The Haryana State Cooperative Supply and Marketing Federation Limited, Panchkula V. Addl. CIT, Panchkula

ITA 790/CHANDI/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 73431 (ITAT-CHANDIGARH)
• Duration Of Justice: 6 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-01-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 28-01-2014
• Assessment Year: 2010-2011
• Appeal Filed On: 16-07-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: JYOTI KUMARI
• Assessee Lawyers: SANJAY MEHTANI
• Keywords: Business income; Opportunity of being heard
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH A, CHANDIGARH BEFORE SHRI T.R.SOOD, ACCOUNTANT MEMBER AND MS. SUSHMA CHOWLA, JUDICIAL MEMBER ITA NO.790/CHD/2013 ASSESSMENT YEAR : 2010-11 THE HARYANA STATE COOPERATIVE SUPPLY VS. THE ADD L.CIT, & MARKETING FEDERATION LIMITED, PANCHKULA RANGE, SECTOR 5, PANCHKULA. PAN: AAAJH0022R (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SANJAY MEHTANI RESPONDENT BY : SHRI JYOTI KUMARI, DR DATE OF HEARING : 28.01.2014 DATE OF PRONOUNCEMENT : 30.01.2014 O R D E R PER SUSHMA CHOWLA, J.M. : THE APPEAL FILED BY THE ASSESSEE IS AGAINST THE ORD ER OF THE COMMISSIONER OF INCOME TAX (APPEALS), PANCHKULA DAT ED 06.05.2013 AGAINST THE ORDER PASSED UNDER SECTION 143(3) OF IN COME TAX ACT, 1961 (IN SHORT THE ACT). 2. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APP EAL: 1] THAT THE ORDER PASSED BY THE CIT(A) IN DISMISSIN G THE APPEAL AND CONFIRMING ACTION OF THE ASSESSING OFFICER ARE ILLE GAL, ARBITRARY, HAVE BEEN PASSED IN A HASTE AND HAVE IGNORED BASIC ASPECTS AN D FACTS THUS CAUSING UNDUE HARDSHIP TO THE APPELLANT. 2] THAT THE CIT (A) HAS ERRED BOTH ON FACTS AND LAW IN NOT ALLOWING THE CLAIM OF DEDUCTION UNDER SECTION 80P(2)(E) OF THE I.T.ACT IN RESPECT OF INCOME DERIVED FROM STORAGE CHARGES. THE CIT(A) HAS ALSO ERRED IN NOT C ONSIDERING THE REVISED AMOUNT OF CLAIM OF DEDUCTION WHICH WAS FILED DURING COURSE OF ASSESSMENT PROCEEDINGS AND DETAILS OF WHICH WERE ALSO FILED BEFORE THE CIT (A). IT IS PRAYED THAT THE DISALLOWANCE OF DEDUCTION CLA IMED UNDER SECTION 80P(2)(E) OF I.T.ACT ORIGINALLY AT RS.1,27,74,782 IN THE RETURN OF INCOME TAX AND SUBSEQUENTLY FOR RS.5,32,01,301/- DURING COURSE OF ASSESSMENT PR OCEEDINGS MAY BE ORDERED TO BE ALLOWED. 2 3] THAT THE CIT (A) HAS ERRED BOTH ON FACTS AND LAW IN NOT ALLOWING THE CLAIM OF DEDUCTION AMOUNTING TO RS.6,04,11,018 MADE UNDER SE CTION 80P(2)(D) OF THE I.T. ACT WHICH WAS CLAIMED BY THE ASSESSEE AT THE TIME OF FI LING OF RETURN OF INCOME TAX- THE ACTION OF THE CIT (A) IN NOT ALLOWING THE CLAIM FOR DEDUCTION UNDER SECTION 80P(2)(D) ON PAST PATTERN IS UNJUST, ILLEGAL AND NO T AS PER PROVISIONS OF LAW. IT IS PRAYED THAT THE ORDERS OF CIT (A) IN NOT ALLO WING THE DEDUCTION OF RS. 6,04,11,018 U/S 80P (2) (D) MAY BE SET ASIDE AND DI RECTIONS FOR ALLOWING CLAIM OF DEDUCTION UNDER SECTION SOP(2)(D) MAY BE GIVEN. 