Kolhapur Udyam Co.op. Society Ltd., Kolhapur V. Income-tax Officer,

ITA 770/PUN/2014

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 9600 (ITAT-PUNE)
• Duration Of Justice: 3 year(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-04-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Next Hearing Date: 17-04-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 16-04-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ANIL CHAWARE
• Keywords: Principle of natural justice
• Section: 143(3); 234B; 263; 154

Judgement Text

- IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH SMC , PUNE , BEFORE MS. SUSHMA CHOWLA, JM . / ITA NO. 655 /P U N/201 4 / ASSESSM ENT YEAR : 20 09 - 10 THE INCOME TAX OFFICER, WARD 1(3), KOLHAPUR . / APPELLANT VS. M/S. KOLHAPUR UDYAM CO - OP SOCIETY LTD., 1328 / 25 , A , Y.P.POWARNAGAR, KOLHAPUR PAN: AAAAK0364N . / RESPONDENT . / ITA N O. 770 /P U N/20 1 4 / ASSESSMENT YEAR: 2010 - 11 M/S.KOLHAPUR UDYAM CO.OP SOCIETY LTD ., 1328 / 25, A , Y.P.POWAR N AGAR, TAL: KOLHAPUR, KOLHAPUR 416 008 PAN: AAAAK0364N . / APPELLANT VS. THE INCOME TAX OFFICER, WARD 1(3), KOLHA PUR . / RESPONDENT / ASSESSEE BY : SHRI M.K.KULKARNI / REVENUE BY : SHRI ANIL CHAWARE / DATE OF HEARING : 17 . 0 4 .201 7 / DATE OF PRONOUNCEMENT: 28 . 0 4 .201 7 ITA NO.655/PUN/2014 & ITA NO.770/PUN/2014 M/S. KOLHAPUR UDYAM CO.OP SOCIETY LTD. 2 / ORDER PER SUSHMA CHOWLA, J M : OUT OF TWO APPEALS, ONE APPEAL FILED BY THE ASSESSEE IS AGAINST THE ORDER OF CIT(A), KOLHAPUR, DATED 15.01.2014 RELATING TO ASSESSMENT YEAR 2010 - 11 AGAINST THE ORDER PASSED UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT ). ANOTHER APPEAL FILED BY THE REVENUE IS AGAINST THE ORDER OF CIT(A), KOLHAPUR, DATED 29.01.2014 RELATING TO ASSESSMENT YEAR 2009 - 10 AGAINST THE ORDER PASSED UNDER SECTION 154 OF THE ACT. 2. BOTH THE APPEALS RELATING T O THE SAME ASSESSEE WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. 3 . THE REVENUE IN ITA NO.655/PUN/2014 , RELATING TO ASSESSMENT YEAR 2009 - 10 HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: - 1. ON THE F ACTS AND IN LAW, THE CIT(A) ERRED IN CANCELLING THE ORDER PASSED U/S 154 OF INCOME - TAX ACT, 1961, WITHOUT GOING INTO MERITS OF THE CASE, MERELY HOLDING THAT MISTAKE TO BE RECTIFIED MUST BE ONE APPARENT FROM RECORD, RELYING ON THE HBLE SUPREME COURT DECISI ON IN THE CASES OF CIT V/S VENKATESWARA OIL MILLS [1973] 32 STC 660. 2. ON THE FACTS AND IN LAW, THE CIT(A) ERRED IN CANCELLING THE ORDER PASSED U/S 154 OF THE INCOME - TAX ACT, 1961; WHEN, THERE ARE DIRECTIONS OF THE HBLE APPEX COURT IN FAVOUR OF THE DEPA RTMENT, PER JUDGEMENTS DELIVERED IN THE CASE OF S.T. BALARAM, ITO V/S VOLKARI BROS., [1971](82 ITR 50(SC) AND K.VENKATACHALAM, ITO V/S BOMBAY DYEING & MFG. CO. LTD., [1958] 34 ITR 143) (SC). 3. ON THE FACTS AND IN LAW, THE CIT(A) OUGHT TO HAVE CONFIRMED T HE ORDER PASSED U/S 154 OF THE ACT IN THE LIGHT OF THE RATIO OF THE HBLE SUPREME COURT LAID DOWN IN THE CASES OF T.S.BALARAM, ITO V/S VOLKARI BROS., [1971] (82 IR50 (SC) AND K. VENKATACHALAM, ITO V/S BOMBAY DYEING & MFG CO. LTD., [1958] 34 ITR 143) (SC). WITHOUT PREJUDICE TO ABOVE 4. ON THE FACTS AND IN LAW, THE MATTER BE RESTORED BACK TO THE FILE OF THE CIT (A) TO ADJUDICATE UPON THE MERITS OF THE CASE IN THE LIGHT OF THE RATIO ITA NO.655/PUN/2014 & ITA NO.770/PUN/2014 M/S. KOLHAPUR UDYAM CO.OP SOCIETY LTD. 3 OF THE HBLE SUPREME COURT LAID DOWN IN THE CASES OF T.S. BALARAM, ITO V/S VALKARI BROS., [1971] (82 ITR 50 (SC) AND K. VENKATACHALAM, ITO V/S BOMBAY DYEING & MFG. CO. LTD., [1958] 34 ITR 143) (SC). 