Pattukottai Agricultural Producers Co-Op Marketing Society Limited, Pattukkottai V. ACIT, Thanjavur

ITA 852/CHNY/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 7602 (ITAT-CHENNAI)
• Duration Of Justice: 11 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-03-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 25-02-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 16-04-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: P RADHAKRISHNAN
• Assessee Lawyers: S SRIDHAR
• Keywords: Revised return

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHENNAI . . . , . !' , $ % BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ./ ITA NOS.849, 850, 851, 852 & 853/MDS/2015 ' (' / ASSESSMENT YEARS : 2006-07 TO 2010-11 M/S PATTUKOTTAI AGRICULTURAL PRODUCERS CO-OP. MARKETING SOCIETY LIMITED, MUTHUPETTAI ROAD, PATTUKOTTAI 641 601. PAN : AAAAP 3186 F V. THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE 1, INCOME TAX OFFICE, THANJAVUR 631 006. (*+/ APPELLANT) (,-*+/ RESPONDENT) *+ . / / APPELLANT BY : SHRI S. SRIDHAR, ADVOCATE ,-*+ . / / RESPONDENT BY : SH. P. RADHAKRISHNAN, JCIT 0 . 1$ / DATE OF HEARING : 25.02.2016 2!( . 1$ / DATE OF PRONOUNCEMENT : 24.03.2016 / O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER: ALL THE APPEALS OF THE ASSESSEE ARE DIRECTED AGA INST THE COMMON ORDER OF THE COMMISSIONER OF INCOME TAX (APP EALS)-2, TIRUCHIRAPPALLI, DATED 11.12.2014 AND PERTAIN TO AS SESSMENT YEARS 2006-07 TO 2010-11. 2 I.T.A. NOS.849 TO 853/MDS/15 2. SHRI S. SRIDHAR, THE LD.COUNSEL FOR THE ASSESSEE , SUBMITTED THAT THE ASSESSEE IS A CO-OPERATIVE SOCIETY ENGAGED ITSELF IN MARKETING OF AGRICULTURAL PRODUCE CULTIVATED BY ITS MEMBERS. ACCORDING TO THE LD. COUNSEL, THE INCOME GENERATED BY THE ASSESSEE-CO-OPERATIVE SOCIETY IS ELIGIBLE FOR DEDUC TION UNDER SECTION 80P(2)(A)(III) OF THE INCOME-TAX ACT, 1961 (IN SHORT 'THE ACT'). THE LD.COUNSEL FURTHER SUBMITTED THAT BY AN ORDER D ATED 11.08.1987, THE ASSESSEE-CO-OPERATIVE SOCIETY WAS O RDERED BY THE STATE GOVERNMENT TO OPERATE A FAIR PRICE SHOP. ACC ORDING TO THE LD. COUNSEL, THE INCOME GENERATED OUT OF THE OPERATION OF FAIR PRICE SHOP IS ATTRIBUTABLE TO THE MARKETING AGRICULTURAL PRODUCE, THEREFORE, THE ASSESSEE IS ELIGIBLE FOR EXEMPTION UNDER SECTIO N 80P(2)(A)(III) OF THE ACT. HOWEVER, THE ASSESSING OFFICER REJECTE D THE CLAIM OF THE ASSESSEE ON THE GROUND THAT THE PRODUCTS SOLD BY TH E ASSESSEE ARE NOT PRODUCED BY ITS MEMBERS. ACCORDING TO THE LD. COUNSEL, THE ASSESSING OFFICER PROCEEDED ON THE RESTRICTIVE MEAN ING THEREBY OMITTING THE WORD ATTRIBUTABLE TO. THE LD.COUNSE L FAIRLY SUBMITTED THAT THE ASSESSING OFFICER FOUND THAT THE ASSESSEE IS ELIGIBLE