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2019 (10) TMI 397

..... 80P(2)(b) of the Act on milk sold by the assessee to other than federal society. Identical issue arose before the Co-ordinate Bench of Tribunal in the case of Fattesinghrao Naik (Appa) Sahakari Dudh Utpadak Sangh Limited Vs. ITO [2019 (10) TMI 316 - ITAT PUNE] wherein the Co-ordinate Bench of Tribunal decided the issue in favour of assessee but however for quantification of deduction, remitted the issue back to the file of Assessing Officer. - ITA No.2215/PUN/2017, ITA No.1583/PUN/2018 - 7-10-2019 - Shri Anil Chaturvedi, AM For the Assessee : Shri Pramod Shingte For the Revenue : Shri Ajay Agarwal ORDER PER ANIL CHATURVEDI, AM : 1. These two appeals filed by assessee are against the order of Commissioner of Income Tax (Appeals) - 1, Kolhapur for the assessment years 2014-15 and 2015-16, respectively. Before me, both the parties submitted that though the appeals are for two different assessment years but the issue involved in both the appeals are identical except for the assessment year and the amounts involved. They therefore submitted that they have common arguments for both the years. In view of the aforesaid facts, I, for the sake of convenience proceed to dispose of both the ap .....

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..... ,406/- to the parties other than federal societies and had sold the milk of ₹ 1,83,92,433/- to Mahananda Dairy which is a federal society. The assessee was therefore asked to show cause as to why the deduction u/s. 80P(2)(b) of the Act not be disallowed on the profits earned from sale of milk to other than federal society. The assessee made the submissions which were not found acceptable to Assessing Officer. The Assessing Officer noted that the assessee had sold only 5.11% of the total milk to federal society and 94.89% of the milk was sold to the other private parties. He was of the view that on the profits earned from sale of milk to other than federal society, assessee is not eligible to claim deduction u/s. 80P of the Act. He accordingly, restricted the deduction u/s. 80P to 5.11% of the net profit and accordingly worked out the deduction u/s. 80P(2)(b) at ₹ 2,21,612/- as against the assessee s claim of ₹ 43,36,867/-. Aggrieved by the order of Assessing Officer, the assessee carried the matter before the CIT(A) who upheld the order of Assessing Officer. Aggrieved by the order of CIT(A), the assessee is now in appeal. 4. Before me, the ld. AR reiterated the su .....

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..... from sale of milk made to the Federal Co-operative Society or Government or local authority or Government company and not to outsiders. He therefore submitted that in view of the clear provision of the Act, Assessing Officer and ld. CIT(A) have rightly denied the claim of deduction. He thus supported the orders of lower authorities. On the issue of similarity of facts in assessee s case and in the case of Fattesinghrao Naik (Appa) Sahakari Dudh Utpadak Sangh Limited Vs. ITO (supra) the ld. DR did not controvert the submissions made by the ld. AR. 6. I have heard the rival submissions and perused the material on record. I find that the issue in the preset case is with respect to denial of claim of deduction u/s. 80P(2)(b) of the Act on milk sold by the assessee to other than federal society. I find that identical issue arose before the Co-ordinate Bench of Tribunal in the case of Fattesinghrao Naik (Appa) Sahakari Dudh Utpadak Sangh Limited Vs. ITO (supra) wherein the Co-ordinate Bench of Tribunal decided the issue in favour of assessee but however for quantification of deduction, remitted the issue back to the file of Assessing Officer by observing as under : 6. We have heard the .....

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..... . that it is not a case where assessee has sold the milk at a higher rate to outside parties, in fact assessee was getting higher price on sale of milk to Federal Society in addition to undisputed benefit of deduction u/s 80P(2)(b). It is not a case where assessee has suo-moto volunteered to sell milk in the open market. It was after the denial of Federal Society to accept the milk that the assessee was constrained to sell the milk in open market at a price lower than the price offered by Federal Society. 8. The Hon ble Apex Court in the case of Bajaj Tempo Limited Vs. CIT (supra) has held that a provision in a taxing statute which grants incentives to promote growth and development should be construed liberally so as to advance the objective of the section and not to frustrate it. It is an undisputed position that provisions of deduction u/s 80P is a provision to promote development of Co-operative Sector. Considering the totality of the aforesaid facts and relying on the aforesaid decision of Hon ble Apex Court cited herein we are of the view that assessee is eligible for deduction u/s 80P2(b) of the Act on the milk sold to outside parties. However, the assessee would be eligible .....

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..... g grounds : 1. On the facts and in the circumstances of the case and in law the Lower Authorities have erred in denying the deduction of ₹ 27,58,920/- claimed u/s. 80P(2)(b), to the society for the reason that Society has supplied the Milk collected from its members to Federal Society as well as to Private parties. Alternatively, your appellant would like to raise the following ground : 2. On the facts and in the circumstances of the case and in law the lower authorities erred in denying the deduction of ₹ 27,58,920/- u/s. 80P(2)(a)(iii), by disregarding the appellant s contention in this regard as it has complied with all the provisions of the said section. 11. The appeal is time barred by two days. The assessee has filed an application seeking condonation of delay in filing of the appeal. After perusal of the same, we are satisfied that the delay in filing of the appeal is not intentional or deliberate but has been caused due to bonafide reasons as stated in the application. The delay in filing of appeal is condoned and the appeal is admitted to be heard and disposed of on merits. 12. Since, the facts in the assessment year under appeal are identical to the assessment .....

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