Dharampur Samabay Krishi Unnayan ... vs Assessee

IN THE INCOME TAX APPELLATE TRIBUNAL "A" BENCH : KOLKATA BEFORE HON'BLE SHRI P.K BANSAL, AM & HON'BLE SHRI RAJPAL YADAV, JM

I.T.A No. 109/Kol/2013 A.Y 2008-09

M/s.Dharampur Samabay Krishi Vs. Income-tax Officer, Ward 49(1), Unnayan Samity Ltd. Kolkata PAN: AAAJD 0218K [Appellant] [Respondent] Appellant by : Shri S.K. Agarwal, Accountant, ld.AR Respondent by : Shri Anjan Prasad Roy, JCIT/ld.Sr.DR

Date of Hearing : 29/04/2015 Date of Pronouncement: 29/04/2015

ORDER PER RAJPAL YADAV, JM

The assessee is in appeal before us against the order of Ld. CIT(A) dated 31-10- 2012 passed for assessment year 2008-09.

2. The assessee has taken six grounds of appeal, but its grievance revolves around a single issue namely, whether the assessee is entitled for exemption u/s. 80P of the I.T Act 1961 on the net profit of Rs.9,50,000/-?

3. The brief facts of the case are that the assessee has filed its return on 29-09-2008 declaring 'NIL' income. Its case was selected for scrutiny assessment. Notice u/s. 143(2) was issued and served upon the assessee.

4. On scrutiny of accounts, it revealed to the AO that assessee has bifurcated its income and expenditure into following three categories, namely;

a) General Section (banking) b) Input Section- fertilizer, pesticides etc and rice mill, and c) Consumers Section- consumable goods for its members 2 ITA No.109/Kol/2013-JM M/s.Dharampur Samabay Krishi Unnayan Samity Ltd.

5. The assessee has shown net profit to the tune of Rs. 9,50,000/- through these activities. It claimed exemption u/s. 80P of the I.T Act 1961. The ld.AO has directed the assessee to bifurcate its 'Ínput Section' into two categories, namely a) fertilizer and b) rice mill. He examined the details and observed that the assessee has provided certain services, which resulted income to it. The ld.AO has narrated the nature of services at page 3 of the assessment order and recorded his finding that these activities are not the activities required to be undertaken in the co-operative society. The ld. AO has carved out 10 services, some of them are (a) on sale of fertilizer assessee charged extra carriage;

(b) sale of damaged container and ( c) commission received from insurance company. Accordingly, he disallowed a sum of Rs.17,40,993/-, which relates to these activities. The ld.AO further observed that the assessee is not entitled for exemption u/s. 80P on this amount.

6. On appeal to the ld.CIT(A), the ld. 1st Appellate Authority has confirmed the assessment order without going into these issues. In other words, the appeal of the assessee has been dismissed in limine.

7. With the assistance of the ld. Representative, we have gone through the record carefully. Sub section 6 of section 250 mandates the ld. CIT(A) to state the points in disputes and then assigned the reasons in support of his conclusion on those points. The ld. 1st Appellate Authority has failed to state the points in disputes, thereafter failed to appreciate the facts and circumstances available on record. Therefore, the order of the ld.CIT(A) is not sustainable. Normally whenever we find that the illegality or irregularity has crept in any proceeding, we set aside the illegality and irregularity and restore the proceeding at that level for the adjudication. In the present appeal the proceeding deserves to be restored to the file of the ld. CIT(A), but looking to the assessment order, where the AO has not appreciated the facts and circumstances in right perspective. He disallowed the expenditure. For example, if assessee had received insurance commission than it has only reduced the cost of premium. It is linked with main activity. He has failed to comprehend that the sub activities are not independent in themselves. The co-operative society is one unit and has carried out activities for its 3 ITA No.109/Kol/2013-JM M/s.Dharampur Samabay Krishi Unnayan Samity Ltd.

members. The sub activities carved by the AO are not independent themselves. Therefore, we deem it appropriate to set aside both the orders and restore the issues to the file of the AO for fresh adjudication. It is needless to say that the observation made by us will not impire or injure the case of the AO and will not cause any prejudice to the defence/explanation of the assessee. The ld.AO shall adjudicate the issue after providing due opportunity of hearing to the assessee.

8. In the result, the appeal of the assessee is allowed for statistical purpose.

Order pronounced in the open court on 29-04-2015

Sd/- Sd/- [ P.K BANSAL] [ RAJPAL YADAV] ACCOUNTANT MEMBER JUDICIAL MEMBER Dated: 29 -04-2015

Copy of the order forwarded to:

1. Appellant- M/s. Dharampur Samabay Krishi Unnayan Samity Ltd.

Dharampur, Gaighata 24 Pgs (N) 743 249 2 Respondent : I.T.O W 49(1), 169 AJC Bose Rd. Kol-14

3. CIT,

4. CIT(A),

5. DR, Kolkata Benches, Kolkata *PP/SPS True Copy] By order, Asstt Registrar