The Haryana State Co-operative Supply and Marketing Federation Ltd., Panchkula V. Addl. CIT, Panchkula

ITA 98/CHANDI/2015

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 95468 (ITAT-CHANDIGARH)
• Duration Of Justice: 6 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-08-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 05-08-2015
• Assessment Year: 2011-2012
• Appeal Filed On: 29-01-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: RAVI SARANGA L
• Keywords: Opportunity of being heard; Earning of tax free income
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH,CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI T.R.SOOD, ACCOUNTANT MEMBER ITA NO. 98/CHD/2015 ASSESSMENT YEAR: 2011-12 THE HARYANA STATE COOP. SUPPLY VS THE ADDL.CIT, & MKTG. FEDERATION LTD., PANCHKULA RANGE SECTOR 5, PANCHKULA. PANCHKULA PAN: AAAJH0022R (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI AMAN PARTI RESPONDENT BY : SHRI RAVI SARANGAL DATE OF HEARING : 06.08.2015 DATE OF PRONOUNCEMENT : 11.08.2015 O R D E R PER BHAVNESH SAINI,JM THIS APPEAL BY ASSESSEE IS DIRECTED AGAINST THE ORD ER OF LD. CIT(APPEALS) PANCHKULA DATED 28.11.2014 FOR ASSESSMENT YEAR 2011-12 ON THE FOLLOWING GROUNDS : 1. THAT THE WORTHY CIT(A) ERRED IN FACTS AND LAW I N UPHOLDING THE DISALLOWANCE MADE U/ S 80P(2)(D) ASSUMING TH AT THE APPELLANT HAD INCURRED ADMINISTRATIVE/OFFICE/OVERHEAD/ FINAN CIAL EXPENSES FOR EARNING DIVIDEND AND INTEREST INCOME FROM CO-OP ERATIVE INSTITUTIONS. THE 'WORTHY C1T(A) ALSO ERRED IN APPL YING THE PROVISIONS OF SECTION 14A TO DIVIDEND AND INTEREST RECEIVED FROM CO-OPERATIVE INSTITUTIONS AND ASSIGNING THE REASON, 'FOLLOWING THE 2 DECISION OF THE HON'BLE IT AT FOR THE AY 2009-10' F OR UPHOLDING THE DISALLOWANCE AND THUS THE ORDER DESERVES TO BE SET ASIDE. 2. THAT THE WORTHY C1T(A) ERRED IN FACTS AS WELL A S IN LAW IN UPHOLDING THE DISALLOWANCE U/S 80P(2)(E) IN RESPECT OF RENT DERIVED BY THE APPELLANT FROM THE LETTING OUT OF GODOWNS FO R THE STORAGE OF COMMODITIES AND THEREFORE THE SAID ORDER BE SET ASI DE. 2. BRIEFLY THE FACTS AS NOTED IN THE IMPUGNED ORDER ARE THAT WITH REGARD TO DISALLOWANCE OF RS. 6,18,13,275 /- UNDER SECTION 80P(2)(D) OF THE ACT, THE ASSESSING O FFICER NOTED THAT DEDUCTION UNDER SECTION 80P(2)(D) OF THE ACT AMOUNTING TO RS. 6.07 CR ON DIVIDEND INCOME AND RS. 10.77 LACS ON INTEREST INCOME WERE CLAIMED BY THE ASSESSEE. THE ASSESSING OFFICER OBSERVED THAT DIVI DEND WAS RECEIVED BY THE