Income Tax Appellate Tribunal - Kolkata
Pioneer Cooperative Car Parking ... vs Department Of Income Tax
आयकर अपीलीय अधीकरण,
अधीकरण Ûयायपीठ - "C" , कोलकाता,
कोलकाता
IN THE INCOME TAX APPELLATE TRIBUNAL "C" BENCH : KOLKATA
सम¢) एस भी.
सम¢ ौी एस.
(सम¢ भी मेहरोऽा , लेखा सदःय,
सदःय एवं ौी एन.
एन. ǒवजय कुमारन,
मारन Ûयायीक सदःय,
सदःय )
[Before Sri S.V. Mehrotra, A.M. & Shri N. Vijaya Kumaran, J.M.]
आयकर अपील संÉया / I.T.A No. 934/Kol/2010
Assessment Year : 2006-2007
Deputy Commissioner of Income Tax, -vs.- Pioneer Cooperative Car Parking Servicing
Circle-35, Kolkata & Construction Society Ltd., Kolkata
(PAN : AAAAP 5596 R)
(अपीलाथȸ /Appellant) (ू×यथȸ/Respondent)
For the Appellant : Shri P.K. Chakraborty, D.R.
For the Respondent : S/Shri M. Ghosh & K.N. Kundu, A.R
सुनवाई कȧ तारȣख/Date
तारȣख of Hearing : 11.01.2012
घोषणा कȧ तारȣख/Date
तारȣख of Pronouncement : 11.01.2012
आदे श/ORDER
एस भी.मे
Per Shri S.V. Mehrotra, Accountant Member/ ौी एस. भी मेहरोऽा , लेखा सदःय :-
This appeal filed by the Revenue is against the order of ld. Commissioner of Income-tax (Appeals)-XX, Kolkata dated 18.03.2010 for the assessment year 2006-07.
2. Brief facts of the case are that the assessee, a Cooperative Society, in the relevant assessment year was engaged in Car Parking Services and realized car parking fees from car owners at different parts of Kolkata and other places. The assessee claimed its entire income as exempt under section 80(P)(a)(vi) which deals in "collective disposal of labour of members" of a Cooperative Society. It was also stated that the Society was collecting parking fees from its approved members possessing voting rights who were allotted parking places The Assessing Officer noted that in reality the Society had engaged 43 non-members for managing their core activities of managing parking places defeating the purpose for which the Society was formed. The Assessing Officer following the order for assessment year 2004-05 treated the assessee as an AOP and denied the claim of deduction under section 80(P)(a)(vi) of the Act.
2 ITA No. 934/Kol./20103. Ld. CIT(Appeals) allowed the assessee's appeal following the decision for assessment year 2004-05 in assessee's own case. He also referred to the assessment order for assessment year 2007-08 passed under section 143(3) on 30.12.2009, wherein the Assessing Officer had assessed the assessee in the status of a Cooperative Society and allowed the claim of deduction under section 80P(2)(a)(vi).
4. Department being aggrieved has taken following ground of appeal :-
"Ld. CIT(A.) erred both in facts and in law in allowing the deduction under section 80(P)(2)(a)(vi) on the basis of his order for AY 2004-05 which is pending before ITAT and directing to assess the assessee as a cooperative society without proper appreciation of arguments and the materials brought on record during the course of assessment as well as not proper appreciation the decision of Hon'ble ITAT, Amritsar Bench, in the case of Assessing Officer -vs.- Ganesh Co-op. (L&C) (1998) 67 ITD 436".
5. At the time of hearing, ld. counsel for the assessee in support of his contention filed before us copy of Tribunal's order dated 21.10.2011 in ITA No. 1672/Kol./2009 for assessment year 2004-05 in assessee's own case. The assessee has also filed copy of assessment order for assessment year 2007-08, wherein the Assessing Officer has allowed the claim of deduction under section 80(P)(2)(a)(vi) treating the assessee as a Cooperative Society. He, therefore, argued that the order of ld. CIT(Appeals) be upheld.
