Income Tax Appellate Tribunal - Kolkata
Kalna Block-Ii Cooperative ... vs Assessee
आयकर अपीलीय अधीकरण, Ûयायपीठ - " ए ", कोलकाता,
IN THE INCOME TAX APPELLATE TRIBUNAL "A" BENCH : KOLKATA
(सम¢)Before ौी डȣ. ×यागी, Ûयायीक सदःय, एवं/and ौी सी.
डȣ. के. ×यागी, सी.डȣ.
डȣ.राव,
राव लेखा सदःय)
[Before Hon'ble Sri D. K. Tyagi, JM & Hon'ble Sri C. D. Rao, AM]
आयकर अपील संÉया / I.T.A No. 1713/Kol/2008
िनधॉरण वषॅ/Assessment Year : 2005-06
Kalna Block-II Co-operative Agriculture -Vs- Assistant Commissioner of Income-tax,
Marketing Society (PA No. AAMFS 4291 B) Circle-1, Burdwan
(अपीलाथȸ/APPELLANT ) (ू×यथȸ/RESPONDENT)
For the Appellant : Sri S. K. Mukherjee
For the Respondent Sri O. P.Agarwal
आदे श/ORDER
Per D. K. Tyagi, JM (ौी डȣ.
डȣ. के. ×यागी, ×यागी, Ûयायीक सदःय) The assessee is aggrieved by the order of the Ld. CIT(A), Asansol dated 04.07.2008 for assessment year 2005-06 in confirming the disallowance made by the AO u/s. 80P of the I. T. Act for a sum of Rs.5,59,350/-.
2. The facts of the case in brief as stated by the Ld. CIT(A) are that the AO has allowed the deduction u/s. 80P. However, he has not allowed the deduction u/s. 80P under various heads totaling to Rs.5,59,345/-. In appeal, the Ld. CIT(A) confirmed this action of the AO. Aggrieved by the said order, now the assessee is in appeal before us.
3. At the time of hearing before us, the Ld. Counsel for the assessee submitted that the income of the assessee derived from letting of cold storage and from dealer of agricultural equipments, seeds, fertilizer and other articles for the purpose of supplying them to the members are eligible for reduction under various provisions of section 80P of the I. T. Act, 1961. That the section 80P is a section for providing relief to the cooperative societies. The assessee society helps the poor farmers who are also member of this society. They are provided with many facilities so that they can keep themselves away from the village moneylenders. The society helps the farmers giving loan up to 80% of the sale proceeds. The Govt of India to give relief to the rural farmers give facilities to these societies u/s. 80P of the Income Tax Act 1961 so that the farmers make direct benefit by the section and on the other hand by doing the business. The society would not face any tax burden. In this case the AO made addition especially the receipt amount which was reflected in the accounts for assessment year 2005-06. House Rent received was disallowed u/s.80P and was Taxed. The rent of RS 22120.00 which 2 was disallowed was received from Govt who is also a member of the society. Categorically there are three types of members of the society. A) Village small societies B) Individuals C) State Govt. So the amount received for the rent from a member and rent proceed which was reflected in the books of accounts does not contravene the section 80P. That the loan to staff members and the interest earned of Rs 9516.00 was disallowed. These transaction reflected in the books of accounts does not contravene section 80P. Provision for earning interest enumerated in clause 5 b of the byelaws of the societies. That the miscellaneous income of Rs 3210.00 was earned by selling scrap material and reflected in the books of accounts does not contravene section 80P. Sell of tender form for Rs 38.00 does not tantamount to disqualify the section SOP. That the interest earned from gratuity kept for the member employees was reflected in the accounts and was disallowed to the tune of Rs 130.00 is not as per provision of section 80P. All these amounts are added in the accounts of general section of the society. He also contended that in the cold storage section the following addition was made which was not as per law as enumerated in sec 80 P of the Income tax Act 1961:
i) The other income (MISC) received of Rs 24280.00 was disallowed, actually it was received of misc. sales of rejected gunny bags and spare parts for which the sales proceeds were entered in the books of accounts which was totally related to the business of the society which covered u/s 80P2 (e.)
ii) That sum of Rs.10000.00 was disallowed which was received against service charges received from Kalona Regulating Marketing society for collecting the market fees on behalf of them.
iii) That the amount of Rs. 141721.00 was disallowed as Deferred Revenue Expenses, which was actually the closing stock of Mobil, oil and spare parts, which were required to keep the unit running And the deferred revenue expenses are actually closing stock.
