AI Insights
The case involves Lingnoor Doodh Utpadak and Puravatha Sah Sanstha Maryadit, a cooperative society engaged in collecting milk from individual farmers and selling it to Kolhapur Zillah Sahakari Doodh Utpadak Sangh Maryadit, a federal cooperative society. The society claimed deductions under section 80P of the Income Tax Act for the assessment year 2018-19, which were initially denied by the Assessing Officer and partially allowed by the Commissioner of Income Tax (Appeals). The Tribunal examined whether the society met the criteria for deductions under section 80P(2)(b) and (c), focusing on the nature of its sales and the activities it undertakes in relation to its members.
Appeal Details
Counselvise Citation
[2024] 140 COUNSELVISE.COM (IT) 472085 (ITAT-PUNE)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
2 month(s) 17 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
27-11-2024
Appeal Filed By
Assessee
Order Result
Allowed
Bench Allotted
SMC
Next Hearing Date
19-11-2024
Assessment Year
2018-2019
Appeal Filed On
09-09-2024
Judgement Text
" ।आयकर अपीलीय अिधकरण ”बी” Ɋायपीठ पुणेमŐ। IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCHES “B” :: PUNE BEFORE MS.ASTHA CHANDRA, JUDICIAL MEMBER AND DR.DIPAK P. RIPOTE, ACCOUNTANT MEMBER आयकर अपील सं. / ITA Nos.1875/PUN/2024 िनधाᭅरण वषᭅ / Assessment Year: 2018-19 Lingnoor Doodh Utpadak and Puravatha Sah Sanstha Maryadit, Lingnur, Miraj, Sangli – 416401. PAN: AABAL1723F V s The Income Tax Officer, Ward – 1, Sangli. Appellant/ Assessee Respondent / Revenue Assessee by Shri Hari Krishan – AR Revenue by Shri A.D.Kulkarni – Addl.CIT(DR) Date of hearing 19/11/2024 Date of pronouncement 27/11/2024 आदेश/ ORDER PER DR. DIPAK P. RIPOTE, AM: This appeal filed by the assessee directed against the order of ld.Commissioner of Income Tax(Appeals)[NFAC] u/sec.250 of the Income Tax Act, 1961; dated 25.07.2024 for the A.Y.2018-19. The Assessee has raised the following grounds of appeal : “1. The Ld.Commissioner of Income Tax(Appeal) has erred in holding that the assessee is not eligible for deduction u/s 80P of the ITA No.1875/PUN/2024 2 Income Tax Act in respect of the income of Rs.29,66,901.00 (deduction claimed; Rs.30,66,901.00 (-) deduction allowed by the Commissioner of Income Tax (Appeals) u/s 80P(2)(c) of the Income Tax Act; Rs.50,000.00)” Submission of Ld.AR : 2. Ld.Authorised Representative(ld.AR) for the Assessee filed a paper Book. Ld.AR submitted that assessee had purchased milk from Farmers and this fact was brought to the notice of the AO.The Ld.AR invited our attention to the list of Members which was at page 33-54 of the Paper book .Ld AR submitted that individual farmers are members of the assessee. Assessee collects Milk from these individuals. Ld.AR also invited our attention to the By-Laws of the assessee society which were at page 6-32 of the paper book. Ld.AR submitted that as per the By-Laws only milk producing individuals can become members. Ld.AR submitted that Assessee has sold Milk to Kolhapur Zillah Sahakari Doodh Utpadak Sangh Maryadi Kolhapur which is a federal cooperative society. The ld.AR invited our attention to the certificate issued by the Secretary of the assessee and copies of the Sale bills which are at page 55-90 of the Paper book, to demonstrate that entire sale is made to Federal Milk Society. The Ld.AR submitted that all the conditions ITA No.1875/PUN/2024 3 of the section 80P(2)(b) have been fulfilled by the assessee hence assessee is eligible for deduction. Ld.AR submitted that ld.CIT(A) has erred in stating that Assessee has not sold milk to Federal Co- Operative Milk Society, where as entire sale is to Kolhapur Zillah Sahakari Dudh Utpadak Sangh. Ld.AR submitted that Assessee has also sold Cattle Feed and Animal Medicines to member farmers and it is essential activity. Assessee has to guide farmers regarding animal feed, medicines so that milk production improves. Thus, the activity is intrinsically related to sale of Milk.Ld.AR pleaded that for earlier years the Department has allowed 80P in assessee’s case on identical facts. Ld.AR invited our attention to Assessment Orders for AY 2016-17, 2017-18 which were at page 91-96 of the paper book to demonstrate that department has allowed 80P for earlier years to assessee on identical facts. Hence Ld.AR submitted that assessee is eligible for deduction u/s 80P of the Act. Submission of Ld.DR : 3. Ld.Departmental Representative(ld.DR) for the Revenue relied on the order of the Assessing Officer and ld.CIT(A). ITA No.1875/PUN/2024 4 Findings and Analysis : 4. We have heard both the parties and perused the records. In this case the Assessee had filed return of Income for AY 2018-19 on 29/10/2018 declaring Nil income and claiming deduction of