5. ON THE FACTS AND IN LAW DISCUSSED AS ABOVE, IN THE INTEREST OF NATURAL JUSTICE THE MATTER MAY KINDLY TO BE RESTORED BACK TO THE FILE OF THE AO WITH DIRECTIONS TO CONSIDER THE FACTS OF THE CASE DE NOVO. 6. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE APPELLANT DENIES HIS LIABILITY TO PAY INTEREST U/S 234 (A); U/S 234(B) U/S 234 (C) * U/S 234D OF THE INCOME TA X ACT, 1961 AND SAME MAY BE DELETED. 7. THE APPELLANT CRAVES TO LEAVE, ADD/AMEND OR ALTER ANY OF THE ABOVE GROUND OF APPEAL. 4. THE ASSESSEE IN ITA NO.770/PUN/2014 , RELATING TO ASSESSMENT YEAR 2010 - 11 HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: - 1. ON T HE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) KOLHAPUR WAS NOT JUSTIFIED IN REJECTING THE CLAIM OF DEDUCTION AGAINST THE PRINCIPLES OF LAW MADE UNDER SECTION 80P(2) (E) OF THE ACT OF RS.4039790/ - . THE CLAIM BE ALLOWED IN FULL. 2. ON TH E FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE HON CIT(A) KOLHAPUR WAS NOT JUSTIFIED IN DISALLOWING THE CLAIM UNDER SECTION 80P (2) (A) (I) OF THE ACT OF RS.7456/ - . THE CLAIM BE ALLOWED IN FULL. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE HON . CIT(A) KOLHAPUR WAS NOT JUSTIFIED IN DISALLOWING VARIOUS EXPENSES WHICH ARE PERTAINING TO BUSINESS AND ALLOWABLE UNDER PROVISIONS OF THE INCOME TAX ACT., OUT OF CEREMONY EXPENSES OF RS.107210/ - , OUT OF MEDICAL EXPENSES RS.50000/ - , OUT OF OTHER EXPENSES R S.50000/ - , OUT OF TELEPHONE EXPENSES RS.15000/ - , THE EXPENSES ARE RELATING TO BUSINESS, WHICH MAY BE ALLOWED IN FULL. 4. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND THE CASE AND IN LAW THE LEVY OF INTEREST U/S 234 A, 234 B, AND 234 C IS NOT JUSTIFIED. THE LEVY OF INTEREST BE DELETED. 5. THE APPELLANT CRAVES / LEAVE TO ADD, AMEND OR ALTER ANY OF THE ABOVE GROUNDS OF APPEAL. ITA NO.770/PUN/2014, RELATING TO ASSESSMENT YEAR 2010 - 11: ASSESSEES APPEAL 5. THE ISSUE RAISED BY GROUND OF APPEAL NO.1 IN ASSE SSEES APPEAL IS AGAINST THE CLAIM OF DEDUCTION UNDER SECTION 80P(2)(E) OF THE ACT ON THE INCOME RECEIVED BY THE ASSESSEE AT RS.40,39,790/ - . ITA NO.655/PUN/2014 & ITA NO.770/PUN/2014 M/S. KOLHAPUR UDYAM CO.OP SOCIETY LTD. 4 6. BRIEFLY, IN THE FACTS OF THE CASE, THE ASSESSEE WAS INDUSTRIAL COOPERATIVE SOCIETY CARRYING OUT THE ACTIVITIES T OWARDS PROMOTION OF INDUSTRIAL ACTIVITY FOR ITS MEMBERS. THE ASSESSEE WAS ALSO TRADING IN RAW MATERIAL SUCH AS COKE, SCRAP, PIG IRON, M.S. SCRAP, ETC. WITH ITS MEMBERS AND OTHERS. THE ASSESSEE HAD BECOME INDENTING AGENT FOR OTHER CONCERNS PROVIDING SIMIL AR RAW MATERIALS TO ITS MEMBERS AND OTHER CONCERNS IN KOLHAPUR REGION. THE ASSESSEE FILED THE RETURN OF INCOME AT NIL AFTER CLAIMING THE DEDUCTION UNDER SECTION 80P OF THE ACT AT RS.53,44,470/ - . DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTED THAT THE ASSESSEE HAD PROVIDED STOCK GODOWN AND STORAGE FACILITIES TO SESA INDUSTRIES AND SESA GOA LTD. IN