FOR EXEMPTION UNDER SECTION 80P(2)(A)(III) OF THE ACT, HOWEVER, REFUSED TO ALLOW THE CLAIM OF THE ASSESSEE ONLY IN RESPECT OF THE INCOME RELATABLE TO MARKETING THE PRODUCTS FOR THE FAIR PR ICE SHOP. 3 I.T.A. NOS.849 TO 853/MDS/15 3. REFERRING TO THE ADDITIONAL GROUND RAISED BY THE ASSESSEE BEFORE THE CIT(APPEALS), THE LD.COUNSEL FOR THE ASS ESSEE SUBMITTED THAT THE FAIR PRICE SHOP WAS RUN BY THE STATE GOVER NMENT IN THE COURSE OF ITS SOVEREIGN FUNCTION. THEREFORE, IT IS NOT SUBJECTED TO TAXATION UNDER ARTICLE 289 OF THE CONSTITUTION OF I NDIA. THE LD.COUNSEL HAS ALSO SUBMITTED THAT CO-OPERATIVE SOC IETY, BEING A STATE WITHIN THE MEANING OF SECTION 2(31) OF THE ACT, IT WOULD NOT FALL WITHIN THE DEFINITION OF PERSON. THEREFORE, THE INCOME OF THE ASSESSEE IS NOT LIABLE FOR TAXATION. SINCE THE ASS ESSEE HAS RAISED THE ADDITIONAL GROUND BEFORE THE COMMISSIONER, HE I S EXPECTED TO DISPOSE OF THE SAME BY A SPEAKING ORDER. UNFORTUNA TELY, ACCORDING TO THE LD. COUNSEL, THE COMMISSIONER HAS NOT DISPOS ED OF THE GROUND RAISED BY THE ASSESSEE BY WAY OF ADDITIONAL GROUND. THEREFORE, THE LD.COUNSEL SUBMITTED THAT THE SAME M AY BE REMITTED BACK TO THE FILE OF THE CIT(APPEALS) FOR RECONSIDER ATION. 4. THE LD.COUNSEL FOR THE ASSESSEE FURTHER SUBMITTE D THAT THE ASSESSING OFFICER HAS TAKEN THE GROSS PROFIT INSTEA D OF NET PROFIT FOR COMPUTING THE TAXABLE INCOME. ACCORDING TO THE LD. COUNSEL, THE STARTING POINT FOR COMPUTATION OF ASSESSED INCOME S HOULD BE THE NET PROFIT AND NOT THE GROSS PROFIT. SINCE THE ASSESSI NG OFFICER HAS 4 I.T.A. NOS.849 TO 853/MDS/15 TAKEN THE GROSS PROFIT, THE ASSESSEE HAS RAISED ADD ITIONAL GROUND BEFORE THIS TRIBUNAL IN ALL THE APPEALS. THEREFORE , THE LD.COUNSEL SUBMITTED THAT THE MATTER MAY BE REMITTED BACK TO T HE ASSESSING OFFICER. 5. WE HEARD SH. P. RADHAKRISHNAN, THE LD. DEPARTMEN TAL REPRESENTATIVE ALSO. ACCORDING TO THE LD. D.R., TH E ASSESSEE IS ENGAGED IN MARKETING OF AGRICULTURAL PRODUCE CULTIV ATED BY ITS MEMBERS. IN THE COURSE OF ITS BUSINESS ACTIVITY, T HE ASSESSEE HAS ALSO OPERATED A FAIR PRICE SHOP. THE FAIR PRICE SH OP WAS EXPECTED TO BE OPERATED BY THE STATE GOVERNMENT AND THE ASSESSE E IS NOT MARKETING THE AGRICULTURAL PRODUCE CULTIVATED BY IT S MEMBERS. THEREFORE, THE ASSESSEE IS NOT ELIGIBLE FOR DEDUCTI ON UNDER SECTION 80P(2)(A)(III) OF THE ACT IN RESPECT OF THE INCOME GENERATED ON THE OPERATION OF FAIR PRICE SHOP. THIS GROUND WAS TAKE N BEFORE THE ASSESSING OFFICER BY WAY OF A REVISED RETURN. THER EFORE, ACCORDING TO THE LD. D.R., THE ASSESSING OFFICER HAD NO OCCAS ION TO CONSIDER THE SAME. SINCE THE ASSESSEE HAS NOT RAISED THIS I SSUE BY WAY OF REVISED RETURN, THE CIT(APPEALS) PLACING HIS RELIAN CE ON THE JUDGMENT OF APEX COURT IN GOETZE (INDIA) LTD. V. CI T (2006) 284 ITR 323, FOUND THAT THE ASSESSEE CANNOT RAISE THIS ISSU E OTHER THAN BY 5 I.T.A. NOS.849 TO 853/MDS/15 WAY OF A REVISED RETURN BEFORE THE ASSESSING OFFICE R. THEREFORE, ACCORDING TO THE LD. D.R., THE CIT(APPEALS) HAS RIG HTLY CONFIRMED THE ADDITION MADE BY THE ASSESSING OFFICER. