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2015 (4) TMI 368 - ITAT PANAJIDisallowance u/s 40A(3) - as per assessee kerosene is bought for supply under PDS system to BPL families, and it is a no profit business to the society as well as to suppliers who insisted on cash payment The assessee is running rationing business under Central Govt. Scheme - Held that:- The assessee has carrying on the activity of supply of food grains, sugar & kerosene under Public Distribution System. The public distribution system (PDS) is an Indian food security system. Establishment by the Government of India under Ministry of Consumer Affairs, Food, and public Distribution and managed jointly with state governments in India, it distributes subsidized food and non-food items to India’s poor. The major commodities distributed include staple food grains, such as wheat, rice, sugar, and kerosene, through a network of public distribution shop established in several states across the country. The Central and State governments share the responsibility of regulating the PDS. This shop is used to distribution rations at a subsidized price to the poor. Hence, there is no element of profit. The assessee has distributed Kerosene to various fair price shops as per the orders of Chief Executive Officer of Taluka Panchayat and the assessee as per the order three distributors have distributed kerosene to the appellant society. We find that the assessee has made payment to three agencies but that agencies are nominated by Govt but it cannot be said that this payment is made to Government. Therefore, we are of the view that A.O and CIT(A) is justified in holding that payments has been made to dealer authorised by the Govt. and not to the Government itself. Therefore, AO and CIT(A) is justified in their action and our interference is not required. - Decided against assessee. Deduction u/s 80P(2)(a)(i) claimed - Held that: - The assessee is a Primary Co-operative Agriculture and Rural Development Bank registered under the Karnataka Co-operative Society Act. Therefore, entire income should be deductible u/s 80P(2)(a)(i) of the Income Tax Act. We find that assessee has taken this ground for the first time before us and the CIT(A) has not executed this ground, therefore, in the interest of justice and fair play, we restore this issue to the file of CIT(A) to decide the issue as per law after giving due opportunity of hearing to the assessee. - Decided in favour of assessee by ay of remand.
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