This closing stock was reflected in the books of accounts to ascertain the profit of the society And the purchase of these are also reflected in accounts. This amount is related with business of the society and covered u/s 80 P 2(e).
iv) The sum of Rs. 348330.00 was disallowed against the refund of Insurance Premium. The actual facts in this respect are that the members of the society keep the potatoes in the cold storage of the society .The Society charges fees for storage of the potatoes per bag. The Society, for the save guard of loss if any arise, made Insurance for every bag of potato. But generally the members brought out the potatoes out of the cold storage 3 within two or three months for marketing the potatoes. The Insurance company generally give back the premium for lesser period of coverage of the potatoes to the Society. And this amount of refunded Insurance premium was reflected in the books of accounts for Rs 348330.00, which was reflected in books of accounts in the receipt side of the accounts to ascertain the profit of the Society .This system is followed for conducting the storage of potatoes in the cold storage and the same are fully covered u/s 80 P. He also placed reliance on the following case laws. :
i) Budhewal Co-op. Sugar Mills Ltd. Vs. CIT 184 Taxman 165,
ii) Triveni Engg. & Industries Ltd. Vs. CIT 184 Taxman 179,
iii) Broach Distt. Cooperative Cotton Sales, Ginning & Pressing Society Ltd. Vs. CIT 177 ITR 418 (SC),
iv) Life Insurance Corporation of India Vs. CIT 177 ITR 423,
v) Addl. CIT Vs. Ryots Agricultural Produce Cooperative Marketing Society Ltd. 115 ITR 709
vi) CIT Vs. Ryots Agricultural Produce Cooperative Marketing Society Ltd.323 ITR 666,
vii) CIT Vs. Karjan Coop. Cotton Sles, Ginning & Pressing Society Ltd. 129 ITR 821 He, therefore, prayed that the addition so made by the AO and sustained by the Ld. CIT(A) may be deleted.
4. On the other hand, the Ld. DR relied on the orders of the lower authorities.
5. After hearing both the parties and perusing the material available on record, we find that the facts of the case are not clear from the orders of the lower authorities and the submissions now made before us require verification at the end of the AO. Therefore, the matter is restored to the file of the AO for fresh adjudication after taking into consideration the submissions and the case laws filed by the Ld. Counsel for the assessee. Needless to say that the assessee should be given sufficient opportunity of being heard. The appeal of the assessee is allowed for statistical purposes.
6. In the result, the appeal of the assessee is allowed for statistical purposes.
7. Order is pronounced in the open court.
Sd/- Sd/-
सी.डȣ.राव, लेखा सदःय डȣ. के. ×यागी, Ûयायीक सदःय
(C. D. Rao) (D. K. Tyagi)
Accountant Member Judicial Member
(तारȣख)
तारȣख) Dated : 24th August, 2010
वǐरƵ िनǔज सिचव Jd.(Sr.P.S.)
4
आदे श कȧ ूितिलǒप अमेǒषतः- Copy of the order forwarded to:
1. अपीलाथȸ/APPELLANT - Kalna BlockII Cooperative Agriculture Marketing Society Ltd. Jhakarpara, P.O. Goda Ananda P. S. Kalna, Dist Burdwan.
2 ू×यथȸ/ Respondent, ACIT, Circle-1, Burdwan
3. आयकर किमशनर/The CIT,
4. आयकर किमशनर (अपील)/The CIT(A), Asansol.
5. वभािगय ूितनीधी / DR, Kolkata Benches, Kolkata स×याǒपत ूित/True Copy, आदे शानुसार/ By order, उप पंजीकार/Deputy Registrar.