Income Tax Appellate Tribunal - Chennai
The Chennimalai Kongu Wcs Limited, ... vs Department Of Income Tax on 2 May, 2013
IN THE INCOME TAX APPELLATE TRIBUNAL
'A' BENCH, CHENNAI
BEFORE Dr. O.K. NARAYANAN, VICE-PRESIDENT
AND SHRI VIKAS AWASTHY, JUDICIAL MEMBER
Sl.No. ITA No. A.Y. Assessee Respondent
1. 1552/Mds/2012 2009-10 The Assistant M/s. The
Commissioner of Vengamedu
Income-tax, WCS Ltd.,
Circle-II, Erode. EH 132,
Chennimalai,
Erode-638051
PAN
AAAAV1421D
2. 1553/Mds/2012 2009-10 The Assistant M/s.AA399
Commissioner of The
Income-tax, Chennimalai
Circle-II, Erode Industrial WCS
Ltd., AA399
Chennimalai,
Erode-638051.
PAN
AAAAT6085F
3. 1554/Mds/2012 2009-10 The Assistant M/s. The
Commissioner of Pallakattu Pudur
Income-tax, WCS Ltd.,
Circle-II, Erode AA128,
Chennimalai,
Erode-638051
PAN
AAAAP2222N.
4. 1555/Mds/2012 2009-10 The Assistant M/s. The
Commissioner of Chennimalai
Income-tax, Metro WCS Ltd.,
Circle-II, Erode CH7,
Chennimalai,
Erode-638051
PAN
AAAAC1224D
:- 2 -: ITA 1552, 1553/12 etc.
5. 1556/Mds/12 2009-10 The Assistant M/s. The
Commissioner of Chennimalai
Income-tax, WCS Ltd.,
Circle-II, Erode K885,
PB No.32
Chennimalai,
Erode-638051
PAN
AAAAC1223E
6. 1557/Mds/2012 2009-10 The Assistant M/s. Periyar
Commissioner of Primary
Income-tax, Industrial WCS
Circle-II, Erode Limited,
EH-67,P
Mettupalayam
Chennimalai,
Erode - 638051.
PAN
AAAAP3022A
7. 1558/Mds/2012 2009-10 The Assistant M/s. The
Commissioner of Chennimalai
Income-tax, Kongu WCS
Circle-II, Erode Limited, EH 113,
Chennimalai,
Erode - 638051
PAN
AAAAT5140K
8 1559/Mds/2012 2009-10 The Assistant M/s. The
Commissioner of Kalikkavalasu
Income-tax, Primar Industrial
Circle-II, Erode WCS Limited,
Murungatholuvu,
Chennimalai,
Erode - 638051
PAN
AAAAT3540P
9 1560/Mds/2012 2009-10 The Assistant M/s.
Commissioner of Vijayamangalam
Income-tax, Industrial cum
Circle-II, Erode Primary WCS
Limited,
Vijayamangalam
Chennimalai,
Erode - 638051.
PAN
AAAAV1429M
:- 3 -: ITA 1552, 1553/12 etc.
10 1561/Mds/2012 2009-10 The Assistant M/s. The
Commissioner of Chennimalai
Income-tax, Siragiri Murugan
Circle-II, Erode WCS Limited,
CH 2, PB No.50,
Chennimalai,
Erode - 638051
PAN
AAAAT6076E
Assessees by : Shri N. Madhavan, IRS, JCIT
Respondent by : Shri G. Baskar, Advocate
Date of Hearing : 2nd May, 2013
Date of Pronouncement : 2nd May, 2013
O R D E R
PER Dr. O.K. NARAYANAN, VICE-PRESIDENT This is a bunch of 10 appeals. All the appeals are filed by the Revenue. The common assessment year is 2009-10. The appeals are directed against the orders of the Commissioner of Income-tax(Appeals)-I at Coimbatore dated 7.5.2012 and arise out of the assessments completed under sec.143(3) of the Income-tax Act, 1961.
2. The assessees in all these cases are Co-operative Societies registered under the Industrial Co-operative Societies :- 4 -: ITA 1552, 1553/12 etc. Act of Tamil Nadu. The assessee-societies are engaged in textile manufacturing. In computing their income for the impugned assessment year, all the assessee-societies have claimed deduction under sec.80P(2)(a)(ii). This claim made by the assessees was rejected by the Assessing Officer. In first appeals, the Commissioner of Income-tax(Appeals) allowed the claim of deduction made by the assessees and allowed their appeals. The Revenue is aggrieved and therefore, the second appeals before the Tribunal.