ASSESSEE ON SHARES HELD WITH KRIBHCO, IFFCO WHICH ARE NATIONAL APEX COOPERATIVE SOCIETIES AND ASSESSEE IS A SHAREHOLDER IN SUCH SOC IETIES. THE FUNDS PLACED IN THE ABOVE INVESTMENTS WERE OUT OF BUSINESS OF THE ASSESSEE. THESE INVESTMENTS WERE P ART AND PARCEL OF CARRYING ON THE BUSINESS ACTIVITIES O F THE ASSESSEE. OUT OF THE SAME COMMON FUNDS, INCLUDING INTEREST BEARING FUNDS, PURCHASES WERE MADE, EXPENS ES WERE MET AND THE ABOVE INVESTMENTS WERE MADE. THE ASSESSEE HAS CLAIMED 100% DEDUCTION WITHOUT REDUCTI ON OF ANY PROPORTIONATE EXPENDITURE. THE ASSESSEES PLEA THAT NO COST WAS INCURRED ON THESE INVESTMENTS WAS ALSO NOT ACCEPTED. THE ASSESSING OFFICER, ACCORDINGLY MADE DISALLOWANCE UNDER SECTION 80P(2)(D) OF THE ACT. T HE ASSESSEE SUBMITTED BEFORE LD. CIT(APPEALS) THAT IT HAS 3 EARNED EXEMPT INCOME IN THE FORM OF DIVIDEND/INTERE ST ON THE INVESTMENTS MADE WITH KRIBHCO, IFFCO ETC. BY CLAIMING THE DEDUCTION UNDER SECTION 80P(2)(D) OF T HE ACT. THE ASSESSEE HAS INCURRED ADMINISTRATIVE/OFFICE OVE R- HEAD/FINANCIAL EXPENSES ETC. FOR EARNING THESE INCO ME WHICH ARE MORE THAN THE INCOME EARNED/DERIVED FROM THESE INVESTMENTS. THE LD. CIT(APPEALS) NOTED THAT THIS ISSUE IS DECIDED BY HIS PREDECESSOR IN THE CASE OF THE SAME ASSESSEE FOR ASSESSMENT YEAR 2008-09 VIDE ORDE R DATED 11.01.2012 IN WHICH ASSESSING OFFICER WAS DIR ECTED TO RE-COMPUTE THE DISALLOWANCE AS PER RULE 8D. THE LD. CIT(APPEALS) ALSO NOTED THAT THIS ORDER WAS BASED O N THE ORDER OF THE ITAT IN THE CASE OF THE ASSESSEE, THER EFORE, AS PER DIRECTIONS OF THE ITAT IN EARLIER YEARS, REPORT FROM THE ASSESSING OFFICER WAS CALLED FOR AND ASSESSING OFFI CER WAS DIRECTED TO RE-COMPUTE THE DISALLOWANCE AS PER RULE 8D. THE ASSESSING OFFICER SUBMITTED THE REPORT AND AFTE R CALCULATION AS PER RULE 8D, REACHED TO THE CONCLUSI ON THAT DEDUCTION UNDER SECTION 80P(2)(D) OF THE ACT IS RES TRICTED TO NIL. 3. THE LD. CIT(APPEALS), FOLLOWING THE ORDER OF HIS PREDECESSOR FOR ASSESSMENT YEAR 2008-09, ORDER OF I TAT FOR ASSESSMENT YEAR 2009-10 AND REPORT OF THE ASSES SING OFFICER FILED DURING APPELLATE PROCEEDINGS FOUND TH AT THE FACTS REMAINED SAME, THEREFORE, NO INTERFERENCE IS CALLED FOR IN THE MATTER AND DISMISSED THIS GROUND OF APPE AL OF THE ASSESSEE. 