DCIT, CIRCLE-4(1), BHUBANESWAR vs. M/S. ORISSA STATE HANDLOOM WEAVERS CO-OPERATIVE SOCIETY LTD., BHUBANESWAR

IN THE INCOME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK

BEFORE SHRI CHANDRA MOHAN GARG, JUDICIAL MEMBER AND LAXMI PRASAD SAHU, ACCOUNTANT MEMBER

ITA No.217/CTK/2017 Assessment Year : 2012-2013

DCIT, Circle 4(1), Bhubaneswar. Vs. M/s. Orissa State Handloom Weavers Co-operative Society ltd., Pt. J.N. Marg, Bhubaneswar. PAN/GIR No.AAAAO 0474 F (Appellant) .. ( Respondent)

Assessee by : None Revenue by : Shri Subhendu Dutta, DR

Date of Hearing : 28 /11/ 2019 Date of Pronouncement : 28 /11/ 2019

O R D E R Per C.M.Garg,JM This is an appeal filed by the revenue against the order of the

CIT(A)-2, Bhubaneswar dated 17.2.2017 for the assessment year 2012-13.

proceed to decide the appeal of the revenue exparte qua the respondent

assessee after hearing ld D.R. and on the basis of materials available on

record.

CIT(A) is not justified in deleting the addition of Rs.2,29,59,636/- made by

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the AO by disallowing the deduction claimed by the assessee in respect of

rental income received from the house property not utilised for the specific

purpose of storage, processing or facilitating the marketing of commodities.

proceedings, the Assessing Officer noticed that the assessee has shown

rental income of Rs.2,29,59,636/- out of let out buildings / shops which

aren't even in the nature of godowns or warehouses etc. The building let

out to Paradeep Phosphates Ltd. is an office accommodation in the building

known as "Boyanika" where the head office of the assessee is located. The

SBI ATM is located at the show cum sales room of the assessee at Market

Building, Unit-II, Bhubaneswar. Letting out for the purpose of earning rental

income is not the objective of the assessee. There cannot be any doubt that

the legislature desired to extend the benefit of exemption of the whole

income to cooperative societies if derived from the letting of godowns and

warehouses needed for the development of rural economy. It is for that

reason that the legislature limited the benefit to income from godowns and

warehouses, for if it was the intention of the legislature to extend the

benefit to income derived by the letting of shops, etc., nothing would have

been easier than to substitute the words 'any premises' for the words

'godowns or warehouses'. The legislature used the words 'godowns or

warehouses' because the intention was to encourage co-operative societies

to construct godowns and warehouses which would prove useful to the

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rural economy. Hence, the scope of getting exemption u/s 80P(2) is no way

extended to income from letting out surplus commercial assets which are

not meant for godowns, warehouses & storages etc. Before the AO, the

assessee submitted that surplus commercial assets is being let out

temporarily, which according to the AO isn't factually correct. It is to be

stated that all the said assets given under rent by the assessee more or less

are permanent in nature and the building i.e. Boyanika Bhawan, Pt. J N

Marg, BBSR-01 given on rent to Paradeep Phosphate Ltd. and SBI ATM is

neither an asset meant for godown, warehouses or processing units nor the

same is a surplus asset given on rent temporarily to the aforesaid parties.

In the instant case, letting out properties is lying beyond the objects of the

society. In view of above, the Assessing Officer opined that the entire rental

income shown at Rs. 2,29,59,636/- is considered not allowable deduction u/

s 80P(2) of the Act and therefore added back to the total income of the

assessee as "income from other sources".

ITAT, Cuttack in the case of the assessee for the assessment year 2003-04

in ITA No.184/CTK/2007 order dated 1.12.2008, which is supported by the

decision of Hon’ble Supreme Court in the case of CIT vs Karnataka State

Co-operative Apex Bank, 251 ITR 194 and CIT VS Bangalore District Co-

operative bank Ltd., 233 ITR 282 (SC).

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or point out any distinguishing features to not to follow the decision of the

Tribunal in the assessee’s own case for the assessment year 2002-03, which

the CIT(A) has followed. We also find that the issue is covered in favour of

the assessee by the decisions of Hon’ble Supreme Court cited supra by ld

CIT(A). Therefore, we find no infirmity in the order of the ld CIT(A) to

interfere and accordingly, we dismiss the ground of appeal of the revenue.

Order pronounced on 28 /11/2019.

Sd/- sd/- (Laxmi Prasad Sahu) (Chandra Mohan Garg) ACCOUNTANT MEMBER JUDICIAL MEMBER

Cuttack; Dated 28 /11/2019 B.K.Parida, SPS Copy of the Order forwarded to : 1. The Appellant : DCIT, Circle 4(1), Bhubaneswar

By order

Sr.Pvt.secretary ITAT, Cuttack

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