3. The common ground raised by the Revenue in all these appeals is that the Commissioner of Income-tax(Appeals) has erred in allowing deduction under sec.80P(2)(a)(ii) of the Income- tax Act, 1961. It is the case of the Revenue that the Commissioner of Income-tax(Appeals) ought to have observed that there is a huge capital outlay and high turnover for the industry so as to term as cottage industry. It is the case of Revenue that these assessees are not engaged in cottage industry and not entitled for availing benefit under sec.80P(2)(a)(ii). The Revenue has relied on the Circular No. 722 issued by the C.B.D.T. dated 19.9.1995, wherein the Board has :- 5 -: ITA 1552, 1553/12 etc. clarified that a cottage industry is one which is carried on a small scale with a small amount of capital and a small number of workers and reasonably lesser turnover.
4. We heard both sides and considered the issue before us.
5. The very same issue was considered by the Income-tax Appellate Tribunal, Chennai 'C' Bench in the case of AA-399, The Chennimalai Industrial WCS Ltd. through their order dated 26.8.2011 passed in ITA No.422/Mds/2011 for the assessment year 2007-08. The Tribunal in the said order found that the term "cottage industry" is not defined anywhere in the Income-tax Act, 1961, but the classification of a cottage industry is available under the Industrial Development and Regulation Act. The assessee- society enjoys the status of a cottage industry under the said Act. The assessee is also getting all other favours and concessions from both Central and State Governments to promote the handloom industry in its status as a cottage industry. The Tribunal further observed that the assessee is mainly producing handloom bed sheets which sold through the outlets of co-optex handloom, an apex marketing society formed by the Government :- 6 -: ITA 1552, 1553/12 etc. of Tamil Nadu. In that case also, the main reason pointed out by the Assessing Officer to deny the benefit of cottage industry to the assessee was that the size of the assessee's establishment was too big, where it employed more than 2000 workers. Its turnover is crores and crores of rupees and it is a very big co-operative society engaged in producing handloom goods. On this point, the Tribunal observed that the objections raised by the Assessing Officer on the size and extent of the operation of the assessee- society are not valid to disqualify the assessee from the category of cottage industry for the purpose of the Income-tax Act, 1961. The Tribunal held that the recognition available to the assessee- society under the Industrial Development and Regulation Act as a cottage industry is relevant for the purpose of the Income-tax Act, 1961, as well. It was also observed that the assessee is working under the umbrella of the Commissioner of Handloom and Textiles, Government of Tamilnadu and obtaining various concessions like subsidies, rebates etc. in promoting the sale of its products. These concessions and facilities are given both by the State and Central Governments to protect the employment and interest of traditional workers and artisans in different fields of :- 7 -: ITA 1552, 1553/12 etc. cottage industries. Handloom is a traditional industry in India deploying a large number of workers. The handloom provides substantial amount of employment to rural population and handloom is a great contributor to the rural economy. After examining all these aspects of the case, the Tribunal held that the Commissioner of Income-tax(Appeals) in that case was justified in granting benefit of exemption under sec.80P(2)(a)(ii). The above view of the Tribunal has been followed in another set of appeals disposed off by the Income-tax Appellate Tribunal, Chennai 'D' Bench for the assessment year 2008-09 through their order dated 12.6.2012 in ITA Nos. 2004, 2005 & 2006/Mds/2011.
6. Therefore, it is seen that the issue has been decided in favour of the assessee-societies for the earlier assessment years in a consistent manner. In these circumstances, we find that the Commissioner of Income-tax(Appeals) is justified in accepting the claim of deduction made by the assessees in all these cases. Accordingly, the orders of the Commissioner of Income- tax(Appeals) are upheld.
7. In result, these appeals filed by the Revenue are dismissed.
:- 8 -: ITA 1552, 1553/12 etc. Orders pronounced in the open court at the time of hearing on Thursday, the 2nd of May, 2013 at Chennai.
Sd/- Sd/-
(VIKAS AWASTHY) (Dr.O.K.NARAYANAN)
Judicial Member Vice-President
Chennai,
Dated the 2nd May, 2013
mpo*
Copy to: 1. Appellant
2. Respondent
3. CIT
4. CIT(A)
5. DR
6. GF.