Rs.30,16,901/-. During the assessment proceedings the Assessee could not comply to notice u/s 142(1) issued by the Assessing Officer as it was peak Covid Period. The AO passed Ex Party assessment Order on 13/04/2021 and denied deduction claimed by the assessee. The assessee filed appeal before the Ld.CIT(A). Assessee also filed all the details called by the AO. The Ld.CIT(A) admitted the evidence filed by the assessee and called for a remand report from the AO. The Assessing Officer verified the details and submitted Report on 29/02/2024 which is at page 3-5 of the paper book. 4.1 The Ld.CIT(A) in para 8.2.2 observed as under : “8.2.2 It is noted, firstly, that the AO has stated in his remand report that the appellant’s receipts are mostly from milk sale raised by its members and that the case may be decided on merits. Secondly, the report of the AO is not binding on the appellate authority who has to decide the issues as per law, facts and circumstances of the case. Hence, the claim of the appellant needs to be tested as per facts of its ITA No.1875/PUN/2024 5 case and as per law. For the same, the books of accounts of the appellant & other evidences filed by it need to be perused.” 4.2 Then Ld.CIT(A) held that Assessee has not sold milk to federal cooperative society, assessee has also sold medicines and animal feeds hence the assessee is not eligible to deduction u/s 80P(2)(b) of the Act, however the ld.CIT(A) allowed deduction of Rs.50,000/- u/s 80P(2)(c) of the Act. Aggrieved by the order of the CIT(A) the assessee has filed appeal before ITAT. 4.3 On perusal of the copies of the Sale bills filed by the Ld.AR at page 56-90 of the paper book which were admittedly filed by the Assessee before the CIT(A)/AO , it is observed that assessee has sold milk to Kolhapur Zillah Sahakari Dudh Utpadak Sangh Maryadit . Assessee has also filed a certificate duly signed by the secretary of the assessee stating that entire Sale has been done to Kolhapur Zillah Sahakari Dudh Utpadak Sangh Maryadit. The Ld.DR for the Revenue has not disputed this fact. Section 80P(2)(b) of the Act is reproduced here as under : Deduction in respect of income of co-operative societies. 80P. (1) Where, in the case of an assessee being a co-operative society, the gross total income includes any income referred to in sub-section (2), there shall be deducted, in accordance with and subject to the provisions of this section, the sums specified in sub- section (2), in computing the total income of the assessee. ITA No.1875/PUN/2024 6 (2) The sums referred to in sub-section (1) shall be the following, namely :— (a) …………. (b) in the case of a co-operative society, being a primary society engaged in supplying milk, oilseeds, fruits or vegetables raised or grown by its members to— (i) a federal co-operative society, being a society engaged in the business of supplying milk, oilseeds, fruits, or vegetables, as the case may be; or (ii) the Government or a local authority; or (iii) a Government company as defined in section 617 of the Companies Act, 1956 (1 of 1956), or a corporation established by or under a Central, State or Provincial Act (being a company or corporation engaged in supplying milk, oilseeds, fruits or vegetables, as the case may be, to the public), the whole of the amount of profits and gains of such business; 4.4 Thus, as per section 80P(2)(b) assessee should be a Primary society supplying milk to Federal Co-Operative society engaged in the business of supplying milk, or Government Authority to become eligible for deduction. 4.5 In this case assessee has been collecting milk directly from individual farmers. A primary co-operative society is a co- operative society established by Individuals. Assessee has sold milk to Kolhapur Zillah Sahakari Dudh Utpadak Sangh Maryadit. The Kolhapur Zillah Sahkari Dudh Utpadak Sangh Maryadit is a registered Co-Operative Society under Maharashtra State Co- operative Societies Act, 1960. The Milk and Milk Products Order, ITA No.1875/PUN/2024 7 1992 lays down the conditions for registration for milk procuring/producing entities. The State Government has granted certain specified area to Kolhapur Zillah Sahkari Dudh Utpadak Sangh Maryadit as operational area for milk collection. The Kolhapur Zilla Sahakari Dudh Utpadak Sangh Maryadit is a Federal Milk Society as observed by Hon’ble Bombay High Court in the case of CIT vs Kolhapur Zilla Sahakari Dudh Utpadak Sangh Maryadit [2009] 315 ITR 304 (Bom). It means the assessee has sold milk to Federal Milk Society which is one of the requirements of the section 80P(2)(b) of the Act. 4.6 On perusal of the Assessment Order for A.Y.2016-17 and A.Y.2017-18, it is observed that assessee was allowed deduction u/s 80P(2)(b) of the Act. The