Appeal details
Counselvise Citation
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
" \n \n \n।आयकर अपीलीय अिधकरण ”बी” Ɋायपीठ पुणेमŐ। \nIN THE INCOME TAX APPELLATE TRIBUNAL \nPUNE BENCHES “B” :: PUNE \n \nBEFORE MS.ASTHA CHANDRA, JUDICIAL \nMEMBER AND \nDR.DIPAK P. RIPOTE, ACCOUNTANT MEMBER \n \nआयकर अपील सं. / ITA Nos.1875/PUN/2024 \nिनधाᭅरण वषᭅ / Assessment Year: 2018-19 \nLingnoor Doodh Utpadak \nand Puravatha Sah Sanstha \nMaryadit, \nLingnur, Miraj, \nSangli – 416401. \n \nPAN: AABAL1723F \nV\ns \nThe Income Tax Officer, \nWard – 1, Sangli. \nAppellant/ Assessee \n \nRespondent / Revenue \n \n \n \n \nAssessee by \nShri Hari Krishan – AR \nRevenue by \nShri A.D.Kulkarni – Addl.CIT(DR) \nDate of hearing \n19/11/2024 \nDate of pronouncement 27/11/2024 \n \nआदेश/ ORDER \n \nPER DR. DIPAK P. RIPOTE, AM: \n \n \nThis appeal filed by the assessee directed against the order of \nld.Commissioner of Income Tax(Appeals)[NFAC] u/sec.250 of the \nIncome Tax Act, 1961; dated 25.07.2024 for the A.Y.2018-19. \nThe Assessee has raised the following grounds of appeal : \n“1. \nThe Ld.Commissioner of Income Tax(Appeal) has erred in \nholding that the assessee is not eligible for deduction u/s 80P of the \n\n \n \nITA No.1875/PUN/2024 \n \n \n \n \n \n2\nIncome Tax Act in respect of the income of Rs.29,66,901.00 \n(deduction claimed; Rs.30,66,901.00 (-) deduction allowed by the \nCommissioner of Income Tax (Appeals) u/s 80P(2)(c) of the Income \nTax Act; Rs.50,000.00)” \n \nSubmission of Ld.AR : \n \n2. \nLd.Authorised Representative(ld.AR) for the Assessee filed a \npaper Book. Ld.AR submitted that assessee had purchased milk \nfrom Farmers and this fact was brought to the notice of the AO.The \nLd.AR invited our attention to the list of Members which was at \npage 33-54 of the Paper book .Ld AR submitted that individual \nfarmers are members of the assessee. Assessee collects Milk from \nthese individuals. Ld.AR also invited our attention to the By-Laws \nof the assessee society which were at page 6-32 of the paper book. \nLd.AR submitted that as per the By-Laws only milk producing \nindividuals can become members. Ld.AR submitted that Assessee \nhas sold Milk to Kolhapur Zillah Sahakari Doodh Utpadak Sangh \nMaryadi Kolhapur which is a federal cooperative society. The \nld.AR invited our attention to the certificate issued by the Secretary \nof the assessee and copies of the Sale bills which are at page 55-90 \nof the Paper book, to demonstrate that entire sale is made to \nFederal Milk Society. The Ld.AR submitted that all the conditions \n\n \n \nITA No.1875/PUN/2024 \n \n \n \n \n \n3\nof the section 80P(2)(b) have been fulfilled by the assessee hence \nassessee is eligible for deduction. Ld.AR submitted that ld.CIT(A) \nhas erred in stating that Assessee has not sold milk to Federal Co-\nOperative Milk Society, where as entire sale is to Kolhapur Zillah \nSahakari Dudh Utpadak Sangh. Ld.AR submitted that Assessee \nhas also sold Cattle Feed and Animal Medicines to member \nfarmers and it is essential activity. Assessee has to guide farmers \nregarding animal feed, medicines so that milk production \nimproves. Thus, the activity is intrinsically related to sale of \nMilk.Ld.AR pleaded that for earlier years the Department has \nallowed 80P in assessee’s case on identical facts. Ld.AR invited \nour attention to Assessment Orders for AY 2016-17, 2017-18 \nwhich were at page 91-96 of the paper book to demonstrate that \ndepartment has allowed 80P for earlier years to assessee on \nidentical