4] THAT THE APPELLANT CRAVES TO ADD, DELETE, CONCED E, AND MODIFY ANY OR ALL THE GROUNDS OF APPEAL AT T .IT TIME OF HEARING OF APPEA L. 3. THE LEARNED A.R. FOR THE ASSESSEE AT THE OUTSET POINTED OUT THAT THE ISSUES RAISED IN THE PRESENT APPEAL ARE SQ UARELY COVERED BY THE ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE RE LATING TO ASSESSMENT YEAR 2009-10, WHICH IN TURN HAD FOLLOWED RATIO LAID DOWN BY THE HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF THE ASSESSEE ITSELF FOR THE EARLIER YEARS. 4. THE LEARNED D.R. FOR THE REVENUE PLACED RELIANCE ON THE ORDER OF THE CIT (APPEALS). 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ISSUE IN GROUND NO.1 RAISED BY THE ASSESSEE IS GENE RAL AND THE SAME IS DISMISSED. 6. THE ISSUE ARISING IN GROUND NO.2 IS AGAINST THE CLAIM OF DEDUCTION UNDER SECTION 80P(2)(E) OF THE ACT IN RESPECT OF IN COME DERIVED FROM STORAGE CHARGES. IDENTICAL ISSUE AROSE BEFORE THE TRIBUNAL IN EARLIER YEARS AND THE TRIBUNAL IN ITA NO.205/CHD/2013 RELAT ING TO ASSESSMENT YEAR 2009-10 VIDE ORDER DATED 21.6.2013 VIDE PARAS 9 TO 11 HAD HELD AS UNDER: 9. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ISSUE OF ALLOWABILITY OF DEDUCTION U/S 80P(2)(E) OF THE ACT ON THE INCOME FROM SO CALLED WAREHOUSES IN THE HANDS OF THE ASSESSEE AROSE BEFORE THE HON'BLE PUNJAB & H ARYANA HIGH COURT IN ASSESSEE'S OWN CASE IN ITA NO. 157 OF 2005 DATED 8.9.2010. THE SAID ISSUE WAS DECIDED AGAINST THE ASSESSEE AND THE ASSESSEE WAS HELD TO BE NOT ELIGIB LE TO THE 3 CLAIM OF U/S 80P(2)(E) OF THE ACT ON THE ALLEGED ST ORAGE CHARGES RECEIVED BY THE ASSESSEE. THE COURTS HELD THAT THE ASSESSEE WAS UTILIZING ITS STORAGE PLACE FOR ITS OWN BUSINES S OF DEALING IN FOODGRAINS AND AS SUCH THERE WAS NO MERIT IN BIF URCATING THE STORAGE CHARGES AND CLAIMED THE SAID DEDUCTION U/S 80P(2)(E) OF THE ACT. 10. THE LD. AR FOR THE ASSESSEE BEFORE US HAS FAIRL Y ADMITTED THAT THE ISSUE HAS BEEN DECIDED AGAINST THE ASSESSE E BY THE HON'BLE PUNJAB & HARYANA HIGH COURT. HOWEVER, THER E WAS SECOND LIMB TO THE ISSUE RAISED IN RELATION TO THE CLAIM OF DEDUCTION U/S 80P(2)(E) OF THE ACT I.E. THE GODOWNS AT DELHI AND MUMBAI, WHICH HAVE BEEN HIRED OUT TO THE OUTSID ERS AND ARE NOT BEING USED BY THE ASSESSEE FOR ITS OWN BUSI NESS. WE FIND THAT SIMILAR ISSUE IN RESPECT OF THE GODOWNS A T GURGAON AND MUMBAI BEING LET OUT TO THE FARMERS, AROSE IN A SSESSEE'S OWN CASE RELATING TO THE ASSESSMENT YEAR 2008-09. THE CIT(APPEALS) VIDE ORDER DATED 11.01.2012 IN THE APP EAL RELATING