paragraph 2 of the Assessment order for AY 2017-18 is reproduced here as under : “2. All the submissions made by the assessee are carefully verified. On perusal of the ITBA submissions and details furnished by the assessee vis-à-vis the reasons for verification, it is noticed that the assessee has claimed chapter VI-A deduction of Rs.21,80,683/-. The assessee society is registered under the Maharashtra State Co- operative Act, 1960 with District Deputy Registrar, Co-operative Societies, Sangli. As per the Bye-Laws & Records of the society, its main object is to collect the milk from members (farmers) and supply to Taluka and District co-op Dudh (Milk) Sangh.” ITA No.1875/PUN/2024 8 4.7 It has been submitted by the assessee that assessee’s activities are same for all these years. This fact has not been disputed by the Ld.DR. 4.8 We have already observed that assessee has collected milk from individuals and sold to Kolhapur Zilla Sahakari Dudh Utpadak Sangh Maryadit, which is a Federal Milk Society. Therefore, in the facts and circumstances of the case, we are of the opinion that the assessee fulfils the conditions mentioned in section 80P(2)(b) of the Act with reference to collection and sale of Milk. Therefore, the assessee is eligible for the deduction u/sec.80P(2)(b) of the Act on the Profit earned from sale of milk. 4.9 The other question is, whether the assessee is eligible for deduction u/sec.80P on the Profit earned from sale of Medicines, animal feeds? 5. It is fact that the Sale of Animal Feed, Animal medicine, Vilatya has been made by the assessee to the Members of the assessee. It was done during the business of the assessee of collecting milk from members. The activity is intrinsically linked ITA No.1875/PUN/2024 9 to the activity of collecting milk from members. Rather it is an essential activity for the assessee. On identical facts the ITAT Ahmedabad bench had allowed deduction u/sec.80P on sale of Animal feeds medicine .The relevant part is reproduced as under : “The ITAT Ahmedabad Bench in the case of SURENDRANAGAR DISTRICT CO-OPERATIVE MILK PRODUCERS UNION LTD.vs ACIT [2001] 72 TTJ 178 (Ahmedabad - ITAT)[15-06-2001] held as under : 2. The assessee is a co-operative society collecting milk from different co-operative societies of milk producers and supplying milk to Gujarat Dairy Development Board. Besides the activities of procurement of milk and sale thereof, the assessee was also engaged in some trading activities, for example, sale of Rajdhan i.e., cattle feed, sale of agricultural seeds and sale of milk testing equipments, etc. The Assessing Officer disallowed Rs.32,104 on the ground that cattle feed is not an agricultural produce and, therefore, it is not covered by section 80P(2)(a)( iii). Similarly, income of Rs.32,104 on account, of selling of milk testing equipments and other activities were not covered by section 80P(2)(a)( iv). It was further held by the Assessing Officer that rental income of Rs.35,932 received from milk cans is also not covered by section 80P(2)(e). In addition to the above, the Assessing Officer disallowed Rs.25,000 out of entertainment expenses and Rs.66,992 out of vehicle expenses. The CIT(A) confirmed the action of the Assessing Officer. Aggrieved, the assessee is in appeal before the Tribunal. ………………………. ITA No.1875/PUN/2024 10 6.2 After considering the above judicial observations and facts and circumstances of the case and the nature of activities of the assessee, we are of the view that impugned deductions are allowable deduction. Therefore, the Assessing Officer is directed to delete the addition of Rs. 27,608, Rs. 32,104 and Rs. 35,932 made on account of stores, cattle feed and rental income respectively. The ground of appeal of the assessee in respect of the above issue is allowed.” 4.7 No contrary decision has been brought to our notice. In these facts and circumstances of the case, respectfully following the ITAT Ahmedabad Bench we hold that assessee is eligible for deduction on Profit on sale of Animal Feed, Medicines, Vilatya. 5. In the result, the appeal of the assessee is allowed. Order pronounced in the open Court on 27th November, 2024. Sd/- Sd/- (MS.ASTHA CHANDRA) (DR. DIPAK P. RIPOTE) JUDICIAL MEMBER ACCOUNTANT MEMBER पुणे / Pune; ᳰदनांक / Dated : 27th Nov, 2024/ SGR* आदेशकᳱᮧितिलिपअᮕेिषत / Copy of the Order forwarded to : 1. अपीलाथᱮ / The Appellant. 2. ᮧ᭜यथᱮ / The Respondent. 3. The CIT(A), concerned. 4. The Pr. CIT, concerned. 5. िवभागीयᮧितिनिध, आयकर अपीलीय अिधकरण, “बी” बᱶच, पुणे / DR, ITAT, “B” Bench, Pune. 6. गाडᭅफ़ाइल / Guard File. ITA No.1875/PUN/2024 11 आदेशानुसार / BY ORDER, // TRUE COPY // Senior Private Secretary आयकर अपीलीय अिधकरण, पुणे/ITAT, Pune. "
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