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. THE FIRST GROUND OF APPEAL IS THAT THE ADDITIONAL GROUND RAISED BEFO RE THE CIT(APPEALS) WAS NOT CONSIDERED. WE HAVE CAREFULLY GONE THROUGH THE ADDITIONAL GROUND RAISED BEFORE THE CIT(APPEALS ) AND THE ORDER OF THE CIT(APPEALS). THE ADDITIONAL GROUND IS WITH REGARD TO STATUS OF THE ASSESSEE-CO-OPERATIVE SOCIETY AS STATE. T HE ASSESSEE CLAIMS THAT THE CO-OPERATIVE SOCIETY IS A STATE, THEREFORE, IT WILL NOT COME WITHIN THE DEFINITION OF PERSON UNDER SECTIO N 2(31) OF THE ACT. FROM THE BARE READING OF THE ORDER OF THE CIT (APPEALS) IT IS OBVIOUS THAT THIS CONTENTION OF THE ASSESSEE WAS CO NSIDERED SPECIFICALLY BY THE CIT(APPEALS) AFTER CALLING FOR REMAND REPORT FROM THE ASSESSING OFFICER. THE COMMISSIONER SPECIFICA LLY FOUND THAT THE ASSESSEE-CO-OPERATIVE SOCIETY IS A PERSON WIT HIN THE MEANING OF SECTION 2(31) OF THE ACT. THEREFORE, THE CONTEN TION OF THE ASSESSEE THAT THE ASSESSEE IS A STATE, THEREFORE, ITS INCOME CANNOT BE SUBJECTED TO TAXATION, IS DEVOID OF MERIT . THIS TRIBUNAL IS 6 I.T.A. NOS.849 TO 853/MDS/15 OF THE CONSIDERED OPINION THAT CO-OPERATIVE SOCIETY IS NOT A STATE WITHIN THE MEANING OF ARTICLE 12 OF THE CONSTITUTIO N OF INDIA. THEREFORE, IT HAS TO NATURALLY FALL WITHIN THE DEFI NITION OF PERSON UNDER SECTION 2(31) OF THE ACT. THIS IS WHAT THE C IT(APPEALS) FOUND IN HIS ORDER. THEREFORE, WE ARE UNABLE TO ACCEPT T HE CONTENTION OF THE LD.COUNSEL FOR THE ASSESSEE. THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT CO-OPERATIVE SOCIETY CANNOT BE CONSTRU ED AS STATE. THEREFORE, ITS INCOME IS NOT EXEMPTED FROM TAXATION . 7. FROM THE GROUNDS OF APPEAL IT APPEARS THAT THE A SSESSEE HAS RAISED ONE MORE GROUND REGARDING CLAIM OF SECTION 8 0P(2)(C)(I) OF THE ACT AS APPLICABLE TO THE CONSUMER CO-OPERATIVE SOCIETY AS FAR ITS ACTIVITY RELATING TO PUBLIC DISTRIBUTION SYSTEM IS CONCERNED. THIS GROUND WAS RAISED BY WAY OF ANOTHER ADDITIONAL GROU ND BEFORE THE CIT(APPEALS). UNFORTUNATELY, THE CIT(APPEALS) HAS NOT DECIDED THE SAME. IN FACT, THE CIT(APPEALS) REJECTED THE CLAIM OF THE ASSESSEE ON THE GROUND THAT THE SAME WAS NOT RAISED BY WAY O F A REVISED RETURN. WE HAVE CAREFULLY GONE THROUGH THE JUDGMEN T OF APEX COURT IN GOETZE (INDIA) LTD. (SUPRA). THE APEX COURT IN CATEGORICAL TERMS HELD THAT THE POWER