TO ASSESSMENT YEAR 2008-09 HELD AS UNDER : '4.3 THE FACTS OF THE CASE AS WELL AS THE SUBMISSIO NS OF THE APPELLANT AND THE AO HAVE BEEN CONSIDERED BY THE UNDERSIGNED. THE DEDUCTION CLAIMED U/S 80P(2)(E) HAS BEEN WITHDRAWN BY THE LD. AO ON ACCOUNT OF STORAGE CHARGES TO GIVE EFFECT TO THE ORDER OF THE HON'BLE PUNJAB & HARYANA HIGH COURT IN APPELLANT'S OWN CASE IN ITA N O. 157 OF 2005 VIDE ORDER DATED 08.09.2010. THE HON'BLE PUNJAB & HARYANA HIGH COURT VIDE PARA 14 PAGE 10-11 OF THE ORDER HELD A S UNDER :- 'IN THE PRESENT CASE, IT HAS BEEN CLEARLY HELD THAT THE ASSESSEE WAS PURCHASING THE GOODS AND THEN SELLING THE GOODS TO FCI AND IN SUCH A SITUATION, STORING WAS P ART OF BUSINESS OF THE ASSESSEE AND DID NOT AMOUNT TO LETT ING OUT OF STORAGE CAPACITY AS TILL THE GOODS WERE SOLD TO FCI , GOOD BELONGED TO THE ASSESSEE ITSELF AND NOT TO THE FCI. THIS BEING THE FACTUAL SITUATION, THE MATTER IS FULLY COVERED BY JUDGMENT OF THE HON'BLE SUPREME COURT IN SURAT VENKAR SAHKAR I SANGH AND A VENTAKA SUBBARAO AS REITERATED IN UDAIPUR SAH KARI UPBHOKTA. THE INCOME OF THE ASSESSEE FOR STORAGE CO ULD NOT BE TREATED AT PAR WITH HIRE CHARGES. QUESTIONS ARE ANSWERED IN FAVOUR OF THE REVENUE AND AGAINST THE ASSESSEE. 11. THE FACTS OF THE PRESENT CASE ARE IDENTICAL TO THE FACTS ARISING IN ASSESSMENT YEAR 2008-09 AND FOLLOWING TH E SAME PARITY OF REASONING, WE ARE OF THE VIEW THAT THE IS SUE OF LETTING OUT OF GODOWNS AT DELHI AND MUMBAI TO OUTSIDERS NEE DS TO BE VERIFIED BY THE AO. ACCORDINGLY, WE REMIT THIS ISS UE OF VERIFICATION OF LETTING OUT OF GODOWNS AT DELHI AND MUMBAI BACK TO THE FILE OF AO WHO IN TURN SHALL VERIFY THE CLAIM OF THE ASSESSEE AND DECIDE THE ISSUE IN VIEW OF THE RATIO LAID DOWN BY THE HON'BLE PUNJAB & HARYANA HIGH COURT IN ASSESSEE 'S OWN CASE AND CONCLUDE THE DEDUCTION U/S 80P(2)(E) OF TH E ACT ON RECEIPTS OF RS.1.21 CRORES IN ACCORDANCE WITH LAW. HOWEVER, AS HELD BY US IN PARAS HEREIN ABOVE, THE ASSESSEE I S NOT ENTITLED TO CLAIM OF DEDUCTION U/S 80P(2)(E) OF THE ACT ON T HE BALANCE STORAGE PLACE BEING UTILIZED BY ITSELF FOR CARRYING ON ITS BUSINESS IN FOODGRAINS. THE GROUND NO.2 RAISED BY THE ASSESSEE IS THUS, PARTLY ALLOWED. 4 7. THE FACTS AND ISSUE RAISED IN THE PRESENT APPEA L ARE IDENTICAL TO THE FACTS AND ISSUES RAISED BEFORE THE TRIBUNAL IN ASSE SSMENT YEAR 2009-10 (SUPRA) AND FOLLOWING THE SAME PARITY OF REASONING, WE HOLD THAT THE ASSESSEE IS NOT ENTITLED TO THE CLAIM OF DEDUCTION UNDER SECTION 80P(2)(E) OF THE ACT ON THE INCOME EARNED FROM STORAGE CHARGE S UTILIZED FOR ITSELF FOR CARRYING ON ITS BUSINESS IN FOODGRAINS. HOWEVE R, IN RESPECT OF THE LETTING OUT OF GODOWNS IN DELHI AND MUMBAI TO OUTSI DER, THE ISSUE IS REMITTED BACK TO THE ASSESSING OFFICER FOR NECESSAR Y VERIFICATION AS IN THE EARLIER YEAR AND TO DECIDE THE ISSUE IN LINE WI TH THE RATIO LAID DOWN BY THE HON'BLE PUNJAB & HARYANA HIGH COURT IN ASSES SEES OWN CASE AND COMPUTE DEDUCTION UNDER SECTION 80P(2)(E) OF THE AC T ON SUCH RECEIPTS IN ACCORDANCE WITH LAW. THE GROUND OF APPEAL NO.2 RAI SED BY THE ASSESSEE IS PARTLY ALLOWED. 