Income Tax Appellate Tribunal - Pune
Khandoba Panan Sahakari Sanstha ... vs Income-Tax Officer, Ward - 3,, Latur on 19 February, 2019
आयकर अपीऱीय अधिकरण पण
ु े न्यायपीठ एक-सदस्य मामऱा पण
ु े में
IN THE INCOME TAX APPELLATE TRIBUNAL
PUNE BENCH "SMC", PUNE
सुश्री सुषमा चावऱा, न्याययक सदस्य एवं श्री अयिऱ चतुवेदी, ऱेखा सदस्य के समक्ष
BEFORE MS. SUSHMA CHOWLA, JM AND SHRI ANIL CHATURVEDI, AM
आयकर अपीऱ सं. / ITA No.2431/PUN/2017
यििाारण वषा / Assessment Year : 2014-15
Khandoba Panan Sahakari Sanstha Maryadit,
Chavan Building, Main Road,
Andur, Taluka - Tuljapur,
Dist - Osmanabad .... अऩीऱाथी/Appellant
PAN: AAAAK1421A
Vs.
The Income Tax Officer,
Wad 3, Latur .... प्रत्यथी / Respondent
अऩीऱाथी की ओर से / Appellant by : Shri P.S. Shingte
प्रत्यथी की ओर से / Respondent by : Shri Rajesh Gawali
सन
ु वाई की तारीख / घोषणा की तारीख /
Date of Hearing : 02.01.2019 Date of Pronouncement: 19.02.2019
आदे श / ORDER
PER SUSHMA CHOWLA, JM:
The appeal filed by assessee is against order of CIT(A)-2, Aurangabad, dated 22.08.2017 relating to assessment year 2014-15 against order passed under section 143(3) of the Income-tax Act, 1961 (in short 'the Act').
2. The assessee has raised the following ground of appeal:-
1. On the facts and in the circumstances of the case and in law the Lower Authorities erred in not granting the deduction u/s 80P of the Income Tax Act, 1961 for sum of Rs.10,44,088/- by disregarding appellant's contention.ITA No.2431/PUN/2017 2
3. The only issue raised in the present appeal is against the claim of deduction under section 80P of the Act.
4. Briefly, in the facts of the case, the assessee was Co-operative Society and had furnished the return of income declaring Nil income after claiming the deduction under section 80P of the Act. The assessee society was formed for purchase and sale of fertilizers, seeds and pesticides. The said items were then supplied to farmers. The assessee claimed that it had cold storage facility but during the year, the same was closed. The Assessing Officer on verification of Profit and Loss Account noted that the assessee had received hamali of ₹ 5,71,378/- and commission income of ₹ 4,72,710/-. He further observed that the aims and objects of assessee's society were not to earn hamali and commission income and hence, the same were held to be not deductible under section 80P of the Act. The Assessing Officer thus, held that sum of ₹ 10,44,088/- was not eligible for deduction under section 80P of the Act.
5. Before the CIT(A), it was explained that during the year under consideration the District Marketing Officer, Osmanabad has appointed the assessee to work as sub-agent to purchase pulses and soya bean at the prescribed base rates. The said purchases were made on behalf of the Central Government through NAFED and the assessee was entitled to commission and hamali charges. It was thus, claimed that the said commission and hamali charges would be entitled for deduction under section 80P(2)(e) of the Act. Further explanation was that Maharashtra State Co-operative Marketing Federation had issued a circular in this regard and directions were given to ITA No.2431/PUN/2017 3 purchase pulses and soya bean under the Central Government Scheme for NAFED. The assessee thus, explained that according to circular ordering the assessee to start the purchase for the season 2013-14, hamali and other receipts such as commission were incidental to the activity of purchase of pulses and soya bean, hence the entire receipts were entitled to the deduction under section 80P(2)(e) of the Act. The CIT(A) vide para 12 held as under:-
"12. Thus, it is evident that the deduction u/s. 80P(2)(e) is available to an assessee in respect of income derived from the letting of godowns or warehouses, only where the purpose of letting is storage, processing or facilitating the marketing of commodities. It is intrinsic in the provisions of Section 80P(2)(e) itself that income should be derived from the activity of letting out or the use of its godowns or warehouses. Any income derived by a society unconnected with such letting out or use of the godowns or warehouses will not fall under clause (e). Adverting to the facts of the case, it is seen that the assessee has derived income from procuring of pulses and soya bean for which it has been paid commission and hamali charges. These activities do not even remotely connect with the activity of letting out of godown or warehouse for which the deduction is allowed u/s. 80P(2)(e). The activity of the appellant of procuring pulses and soya bean does not tantamount to activity of letting out of warehouse or godown. Hence, the action of assessing officer in treating the impugned amounts as income of the appellant cannot be faulted with and the same is upheld."
