M/S M.P.STATE CO-OPRATIVE LTD, V. THE ITO 1(2),

ITA 920/IND/2005

• Counselvise Citation: [2009] 115 COUNSELVISE.COM (IT) 1466 (ITAT-INDORE)
• Duration Of Justice: 3 year(s) 11 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-11-2009
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 24-11-2009
• Assessment Year: 1999-2000
• Appeal Filed On: 22-12-2005
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Depreciation; Unabsorbed depreciation
• Section: 244A; 80G; 80P

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL , INDORE BENCH, INDORE BEFORE SHRI JOGINDER SINGH, J.M. AND SHRI R.C.SHARMA, A.M. PAN NO. : - I.T.A.NO S . 918 TO 920 /IND/200 5 A.Y S . : 1997 - 98 TO 1999 - 2000 M/S. M.P. STATE COOP. MARKETING FEDERATION LIMITED, INC OME - TAX OFFICER, 1(2), BHOPAL. BHOPAL. VS APPELLANT RESPONDENT APPELLANT BY : SHRI ANIL KHABYA, C. A. RESPONDENT BY : SHRI PRADEEP KUMAR MITRA, SR. DR O R D E R PER R. C. SHARMA, A.M. TH ESE ARE THE APPEALS FILED BY THE ASSESSEE A GAINST THE ORDER OF CIT(A) FOR THE ASSESSMENT YEARS 1997 - 98 TO 1999 - 2000. 2. COMMON GROUNDS HAVE BEEN TAKEN BY THE ASSESSEE IN ALL THE YEARS UNDER CONSIDERATION, THEREFORE, ALL THE APPEALS WERE HEARD TOGETHER AND ARE NOW DECIDED BY THIS CONSOLIDATED ORDER. - : 2 : - 2 3. TH E FACTS, IN BRIEF, ARE THAT THE ASSESSEE IS A CO - OPERATIVE SOCIETY HAVING INCOME OF RENT FOR LETTING GODOWNS AND WAREHOUSES, DIVIDEND INCOME FROM VARIOUS COMPANIES AND COOPERATIVE SOCIETIES, INTEREST INCOME FROM COOPERATIVE BANK AND OTHERS. IT HAS CLAIMED DEDUCTION U/S 80P IN RESPECT OF VARIOUS INCOMES DECLARED IN THE RETURN. THE AO HAS DECLINED ASSESSEE S CLAIM AND THE SAME WAS CONFIRMED BY THE LD. CIT(A) AND NOW THE ASSESSEE IS IN FURTHER APPEAL BEFORE US. 4. AT THE OUT - SET, THE LD. AUTHORIZED REPRESENTATIVE FAIRLY CONCEDED AND DI D NOT PRESS GROUNDS WITH REGARD TO CLAIM OF DEDUCTION U/S 80P IN RESPECT OF INTEREST INCOME RECEIVED ON INCOME TAX REFUND U/S 244A AND DIVIDEND INCOME. ACCORDINGLY, GROUND RAISED WITH REGARD TO INTEREST ON REFUND AND DIVIDEND INCOME ARE DISMISSED IN LIMINE AS NOT PRESSED. 