Commissioner of Income Tax vs Udaipur Sahkari Upbhokta Thok Bhandar Ltd.

These appeals u/s 260A of the Income Tax Act, 1961 (for short the Act of 1961 hereinafter) relating to assessment years 1997-98to 2001-02, arising out of a common judgment dated 28-2-2006 passed by the Income Tax Appellate Tribunal, Jodhpur Bench, Jodhpur (hereinafter referred to as the Tribunal" hereinafter), in ITA Nos. 136/Jd/2003, 137/Jd/2003, 138/Jd/2003, 139/Jd/2003 and 349/Jd/2O03 in respect of assessment years 1997-98, 1998-99, 1999-2000, 2000-01, 2001-02 respectively, were admitted by this Court on following substantial question of law:

Whether on the facts and in the circumstances of the case as well as in the law the learned Tribunal was justified in law in holding that income derived by the assessee society in the form of commission/margin is eligible for deduction u/s 80P(2)(e) whereas the facts remained that the society has not derived income from letting out of godowns or warehouse for storage, processing or facilitating the Tnarketing of commodities as provided in the Act ?

The respondent assessee is a co-operative society involved in purchase and sale of controlled items. During the relevant assessment year the assessee claimed deduction u/s 80P(2)(e) of the Act of 1961, on account of commission received from the Government for stocking of controlled goods in its godowns. Thereafter, as and when required, these goods are sold by the assessee to various retailers authorised by the Government at the specified rate. In lieu of its services, the assessee is entitled to receive the cost of the goods sold, commission (margin) specified by the Government, octroi, transportation charges from railway station to godowns and handling charges at the rates specified by the Government from the retailers.

The assessing officer rejected the claim of the respondent assessee on the ground that the assessee did not receive any money from the Government either as commission or letting charges and no amount has been separately credited in the P&L a/c either as commission or letting charges. Accordingly, the assessing officer arrived at the finding that since no amount is payable to the assessee as "letting charges of godown" such income arising to the assessee is not income from letting of godowns and consequently, the same is not eligible for deduction u/s 80P(2)(e) of the Act of 1961.

The Commissioner (Appeals), Udaipur (in short the Commissioner (Appeals) hereinafter), while following the decision of the Tribunal in the case of the assessee in respect of earlier assessment year held that income received by the assessee in form of commission (margin) is entitled to the deductions u/s 80P(2)(e) of the Act of 1961.

On further appeal by the revenue, the learned Tribunal also followed its earlier decision in respect of the earlier assessment years and accordingly confirmed the order passed by the Commissioner (Appeals). Hence, these appeals.

It is submitted by the learned Counsel for the revenue that as a matter of fact the controversy involved in these appeals is no more res integra inasmuch as in the appeals arising from the identical orders passed by the learned Tribunal in respect of earlier assessment years i.e., 1991-92 to 1996-97, the identical substantial question of law has already been answered by this Court in the matter of CIT v. Udaipur Shahkari Upbhokta Thok Bhandar Ltd. 2007 295 ITR 164 (Raj).

We have gone through the judgment of this Court in the matter of Udaipur Shahkari Upbhokta Thok Bhandar Ltd. (supra) relied upon by the learned Counsel for the revenue. Vide aforesaid judgment, this Court while deciding the identical questions in the assessees own case relating to the assessment years 1991-92 to 1996-97, has answered the question in the following terms:

As a result of the aforesaid discussion, we are of the opinion that since the assessee was storing the commodities in question in godown as a part of its own trading stock, it being trader in the essential commodities In question, the provisions of Section 80P(2)(e) are not applicable, to be invoked by the assessee. He is only entitled to claim deduction of expenses incurred by him on hiring of godown, and the depreciation, as may be allowable on godowns owned by it as business assets, while computing income from its business.

It is not disputed before us by the learned Counsel appearing on behalf of the respondent assessee that the substantial question of law involved in these appeals is squarely covered by the decision of this Court referred above.

Accordingly, we answer the question framed in favour of the revenue and against the assessee in the same terms as answered by this Court in assessees own case (supra). Consequently, the appeals preferred by the revenue are allowed. The orders of the learned Tribunal as well as of the Commissioner (Appeals) are set aside and the assessing officer is directed to recompute the income of the assessee for the assessment years in question, in the light of the aforesaid judgment of this Court. No order as to costs.