6. Having heard both the sides and carefully perused the material available on record. We find that this Tribunal vide its order dated 21.10.2011 in ITA No. 1672/Kol./2009 for assessment year 2004-05 in assessee's own case decided the issue in favour of assessee, wherein it has been held at para 6 to 6.5 as under :-
"6. We have heard the rival submissions of the parties and carefully gone through the orders of the authorities below as well as other evidences placed on record. The issue in question is as to whether on the facts and in the circumstances of the case, the assessee as a co-operative society fulfilled the conditions to get deduction u/s. 80P(2)(a)(vi) of the Act or the assessee did not satisfy the condition contained in clause
(vi) of Sec. 80P(2)(a) of the Act and it is to be treated as an AOP in status not entitled to claim deduction under the said section. Sec. 80P(2)(a)(vi) of the Act reads as under
:-
"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 subsection (2), in computing the total income of the assessee.3 ITA No. 934/Kol./2010
(2) The sums referred to in sub-section (1) shall be the following, namely :-
(a) in the case of a co-operative society engaged in -
(i) ............
..............
(vi) the collective disposal of the labour of its members,"
According to the aforesaid sub-clause (vi) to sec. 80P(2)(a), an assessee-cooperative society is entitled to 100% deduction under the said section if the members of the society earn some income by giving their collective labour to their society. The A.O. was not impressed upon the contention of the assessee that it employed 43 persons only to manage its five offices and its 206 members worked for the core activity of the society and they did not work in the offices of the society. The A.O. further alleged that most of the members were of the age group of 50 years or above and they were physically unfit to perform the outdoor duties of the society. According to him further, for carrying out the core activity, the society was required to engage at least 214 persons and he thus suspected deployment of outsiders to perform the society's core activity. In support of his presumption, the A.O. referred to the statement of the Secretary of the assessee- society dated 27/12/2006 allegedly stating that the society takes help of the other members of other co-operatives who are working besides them in adjacent areas. During the course of assessment proceedings, the A.O. obtained specimen of audit report in respect of the system of maintenance of books of account from the Dy. Director of Co-operative Societies and alleged that the assessee was not maintaining its books of account according to the specification enumerated by the said authority. He, therefore, rejected the books of account of the assessee and treated the assessee as an AOP.
6.1. We observe that the A.O. has alleged that the assessee employed 43 persons to carry out the core activities of the assessee and they were not working in the offices of the assessee, which according to him was only two. The assessee before the authorities has filed a list of 43 persons indicating the nature of duties assigned to them office-wise and payments made to each of them and these evidences are also filed in the paper book before us. The same is also appearing on page-7 of the appellate order. Further, we observe that the assessee maintains five offices and one Pay and Use Toilet in the city (and not two offices as alleged by the A.O.), the details of which are given in A-11 of the paper book. It is not denied to the fact that for running the establishments, the assessee is required to employ persons. In the list the assessee has given office-wise deployment of employees with their allotment of various nature of duties. The A.O. could not deny this factual position by bringing on record any contrary evidence to establish his suspicion that these 43 employees were also used for core activities of the assessee-society. He rather expressed surprise over employment of 43 employees in two offices, whereas as per details available with him as also before the ld. C.I.T.(A) and filed before us as well, the assessee maintains five offices. In these circumstances, the A.O.'s doubt about excess strength of employees and their deployment in core activities of the assessee-society is factually and logically incorrect. In our considered opinion, the ld. C.I.T.(A) has rightly stated that it was for the A.O. to establish that employment of 43 persons by the assessee was excessive, which the A.O. failed to discharge. Therefore, for running/maintaining the car parking spaces and realization of the fees therefrom, it can be said that the assessee has deployed its members to do such duties, more so when the A.O. himself has stated that for such job approximately 214 man power is required, whereas admittedly the assessee's members strength during the year under consideration was 206. In our considered opinion further, the A.O. has drawn a general conclusion without any proof/positive evidence that most of the members of 4 ITA No. 934/Kol./2010 above 50 years of age were unfit for providing outdoor services to the assessee-society. This observation of the A.O. based on suspicion and in absence of any concrete evidence, in our opinion, cannot be accepted. We further observe that the A.O. took the statement of the Secretary of the assessee-society dated 27/12/2006 in proof of his observation that the assessee-society in case of shortage takes help of other members of other co-operatives of adjacent areas. On the basis of this alleged assertion, the A.O. held that the assessee employed outsiders and hence not entitled to deduction u/s. 80P(2)(a)(vi) of the Act. The relevant question and reply of the Secretary is appearing on pages 10 & 11, para 6.3.5 of the appellate order, which read as under :-
"In question no. 11, the AO asked - "in case of shortfall in members in a day, how you manage your parking lots with reduced manpower? The Secretary replied - "we do not deploy outsiders but in case of shortage, we take help from our society members who works beside us."