THESE GODOWNS, RAW MATERIALS, SCRAP, PIG IRON, COKE, ETC. WERE KEPT AND SUPPLIED TO THE MEMBERS OF THE SOCIETY. SO, THE FACILITY WAS CLAIMED TO BE USED ONLY FOR THE MEMBERS OF THE SOCIETY. THE ASSESSEE HAD EARNED COMMISSION OF RS.40,39,790/ - FROM THIS BUSINESS WHICH WAS CLAIMED AS EXEMPT UNDER SECTION 80P(2)(E) OF THE ACT, CLAIMING THE INCOME TO BE DEPORT MANAGEMENT CHARGES. THE ASS ESSING OFFICER FURTHER NOTED FROM THE BOOKS OF ACCOUNT THAT THE ASSESSEE HAD PURCHASED RAW MATERIAL OF PIG IRON, COKE, ETC. AND SOLD THE SAME TO ITS MEMBERS. FOR THIS PURPOSE, THE ASSESSEE HAD DEBITED AN AMOUNT OF RS.7,23,429/ - AS SOCIETY DEPOT EXPENSES . THE ASSESSEE HAD PURCHASED COKE FOR RS.2,53,97,125/ - , MEDICINES FOR RS.7,79,378/ - , WHOLESALE MEDICINES RS.3,51,204/ - AND SOLD COKE FOR RS.2,75,70,958/ - , MEDICINES RS.9,74,705/ - AND WHOLESALE MEDICINES RS.3,51,546/ - . AS SUCH, THE ASSESSING OFFICER INFER RED THAT THE ASSESSEE WAS DOING TRADING IN THESE MATERIALS AND THE RESULTANT PROFITS IT WAS CLAIMING AS EXEMPT UNDER SECTION 80P OF THE ACT, WHICH WA S NOT ELIGIBLE. THE ASSESSING OFFICER THUS, DISALLOWED THE CLAIM OF DEDUCTION UNDER SECTION 80P(2)(E) OF T HE ACT AT RS.40,39,790/ - . ITA NO.655/PUN/2014 & ITA NO.770/PUN/2014 M/S. KOLHAPUR UDYAM CO.OP SOCIETY LTD. 5 7. BEFORE THE CIT(A), THE ASSESSEE CONTENDED THAT IT WAS STORING ITS OWN GOODS I.E. STOCK IN TRADE IN THE WAREHOUSE. IT WAS NOT DOING TRADING BUSINESS AND WAS RECEIVING CHARGES FOR ITS MARKETING ACTIVITIES AND FACILITATING THE SA ME. THE SOCIETY WAS NOT RENDERING SERVICES TO ITSELF AND STORED GOODS WERE NOT ITS PROPERTY. THE CIT(A) OBSERVED THAT THE ISSUE ARISING IN THE PRESENT APPEAL WAS THE SAME AS IN ASSESSEES OWN CASE RELATING TO ASSESSMENT YEAR 2006 - 07 AND AFTER DELIBERATIN G UPON THE ISSUE, THE CIT(A) HELD THE ACTIVITY CARRIED ON BY THE ASSESSEE WAS THAT OF AN INDENTING AGENT FOR ITS PRINCIPALS AND NOT OF LETTING OF GODOWNS OR WAREHOUSES FOR STORAGE, PROCESSING OR FACILITATING THE MARKETING OF COMMODITIES PURPOSES AS REQUIRE D FOR CLAIMING THE DEDUCTION UNDER SECTION 80P(2)(E) OF THE ACT. THE CIT(A) UPHELD THE ORDER OF ASSESSING OFFICER IN TRADING THE DEPOT MANAGEMENT CHARGES AS COMMISSION OR BROKERAGE AND HELD THE ASSESSEE NOT ENTITLED TO THE CLAIM OF DEDUCTION UNDER SECTION 80P(2)(E) OF THE ACT. 8. THE ASSESSEE IS IN APPEAL AGAINST THE ORDER OF CIT(A) IN REJECTING THE CLAIM OF DEDUCTION TO THE EXTENT OF RS.40,39,790/ - . 9. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT THE ISSUE IS COVERED BY THE OR DER OF TRIBUNAL IN ASSESSEES OWN CASE RELATING TO ASSESSMENT YEARS 2004 - 05 AND 2005 - 06 WHERE THE MATTER HAS BEEN RESTORED BACK TO THE FILE OF ASSESSING OFFICER. 10. THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE ON THE OTHER HAND, PLACED RELIANC E ON THE ORDERS OF AUTHORITIES BELOW. ITA NO.655/PUN/2014 & ITA NO.770/PUN/2014 M/S. KOLHAPUR UDYAM CO.OP SOCIETY LTD. 6 11. ON PERUSAL OF RECORD AND AFTER HEARING THE RIVAL CONTENTIONS, THE ISSUE WHICH HAS BEEN RAISED BY WAY OF GROUND OF APPEAL NO.1 IS AGAINST THE REJECTION OF CLAIM OF DEDUCTION UNDER SECTION 80P(2)(E) OF THE ACT AT RS .40,39,790/ - . THE ASSESSING OFFICER HAD HELD THE ASSESSEE NOT ELIGIBLE TO THE SAID CLAIM AS THE ASSESSEE WAS DOING