C.I.T. vs. M/S. RAJ.RAJYA SAHKARI SANG LTD.

This Court vide order dt.02/03/1994 passed in DB I.T. Reference Application No.106/84, directed the Tribunal to refer the questions proposed.

The Tribunal vide its order dt. 09/07/1996 has referred following questions of law:- “1. Whether on the facts and in the circumstances of the case the Income-Tax Appellate Tribunal was justified in holding that assessee was entitled to deduction u/s 80(P)(2)(d) of the Income-Tax Act, 1961 of interest income on gross receipts and not on net receipts? 2. Whether on the facts and in the circumstances of the case the Income-Tax Appellate Tribunal is justified in upholding the decision of 2 the Commissioner of Income-Tax (A) in deleting the additions of Rs. 85,090/-?”

The assessment year involved is the assessment year 1977-78. 5. The brief facts, as emerging on the face of record, are that the assessee is a co-operative Society deriving income from sale of controlled cloth, confiscated goods, commission on sale of controlled cloth and interest from agriculture wholesale Bhandars. The accounts were maintained by the assessee and duly audited by the Chief Accounts

During the course of the assessment proceedings, it was pointed out by the Assessing Officer that the assessee had claimed full expenses on the remaining income even when some income was exempted u/s 80P(2)(1)(a) and 80P(2)(1) (d) of the IT Act, and in the show cause notice, it was asked that as to why not proportionate expenses on exempted income be disallowed. The assessee objected to the said proposition but the Assessing Officer did not agree with the submissions made and disallowed the expenses claimed by the assessee.

Dissatisfied with the same, an appeal was 3 preferred before the CIT (Appeal), who, following the view of the Income Tax Appellate Tribunal, held that the Assessing Officer was not correct in disallowing expenses on proportionate basis and accordingly allowed the appeal of the assessee-respondent.

Dissatisfied with the said order, the revenue preferred an appeal before the Income Tax Appellate Tribunal who also following its own order for the assessment year 1976-77, dismissed

The reference application was moved which too came to be rejected by the ITAT who declined to refer the questions to this Court. However, this Court as aforesaid vide order dt. 02/03/1994 directed the Tribunal to refer the question.

Shri R.B. Mathur, ld. Counsel for the revenue-appellant submitted that this Court in the case of assessee itself for the assessment year 1976-77, titled as CIT Vs. Rajasthan Rajya Sahkari Upbhokta Sangh Ltd reported in (1995) 215 ITR 448 for the immediate past assessment year has decided the reference in favour of the revenue and against the respondent-assessee. He further submitted that identical issue came up before this Court in the case of Kota Co-operative Marketing the assessee-respondent.

We have heard ld. Counsel for the appellant Co-operative Sugar Factories (2013) 37 Taxmann.Com 58 (All) has also followed judgment of this Court reported in 215 ITR 448 (supra) and since this Court has already taken a view on similar facts and particularly in assessee own case, then we are not inclined to deviate with the said finding in the said judgment.

Consequently, both the questions are answered against the assessee and in favour of the revenue. No cost. [J.K. RANKA], J [AJAY RASTOGI],J. S/kumawat Certificate All corrections made in the judgment/order have been incorporated in the judgment/order being e-mailed. S.Kumawat Jr. P.A