TALOJA CETP COO.OP SOCIETY LTD, MUMBAI V. DCIT CIR, THANE

ITA 801/MUM/2009

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 7899 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 1 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-03-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 22-02-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 06-02-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D SONGATE
• Assessee Lawyers: RAJA B SINGH

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES, E, MUMBAI BEFORE SHRI S V MEHROTRA, ACCOUNTANT MEMBER AND SHRI VIJAY PAL RAO, JUDICIAL MEMBER ITA NO. 801/MUM/2009 (ASSESSMENT YEAR 2005-06) TALOJA CETP COOP SOCIETY LTD PLOT NO.P-24, MIDC INDL AREA, TALOJA DIST RAIGAD PAN:AAAJT0588L . APPELLANT VS THE DCIT THANE. RESPONDENT APPELLANT BY : SHRI RAJA B SINGH RESPONDENT BY : SHRI D SONGATE O R D E R PER VIJAY PAL RAO,JM THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 14.11.2008 OF CIT(A) FOR THE ASSESSMEN T YEAR 2005-06. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS I N THIS APPEAL: 1. THE LD. AO HAS WRONGLY ASSESSED BY DEMANDING THE TAX OF RS.181,8201; 2. THE LD CIT(A) HAS ORDERED THAT THE SOCIETY IS NOT ENTITLED TO RELIEF UNDER SECTION 80IA(4)(I) WHE REAS ITA NO. 801/MUM/2009 (ASSESSMENT YEAR 2005-06) 2 WE HAD ARGUED FOR THE RELIEF OF TAX ON THE BASIS OF PRINCIPLE OF MUTUALITY 3. FACTS OF THE CASE ARE THAT THE ASSESSEE IS A CO OPERATIVE SOCIETY FORMED BY THE INDUSTRIAL UNITS OF THE MI DC AREA OF TALOJA, FOR TREATMENT OF THE INDUSTRIAL EFFLUENTS. THE ASSESSEE FILED RETURN OF INCOME ON 25.10.2005 DECLARING TOTA L INCOME AT RS. NIL. THE AO NOTICED THAT THE ASSESSEE DISCLO SED THE EXCESS OF INCOME OVER EXPENDITURE OF RS.47,69,412/ -. THE ASSESSEE CLAIMED ENTIRE INCOME AS DEDUCTION U/S 80 IA OF THE ACT. THE AO DISALLOWED THE CLAIM OF THE ASSESSEE A ND ASSESSED THE SURPLUS OF RS.47,69,413/- AS INCOME OF THE ASSESSEE. 4. ON APPEAL, THE CIT(A) HAS CONFIRMED THE DISALLOW ANCE MADE BY THE AO. 5. BEFORE US, THE LEARNED AR OF THE ASSESSEE HAS SUBMITTED THAT THE ASSESSEE HAS CLAIMED THE SURPLUS AS NOT TAXABLE ON THE PRINCIPLE OF MUTUALITY THOUGH THE ASSESSEE HAS ALSO CLAIMED THE DEDUCTION U/S 80IA. HE HAS REFERR ED THE ASSESSMENT ORDER AS WELL AS THE ORDER OF THE CIT(A) AND SUBMITTED THAT BOTH THE AO AND THE CIT(A) HAS NOT A DJUDICATED THE ISSUE OF PRINCIPLE OF MUTUALITY . HE HAS ALSO REFERRED THE LETTER DATED 9.7.2008 AND SUBMITTED THAT THE ASSES SEE HAS ITA NO. 801/MUM/2009 (ASSESSMENT YEAR 2005-06) 3 DULY RAISED THE ISSUE OF THE CONCEPT OF PRINCIPLE OF MUTUALITY BEFORE THE CIT(A). THUS THE LEARNED AR HAS SUBMITT ED THAT THE ORDERS OF THE LOWERS AUTHORITIES BE SET ASIDE AND ISSUE OF CONCEPT OF PRINCIPLE OF MUTUALITY DIRECTED TO BE DECIDED. 6. ON THE OTHER HAND, THE LEARNED DR HAS RELIED UPO N THE ORDERS OF THE LOWER AUTHORITIES. 7. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND REL EVANT RECORD. THE AO HAS RECORDED THE REASONS FOR NOT A LLOWING THE CLAIM OF THE ASSESSEE U/S 80IA(4)(I)(A) AS UNDER : THE ASSESSEE HAS ALSO SOUGHT TO EXPLAIN THE CONCEPT OF MUTUALITY IN ITS LETTER DATED 25.1.2007. THE ASSESSEE HAS ALSO RELIED UPON THE VARIOUS CASES LAW S, THOUGH NONE OF THEM APPEARED TO BE RELEVANT IN DECIDING THE POINT IN QUESTION. NONE OF THE ARGUMEN TS RAISED BY THE ASSESSEE SHOWS THAT AN ENTERPRISE WHICH IS NOT OWNED BY A COMPANY AS DEFINED IN THE I T ACT OR CONSORTIUM OF SUCH COMPANIES ARE ENTITLED T O THE BENEFITS U/S 80IA, EVEN IF ALL OTHER CONDITIONS LAID DOWN IN THAT SECTION IS SATISFIED THE ASSESSEE HAS FAILED THE TEST OF QUALIFICATION FOR DEDUCTION U/S 80IA O F THE IT ACT. THE MAIN POINT IN QUESTION IS WHETHER THE ASSESSEE IS ENTITLED FOR DEDUCTION U/S 80IA, WHEN I T IS NOT OWNED BY A COMPANY OR CONSORTIUM OF COMPANIES, THE OTHER EXPLANATIONS OF THE ASSESSEE CONTAINED IN THE LETTER REFERRED TO ABOVE, ARE NOT CONSIDERED A T THIS STAGE 8. THE AO HAS DECIDED THE ISSUE OF DEDUCTION U/S 80 IA VIDE PARAGRAPHS 6 AS UNDER : 6. FROM THE PLETHORA OF JUDICIAL VERDICTS, IT IS AMPLY CLEAR THAT WHEN THE STATUS HAS RESTRICTED TH E RELIEF U/S 80IA TO ENTERPRISES OWNED BY COMPANY OR ITA NO. 801/MUM/2009 (ASSESSMENT YEAR 2005-06) 4 CONSORTIUM OF COMPANIES, BY NO AMOUNT OF REASONING AND INTERPRETATION, THE DEDUCTION CAN BE CLAIMED B Y ANYBODY ELSE, OTHER THAN THOSE CLEARLY AND EXPRESS LY QUALIFIED BY THE STATUTE. IN THIS VIEW OF THE MATT ER THE DEDUCTION, CLAIMED BY THE ASSESSEE, U/S 80IA IS REJECTED 9. THUS, IT IS CLEAR THAT THE AO HAS DECIDED THE CL AIM OF THE ASSESSEE ONLY U/S 80IA AND THE ISSUE OF CONCEPT OF PRINCIPLE OF MUTUALITY HAS NOT BEEN ADJUDICATED. SIMILARLY, T HE CIT(A) HAS DECIDED THE APPEAL OF THE ASSESSEE IN PARAGRAPH 7.4 AS UNDER : 7.4 IN VIEW OF THE ABOVE FACTS AND LEGAL POSITION , I AM NOT IN A POSITION TO INTERFERE WITH THE ORDER OF THE AO. THE DISALLOWANCE OF THE CLAIM OF DEDUCTION U/S 80IA(4) AT RS.47,69,410/- MADE BY THE AO IS, THEREFORE, CONFIRMED 10. FROM THE ORDERS OF THE LOWER AUTHORITIES, IT IS MANIFEST THAT THE ISSUE OF PRINCIPLE OF MUTUALITY HAS NOT BE EN ADJUDICATED. WE NOTE THAT THE ASSESSEE HAS RAISED T HIS ISSUE BEFORE THE AO AS RECORDED BY THE AO AS REPRODUCED ABOVE AND BEFORE HE CIT(A) VIDE LETTER DATED 9.7.2008. TH US, IN THE FACTS AND CIRCUMSTANCES OF THE CASE, WE SET ASIDE THE ISSUE OF MUTUALITY TO THE RECORD OF THE AO FOR CONSIDERATI ON AND ADJUDICATION OF THE SAME AS PER LAW. ITA NO. 801/MUM/2009 (ASSESSMENT YEAR 2005-06) 5 11. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 25TH MAR ,2011 SD SD (S V MEHROTRA ) (VIJAY PAL RAO) ACCOUNTANT MEMBER JUDICIAL M EMBER MUMBAI, DATED 25 TH MAR 2011 SRL:9311 COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT CONCERNED 4. CIT(A) CONCERNED 5. DR CONCERNED BENCH BY ORDER TRUE COPY ASSTT. REGISTRAR, ITAT, MUMBAI