OF THIS TRIBUNAL MAY NOT IMPING E FOR ADMITTING THE ADDITIONAL GROUNDS. WHEN THE ASSESSEE SPECIFIC ALLY CLAIMS BY 7 I.T.A. NOS.849 TO 853/MDS/15 WAY OF ADDITIONAL GROUND BEFORE THE CIT(APPEALS) TH AT ITS INCOME WAS EXEMPTED UNDER SECTION 80P(2)(C)(I) OF THE ACT AS CONSUMER CO-OPERATIVE SOCIETY, THIS TRIBUNAL IS OF THE CONSI DERED OPINION THAT THE CIT(APPEALS) IS EXPECTED TO DISPOSE OF THE GROU ND RAISED BY THE ASSESSEE BY WAY OF AN ADDITIONAL GROUND. SINCE SUC H AN EXERCISE WAS NOT DONE, THIS TRIBUNAL IS OF THE CONSIDERED OP INION THAT THE MATTER NEEDS TO BE RECONSIDERED BY THE CIT(APPEALS) AND DISPOSE OF THE ADDITIONAL GROUND RAISED BY THE ASSESSEE WIT H REGARD TO CLAIM OF SECTION 80P(2)(C)(I) OF THE ACT. ACCORDINGLY, T HE ADDITIONAL GROUND RAISED BY THE ASSESSEE BEFORE THE CIT(APPEALS) UNDE R SECTION 80P(2)(C)(I) OF THE ACT IN RESPECT OF THE INCOME GE NERATED OUT OF PUBLIC DISTRIBUTION SYSTEM, IS REMITTED BACK TO THE FILE OF THE CIT(APPEALS). THE CIT(APPEALS) SHALL EXAMINE THE I SSUE IN THE LIGHT OF THE PROVISIONS OF SECTION 80P(2)(C)(I) OF THE AC T AND THEREAFTER DECIDE THE SAME IN ACCORDANCE WITH LAW AFTER GIVING REASONABLE OPPORTUNITY TO THE ASSESSEE. 8. THE ASSESSEE HAS ALSO RAISED AN ADDITIONAL GROUN D BEFORE THIS TRIBUNAL IN RESPECT OF STARTING POINT OF COMPU TATION OF ASSESSED INCOME. THE ASSESSEE CLAIMS THAT THE ASSESSING OFF ICER HAS TAKEN THE STARTING POINT FOR COMPUTING ASSESSED INCOME AS GROSS PROFIT. 8 I.T.A. NOS.849 TO 853/MDS/15 ACCORDING TO THE ASSESSEE, IT SHOULD BE NET PROFIT. BOTH THE AUTHORITIES BELOW HAD NO OCCASION TO CONSIDER THIS CLAIM OF THE ASSESSEE. SINCE THE ISSUE WITH REGARD TO CLAIM OF DEDUCTION UNDER SECTION 80P(2)(C)(I) OF THE ACT IS REMITTED BACK TO THE FILE OF THE CIT(APPEALS), THIS TRIBUNAL IS OF THE CONSIDERED OP INION THAT THE ADDITIONAL GROUND WITH REGARD TO STARTING POINT FOR COMPUTATION OF ASSESSED INCOME ALSO NEEDS TO BE CONSIDERED BY THE CIT(APPEALS). ACCORDINGLY, THE CIT(APPEALS) IS DIRECTED TO CONSID ER THE STARTING POINT OF COMPUTATION OF ASSESSED INCOME AS TO WHETH ER IT IS GROSS PROFIT OR NET PROFIT AND THEREAFTER DECIDE THE ISSU E IN ACCORDANCE WITH LAW AFTER GIVING REASONABLE OPPORTUNITY TO THE ASSE SSEE. 9. IN THE RESULT, THE APPEALS OF THE ASSESSEE ARE P ARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON 24 TH MARCH, 2016 AT CHENNAI. SD/- SD/- (. !' ) ( . . . ) (A. MOHAN ALANKAMONY) (N.R.S. GANESAN) $ / ACCOUNTANT MEMBER /JUDICIAL MEMBER /CHENNAI, 4 /DATED, THE 24 TH MARCH, 2016. KRI. 9 I.T.A. NOS.849 TO 853/MDS/15 . ,156 76(1 /COPY TO: 1. *+ /APPELLANT 2. ,-*+ /RESPONDENT 3. 0 81 () /CIT(A)-2, TIRUCHIRAPPALLI 4. 0 81 /CIT-2, TRICHY 5. 69 ,1 /DR 6. :' ; /GF.