5. THE ASSESSEE HAS ALSO CLAIMED DEDUCTION IN RESPECT OF INTEREST ON DEPOSITS OF M.P.E.B., WHICH WAS TREATED BY THE ASSESSING OFFICER AS INCOME FROM OTHER SOURCES AND DECLINED CLAIM OF DEDUCTION U/S 80P. WE FOUND THAT T HIS ISSUE IS SQUARELY COVERED BY THE ORDER OF THE TRIBUNAL IN ASSESSEE S OWN CASE FOR THE ASSESSMENT YEAR 1991 - 92 AND 1992 - 93, ORDER - : 3 : - 3 DATED 8 TH APRIL, 2002, WHEREIN FOLLOWING WAS THE PRECISE OBSERVATION OF THE BENCH : - 12. WE HAVE CONSIDERED THE RIVAL SUB MISSIONS CAREFULLY AND HAVE ALSO GONE THROUGH THE DOCUMENTS FILED ON RECORD AND JUDGMENTS RELIED ON BY THE PARTIES. WE FIND FORCE IN THE CONTENTION OF LD. AUTHORIZED REPRESENTATIVE BECAUSE WHILE CARRYING OUT THE OBJECTS OF SOCIETY, ASSESSEE HAS TO GRANT SO ME LOANS TO IS EMPLOYEES ALSO AND INTEREST RECEIVED FROM SUCH EMPLOYEES CANNOT BE CALLED TO BE A SEPARATE ACTIVITY. IT WOULD BE WORTH WHILE TO NOTICE THE LANGUAGE OF SECTION 80P(2) WHERE IT HAS BEEN PROVIDED THAT THE WHOLE OF AMOUNT OF PROFITS AND GAINS O F BUSINESS ATTRIBUTABLE TO ANYONE OR MORE OF SUCH ACTIVITY HAS BEEN USED . FOR CARRYING OUT THE ACTIVITY OF SOCIETY, IT IS IMPERATIVE THAT SOME LOANS MIGHT HAVE BEEN GIVEN TO THE EMPLOYEES AND SUCH INTEREST RECEIVED ON THESE LOANS CANNOT BE HELD TO BE NOT ATTRIBUTABLE TO THE PROFIT RECEIVED FROM SUCH ACTIVITY. SIMILARLY, WE FIND THAT INTEREST AMOUNTING - : 4 : - 4 TO RS. 4,51,972/ - HAS BEEN MOSTLY RECEIVED ON DELAYED PAYMENTS AND ONE LARGE ITEM AMOUNTING TO RS. 3,19,984/ - PERTAINS TO INTEREST ON LATE DELIVERY OF COTTON BALES. ONLY A SMALL AMOUNT OF RS. 4379/ - HAS BEEN RECEIVED FROM M.P. ELECTRICITY BOARD BUT EVEN IN THIS CASE ALSO IF A SECURITY DEPOSIT HAS BEEN MADE WITH THE ELECTRICITY BOARD, THEN SUCH INTEREST CANNOT BE CALLED TO BE A SEPARATE ACTIVITY OF THE SOCIETY. IN THESE CIRCUMSTANCES, WE SET - ASIDE THE ORDER OF CIT(A) AND DIRECT THE AO TO TREAT INTEREST INCOME OF RS. 762828/ - AS EXEMPTED. 6. RESPECTFULLY FOLLOWING THE DECISION OF THE COORDINATE BENCH IN ASSESSEE S OWN CASE, WE DIRECT THE AO TO ALLOW 80P . DEDUC TION IN RESPECT OF INTEREST INCOME RECEIVED FROM M.P.E.B. SIMILARLY, INTEREST RECEIVED IN RESPECT OF LOANS GIVEN TO ITS EMPLOYEES ARE ALSO EXEMPT U/S 80P. WE DIRECT ACCORDINGLY. 7. WITH REGARD TO THE ASSESSEE S CLAIM THAT THE AO HAS NOT RECOMPUTED BUSINESS L OSS AFTER CONSIDERING PAST LOSSES AND UNABSORBED DEPRECIATION. WE DIRECT THE AO TO RECOMPUTE THE INCOME OF THE SOCIETY IN EACH YEAR AFTER GIVING DUE BENEFIT - : 5 : - 5 OF CARRY FORWARD BUSINESS LOSSES AND UNABSORBED DEPRECIATION AS PER LAW. WE DIRECT ACCORDINGLY. 