4 4. IT IS ALSO NOTED IN THE IMPUGNED ORDER WITH REGA RD TO DISALLOWANCE OF RS. 7,16,20,608/- UNDER SECTION 80P (2)(E) OF THE ACT THAT ASSESSEE CLAIMED THIS DEDUCTION ON ACCOUNT OF STORAGE CHARGES. THE ASSESSING OFFICER OBSERVED THAT ASSESSEE HAS NOT SUBSTANTIATED ITS CLAIM WITH EVIDE NCES THAT THE GODOWNS ARE NOT USED FOR ANY OTHER PURPOSE S. SINCE ONUS UPON ASSESSEE WAS NOT DISCHARGED, THEREF ORE FOLLOWING THE DECISION OF THE HON'BLE PUNJAB & HARY ANA HIGH COURT IN THE CASE OF THE SAME ASSESSEE DATED 08.09.2010 DECIDING THE ISSUE IN FAVOUR OF THE REVE NUE, THE ASSESSING OFFICER MADE DISALLOWANCE UNDER SECTI ON 80P(2)(E) OF THE ACT. IT WAS SUBMITTED BEFORE LD. CIT(APPEALS) THAT ASSESSEE DERIVED STORAGE INCOME F ROM LETTING OUT ITS GODOWNS FOR THE PURPOSE OF STORAGE. THE LD. CIT(APPEALS), HOWEVER FOUND THAT IN EARLIER YEAR 20 08-09, THIS ISSUE HAS BEEN DECIDED AGAINST THE ASSESSEE. HOWEVER, ASSESSING OFFICER WAS DIRECTED TO VERIFY C LAIM OF ASSESSEE IN VIEW OF THE DECISION OF THE HON'BLE HIG H COURT ON ACCOUNT OF LETTING OF GODOWNS TO FARMERS AT GURG AON AND MUMBAI FOR STORAGE. IT WAS ALSO NOTED THAT IN ASSESSMENT YEAR 2009-10, THE ITAT IN ITA 205/CHD/20 13 VIDE ORDER DATED 21.06.2013 ALSO DECIDED THE ISSUE AGAINST THE ASSESSEE HOLDING THAT ASSESSEE IS NOT E NTITLED TO CLAIM DEDUCTION ON THE BALANCE STORAGE PLACE BEI NG UTILIZED BY ITSELF FOR CARRYING OUT ITS BUSINESS IN FOODGRAINS. HOWEVER, LETTING OF GODOWN AT MUMBAI A ND GURGAON WAS RESTORED TO ASSESSING OFFICER. THE LD. CIT(APPEALS), AS PER DIRECTIONS OF THE TRIBUNAL IN EARLIER 5 YEARS FOR VERIFICATION OF LETTING OUT OF GODOWNS AT DELHI AND MUMBAI BY THE ASSESSING OFFICER, CALLED FOR THE REMAND REPORT AND THE ASSESSING OFFICER IN THE REMA ND REPORT STATED THAT ASSESSEE WAS REQUIRED TO FURNISH INFORMATION REGARDING STORAGE INCOME ON ACCOUNT OF LETTING OUT OF GODOWNS DIRECTLY TO THE FARMER BUT NO REPLY HAVE BEEN FURNISHED BEFORE ASSESSING OFFICER. THE LD. CIT(APPEALS), THEREFORE, FOLLOWING HIS ORDER FOR AS SESSMENT YEAR 2008-09 AND ORDER OF THE TRIBUNAL FOR ASSESSME NT YEAR 2009-10 FOUND THAT FACTS ARE SAME AND DESPITE GIVING OPPORTUNITY OF BEING HEARD EVEN AT APPELLATE STAGE, ASSESSEE HAS FAILED TO PROVE ITS CASE AS PER SECTIO N 80P(2)(E) OF THE ACT AND ACCORDINGLY, DISMISSED THE APPEAL OF THE ASSESSEE. 5. WE HAVE HEARD LD. REPRESENTATIVES OF BOTH THE PARTIES. AS PER SECTION 80P(2)(D) OF THE ACT OF TH E ACT, THE ASSESSEE SHALL HAVE TO PROVE THAT INCOME BY WAY OF INTEREST OR DIVIDEND DERIVED BY THE CO-OPERATIVE SO CIETY FROM ITS INVESTMENTS WITH ANY OTHER COOPERATIVE SOC IETY, THEN DEDUCTION WILL BE ALLOWABLE TO THE ASSESSEE. SIMILARLY AS PER SUB-CLAUSE (E), THE DEDUCTION WOUL D