PURCHASE AND SALE OF TRADING ITEMS AND SINCE THE ASSESSEE HAD NOT EARNED INCOME FROM LETTING OF THE GODOWNS OR WAREHOUSES, AS ENVISAGED IN S ECTION 80P(2)(E) OF THE ACT, THE CLAIM OF THE ASSESSEE WAS REJECTED. THE CIT(A) UPHELD THE DISALLOWANCE MADE BY THE ASSESSING OFFICER OBSERVING AS UNDER: - 8. THE CONTENTION OF THE APPELLANT IS DULY CONSIDERED. THIS ISSUE HAD ALSO ARISEN IN AY 2006 - 07 IN APPELLANT'S OWN CASE. FACTS ARE SAME AS ARE BEING DISCUSSED BELOW. I FIND THAT THE APPELLANT DOES NOT FULFILL THE PRE - REQUISITE CONDITIONS, I.E. THE CO - OPERATIVE SOCIETY MUST HAVE INCOME FROM LETTING OF GODOWNS OR WAREHOUSES, AS CLAIMED BY IT FOR THE RE ASON THAT APPELLANT DOES NOT DERIVE ANY INCOME FROM LETTING OF GODOWNS OR WAREHOUSES FOR STORAGE, PROCESSING OR FACILITATING THE MARKETING OF COMMODITIES, BUT IN FACT, THE APPELLANT IS IN RECEIPT OF COMMISSION IN THE CAPACITY OF INDENTING AGENT, AS REVEALE D FROM THE AGREEMENT ENTERED BY IT WITH SESA KEMBIA COKE CO. LTD AND SESA INDUSTRIES AND FROM THE TDS CERTIFICATE ISSUED BY THEM WHICH CLEARLY SHOWS THAT THE PAYMENT RECEIVED BY THE APPELLANT IS PAYMENT AS COMMISSION AND BROKERAGE AND NOT AS RENT. IF THE A PPELLANT IS NOT DOING TRADING THEN IT HAS NOT EXPLAINED HOW AS PER ITS BOOKS OF ACCOUNTS, SALES AND PURCHASE OF COKE, MEDICINES HAVE BEEN DONE. THE AGREEMENT EXECUTED WITH SESA INDUSTRIES LTD. AND SESA KEMBIA COKE LTD. WAS FOR APPOINTMENT OF THE APPELLANT SOCIETY AS CONSIGNMENT STOCKIST WHEREIN THERE IS NO MENTION OF ANY WAREHOUSING ACTIVITY. FURTHER, THE REMUNERATION PART IN THE AGREEMENT INDICATES THAT COMMISSION IS PAYABLE BASED ON NUMBER OF DAYS TAKEN TO REALIZE THE SALE PROCEEDS WITH RESPECT TO THE QUA NTITY OF GOODS HANDLED. THE BILLS RAISED BY THE APPELLANT SOCIETY INDICATE THAT INCREASE OR DECREASE IN VALUE OF BILL DEPENDS UPON THE TIME TAKEN TO REALIZE SALE PROCEEDS AND NOT ON THE QUANTITY HANDLED. WHEREAS IN THE CASE OF 'RENT', FIXED CHARGES ARE R ECEIVABLE FOR STORAGE OF GOODS IRRESPECTIVE OF TIME TAKEN FOR REALIZATION OF SALE PROCEEDS. A PROPERTY IS LET OUT AT A FIXED MONTHLY / YEARLY RENT AND RENT DOES NOT DEPEND ON QUANTITY STORED. CHARGES RECEIVED BY APPELLANT DEPEND ON HOW QUICKLY THE SALE PRO CEEDS ARE COLLECTED. IN VIEW OF THE ABOVE, IT IS CRYSTAL CLEAR THAT THE APPELLANT'S ACTIVITY IS NOTHING BUT THAT OF AN INDENTING AGENT FOR ITS PRINCIPALS AND NOT OF LETTING OF GODOWNS OR WAREHOUSES FOR STORAGE, PROCESSING OR FACILITATING THE MARKETING OF C OMMODITIES PURPOSES AS REQUIRED FOR CLAIMING DEDUCTION U/S 80P(2)(E) OF THE ACT. THEREFORE, I HOLD THAT THE ASSESSING OFFICER HAS RIGHTLY TREATED THE DEPOT MANAGEMENT CHARGES RECEIVED BY THE APPELLANT AS 'COMMISSION OR BROKERAGE' AND HAS RIGHTLY COME TO TH E CONCLUSION THAT THE APPELLANT IS NOT ENTITLED FOR THE DEDUCTION U/S 80P(2)(E) OF THE ACT. IN THE RESULT, THE GROUND OF APPEAL NO.1 STANDS DISMISSED. ITA NO.655/PUN/2014 & ITA NO.770/PUN/2014 M/S. KOLHAPUR UDYAM CO.OP SOCIETY LTD. 7 12. SIMILAR ISSUE AROSE BEFORE THE TRIBUNAL IN ASSESSMENT YEARS 2004 - 05 AND 2005 - 06 , WHEREIN IN ITA NO S.437 & 438/PN/2009, VIDE ORDER DATED 24.08.2011, THE EXERCISE OF JURISDICTION BY THE COMMISSIONER, KOLHAPUR UNDER SECTION 263 OF THE ACT ON SIMILAR ACCOUNTS OF DEPOT MANAGEMENT