facts. Hence Ld.AR submitted that assessee is eligible for \ndeduction u/s 80P of the Act. \n \nSubmission of Ld.DR : \n \n3. \nLd.Departmental Representative(ld.DR) for the Revenue \nrelied on the order of the Assessing Officer and ld.CIT(A). \n \n\n \n \nITA No.1875/PUN/2024 \n \n \n \n \n \n4\nFindings and Analysis : \n \n4. \nWe have heard both the parties and perused the records. In \nthis case the Assessee had filed return of Income for AY 2018-19 \non 29/10/2018 declaring Nil income and claiming deduction of \nRs.30,16,901/-. During the assessment proceedings the Assessee \ncould not comply to notice u/s 142(1) issued by the Assessing \nOfficer as it was peak Covid Period. The AO passed Ex Party \nassessment Order on 13/04/2021 and denied deduction claimed by \nthe assessee. The assessee filed appeal before the Ld.CIT(A). \nAssessee also filed all the details called by the AO. The Ld.CIT(A) \nadmitted the evidence filed by the assessee and called for a remand \nreport from the AO. The Assessing Officer verified the details and \nsubmitted Report on 29/02/2024 which is at page 3-5 of the paper \nbook. \n \n4.1 The Ld.CIT(A) in para 8.2.2 observed as under : \n \n“8.2.2 \nIt is noted, firstly, that the AO has stated in his remand report \nthat the appellant’s receipts are mostly from milk sale raised by its \nmembers and that the case may be decided on merits. Secondly, the \nreport of the AO is not binding on the appellate authority who has to \ndecide the issues as per law, facts and circumstances of the case. \nHence, the claim of the appellant needs to be tested as per facts of its \n\n \n \nITA No.1875/PUN/2024 \n \n \n \n \n \n5\ncase and as per law. For the same, the books of accounts of the \nappellant & other evidences filed by it need to be perused.” \n \n4.2 Then Ld.CIT(A) held that Assessee has not sold milk to \nfederal cooperative society, assessee has also sold medicines and \nanimal feeds hence the assessee is not eligible to deduction u/s \n80P(2)(b) of the Act, however the ld.CIT(A) allowed deduction of \nRs.50,000/- u/s 80P(2)(c) of the Act. Aggrieved by the order of the \nCIT(A) the assessee has filed appeal before ITAT. \n \n4.3 On perusal of the copies of the Sale bills filed by the Ld.AR \nat page 56-90 of the paper book which were admittedly filed by the \nAssessee before the CIT(A)/AO , it is observed that assessee has \nsold milk to Kolhapur Zillah Sahakari Dudh Utpadak Sangh \nMaryadit . Assessee has also filed a certificate duly signed by the \nsecretary of the assessee stating that entire Sale has been done to \nKolhapur Zillah Sahakari Dudh Utpadak Sangh Maryadit. The \nLd.DR for the Revenue has not disputed this fact. Section \n80P(2)(b) of the Act is reproduced here as under : \n \nDeduction in respect of income of co-operative societies. \n80P. (1) Where, in the case of an assessee being a co-operative \nsociety, the gross total income includes any income referred to in \nsub-section (2), there shall be deducted, in accordance with and \nsubject to the provisions of this section, the sums specified in sub-\nsection (2), in computing the total income of the assessee. \n\n \n \nITA No.1875/PUN/2024 \n \n \n \n \n \n6\n \n(2) The sums referred to in sub-section (1) shall be the following, \nnamely :— \n \n (a) …………. \n (b) in the case of a co-operative society, being a primary society \nengaged in supplying milk, oilseeds, fruits or vegetables raised or \ngrown by its members to— \n \n(i) a federal co-operative society, being a society engaged in the \nbusiness of supplying milk, oilseeds, fruits, or vegetables, as the \ncase may be; or \n (ii) the Government or a local authority; or \n(iii) a Government company as defined in section 617 of the \nCompanies Act, 1956 (1 of 1956), or a corporation established by \nor under a Central, State or Provincial Act (being a company or \ncorporation engaged in supplying milk, oilseeds, fruits or \nvegetables, as the case may be, to the public), \nthe whole of the amount of profits and gains of such business; \n \n4.4 Thus, as per section 80P(2)(b) assessee should be a Primary \nsociety supplying milk to Federal Co-Operative society engaged in \nthe business of supplying milk, or Government Authority to \nbecome eligible for deduction. \n \n4.5 In this case assessee has been collecting milk directly from \nindividual farmers. A primary co-operative society is a co-\noperative society established by Individuals. Assessee has sold \nmilk to Kolhapur Zillah Sahakari Dudh Utpadak Sangh Maryadit. \nThe Kolhapur Zillah Sahkari Dudh Utpadak Sangh Maryadit is a \nregistered Co-Operative Society under Maharashtra State Co-\noperative Societies Act, 1960. The Milk and Milk Products Order, \n\n \n \nITA No.1875/PUN/2024 \n \n \n \n \n \n7\n1992 lays down the conditions for registration for milk \nprocuring/producing entities. The State Government has granted \ncertain specified area to Kolhapur Zillah Sahkari Dudh Utpadak \nSangh Maryadit as operational area for milk collection. The \nKolhapur Zilla Sahakari Dudh Utpadak Sangh Maryadit is a \nFederal Milk Society as observed by Hon’ble Bombay High Court \nin the case of CIT vs Kolhapur Zilla Sahakari Dudh Utpadak \nSangh Maryadit [2009] 315 ITR 304 (Bom). It means the assessee \nhas sold milk to Federal Milk Society which is one of the \nrequirements of the section 80P(2)(b) of the Act. \n \n4.6 On perusal of the Assessment Order for A.Y.2016-17 and \nA.Y.2017-18, it is observed that assessee was allowed deduction \nu/s 80P(2)(b) of the Act. The paragraph 2 of the Assessment order \nfor AY 2017-18 is reproduced here as under : \n“2. \nAll the submissions made by the assessee are carefully verified. \nOn perusal of the ITBA submissions and details furnished by the \nassessee vis-à-vis the reasons for verification, it is noticed that the \nassessee has claimed chapter VI-A deduction of Rs.21,80,683/-. The \nassessee society is registered under the Maharashtra State Co-\noperative Act, 1960 with District Deputy Registrar, Co-operative \nSocieties, Sangli. As per the Bye-Laws & Records of the society, its \nmain object is to collect the milk from members (farmers) and supply \nto Taluka and District co-op Dudh (Milk) Sangh.” \n\n \n \nITA No.1875/PUN/2024 \n \n \n \n \n \n8\n \n4.7 It has been submitted by the assessee that assessee’s activities \nare same for all these years. This fact has not been disputed by the \nLd.DR. \n \n4.8 We have already observed that assessee has collected milk \nfrom individuals and sold to Kolhapur Zilla Sahakari Dudh \nUtpadak Sangh Maryadit, which is a Federal Milk Society. \nTherefore, in the facts and circumstances of the case, we are of the \nopinion that the assessee fulfils the conditions mentioned in section \n80P(2)(b) of the Act with reference to collection and sale of Milk. \nTherefore, the assessee is eligible for the deduction u/sec.80P(2)(b) \nof the Act on the Profit earned from sale of milk. \n \n4.9 The other question is, whether the assessee is eligible for \ndeduction u/sec.80P on the Profit earned from sale of