8. THE ISSUE IN GROUND NO.3 RAISED BY THE ASSESSEE IS AGAINST THE DEDUCTION UNDER SECTION 80P(2)(D) OF THE ACT. SIMI LAR ISSUE AROSE BEFORE THE TRIBUNAL IN ASSESSMENT YEAR 2009-10 (SUPRA) AND THE TRIBUNAL VIDE PARAS 14 TO 18 HELD AS UNDER: 14. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSE D THE RECORD. THE ASSESSEE DURING THE YEAR UNDER CONSIDE RATION, HAD CLAIMED DEDUCTION U/S 80P(2)(D) OF THE ACT ON DIVID END INCOME OF RS.5.92 CRORES AND INTEREST INCOME OF RS.11.91 L ACS. THE AO HAD OBSERVED THAT THE INVESTMENTS WERE PART AND PAR CEL OF THE CARRYING ON OF THE BUSINESS ACTIVITY BY THE ASSESSE E AND OUT OF COMMON FUNDS INCLUDING INTEREST BEARING FUNDS, PURC HASES WERE MADE, EXPENSES WERE MET AND THE INVESTMENTS WERE MA DE. THE PLEA OF THE ASSESSEE THAT NO COST WAS ATTACHED TO T HE SAID INVESTMENT WAS THUS REJECTED AND THE EXPENDITURE RE LATABLE TO THE EARNING OF THE SAID DIVIDEND AND INTEREST INCOM E WAS WORKED OUT AT RS.36.82 CRORES. THE DEDUCTION U/S 8 0P(2)(D) WAS THUS, RESTRICTED TO NIL AS THE INCOME FROM DI VIDEND AND INTEREST WAS RS.6.03 CRORES AND THE EXPENDITURE REL ATABLE TO THE SAME WAS RS.36.82 CRORES. 15. THE CIT(APPEALS) HAD NOTED THE FACT THAT IN THE APPEAL RELATING TO ASSESSMENT YEAR 2008-09, THE ISSUE HAS BEEN SET ASIDE TO THE FILE OF AO FOR RE-COMPUTATION OF THE D ISALLOWANCE AS PER RULE 8D IN VIEW OF THE DECISION OF THE TRIBU NAL. THOUGH THE CIT(APPEALS) ACCEPTED THE FACTS BEING SAME AND THE SAID 5 DIRECTION WAS ALSO GIVEN TO THE AO BUT THE GROUND O F APPEAL WAS DISMISSED BY THE CIT(APPEALS). 16. THE ASSESSEE IS AGGRIEVED BY THE FINDING OF THE CIT(APPEALS) IN THIS REGARD. 17. WE FIND THAT SIMILAR ISSUE OF CLAIM OF DEDUCTIO N U/S 80P(2)(D) OF THE ACT AROSE BEFORE THE TRIBUNAL IN A SSESSEE'S OWN CASE IN ITA NOS.522/CHD/2008 AND CROSS APPEAL I N ITA NO.575/CHD/2008 RELATING TO A.Y. 2004-05 AND ITA NO . 721/CHD/2008 AND CROSS APPEAL IN ITA NO.722/CHD/200 8 RELATING TO A.Y. 2005-06, WHEREIN VIDE ORDER DATED 31.10.2008, IT WAS HELD AS UNDER : 5. THE NEXT GROUND I.E. GROUND NO. 3 IS THAT THE LEARNED FIRST APPELLATE AUTHORITY IS NOT JUSTIFIED IN REDUCING TH E DEDUCTION CLAIMED U/S 80-P(2) (D) AFTER DEDUCTING 5% EXPENSES WHICH I S AGAINST THE LAW AND HAS TO BE COMPUTED UNDER THE PROPER HEAD. DURI NG ARGUMENTS, THE CLAIM OF THE ASSESSEE IS THAT THE ASSESSEE CLAIMED