CHARGES WAS ADJUDICATED. THE TRIBUNAL VIDE PARA 8 AFTER DELIBERATING UP ON THE ISSUE HAD SET ASIDE THE ISSUE TO THE ASSESSING OFFICER TO LOOK INTO THE CLAIM OF ASSESSEE, HAVING REGARD TO THE TERMS AND CONDITIONS OF THE AGREEMENT WITH SESA GOA LTD. AND OTHER RELEVANT MATERIAL. THE ASSESSING OFFICER WAS DIRECTED TO EXAMINE THE CLAIM OF THE ASSESSEE FOR DEDUCTION UNDER SECTION 80P(2)(E) OF THE ACT. THE TRIBUNAL HAD TAKEN NOTE OF THE ORDER OF THE ASSESSING OFFICER RELATING TO ASSESSMENT YEAR 2006 - 07 AND HAD SET ASIDE THE ISSUE. THE FINDINGS OF TRIBUNAL AS PER PARA 8 ARE AS UNDER: - 8. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS. IN SO FAR AS THE ASSESSMENT YEAR 2004 - 05 IS CONCERNED, IT EMERGES THAT THE ASSESSMENT UNDER SECTION 143(3) OF THE ACT WAS FINALISED BY THE ASSESSING OFFICER ON 26.9.2006 WHEREIN THE INCOME HAS BEEN ASSES SED AT RS 8,58,032/ - , WHICH, INTER ALIA, INCLUDED THE CLAIM OF DEDUCTION UNDER SECTION 80P(2)(E) OF THE ACT IN RESPECT OF DEPOT MANAGEMENT CHARGES OF RS 26,83,432/ - . THE DEDUCTION UNDER SECTION 80P(2)(E) OF RS 26,83,432/ - WHICH HAS BEEN ALLOWED BY THE ASSE SSING OFFICER, WAS CONSIDERED BY THE COMMISSIONER AS ERRONEOUS AND, THEREFORE, HE HAS INVOKED THE PROVISIONS OF SECTION 263 AND DIRECTED THE ASSESSING OFFICER THAT SUCH DEDUCTION BE WITHDRAWN. SECTION 80P(2)(E) PERMITS CO - OPERATIVE SOCIETIES A DEDUCTION IN RESPECT OF ANY INCOME DERIVED FROM THE LETTING OF GODOWNS AND WAREHOUSES FOR STORAGE, PROCESSING OR FACILITATING THE MARKETING OF COMMODITIES. IN THIS CASE, THE ASSESSEE CLAIMED DEDUCTION UNDER SECTION 80P(2)(E) OF THE ACT IN RESPECT OF DEPOT MANAGEMENT C HARGES. SUCH CHARGES ARE CLAIMED TO HAVE BEEN RECEIVED FROM SESA GOA INDUSTRIES GROUP IN TERMS OF AN AGREEMENT DATED 01.07.2002. THE CASE SET - UP BY THE COMMISSIONER IS THAT THE RECEIPTS IN TERMS OF THE SAID AGREEMENT DO NOT QUALIFY FOR CLAIM OF DEDUCTION U NDER SECTION 80P(2)(E) OF THE ACT AND THAT IN THE ASSESSMENT PROCEEDINGS UNDER SECTION 143(3) OF THE ACT DATED 26.9.2006, THE ASSESSING OFFICER HAS NOT FACTUALLY ANALYSED SUCH ACTIVITIES OF THE ASSESSEE SOCIETY VIS - A - VIS THE REQUIREMENTS OF SECTION 80P(2)( E) OF THE ACT. THE SAID CHARGE MADE BY THE COMMISSIONER HAS BEEN EXAMINED BY US WITH REFERENCE TO THE DISCUSSION IN THE ASSESSMENT ORDER DATED 26.9.2006 AND ALSO THE SUBMISSIONS MADE BY THE ASSESSEE TO THE ASSESSING OFFICER DURING ASSESSMENT PROCEEDINGS, C OPY OF WHICH HAS BEEN PLACED IN THE PAPER BOOK AT PAGES 27 TO 28. ON THE BASIS OF THE AFORESAID, IT IS QUITE EVIDENT THAT THE TERMS AND CONDITIONS OF THE AGREEMENT AND THE NATURE OF INCOME HAS NOT BEEN EXAMINED BY THE ASSESSING OFFICER AT ANY STAGE DURING THE ASSESSMENT PROCEEDINGS CULMINATING IN ASSESSMENT ORDER DATED 26.9.2006. THE CHARGE OF THE COMMISSIONER CONTAINED IN THE IMPUGNED ORDER VIDE PARA 8 THAT ITA NO.655/PUN/2014 & ITA NO.770/PUN/2014 M/S. KOLHAPUR UDYAM CO.OP SOCIETY LTD. 8 APPARENTLY NO VERIFICATION HAS BEEN MADE IS QUITE TENABLE. MOREOVER, WE ALSO FIND THAT THE COMMISS IONER HAS REFERRED TO AN ASSESSMENT ORDER PASSED UNDER SECTION 143(3) OF THE ACT FOR THE SUBSEQUENT ASSESSMENT YEAR 2006 - 07 WHEREIN SUCH ACTIVITY HAS BEEN FACTUALLY ANALYSED AND IT HAS BEEN HELD BY THE ASSESSING OFFICER THEREIN THAT