR, ITAT, CHANDIGARH 6. / GUARD FILE / BY ORDER, / ASSISTANT REGISTRAR