6. The assessee is in appeal against the order of CIT(A).
7. The learned Authorized Representative for the assessee pointed out that the assessee was engaged in collection and distribution of agricultural products i.e. pulses only and it was collecting the same from its members and selling on their behalf, the profits thereon were eligible for deduction under section 80P(2)(e) of the Act. During the year, the Government had decided that the assessee at rates specified would purchase pulses and store them and sell to specified parties. Such storing of pulses was in the nature of business carried on by the assessee and the charges received by assessee in the form of hamali and commission were eligible for deduction under section 80P(2)(e) of the Act. In this regard, he placed reliance on the decision of the Hon'ble ITA No.2431/PUN/2017 4 Bombay High Court in CIT Vs. Bhandara Zilla Sahakari Kharedi Vikri Sangh Ltd. (1995) 212 ITR 124 (Bom).
8. The learned Departmental Representative for the Revenue placed reliance on the orders of authorities below.
9. We have heard the rival contentions and perused the record. The issue which arises in the present appeal is the claim of deduction under section 80P(2)(e) of the Act on hamali and commission income earned by the assessee. In order to adjudicate the aforesaid issue, first reference is made to section 80P(2)(e) of the Act, wherein it is clearly provided that where the income is derived by Co-operative Society from letting of godowns and warehouses for storage / processing or facilitating the marketing of commodities, then whole of such income is exempt under section 80P(2)(e) of the Act. The interpretation of the CIT(A) in this regard was that the words used in the said sub clause are for income derived from letting of godowns or warehouses for different purposes i.e. storage, processing and also facilitating the marketing of commodities. There is no merit in the observations of CIT(A) in this regard. The assessee has clearly pointed out that it was solely engaged in the purchase and sale of fertilizers, seeds and pesticides. It was also pointed out that during the year, the storage plant of assessee was closed. However, the profits earned on purchase and sale of fertilizers, seeds, i.e. from its members to its members was claimed as exempt under section 80P(2)(e) of the Act and the same was allowed in the hands of assessee. However, the receipts on account of hamali of ₹ 5,71,378/- and commission income of ₹ 4,72,710/- was held to be not eligible for the aforesaid deduction under section 80P(2)(e) of the Act.
ITA No.2431/PUN/20175
10. With regard to said charges received during the year, it may be pointed out that the Central Government had appointed the assessee as sub-agent and had directed it to purchase pulses from NAFED and supply it to the farmers, against which it has received the aforesaid hamali and commission. The activity undertaken by the assessee was in line with the activity carried on by it vis-à-vis its members i.e. procurement of pulses and selling the same to its members. Here, the procurement was at the directive of the Central Government and for such services, the assessee received hamali and commission income. The said receipts in the hands of assessee are in line with the business activity carried on by it and hence, eligible for deduction under section 80P(2)(e) of the Act.
11. The Hon'ble Bombay High Court in CIT Vs. Bhandara Zilla Sahakari Kharedi Vikri Sangh Ltd. (supra) while deciding the issue of Co-operative Society observed that under the Fertilizer Agreement, where the assessee was required to store fertilizers in its godown and get the commission on its sale, then whole of the commission should be taken from letting of godown and hence, exempt. It was further held that however under the Paddy Agreement, the assessee was not only to store paddy but also to mill it and so far as milling is concerned, it was not entitled to the benefit under section 80P(2)(e) of the Act.
12. The issue raised in the present appeal is covered by the dictate of the Hon'ble Bombay High Court in CIT Vs. Bhandara Zilla Sahakari Kharedi Vikri Sangh Ltd. (supra), in the first instance, wherein it has been held that commission on sale of fertilizers is part of warehousing activity and exempt in the hands of Co-operative Society. Applying the said ratio to the facts of ITA No.2431/PUN/2017 6 present case, we hold that the assessee is entitled to the deduction under section 80P(2)(e) of the Act on the aforesaid hamali and commission income earned by it. The ground of appeal raised by assessee is thus, allowed.
13. In the result, the appeal of assessee is allowed.
Order pronounced on this 19th day of February, 2019.
Sd/- Sd/-
(ANIL CHATURVEDI) (SUSHMA CHOWLA)
ऱेखा सदस्य / ACCOUNTANT MEMBER न्याययक सदस्य / JUDICIAL MEMBER
ऩुणे / Pune; ददनाांक Dated : 19th February, 2019.
GCVSR
आदे श की प्रयतलऱपप अग्रेपषत/Copy of the Order is forwarded to :
1. अऩीऱाथी / The Appellant;
2. प्रत्यथी / The Respondent;
3. आयकर आयुक्त(अऩीऱ) / The CIT(A)-2, Aurangabad;
4. The Pr.CIT-2, Aurangabad;
5. ववभागीय प्रतततनधध, आयकर अऩीऱीय अधधकरण, ऩुणे, एक-सदस्य मामऱा / DR 'SMC', ITAT, Pune;
6. गार्ड पाईऱ / Guard file.
ु ार/ BY ORDER, आदे शािस सत्यावऩत प्रतत //True Copy// वररष्ठ तनजी सधिव / Sr. Private Secretary आयकर अऩीऱीय अधधकरण ,ऩुणे / ITAT, Pune