THE SAME DOES NOT FULFI LL THE REQUIREMENTS OF SECTION 80P(2)(E) OF THE ACT. WITHOUT GOING INTO THE MERITS, IT WOULD BE SUFFICIENT TO OBSERVE THAT IN THE INSTANT ASSESSMENT YEAR WHILE FRAMING THE ASSESSMENT UNDER SECTION 143(3) VIDE ORDER DATED 26.9.2006, THE NATURE OF SUCH INCOM E HAS NOT BEEN EXAMINED VIS - A - VIS REQUIREMENTS OF SECTION 80P(2)(E) OF THE ACT. THIS, IN OUR VIEW, HAS RENDERED THE ASSESSMENT ORDER ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF REVENUE WITHIN THE MEANING OF SECTION 263 OF THE ACT HAVING REGARD TO THE PAR ITY OF REASONING LAID DOWN BY THE HONBLE SUPREME COURT IN THE CASE OF MALABAR INDUSTRIAL CO. LTD., V.CIT 243 ITR 83 (SC). PER CONTRA, THE PLEA SET - UP BY THE ASSESSEE IS THAT HAVING REGARD TO THE TERMS AND CONDITIONS OF THE AGREEMENT, THE OBLIGATIONS OF TH E ASSESSEE ARE SUCH THAT THE SAME FULFILLS THE REQUIREMENTS OF SECTION 80P(2)(E) OF THE ACT AND THAT THE NOMENCLATURE OF THE INCOME CANNOT BE DETERMINATIVE OF THE TRANSACTION. THE LEARNED COUNSEL HAD ALSO BROUGHT TO OUR NOTICE THE WRITTEN SUBMISSIONS ADDRE SSED TO THE COMMISSIONER IN THIS REGARD, COPY OF WHICH HAS BEEN PLACED IN THE PAPER BOOK AT PAGES 1 TO 26 TO JUSTIFY THE MERITS OF THE CLAIM. AS AGAINST THIS, WE OBSERVE THAT THE COMMISSIONER HAS MERELY GONE BY THE DECISION OF THE ASSESSING OFFICER IN THE ASSESSMENT PROCEEDINGS FOR THE ASSESSMENT YEAR 2006 - 07 AND HAS DIRECTED MODIFICATION OF THE ASSESSMENT ORDER OF THE INSTANT ASSESSMENT YEAR WITHDRAWING THE CLAIM OF DEDUCTION UNDER SECTION 80P(2)(E) OF THE ACT. IN OUR VIEW, IT WOULD BE IN THE FITNESS OF TH INGS THAT THE CLAIM OF THE ASSESSEE ON MERITS IS EXAMINED HAVING REGARD TO THE TERMS AND CONDITIONS OF THE AGREEMENT WITH SESA GOA AND OTHER RELEVANT MATERIAL. FOR THIS PURPOSE, WE MODIFY THE IMPUGNED ORDER PASSED BY THE COMMISSIONER AS FOLLOWS. WHILE UPHO LDING THE INVOKING OF JURISDICTION BY THE COMMISSIONER UNDER SECTION 263 OF THE ACT AND SETTING ASIDE THE ASSESSMENT ORDER DATED 26.9.2006 (SUPRA),QUA THE ISSUE OF SECTION 80P(2)(E) OF THE ACT, WE DIRECT THE ASSESSING OFFICER TO EXAMINE THE CLAIM OF THE AS SESSEE FOR DEDUCTION UNDER SECTION 80P(2)(E) OF THE ACT ON THE BASIS OF SUBMISSIONS AND ANY OTHER MATERIAL WHICH THE ASSESSEE MAY DEEM PROPER TO SET UP BEFORE HIM. THE ASSESSEE SHALL BE AT LIBERTY TO PRODUCE SUCH MATERIAL AS IT WOULD DEEM FIT IN SUPPORT OF THE DEDUCTION CLAIMED UNDER SECTION 80P(2)(E) AMOUNTING TO RS 26,83,432/ - AND THE ASSESSING OFFICER SHALL PASS AN ORDER THEREAFTER AFRESH ON THIS ASPECT, IN ACCORDANCE WITH LAW. THEREFORE, WHILE UPHOLDING THE ACTION OF THE COMMISSIONER UNDER SECTION 263 O F THE ACT IN PRINCIPLE, THE SAME STANDS MODIFIED TO THE AFORESAID EXTENT. 13. SIMILAR ISSUE ALSO AROSE BEFORE THE TRIBUNAL IN ASSESSMENT YEARS 2002 - 03, 2003 - 04 AND 2006 - 07. THE TRIBUNAL WITH LEAD ORDER IN ITA NO.1682/PN/ 2013 RELATING TO ASSESSMENT YEAR 2002 - 03, ADJUDICATED THE ISSUE BY REFERRING TO THE FACTS AND ISSUE IN ITA NO.1988/PN/2013, RELATING TO ASSESSMENT YEAR 2003 - 04 AND APPLIED THE SAME PRINCIPLE TO THE APPEAL OF THE ASSESSEE IN ITA NO.1989/PN/2013, RELATING TO ASSESSMENT YEAR 2006 - 07, VIDE CO NSOLIDATED ORDER DATED 30.05.2016. THE CASE OF THE ASSESSEE BEFORE THE ITA NO.655/PUN/2014 & ITA