Guruvareddiyur Primary Agricultural Co-operative Credit Society Ltd., Erode v. ACIT, Erode

ITA 720/CHNY/2016 | 2011-2012
Pronouncement Date: 07-10-2016

Appeal Details

RSA Number 72021714 RSA 2016
Assessee PAN AAAAG1657Q
Bench Chennai
Appeal Number ITA 720/CHNY/2016
Duration Of Justice 6 month(s) 13 day(s)
Appellant Guruvareddiyur Primary Agricultural Co-operative Credit Society Ltd., Erode
Respondent ACIT, Erode
Appeal Type Income Tax Appeal
Pronouncement Date 07-10-2016
Appeal Filed By Assessee
Bench Allotted B
Date Of Final Hearing 14-07-2016
Next Hearing Date 14-07-2016
Assessment Year 2011-2012
Appeal Filed On 24-03-2016
Judgment Text
IN THE INCOME - TAX APPELLATE TRIBUNAL B BENCH CHENNAI . . BEFORE SHRI A. MOHAN ALANKAMONY ACCOUNTANT MEMBER & SHRI DUVVURU R L REDDY JUDICIAL MEMBER ./ I T.A. NO. 720 /MDS/201 6 / ASSESSMENT YEAR :20 11 - 1 2 M/S. GURUVAREDDIYUR PACCS LTD. CHENNAMPATTI MAIN ROAD GURUVAREDDIYUR POST BHAVANI TALUK ERODE 638 504. [PAN: A AAAG1657Q ] VS. THE ASSISTANT COMMIS SIONER OF INCOME TAX CIRCLE II ERODE. ( / APPELLANT ) ( / RESPONDENT ) / APPELLANT BY : SHRI S. SRIDHAR ADVOCATE ERODE / RESPONDENT BY : SHRI SUPRIYO PAL J CIT / DATE O F HEARING : 14 . 0 7 .201 6 / DATE OF P RONOUNCEMENT : 07 . 1 0 .201 6 / O R D E R PER DUVVURU RL REDDY JUDICIAL MEMBER : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX ( APPEALS ) 3 C OIMBATORE DATED 2 9 . 0 1 .20 1 6 RELE VANT TO THE ASSESSMENT YEAR 20 11 - 1 2 . THE ASSESSEE HAS RAISED TWO EFFECTIVE GROUND S VIZ. (I) THE LD. CIT(A) AS WELL AS THE ASSESSING OFFICER ERRED IN NOT CONSIDERING THE VITAL FACT THAT THE PDS SUBSIDY WHICH HAS ALR EADY BEEN INCLUDED IN TRADE INCOME OF THE APPELLANT OF THE SOCIETY HAS BEEN CONSIDERED AGAIN WHILE COMPLETING THE ASSESSMENT; AND I.T.A. NO.720/M/16 2 (II) THE LD. CIT(A) AS WELL AS THE ASSESSING OFFICER ERRED IN NOT CONSIDERING THAT THE INCOME TAX DOES NOT DISTINGUISH AND/ DIFFERENTIATE BETWEEN CLASSES OF MEMBERS WHICH HAS RESULTED IN THE ADDITION OF .77 544/ - BEING INTEREST EARNED FROM NON - MEMBERS. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS AN AOP [COOPERATIVE SOCIETY] FILED ITS RETURN OF INCOME ON 24.11.2012 ADMITTING TOTAL INCOME OF .NIL AND THE SAME WAS PROCESSED UNDER SECTION 143(1) OF THE INCOME TAX ACT 1961 [ ACT IN SHORT] ON 09.05.2013. SUBSEQUENTLY THE CASE WAS SELECTED FOR SCRUTINY AND NOTICE UNDER SECTION 143(2) OF THE ACT WAS ISSUED TO THE ASSES SEE ON 07.08.2013. IN RESPONSE THERETO THE ASSESSEE FILED ALL DETAILS. AFTER VERIFICATION OF DETAILS FURNISHED BY THE ASSESSEE THE ASSESSING OFFICER HAS COMPLETED THE ASSESSMENT UNDER SECTION 143(3) OF THE ACT ON 13.03.2014 BY ASSESSING THE TOTAL INCOME AT .4 50 090/ - AND DISALLOWING SUBSIDY AT .4 22 531/ - AND INTEREST EARNED FROM NON - MEMBERS AT .77 544/ - . 3. THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT(A). AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE THE LD. CIT(A) DISMISSED T HE APPEAL FILED BY THE ASSESSEE. 4. ON BEING AGGRIEVED THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. BY REFERRING TO THE GROUNDS OF APPEAL THE LD. COUNSEL FOR THE ASSESSEE HAS STRONGLY CONTENDED THAT THE AUTHORITIES BELOW HAVE FAILED TO NOTE THE FACT THAT THE PDS SUBSIDY WAS ALREADY INCLUDED IN TRADE INCOME OF THE ASSESSEE SOCIETY IN EARLIER YEAR AND THE SAME IS ONCE AGAIN CONSIDERED IN THE I.T.A. NO.720/M/16 3 ASSESSMENT YEAR UNDER CONSIDERATION. WITH REGARD TO THE ADDITION OF INTEREST INCOME RECEIVED FROM B CLASS MEMBER S THE ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY VARIOUS DECISION OF THE TRIBUNAL AND MOREOVER FOR THE EARLIER ASSESSMENT YEAR THE ASSESSING OFFICER HAS ACCEPTED ASSESSEE S CONTENTION . ON THE OTHER HAND THE LD. DR DUTIFULLY RELIED ON THE OR DERS OF AUTHORITIES BELOW. 