M/S Babaiah Weaker Section & Waddera ... vs Department Of Income Tax

Income Tax Officer, M/s. Babaiah Weaker Ward-11(1), Vs Section & Waddera Labour HYDERABAD Contract Co-op Society Ltd., HYDERABAD [PAN: AAEFB2283L]

(Appellant) (Respondent)

For Revenue : Shri Rajat Mitra, DR For Assessee : NONE

Date of Hearing : 26-03-2015 Date of Pronouncement : 31-03-2015

ORDER

PER B. RAMAKOTAIAH, A.M. :

This is Revenue's appeal was against the order of the Commissioner of Income Tax(Appeals)-VI, Hyderabad, dated 26-08-2014 for the Assessment Year (AY) 2008-09. When the case was taken up for hearing even though notice was sent to assessee, none appeared on behalf of assessee. Accordingly, the case was taken up exparte assessee- respondent.

I.T.A. No. 1795/Hyd/14 :- 2 -: M/s. Babaiah Weaker Section & Waddera Labour Contract Co-op. Society Ltd.

2. Briefly stated, assessee-society has obtained a PAN

No.AAEFB2283L in the status of firm, therefore, the incomes which are returned by assessee were considered as 'business incomes'. Assessee is a civil contractor doing civil works of GHMC. On the gross receipts of Rs.1,95,50,602/- received during the year, Assessing Officer (AO) estimated the profit at 8% of the gross receipts and brought to tax an amount of Rs.15,64,050/-. Aggrieved, assessee preferred an appeal before the CIT(A). Ld.CIT(A) following the ITAT's order in AY.2006-07 held that assessee being a co-operative society having membership of over 70 members mainly from Waddera Community is entitled for deduction u/s.80P(2)(vi) of the Income Tax Act [Act]. Ld.CIT(A) directed that the profit should be estimated at 6% as against 8% adopted in the assessment order and the assessee-society deserves to be co-operative society and is eligible for deduction u/s.80P. AO was directed accordingly. He however, stated that the deduction may be allowed subject to the condition that assessed income is not less than the returned income. With these observations, appeal is treated partly allowed. Assessee did not prefer any appeal whereas, Revenue is aggrieved and raised the following grounds:

"1. The CIT(A) ought to have followed the directions of the Hon'ble ITAT in all its entirely and ought to have restored all the issues to the file of the Assessing Officer with the direction to frame fresh assessment by considering the claim of the assessee for deduction u/s.80P of the I.T.Act.

2. The CIT(A) has erred in deciding the issue of applicability of section 80P himself while following the Tribunal order in ITA No.1023/Hyd/2011 for A.Y.2006-07".

3. After considering the Ld.DR's contentions, we agree with Revenue. As far as issue of status of assessee is concerned, the matter was restored to the file of AO by ITAT in an earlier year to examine and I.T.A. No. 1795/Hyd/14 :- 3 -: M/s. Babaiah Weaker Section & Waddera Labour Contract Co-op. Society Ltd.

decide whether assessee is a co-operative society or not and is eligible for deduction u/s.80P. The order of ITAT vide ITA No.1023/Hyd/2011 dt. 17-04-2014 is as under:

"5. We have heard the rival contentions and perused the record. Admittedly, the assessee has been assessed under the status of partnership firm. It is also an admitted fact that the assessee is a cooperative society and hence, it could not be considered as partnership firm. We also notice that the assessee did not claim deduction under section 80P of the Act in the return of income filed before the A.O. and the said claim was put forth before the CIT(A) in the appellate proceedings. Though the A.O. and Ld. CIT(A) have expressed the view that the assessee is not entitled for deduction under section 80P of the Act, yet learned A.R. submitted that the assessee would be in a position to substantiate its claim with supporting material and case law, if one more opportunity is given to the assessee. Learned A.R. also submitted that the present society has been formed by illiterate labourers. Considering the facts of the case, we are of the view that, in the interest of natural justice, the assessee may be given one more opportunity to substantiate its claim for deduction under section 80P of the Act. Further the impugned assessment has been framed u/s 144 of the Act and for that reason also, the assessee is seeking one more opportunity. Accordingly, we set aside the order of the Ld. CIT(A) and restore all the issues to the file of the A.O. with a direction to frame fresh assessment by considering the claim of the assessee for deduction under section 80P of the Act and also any other claim that may be put before him".

4. Since, CIT(A) did not have any power to set aside the assessment, he might have directed the AO to allow the deduction u/s.80P holding that assessee is a co-operative society, which is in our view is little premature as the issue of status in AY.2006-07 was pending before the AO. CIT(A) should not have pre-judged the issue. Revenue ground is also on the same lines that the issue should have restored to the file of AO to frame fresh assessment. Since the co-ordinate bench has restored the issue to the file of AO in AY.2006-07, we are of the opinion that this issue also is to be restored to the file of AO for fresh examination and I.T.A. No. 1795/Hyd/14 :- 4 -: M/s. Babaiah Weaker Section & Waddera Labour Contract Co-op. Society Ltd.

adjudication on similar lines as in AY.2006-07. Therefore, the order of CIT(A) is modified and the issue is restored to the file of AO.

5. As seen from the orders, assessee's status has been shown as 'firm' instead of 'co-operative society' while obtaining PAN number which may be the cause of confusion. In case the status is determined as a Society, Assessee is well advised to either apply for fresh PAN with the correct status or modify the existing PAN to the correct status.

6. With these observations, Revenue's appeal is allowed for statistical purposes.

Order pronounced in open Court on 31st March, 2015.

Sd/- Sd/- (SAKTIJIT DEY) (B. RAMAKOTAIAH) JUDICIAL MEMBER ACCOUNTANT MEMBER

Hyderabad, Dated 31st March, 2015

TNMM

Copy to :

1. The Income Tax Officer, Ward-11(1), D' Block, 5th Floor, I.T. Towers, A.C.Guards, Hyderabad.

2. M/s. Babaiah Weaker Section & Waddera Labour Contract Co-op. Society Ltd., H.No.23-75, Giri Nagar, Opp. IDPL Colony, Quthbullapur Mandal, Hyderabad.

3. CIT(Appeals)-VI, Hyderabad

4. CIT-V, Hyderabad

5. D.R. ITAT, Hyderabad