NO.770/PUN/2014 M/S. KOLHAPUR UDYAM CO.OP SOCIETY LTD. 9 TRIBUNAL WAS THAT THE ISSUE WAS SQUARELY COVERED BY THE EARLIER ORDER OF THE TRIBUNAL IN ITA NOS.437 & 438/PN/2009, RELATING TO ASSESSMENT YEARS 2004 - 05 AND 2005 - 06. WHILE REFERRING T O THE SAID RELIANCE PLACED UPON BY THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE, THE ISSUE WAS DECIDED IN TURN, RELYING ON ASSESSEES OWN CASE IN ASSESSMENT YEARS 2008 - 09 AND 2009 - 10 IN ITA NOS.262 AND 263/PN/2014, ORDER DATED 30.01.2015, WHEREIN ALSO ANOTHER ISSUE WAS SET ASIDE TO THE FILE OF ASSESSING OFFICER ON ACCOUNT OF DEDUCTION UNDER SECTION 80P(2)(A)(I) OF THE ACT. BY AN ERROR, REFERENCE WAS MADE TO THE RELIANCE IN RESPECT OF SECTION 80P(2)(A)(I) OF THE ACT, THOUGH THE ISSUE WAS COVERED B Y THE ORDER OF TRIBUNAL RELATING TO ASSESSMENT YEARS 2004 - 05 AND 2005 - 06 (SUPRA), WHEREIN THE ISSUE WAS THE DEDUCTION CLAIMED UNDER SECTION 80P(2)(E) OF THE ACT. THE ASSESSEE HAS PLACED ALL THESE ORDERS ON RECORD. HOWEVER, THE ISSUE IS CONSIDERED BY THE TRIBUNAL IN ASSESSMENT YEARS 2004 - 05 AND 2005 - 06 AND NOT IN ASSESSMENT YEARS 2008 - 09 AND 2009 - 10 AND CONSEQUENTLY, APPLYING THE RATIO LAID DOWN BY THE TRIBUNAL IN ITA NOS.437 & 438/PN/2009, THE MATTER IS SET ASIDE TO THE FILE OF ASSESSING OFFICER, WHO SHAL L FOLLOW THE DIRECTIONS OF TRIBUNAL IN ITA NOS.437 & 438/PN/2009 TO ADJUDICATE THE ISSUE. THE ASSESSING OFFICER MAY DECIDE THE ISSUE IN LINE WITH THE EARLIER ORDERS SINCE THE FACTS AND ISSUE REMAINS THE SAME. THE GROUND OF APPEAL NO.1 RAISED BY THE ASSES SEE IS THUS, ALLOWED FOR STATISTICAL PURPOSES. 14. NOW, COMING TO THE ISSUE RAISED BY WAY OF GROUND OF APPEAL NO.3 I.E. DISALLOWANCE OF VARIOUS EXPENSES. THIS ISSUE IS LINKED TO THE DETERMINATION OF INCOME FROM DEPOT MANAGEMENT CHARGES, AGAINST WHICH THE ASSESSEE HAS CLAIMED DEDUCTION UNDER SECTION 80P(2)(E) OF THE ACT. AS THE ISSUE RAISED BY ITA NO.655/PUN/2014 & ITA NO.770/PUN/2014 M/S. KOLHAPUR UDYAM CO.OP SOCIETY LTD. 10 GROUND OF APPEAL NO.1 IS SET ASIDE TO THE FILE OF ASSESSING OFFICER, THIS ISSUE IS ALSO SET ASIDE TO THE FILE OF ASSESSING OFFICER. 1 5 . THE ASSESSEE HAS RAISED OTHER GROUND OF APPEAL I.E. GROUND OF APPEAL NO.2 I.E. ON ACCOUNT OF AMOUNT RELATING TO XEROX SERVICES GIVEN TO THE MEMBERS WHICH WAS NOT PRESSED BEFORE THE CIT(A) AND ACCORDINGLY, THERE IS NO MERIT IN THE GROUND OF APPEAL NO.2 RAISED BEFORE THE TRIBUNAL. IN ANY CASE, THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE HAS NOT MADE ANY SUBMISSIONS IN RESPECT OF GROUND OF APPEAL NO.2 AND HENCE, THE SAME IS DISMISSED. 1 6 . THE GROUND OF APPEAL NO.4 IS AGAINST LEVY OF INTEREST UNDER SECTIONS 234A, 234B A ND 234C OF THE ACT, WHICH IS CONSEQUENTIAL, HENCE, DISMISSED. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE THUS, PARTLY ALLOWED. ITA NO.655/PUN/2014, RELATING TO ASSESSMENT YEAR 2009 - 10 : REVENUES APPEAL 1 7 . NOW, COMING TO THE APPEAL OF THE REVENUE WHICH IS AGAINST THE ORDER PASSED UNDER SECTION 154 OF THE ACT. 1 8 . THE ASSESSMENT IN THE CASE WAS COMPLETED UNDER SECTION 143(3) OF THE ACT, WHEREIN THE INCOME OF THE ASSESSEE WAS ASSESSED AT RS.6,54,590/ - AS AGAINST THE RETURN OF INCOME FILED AT NIL . THE REVENUE IS IN APPEAL AGAINST THE ORDER OF CIT(A), WHEREIN THE