5 . WE HAVE HEARD BOTH SIDES PERUSED THE MATERIALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. WITH REGARD TO THE ADDITION TOWARDS PDS SUBSIDY BY FILING COPY OF THE FINAL AUDIT 2009 - 10 THE LD. COUNS EL FOR THE ASSESSEE HAS SUBMITTED THAT THE PDS SUBSIDY WAS ALREADY INCLUDED IN TRADE INCOME OF THE ASSESSEE SOCIETY IN EARLIER YEAR AND THE SAME IS ONCE AGAIN CONSIDERED IN THE ASSESSMENT YEAR UNDER CONSIDERATION. THE LD. CIT(A) WAS OF THE OPINION THAT THE ASSESSEE HAS NOT OFFERED THE SUBSIDY RECEIVED FROM THE GOVERNMENT FOR TAXATION IN EARLIER YEAR. IN VIEW OF THE ABOVE WE DIRECT THE ASSESSING OFFICER TO VERIFY AS TO WHETHER THE ASSESSEE HAS BEEN OFFERED TO TAX IN THE EARLIER YEAR AND IF IT IS OFFERED TO TAX IT CANNOT BE TAXED IN THE ASSESSMENT YEAR UNDER CONSIDERATION AND IF IT IS FOUND NOT OFFERED TO TAX THEN THE ORDER OF THE LD. CIT(A) ON THIS ISSUE STANDS SUSTAINED. 6. WITH REGARD TO THE ADDITION TOWARDS INTEREST INCOME RECEIVED FROM B CLASS MEMB ERS TREATING AS NON - MEMBERS AMOUNTING TO .77 544/ - BY I.T.A. NO.720/M/16 4 OBSERVING THAT THE ABOVE INTEREST RECEIPT HAS BEEN EARNED FROM NON - MEMBERS THE ASSESSING OFFICER HAS BROUGHT THE SAME TO TAX. DENIAL OF BENEFITS UNDER SECTION 80P OF THE ACT TO NON - MEMBER/ASSOCIATE MEMBER IN THE CASES OF SL(SL P) 151 KARKUDALPATTY PACCS LTD. & OTHERS IN I.T.A. NOS. 292 & 293/MDS/2014 DATED 17.03.2014 THE COORDINATE BENCH OF THE TRIBUNAL HAS FOUND THAT THE DEFINITION OF MEMBERS INCLUDES ASSOCIATE MEMBERS AS WELL AS PER THE PROVISIONS OF STATE CO - OPERATIVE S OCIETIES ACT 1983. THE TRIBUNAL FURTHER OBSERVED THAT THE OBJECTIONS OF THE REVENUE THAT MEMBERS DEFINED IN SUB - CLAUSE (I) OF SECTION 80P(2) SHOULD ONLY INCLUDE VOTING MEMBERS WOULD AMOUNT TO A CLASSIFICATION WITHIN CLASSIFICATION WHICH IS BEYOND THE P URVIEW OF TAXING STATUTE UNLESS PROVIDED SPECIFICALLY BY THE LEGISLATURE. THE FINDINGS OF THE TRIBUNAL HAVE BEEN DULY CONFIRMED BY THE HON BLE JURISDICTIONAL HIGH COURT IN THE CASE CIT V. VEERAKERALAM PACCS LTD. & OTHERS IN TCA NOS. 735 755 OF 2014 AND 4 60 OF 2015 DATED 05.07.2016 BY HOLDING THAT THE CONTENTION OF THE DEPARTMENT THAT THE MEMBERS OF THE ASSESSEE SOCIETIES WHO ARE NOT ENTITLED TO RECEIVE ANY DIVIDEND OR HAVING ANY VOTING RIGHT OR NO RIGHT TO PARTICIPATE IN THE GENERAL ADMINISTRATION OR TO A TTEND ANY MEETING ETC. BECAUSE THEY ARE ADMITTED AS ASSOCIATE MEMBERS FOR AVAILING LOAN ONLY AND WAS ALSO CHARGING A HIGHER RATE OF INTEREST AT THE RATE OF 14% IS NOT A GROUND TO DENY THE EXEMPTION GRANTED UNDER SECTION 80P (2)(A)(I) OF THE ACT. IN VIEW O F THE ABOVE DECISION OF THE HON BLE JURISDICTIONAL HIGH COURT MEMBERS FOR THE PURPOSE OF I.T.A. NO.720/M/16 5 PROVISIONS OF SECTION 80P OF THE ACT THE B CLASS MEMBERS ALSO INCLUDE ON PAR WITH A CLASS MEMBERS. WHEN INTEREST INCOME RECEIVED FROM A CLASS MEMBERS ARE EXE MPTED FROM TAXATION WE ARE OF THE CONSIDERED OPINION THAT B CLASS MEMBERS ARE ALSO EXEMPTED FROM TAXATION. THUS THE DISALLOWANCE MADE BY THE ASSESSING OFFICER IS DELETED AND THE GROUND RAISED BY THE ASSESSEE IS ALLOWED. 7 . IN THE RESULT THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON THE 07 TH OCTOBER 2016 AT CHENNAI. SD/ - SD/ - (A. MOHAN ALANKAMONY ) ACCOUNTANT MEMBER ( DUVVURU RL REDDY ) JUDICIAL MEMBER CHENNAI DATED THE 07 . 1 0 .201 6 VM/ - / COPY TO: 1. / APPELLANT 2. / RESPONDENT 3. ( ) / CIT(A) 4. / CIT 5. / DR & 6. / GF.