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Income Tax Appellate Tribunal, NAGPUR BENCH : NAGPUR
Before: S.S.VISWANETHRA RAVI & DR. DIPAK P. RIPOTE
ORDER
PER DR. DIPAK P. RIPOTE, AM:
This is an appeal filed by the Assessee against the order of ld.Commissioner of Income Tax(Appeals)-1, Nagpur dated 05.08.2020 for A.Y.2012-13 emanating from the order of the Assessing Officer(AO) dated 27.03.2015 passed under section 143(3) of the Income Tax Act, 1961. The appellant has raised following grounds of appeal
1. The ld. AO is not justified in disallowing the deduction u/s 80P(2)(c)(ii) in respect income of Rs.1,99,609.00
2. Any other ground of appeal at the time of hearing with prior approval of the Hon’ble Bench.”
A.Y.2012-13 Shri Keshao Urban Credit Co-op Society Ltd., [A]
Brief facts of the case: In this case, the assessee had file return of income on 30.09.2012 declaring return of income at Rs.Nil for A.Y. 2012-13. The case was selected for scrutiny. The assessee had claimed deduction under section 80P(2)(a) of the Act. During the assessment proceedings, the Assessing Officer(AO) observed that assessee has credited following amounts to Profit and Loss Account. Assessee had claimed deduction under section 80P(2)(a) of the Act on total income of Rs.23,79,900/- including below mentioned Rs.3,35,092/-. Sr.No. Particulars Amount 1 Namuna Vikri 5,625/- 2 Godown Rent 1,99,609/- 3 Kirkol Income 80,960/- 4 Penalty Interest 48,898/- Total 3,35,092/-
The AO disallowed the assessee’s claim of deduction under section 80P for Rs.3,35,092/-. Aggrieved by the same, the assessee filed appeal before the ld.CIT(A). The ld.CIT(A) accepted the assessee’s contentions except for godown rent, the ld.CIT(A) held that Rs.1,99,609/- in respect of godown rent is not eligible for deduction under section 80P(2)(a) of the Act.
The ld.Authorised Representative(ld.AR) of the assessee filed written submissions. The relevant portion submitted as under:
A.Y.2012-13 Shri Keshao Urban Credit Co-op Society Ltd., [A]
“1) Godown Rent Rs. 1,99,609/-: i) The assessee has earned a godown rent of Rs.1,99,609/- which is jointly let out to the various members of the society for keeping their agriculture produced in the warehouse which is constructed by the society for its members. ii) The said godown is constructed during the year 2011-12 for which the society has obtained permission from the District Deputy Registrar Co-op. Societies, Buldhana. The said godown is constructed under scheme of Central Govt, for construction godown in villages for storage of agriculture products. iii) The members of the society who are mainly agriculturist keeps their agriculture product in the godown for which the society charge the rent on tonnage basis for certain period. A copy of the ledger account of godown rent is enclosed herewith at page no. 8 to 9. iv) Similarly the assessee has provide loans to the agriculturist on mortgage of this ware house receipts issued by godown in- charge. Generally most of the members/agriculturist keeps the agriculture products in the godown and obtained the loans against the agriculture products. We enclosed herewith a list of members who has kept the agriculture product in the godown and also obtained the loan from the society at page no. 10 to 11. Ongoing from the list it can be noted that during the financial year 2011-12 total 55 agriculturist has kept the product in the godown and out of which 48 agriculturist has obtained the loan from the society. According to the above the society can carry on any activity for the improvement economic condition of its members by various plans and also providing finance to the members. vi) In this activity the society earns a godown rent and also earn interest on loan provided to the members. Hence the same is well under the banking business and hence godown rent is eligible for deduction u/s.80(F)(2)(a) of I.T. Act. viii) The society is carrying on the activity in the Rural area having head office at Shegoan Tah. Khamgaon Dist. Buldhana and various branches at 1) Shegaon 2) Nandura 3) Tunki 4) Badnerbholji 5) Bawanbir. The main source of this area is an agricultural activity and society mainly providing the loans to the farmers for their agriculture activities. In the same line to enhance the further agriculture support to the farmers/members, the society has constructed godowns for storage of agriculture products with permission of the District Deputy Registrar. The main intention of A.Y.2012-13 Shri Keshao Urban Credit Co-op Society Ltd., [A] the society that the farmers/ members can store their agriculture products on the godown on the temporary basis and sale it the market to get good price to the agriculture products. Hence it is submitted that the said activity is well within the object of the society. ix) The society also provides the temporary loans to the farmers/members on the mortgage of warehouse receipts of the product kept by the farmers/members in the godown and also earn interest on the said loans. As stated by the Hon’ble CIT Appeal though it is not precondition that the members must obtained a loan against warehouse receipts but most of the farmers obtained loans against the warehouse receipts. During the assessment year 2011- 12 the society has kept the goods of 55 members and out of that finance was made to the 48 members. Hence it is very clear that most of the farmers/ members are availing this facility of loan from the society and societies earning interest on the said loans.”
The ld.Departmental Representative(ld.DR) for the Revenue relied on the orders of the Lower Authorities.
We have heard both the parties, perused the records. It is a fact that assessee has earned godown rent of Rs.1,99,609/-. The assessee is a credit co-operative society engaged in the activity of accepting deposits from members and providing advances to the members of the society. It is also a fact that assessee had constructed godown with the approval of District Deputy Registrar Co-operative Societies. These godowns were given on rent to the agriculturalist to keep their agricultural produce. The list of persons to whom these godowns have been given on rent had been annexed at page 10 & 11 of the paper book. It is observed that out of 55 persons to whom these godown were given for rent, except 5 persons, all had taken loans from assessee society and the agricultural produce it was kept
A.Y.2012-13 Shri Keshao Urban Credit Co-op Society Ltd., [A] in the godown was hypothicated with the assessee’s co-operative society. During the hearing, the ld.AR pleaded that alternatively assessee is eligible for deduction under section 80P(2)(e). The relevant part of the section 80P(2)(e) is reproduced here as under: “(e) in respect of any income derived by the co-operative society from the letting of godowns or warehouses for storage, processing or facilitating the marketing of commodities, the whole of such income.”
As mentioned above, assessee has given godown on rent to its members for storing agricultural produce. Therefore, assessee is eligible for deduction under section 80P(2)(e) of the Act, accordingly, grounds of appeal of the assessee are allowed.
In the result, appeal of the Assessee is Allowed. Order pronounced in the open Court on 17th November, 2022.