Medicines, \nanimal feeds? \n \n5. \nIt is fact that the Sale of Animal Feed, Animal medicine, \nVilatya has been made by the assessee to the Members of the \nassessee. It was done during the business of the assessee of \ncollecting milk from members. The activity is intrinsically linked \n\n \n \nITA No.1875/PUN/2024 \n \n \n \n \n \n9\nto the activity of collecting milk from members. Rather it is an \nessential activity for the assessee. On identical facts the ITAT \nAhmedabad bench had allowed deduction u/sec.80P on sale of \nAnimal feeds medicine .The relevant part is reproduced as under : \n“The ITAT Ahmedabad Bench in the case of SURENDRANAGAR \nDISTRICT CO-OPERATIVE MILK PRODUCERS UNION LTD.vs \nACIT [2001] 72 TTJ 178 (Ahmedabad - ITAT)[15-06-2001] held as \nunder : \n \n2. The assessee is a co-operative society collecting milk from different \nco-operative societies of milk producers and supplying milk to \nGujarat Dairy Development Board. Besides the activities of \nprocurement of milk and sale thereof, the assessee was also engaged \nin some trading activities, for example, sale of Rajdhan i.e., cattle \nfeed, sale of agricultural seeds and sale of milk testing equipments, \netc. The Assessing Officer disallowed Rs.32,104 on the ground that \ncattle feed is not an agricultural produce and, therefore, it is not \ncovered by section 80P(2)(a)( iii). Similarly, income of Rs.32,104 on \naccount, of selling of milk testing equipments and other activities were \nnot covered by section 80P(2)(a)( iv). It was further held by the \nAssessing Officer that rental income of Rs.35,932 received from milk \ncans is also not covered by section 80P(2)(e). In addition to the \nabove, the Assessing \nOfficer disallowed Rs.25,000 out of \nentertainment expenses and Rs.66,992 out of vehicle expenses. The \nCIT(A) confirmed the action of the Assessing Officer. Aggrieved, the \nassessee is in appeal before the Tribunal. \n………………………. \n \n\n \n \nITA No.1875/PUN/2024 \n \n \n \n \n \n10\n6.2 After considering the above judicial observations and facts and \ncircumstances of the case and the nature of activities of the assessee, \nwe are of the view that impugned deductions are allowable deduction. \nTherefore, the Assessing Officer is directed to delete the addition of \nRs. 27,608, Rs. 32,104 and Rs. 35,932 made on account of stores, \ncattle feed and rental income respectively. The ground of appeal of \nthe assessee in respect of the above issue is allowed.” \n \n4.7 No contrary decision has been brought to our notice. In these \nfacts and circumstances of the case, respectfully following the \nITAT Ahmedabad Bench we hold that assessee is eligible for \ndeduction on Profit on sale of Animal Feed, Medicines, Vilatya. \n \n5. \nIn the result, the appeal of the assessee is allowed. \n Order pronounced in the open Court on 27th November, 2024. \n \n \n \nSd/- \n \n \n \n \n Sd/- \n (MS.ASTHA CHANDRA) \n (DR. DIPAK P. RIPOTE) \n JUDICIAL MEMBER ACCOUNTANT MEMBER \n \nपुणे / Pune; ᳰदनांक / Dated : 27th Nov, 2024/ SGR* \nआदेशकᳱᮧितिलिपअᮕेिषत / Copy of the Order forwarded to : \n1. \nअपीलाथᱮ / The Appellant. \n2. \nᮧ᭜यथᱮ / The Respondent. \n3. \nThe CIT(A), concerned. \n4. \nThe Pr. CIT, concerned. \n5. \nिवभागीयᮧितिनिध, आयकर अपीलीय अिधकरण, “बी” बᱶच, \nपुणे / DR, ITAT, “B” Bench, Pune. \n \n6. \nगाडᭅफ़ाइल / Guard File. \n \n\n \n \nITA No.1875/PUN/2024 \n \n \n \n \n \n11\nआदेशानुसार / BY ORDER, \n \n \n// TRUE COPY // \nSenior Private Secretary \n \n \n \n \nआयकर अपीलीय अिधकरण, पुणे/ITAT, Pune. \n \n \n \n"
Mehul