The ld. C.I.T.(A) on plain reading of the aforesaid question and reply thereof found that the Secretary was referring to his own members and not to members of other cooperative societies, as interpreted by the A.O. On the above question put by the A.O. and reply of the Secretary, we are of the considered opinion that the ld. C.I.T.(A) has correctly considered/interpreted the contents of that statement of the Secretary, which, in fact, supports the contention of the assessee.
6.2. The A.O. obtained copy of the co-operative society's audit report in respect of the system of maintenance of books of account from the office of Dy. Director of Cooperative Societies. On the basis of the contents therein, the A.O. alleged that the assessee was not maintaining its books of account in proper, fair and in transparent manner, which has resulted in rejection of books of account of the assessee. We observe that the Registrar of Co-operative Society on introduction of computerized system of keeping the accounts, has made some remarks, observations and suggestions and the A.O. himself has quoted the same under the heading 'General Remarks, Observations and Suggestions'. Vide item 4 reproduced above, it is stated that in view of the huge volume of transactions the society authority is suggested to introduce internal control and checking system. The learned counsel has stated that the books of account of the assessee-society are duly audited by Govt. Auditors as per Co-operative Societies Rules & Regulations and the A.O. did not dispute the same. We also find substantial force in the contention of the assessee's learned counsel that observations made in the Registrar of Co-operative Society's Audit Report are only in the nature of suggestions given with a view to bring about improvements in the system of maintenance of books of account, cash book uptodate etc. But by these suggestions/ observations it cannot be said that the Registrar of Co-operative Society has specified or pointed out any mistake or irregularity in the books of account of the assessee, which are duly audited by the Govt. Auditors. Therefore, the action of the A.O. in having rejected the assessee's books of account solely on the basis of above observations/ suggestions and treating the assessee's status as that of AOP, in our considered opinion, was not justified and we find no infirmity in the order of the ld. C.I.T.(A) in rejecting such action of the A.O. Our above conclusion is also backed by the fact that for assessment year 2001-02, the A.O. has treated the status of this very assessee as 'Cooperative Society' and as there was loss in that year, no deduction u/s. 80P(2)(a)(vi) of the Act was claimed or considered. A copy of the said assessment order dated 29.8.2003 in placed in the paper book at A-5. Further, during the course of hearing, the learned counsel for the assessee has also filed a copy of assessment order dated 30/12/2009 for assessment year 2007-08 which was passed by the same D.C.I.T., who filed the appeal before the Tribunal. We observe that the A.O. in this assessment year after taking the status of the assessee as Co-
5 ITA No. 934/Kol./2010operative Society has allowed the deduction of Rs.18,83,815/- u/s. 80P(2)(a)(vi) of the Act from the net profit as per P/L account, assessing the total income at Nil. The ld. Departmental Representative could not bring on record any incidence or evidence on record to establish that the nature of activities in those two assessment years, i.e. A.Ys 2001-02 & 2007-08, were different than those of the assessment year under consideration. It is pertinent to mention here that the A.O. in the assessment order for A.Y. 2007-08 has allowed the claim of the assessee by stating as under :-
"In view of above, as the issues involved are same, following the order of CIT(A) for A.Y. 2004-05, assessee's status is considered as a co- operative society and deduction u/s. 80P(2)(a)(vi)."
In view of the above, once the department has accepted in A.Y. 2007-08 that the facts of this year are identical to those of assessment year under consideration, in our considered opinion, there remains no case for the department to take the status of the assessee as an AOP and consequentially deny the deduction u/s. 80P(2)(a)(vi) of the Act.