DEDUCTION ON ACCOUNT OF DIVIDENDS RECEIVED FROM COOPERATIVE SOCIETIES AM OUNTING TO RS.2,39,42,070/- AND THE ASSESSEE CLAIMED 100% DEDU CTION ON ACCOUNT OF DIVIDEND. ON QUESTIONING BY THE DEPARTMENT THE A SSESSEE CLAIMED THAT SINCE IT IS A BUSINESS INCOME, THEREFORE, EXPE NSES CANNOT BE APPORTIONED. THE LEARNED ASSESSING OFFICER DISALLO WED 20% OF THE EXPENSES, WHICH COMES TO RS. 47,88,414/-. THE ARGU MENT ON BEHALF OF THE ASSESSEE IS THAT NEITHER THE ASSESSEE HAS TAKEN ANY LOAN, THEREFORE, THERE IS NO QUESTION OF ANY DIRECT EXPENSES TO THIS ACTIVITY, SO NO INDIRECT EXPENSES ARE TO BE ADJUSTED. RELIANCE W AS PLACED IN 189 ITR 89(P&H). ON THE OTHER HAND, THE LEARNED DR CONTEND ED THAT IT REQUIRES-EXAMINATION PURSUANCE TO RULE 8-D OF THE R ULES. RELIANCE WAS ALSO PLACED IN THE CASE OF ACIT VS. CITICORP FINANC E INDIA LTD (108 ITD 457)(MUM). BOTH THE LEARNED REPRESENTATIVES AGREED THAT THIS ISSUE MAY BE SENT TO THE FILE OF THE LEARNED ASSESSING OF FICER FOR FRESH ADJUDICATION IN ACCORDANCE WITH LAW. IN VIEW OF T HESE FACTS, THIS GROUND IS SENT TO THE FILE OF THE LEARNED ASSESSING OFFICER TO EXAMINE THE CLAIM OF THE ASSESSEE/REVENUE AND THEN DECIDE I N ACCORDANCE WITH LAW. THIS WILL ALSO COVER GROUND NO.3 OF THE APPEA L OF THE REVENUE (ITA NO. 575/CHD/2008). NEEDLESS TO MENTION HERE THAT DUE OPPORTUNITY OF BEING HEARD BE PROVIDED TO THE ASSES SEE. THE ASSESSEE IS ALSO AT LIBERTY TO FURNISH EVIDENCE, IF ANY, TO SUBSTANTIATE ITS CLAIM, THEREFORE, THESE GROUNDS OF THE ASSESSEE / REVENUE ARE ALLOWED FOR STATISTICAL PURPOSES ONLY. 18. THE FACTS OF THE PRESENT CASE ARE IDENTICAL TO THE FACTS BEFORE THE TRIBUNAL IN THE EARLIER YEARS AND FOLLOWING THE PARITY OF RE ASONING, WE REMIT THE ISSUE BACK TO THE FILE OF AO FOR FRESH ADJUDICATION IN LI NE WITH THE DIRECTIONS OF THE TRIBUNAL VIDE ORDER DATED 31.10.2008. ACCORDINGLY, THE GROUND OF APPEAL RAISED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES . 9. THE TRIBUNAL IN TURN HAD FOLLOWED THE RATIO LAID DOWN IN ASSESSEES OWN CASE IN THE EARLIER YEARS. FOLLOWING THE SAME PARITY OF REASONING AND AS THE FACTS OF THE CASE ARE IDENTICAL TO THE F ACTS IN THE EARLIER YEARS, WE REMIT THE ISSUE BACK TO THE FILE OF THE ASSESSIN G OFFICER FOR FRESH 6 ADJUDICATION IN LINE WITH THE DIRECTIONS OF THE TRI BUNAL VIDE ORDER 21.6.2013. THUS THE GROUND NO.3 RAISED BY THE ASSE SSEE IS ALLOWED FOR STATISTICAL PURPOSES. 10. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 30 TH DAY OF JANUARY, 2014. SD/- SD/- (T.R.SOOD) (SUSHMA CHOWLA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 30 TH JANUARY, 2014 *RATI* COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT(A)/TH E CIT/THE DR. ASSISTANT REGISTRAR, ITAT, CHANDIGARH