BE ALLOWABLE TO ASSESSEE IN RESPECT OF ANY INCOME DERI VED BY THE CO-OPERATIVE SOCIETY FROM THE LETTING OUT OF TH E GODOWNS OR WAREHOUSE FROM STORAGE, PROCESSING OR FACILITATING THE MARKETING OF COMMODITIES. THE LD. COUNSEL FOR THE ASSESSEE ADMITTED THAT IN PRECEDING ASSESSM ENT YEAR 2009-10, BOTH THE ISSUES HAVE BEEN DECIDED AGA INST 6 THE ASSESSEE BY ITAT CHANDIGARH BENCH IN THE CASE O F ASSESSEE IN ITA 205/2013 ORDER DATED 21.06.2013. C OPY OF THE ORDER IS PLACED ON RECORD. WE FIND THAT THE TRIBUNAL IN EARLIER YEAR DECIDED THE ISSUES AGAINST THE ASSESSEE AND AS PER DIRECTIONS GIVEN IN EARLIER YEA R DIRECTED THE ASSESSING OFFICER TO VERIFY THE DEDUCT IONS AS CLAIMED ABOVE. THE LD. CIT(APPEALS), WITH REGARD DEDUCTION CLAIMED UNDER SECTION 80P(2)(E) OF THE AC T, CALLED FOR THE REMAND REPORT FROM THE ASSESSING OFF ICER. THE ASSESSEE DID NOT FILE ANY EVIDENCE OR REPLY FRO M ASSESSING OFFICER IN THE REMAND PROCEEDINGS, THEREF ORE, IN ABSENCE OF ANY EVIDENCE OR MATERIAL, LD. CIT(APPEAL S) CONFIRMED THE ADDITION UNDER SECTION 80P(2)(E) OF T HE ACT. SIMILARLY, WITH REGARD TO DEDUCTION CLAIMED UNDER S ECTION 80P(2)(D) OF THE ACT OF THE ACT, ASSESSING OFFICER WAS DIRECTED TO RE-COMPUTE THE DISALLOWANCE AS PER DIRE CTIONS ISSUED BY ITAT IN EARLIER YEAR AND ASSESSING OFFICE R SUBMITTED REMAND REPORT BEFORE LD. CIT(APPEALS) HOL DING THAT DEDUCTION UNDER SECTION 80P(2)(D) OF THE ACT I S RESTRICTED TO NIL THEREFORE, FACTS REMAINED SAME AS HAVE BEEN CONSIDERED IN EARLIER YEARS AND CLAIM OF ASSES SEE WAS DISALLOWED. 6. CONSIDERING THE ABOVE FACTS IN THE LIGHT OF THE PROVISIONS OF LAW IN WHICH ASSESSEE CLAIMED DEDUCTI ON, BURDEN WAS UPON ASSESSEE TO PROVE ITS CASE AS PER L AW BUT ASSESSEE FAILED TO MAKE OUT ANY CASE OF CLAIM OF DE DUCTION UNDER THE ABOVE PROVISIONS CONTAINED UNDER SECTION 7 80P(2)(D) AND (E) OF THE ACT. NOTHING IS BROUGHT O N RECORD TO CHALLENGE THE FINDINGS OF LD. CIT(APPEALS). IN THE ABSENCE OF ANY MATERIAL ON RECORD, WE DO NOT FIND A NY JUSTIFICATION TO INTERFERE WITH THE ORDER OF THE LD . CIT(APPEALS) IN DISMISSING BOTH THESE GROUNDS OF AP PEAL OF THE ASSESSEE. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DIS MISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 11 TH AUGUST,2015. SD/- SD/- (T.R.SOOD) (BHAVNESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 11 TH AUGUST,2015. POONAM COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT(A), THE CIT, DR ASSISTANT REGISTRAR, ITAT CHANDIGARH