ASSESSED INCOME WAS RECTIFIED UNDER SECTION 154 OF THE ACT AND THE CIT(A) HAD HELD THAT THE ORDER PASSED BY THE ASSESSING ITA NO.655/PUN/2014 & ITA NO.770/PUN/2014 M/S. KOLHAPUR UDYAM CO.OP SOCIETY LTD. 11 OFFICER UNDER SECTION 154 OF THE ACT WAS NOT RESULT O F RECTIFI CATI ON OF MISTAKE APPARENT FROM THE RECORD BUT RECONSIDERATION OF HER VIEW REGARDING ALLOWABILITY OF DEDUCTION UNDER SECTION 80P OF THE ACT. REFERENCE WAS MADE TO THE ORDER PASSED UNDER SECTION 154 OF THE ACT BY THE ASSESSING OFFICER. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE HAS RAISED SEVERAL PROPOSITIONS. HOWEVER, ON PERUSAL OF THE ORDER PASSED UNDER SECTION 154 OF THE ACT, IT IS NOT CLEAR AS TO WHAT WERE THE MISTAKES WHICH WERE NOTED BY THE ASSESSING OFFICER JUSTIFYING RECTIFICATION UNDER SE CTION 154 OF THE ACT. AS PER THE SAID ORDER PASSED UNDER SECTION 154 OF THE ACT, THE ASSESSING OFFICER OBSERVED THAT IT WAS BROUGHT TO HIS NOTICE THAT THE FOLLOWING MISTAKES HAD OCCURRED IN THE INTIMATION DATED 24.12.2011 UNDER SECTION 143(3) OF THE ACT W HICH WERE NOT APPARENT FROM THE RECORD. HOWEVER, THE SAID ORDER PASSED UNDER SECTION 154 OF THE ACT SUFFERS FROM INFIRMITY, WHEREIN THE ASSESSING OFFICER REFERS TO THE INTIMATION DATED 24.12.2011 UNDER SECTION 143(3) OF THE ACT. FURTHER, WHAT ARE THE MIS TAKES WHICH HAVE OCCURRED IN THE SAID INTIMATION ARE ALSO NOT CLEAR EXCEPT FOR RECOMPUTING THE DEMAND IN THE CASE OF ASSESSEE. FIRST OF ALL, THE ORDER UNDER SECTION 143(3) OF THE ACT WAS PASSED ON 23.12.2011, WHEREAS THE ASSESSING OFFICER IN HIS ORDER PAS SED UNDER SECTION 154 OF THE ACT REFERS TO INTIMATION DATED 24.12.2011 UNDER SECTION 143(3) OF THE ACT . THIS IS CLEARLY A MISTAKE ON THE PART OF ASSESSING OFFICER. ALSO, IT IS NOT CLEAR WHAT MISTAKES WERE NOTED IN THE SO - CALLED INTIMATION ISSUED ON 24.12 .2011 PASSED UNDER SECTION 143(3) OF THE ACT. THE MISTAKES ARE NOT REFERRED TO AND IN ANY CASE, IF IT IS THE CASE OF INTIMATION, THEN IT SHOULD BE UNDER SECTION 143(1) OF THE ACT AND NOT UNDER SECTION 143(3) OF THE ACT. SECONDLY, THE INTIMATION IN ANY CA SE COULD NOT BE PASSED AFTER 23.12.2011. IN VIEW OF THE SAID ERRORS, THE ORDER PASSED BY THE ASSESSING OFFICER MERITS TO BE DISMISSED. HOWEVER, IN VIEW OF ITA NO.655/PUN/2014 & ITA NO.770/PUN/2014 M/S. KOLHAPUR UDYAM CO.OP SOCIETY LTD. 12 THE PRINCIPLES OF NATURAL JUSTICE, THE MATTER IS RESTORED BACK TO THE FILE OF ASSESSING OFFICER, WHO SHALL DECIDE THE ISSUE OF RECTIFICATION UNDER SECTION 154 OF THE ACT AFTER AFFORDING REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSE E AND IN ACCORDANCE WITH THE LAW. THE GROUNDS OF APPEAL RAISED BY THE REVENUE ARE THUS, ALLOWED FOR STATISTICAL PURPOSES. 1 9 . IN THE RESULT, THE APPEAL OF ASSESSEE IS PARTLY ALLOWED AND THE APPEAL OF REVENUE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER P R ONOUNCED ON THIS 28 TH DAY OF APRIL , 201 7 . SD/ - / - (SUSHMA CHOWLA) / JUDICIAL MEMBER / PUNE ; DATED : 28 TH APRIL , 201 7 . GCVSR / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT ; 2. / THE RESPONDENT; 3. ( ) / THE CIT (A) , KOLHAPUR ; 4. / CIT - I / II, KOLHAPUR / CIT (CENTRAL), PUNE ; 5. , , / DR SMC , ITAT, PUNE; 6. / GUARD FILE . / BY ORDER, // TRUE COPY // / ASSISTANT REGISTRAR, , / ITAT, PUNE