6.3. We further observe that the A.O. while denying the deduction u/s. 80P(2)(a)(vi) of the Act relied on the decision in the case of Nilgiri Engineering Co-op. Society Ltd. vs. CIT (supra). However, we find that the facts and circumstances in the above case are totally different than those of the assessee's case. In the said case the assessee, which was formed by graduate engineers, undertook labour contract and claimed benefit of sec. 80P(2)(a)(vi) of the Act. The contribution of the member-engineers was confined only to overall supervision in the office and the actual supervision of the works in thefield was done by the paid employees of the society. The income declared by the society was earned by undertaking contract works and getting them executed through engagement of sub-contractors and by deployment of outside labour. On the above facts, it was held that no labour was exercised by the members and that they had acted like any other businessmen. However, in the case before us, as already stated above, the facts are different. There was no sub-contract of the assigned job and actual labour is exercised by the members of the society. Therefore, the aforesaid decision of Hon'ble Orissa High Court is not applicable to the case of the assessee.
6.4. Before parting, we may state that though it is mentioned in the grounds of appeal that the remand report containing the decision of ITAT, Amritsar Bench in the case of Assessing Officer vs. Ganesh Co-operative (L&C) Society Ltd. [67 ITR 436] has not been considered by the ld. C.I.T.(A), but however the ld. Departmental Representative has not filed any remand report before us on which the revenue is placing reliance. On the other hand, we observe from the papers placed in the paper book under A-6 that the ld. C.I.T.(A) vide his letter dated 13/1/2009 sought from the A.O. assessment record in the case of the assessee for the assessment year under consideration and the A.O. vide his reply dated 21/1/2009 has complied with the requirement as made by the ld. C.I.T.(A). Therefore, we are of the opinion that this assertion of the department in the grounds of appeal is misplaced and out of the context. Even otherwise also, the decision of the Tribunal in the case of Assessing Officer vs. Ganesh Co-operative (L&C) Society Ltd. (supra) is not applicable to the facts and circumstances of the assessee's case. In that case the Tribunal held the deduction u/s. 80P(2)(a)(vi) not allowable on the reasonings that the bye-laws of the co-operative society laying down rules for membership and voting rights violated proviso to sec. 80P(2)(a)(vi) and further the major contribution of individual labour to contract work undertaken by the society was from non-members. But so far as the case of the assessee is concerned, the department could not establish any violation of bye-
6 ITA No. 934/Kol./2010laws and further we have already held that core activity of the assessee-society has been performed by the members of the society without engagement of outsiders. In that view of the matter the aforesaid decision of the Tribunal is also not applicable to the facts of the assessee's case.
6.5. In view of the above facts and circumstances of the case, we are of the considered opinion that the ld. C.I.T.(A) has dealt with each and every objection raised by the A.O. and thus correctly directed him to take the status of the assessee as cooperative society and to allow deduction u/s. 80P(2)(a)(vi) of the Act, as claimed by the assessee. We uphold his order on this issue and the ground of appeal of the department is dismissed".
6.1. Respectfully following the same, we do not find any reason to interfere with the order of ld. CIT(Appeals) and dismiss the appeal of the Revenue.
7. In the result, the appeal filed by the Revenue is dismissed.
पǐरणामतः ǒवभाग का अपील खाǐरज Ǒकया जाता है ।
ORDER PRONOUNCED IN THE OPEN COURT ON 11/01/2012.
Sd/- Sd/-
[N. Vijaya Kumaran / एन.
एन. ǒवजय कुमारन]
मारन एस भी.मे
[S.V. Mehrotra/ (एस. भी मेहरोऽा)]
रोऽा
Judicial Member/ Ûयायीक सदःय Accountant Member/ लेखा सदःय
Dated : 11/ 01/ 2012
Copy of the order forwarded to:
1. Pioneer Cooperative Car Parking Servicing & Construction Society Ltd., 33/1, N.S. Road, Kolkata-1.
2 DCIT, Circle-35, Kolkata, 18, Rabindra Sarani, Poddar Court, 3rd floor, Kolkata-1
3. CIT(Appeals)- ,Kolkata
4. CIT, Kolkata
5. DR, Kolkata Benches, Kolkata (True Copy) By Order Assistant Registrar, I.T.A.T., Kolkata Laha, Sr. P.S.