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Facts
The assessee, a co-operative marketing society, filed its return of income for AY 2018-19 claiming deductions under Section 80P. The Assessing Officer (AO) rejected the deduction claim of Rs. 63,90,996. The Commissioner of Income Tax (Appeals) also upheld the AO's order.
Held
The Tribunal noted that the assessee's counsel requested a remand for re-examining grounds related to Section 80P(2)(c) and PDS margin in light of specific judgments. The Tribunal found substance in the assessee's arguments and decided to set aside the appeal for a limited purpose.
Key Issues
Whether the CIT(A) erred in restricting the deduction claimed under Section 80P(2)(c) and disallowing deduction for PDS margin, and whether the matter should be remanded for reconsideration based on cited judgments.
Sections Cited
80P(2)(c), 80P(2)(a)(i), 80P(2)(e), 143(3), 143(3A), 143(3B), 139(1)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, ‘ A’ BENCH, CHENNAI
Before: HON’BLE SHRI MANOJ KUMAR AGGARWAL, AM & HON’BLE SHRI MANU KUMAR GIRI, JM
(िनधा�रणवष� / Assessment Year: 2018-2019) A 1235 Madurai Taluk Agricultural Vs. The Income Tax Officer, Producers Co-operative Marketing Non Corporate Ward 1(1) Society Limited, Madurai. 31, Visuvasapuri 3rd Street, Gnanaolipuram, Madurai 625 016. [PAN: AAAAA 9671J] (अपीलाथ�/Appellant) (��यथ�/Respondent) अपीलाथ� क� ओर से/ Appellant by : Shri S. Sridhar, (Erode) Advocate ��यथ� क� ओर से /Respondent by : Shri ARV Srinivasan,IRS, Adl CIT. सुनवाई क� तार�ख/Date of Hearing : 20.06.2024 घोषणा क� तार�ख /Date of Pronouncement : 29.08.2024 आदेश / O R D E R PER MANU KUMAR GIRI (Judicial Member) This appeal by the assessee is arising out of the order of the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi in order No.ITBA/NFAC/S/250/2023-24/1051232891 (1) dated 24.03.2023. The assessment was framed by the Additional/Joint /Deputy/Assistant Commissioner of Income Tax / Income-tax Officer, National e-Assessment Centre, Delhi u/s.143(3) r.w.s. 143(3A)
& 143(3B) of the Income Tax Act, 1961 (hereinafter the ‘Act’) for the assessment year 2018-19 vide order dated 07.04.2021.
The assessee has raised the following grounds of appeal.
‘’1) The order of the learned CIT(A) is bad and erroneous in law. 2) The learned CIT(A) erred in not considering the replies filed by the appellant in proper perspective. 3) The learned CIT(A) erred in restricting the deduction claimed u/s. 80P(2)(c) at Rs.50,000/-, without considering the effect of the decision of the SC reported in 1981 (4) SCC 535, wherein the societies involved in PDS activities were termed/classified as "Consumer Societies". 4) The learned CIT(A) erred in not considering the fact that the PDS margin, related to the PDS activities of the appellant, is attributable to the other activities of the appellant society, falling within Section 80P(2)(a)(i).[Reliance is placed on the decisions by the Madras HC reported in TCA No: 1453 of 2008 dated 31/10/2018 and TCA No: 571 of 2011 dated 01/11/2018.] 5) Without prejudice to the above, the learned CIT(A) erred in disallowing the deduction claimed in respect of PDS margin, falling within "Commission", without considering the decision reported in 1995 Tax L.R. 1308 (i.e.) CIT vs. The Coimbatore District Central Co-operative Supply and Marketing Society Limited’’.
Ld. Counsel for the assessee at the outset submitted that, he was not pressing ground No.4 assailing PDS margin. Accordingly, this ground is dismissed as not pressed.
The brief facts of the case are that the assessee is a Society. The appellant society filed its return of income for the AY 2018-19 u/s.139(1) of the Act on 25.10.2018 claiming deductions u/s.80P. The assessment was completed by order u/s.143(3) r.w.s.143(3A) and 143(3B) on 07.04.2021 by rejecting the claim of deduction of Rs.63,90,996/- made u/s.80P of the Act. Aggrieved, assessee preferred an appeal before the ld. CIT(A). Assessee was issued notices u/s.250 of the Act on 10.02.2023 and 20.03.2023 respectively. The assessee society claimed deductions as under:-
Section Amount of deduction Deduction allowed (Rs. Claimed) by the AO 80P(2)(a) (i) 50,61,663/- 0 80P(2)(c ) 1,00,000/- 50,000/- 80P(2)(d ) 1,24,748/- 0 80P(2)(e ) 11,04,585/- (part of 0 Rs.1,65,34,010/- being PDS margin. Total 63,90,996/- Assessee contested the ground with regard to denying of the deduction claimed u/s.80P(2)(e) of the Act being PDS margin. Assessee placed reliance on the decision of Hon’ble Madras High Court in the case of "CIT v. The Coimbatore District Central Co-op. Supply and Marketing Society Limited" reported in 1995 Tax L.R. 1308. Alternatively, the assessee argued that PDS Margin related to the PDS activities is attributable to the other activities of the appellant society and that its case is eligible for deduction u/s. 80P(2)(a)(iii) and is squarely covered by the decision of Hon’ble Madras High Court in the case of "Kodumudi Growers". Assessee also cited the decision of Hon'ble High Court of Madras, in the case of 'The Kodumudi Growers Co-operative Bank Ltd' to claim deduction u/s 80P(2)(a)(iii). This argument was also made before the AO. The AO pointed out that Hon'ble High Court of Madras, in the case of The Kodumudi Growers Co-operative Bank Ltd has specifically mentioned why the PDS commission on sale of Fertilizers was allowed as deduction in his order. It is clear that the fertilizer was sold to its members only in that case before the Hon'ble High Court. However, in the present case, the appellant is an agent of the Tamil Nadu Civil Supply Corporation and the buyers are general public whoever carries the 'Ration Card' given to below poverty line people by the government. Therefore, the case law relied is not of any help to the appellant society. Therefore, the deduction for the commission/margin in PDS' is neither available u/s 80P(2)(e) nor under 80P(2)(a)(iii) of the Act. Accordingly, he dismissed the appeal of the assessee. Aggrieved, assessee is in appeal before the Tribunal.
At the outset, the ld.Counsel for the assessee prayed that the matter may be remanded back to the ld.AO to look into the claim u/s 80P(2)(c) of the Act and PDS margin in the light of the judgments referred in ground No.2 and ground No.5 respectively. Per contra, ld.CIT-DR objected to the contentions of the assessee.
We have heard the rival submissions and perused the records of the lower authorities. We find substance in the arguments of the ld.Counsel for the assessee, hence we set aside the appeal for limited purpose to re-look into the ground No.2 and ground No.5 only in the light of referred decisions in respective grounds. We also make it clear that there is no bar in referring or relying any other judgments before the ld.AO. The ld.AO is also free to take further query in respect of those grounds.
In result, appeal of the assessee is partly allowed for statistical purpose. Pronounced in open court on 29th August, 2024 at Chennai.