8. GR OUND NO. 5 IN THE ASSESSMENT YEAR 1997 - 98 RELATES TO CLAIM OF DEDUCTION OF RS. 50,000/ - U/S 80P(2) (C) (II) OF THE INCOME - TAX ACT, 1961 . HOWEVER, THE FACTS ARE NOT CLEAR AS TO WHAT INCOME HAS BEEN CLAIMED AS EXEMPT. NEITHER THE AO HAS DEALT WITH THIS ISSUE A FTER QUOTING THE AMOUNT OF RS. 50,000/ - NOR THE LD. CIT(A) HAS STATED ANY PRECISE OBSERVATION WITH THIS REGARD. ACCORDINGLY, WE RESTORE BACK THIS GROUND TO THE FILE OF THE AO FOR DECIDING AFRESH AFTER CONSIDERING ASSESSEE S SUBMISSION IN THIS REGARD. 9. ONE MORE GROUND HAS BEEN TAKEN IN THE ASSESSMENT YEAR 1998 - 99 WITH REGARD TO ALLOWING DEDUCTION U/S 80G IN RESPECT OF RS. 10 LAKHS DONATED BY THE ASSESSEE TO STATE GOVERNMENT FOR THE HELP OF THE PERSONS AFFECTED BY THE EARTH QUAKE. T HIS AMOUNT HAS BEEN GIVEN T O THE CHIEF MINISTER RELIEF FUND, WHICH IS ELIGIBLE FOR DEDUCTION U/S 80G, BUT THE SAME HAS NOT BEEN GRANTED BY THE ASSESSING OFFICER. WE DIRECT THE AO TO VERIFY THE RELEVANT RECEIPTS FOR DONATION AND ALLOW THE - : 6 : - 6 CLAIM OF DEDUCTION U/S 80G AS PER LAW WHILE C OMPUTING ASSESSEE S INCOME. 10. IN THE ASSESSMENT YEAR 1998 - 99, THE AO HAS ALSO DECLINED CLAIM OF DEDUCTION IN RESPECT OF INTEREST RECEIVED FROM NON - COOPERATIVE AGENCY AMOUNTING TO RS. 20,36,611/ - . WE HAVE VERIFIED THE DETAILS OF SUCH INCOME AS PLACED AT PAGE 36, WHICH COMPRISES OF DISCOUNT BY FERTILIZER/SUPPLIER, INTEREST RECEIVED ON LOAN TO EMPLOYEES AND INTEREST RECOVERY FOR DELAY IN LIFTING OF STOCK BY THE TRADERS. AS DISCUSSED IN PARA 5 ABOVE. ASSESSEE ELIGIBLE FOR GRANT OF DEDUCTIONS IN RESPECT OF THESE INCOME U/S 80P IN SO FAR AS ALL THESE INCOME ARE ATTRIBUTABLE TO ANY ONE OR MORE ACTIVITIES AS UNDERTAKEN BY ASSESSEE. ACCORDINGLY, AO IS DIRECTED TO VERIFY INTEREST RECOVERY FOR DELAY IN LIFTING OF STOCK BY TRADERS AMOUNTING TO RS. 7,90,087/ - , DISCOUNT AM OUNT RECEIVED BY FERTILIZERS/SUPPLIERS AMOUNTING TO RS. 8,57,563/ - AND INTEREST FREE LOAN TO EMPLOYEES AMOUNTING TO RS. 4,59,961/ - AND TO ALLOW DEDUCTION IN RESPECT OF SUCH INCOME U/S 80 - P (2) . 11. WITH REGARD TO CLAIM OF DEDUCTION U/S 80P(2)(C)(II) AMOUNTING T O RS. 50,000/ - IN EACH OF THE YEAR UNDER - : 7 : - 7 CONSIDERATION, IS RESTORED BACK TO THE FILE OF AO FOR DECIDING AFRESH AFTER CALLING NECESSARY INFORMATION AND DETAILS FROM THE ASSESSEE IN SO FAR AS THE FACTS ARE NOT CLEAR FROM RECORD. WE DIRECT ACCORDINGLY. 12. IN TH E RESULT, THE APPEALS OF THE ASSESSEE ARE ALLOWED IN PART IN TERMS INDICATED HEREINABOVE. THIS ORDER HAS BEEN PRONOUNCED IN THE OPEN COURT ON 26 TH APRIL, 2011. SD/ - SD/ - (JOGINDER SINGH) ( R.C.SHARMA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 26 T H APRIL, 2011 . CPU* 2125