Commissioner Of Income Tax-I, Chandigarh v. M/S The Morinda Co-Op. Surgar Mills Ltd

ITA No. 589 of 2010 IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH ITA No. 589 of 2010 Date of Decision: 25.7.2011 Commissioner of Income Tax-I, Chandigarh Versus M/s The Morinda Co-op. Surgar Mills Ltd. ....Appellant. ...Respondent. CORAM:-HON'BLE MR. JUSTICE ADARSH KUMAR GOEL,ACTING CHIEF JUSTICE.ACTING CHIEF JUSTICE. HON'BLE MR. JUSTICE AJAY KUMAR MITTAL. PRESENT: Ms. Urvashi Dhugga, Senior Standing Counsel,for the appellant.for the appellant. AJAY KUMAR MITTAL, J. 1.This appeal has been preferred by the revenue underSection 260A of the Income Tax Act, 1961 (in short “the Act”) againstthe order dated 22.12.2009 passed by the Income Tax AppellateTribunal, Chandigarh Bench “A” (hereinafter referred to as “theTribunal”) in ITA No. 1184/Chd/1993, relating to the assessment year1995-96, claiming the following substantial questions of law:- “i)Whether on the facts and circumstances of the caseand in law, the Hon'ble ITAT is right in allowing thededuction u/s 80P(2)(a)(iii) to the assessee as sugarand molasses are products of a complexmanufacturing process which involves usage of Plantand in law, the Hon'ble ITAT is right in allowing thededuction u/s 80P(2)(a)(iii) to the assessee as sugarand molasses are products of a complexmanufacturing process which involves usage of Plant and Machinery? ii)Whether on the facts and circumstances of the caseand in law the Hon'ble ITAT is right in allowing thededuction u/s 80P(2)(a)(iii) to the assessee as sugarand molasses are not the marketable agriculturalproduces grown by the members?” 2.Briefly stated, the facts necessary for adjudication asnarrated in the appeal are that the assessee is a Cooperative Societyengaged in marketing of agricultural produce of its members and it filedits return on 30.10.1996 showing nil income after claiming deductionunder Section 80P(2)(a)(iii) of the Act. The Assessing Officer videorder dated 24.2.1997 rejected the claim of the assessee on the groundthat the sugar and molasses were by-products of a complexmanufacturing process which involved usage of plant and machinery.Feeling aggrieved, the assessee filed an appeal before theCommissioner of Income Tax (Appeals) [in short “the CIT(A)”] who videorder dated 26.9.1997 deleted the addition holding that in the case ofsugarcane the only method of marketing available to a cooperativesociety was to produce sugar and sell the same. Against the order ofthe CIT(A), the department filed an appeal before the Tribunal. TheTribunal vide order dated 13.6.2003 set aside the order of the CIT(A)and directed the Assessing Officer not to allow deduction to theassessee under Section 80P(2)(a)(iii) of the Act by relying upon thedecision of the jurisdictional High Court in the case of KarnalCooperative Sugar Mills Ltd. v. CIT [2002] 253 ITR 659 and in thecase of National Agriculture Cooperative Marketing Federation of India Ltd. v. Union of India [2003] 260 ITR 548. Against the order ofthe Tribunal, the assessee filed an appeal before this Court (ITA No. 27of 2004) which vide order dated 12.10.2009 set aside the order of theTribunal and remanded the matter to the Tribunal for fresh orders inview of the decision of the High Court in Budhewal Cooperative Sugar Mills Ltd. v. Commissioner of Income Tax [2009] 315 ITR351. The Tribunal vide order dated 22.12.2009 dismissed the appealfiled by the revenue against the order of the CIT(A) dated 26.9.1997 byrelying on the decision of this Court in Budhewal Cooperative SugarMills Ltd's case (supra). Hence, the present appeal by the revenue. 3.We have heard learned counsel for the appellant. 4.The point for consideration in this appeal is whether theassessee was entitled to claim deduction under Section 80P(2)(a)(iii) ofthe Act which was engaged in marketing of agricultural produce of itsmembers. Sugar Mills Ltd. v. Commissioner of Income Tax [2009] 315 ITR351. The Tribunal vide order dated 22.12.2009 dismissed the appealfiled by the revenue against the order of the CIT(A) dated 26.9.1997 byrelying on the decision of this Court in Budhewal Cooperative SugarMills Ltd's case (supra). Hence, the present appeal by the revenue. 3.We have heard learned counsel for the appellant. 4.The point for consideration in this appeal is whether theassessee was entitled to claim deduction under Section 80P(2)(a)(iii) ofthe Act which was engaged in marketing of agricultural produce of itsmembers. 5.The Assessing Officer had denied the claim of theassessee on the ground that the sugar and molasses were by-productsof a complex manufacturing process involving usage of plant andmachinery. The Tribunal vide order dated 22.12.2009 whileadjudicating the aforesaid issue in favour of the assessee had reliedupon a Full Bench judgment of this Court in Budhewal CooperativeSugar Mills Ltd's case (supra) and order of this Court dated12.10.2009 passed in the case of the assessee, i.e. M/s MorindaCooperative Sugar Mills Ltd. v. Commissioner of Income Tax-II,Chandigarh in ITA No. 27 of 2004. 6.Learned counsel for the revenue fairly conceded that the ITA No. 589 of 2010 Full Bench judgment in Budhewal Cooperative Sugar Mills Ltd's case (supra) was applicable to the facts of the present case. 7.In view of the above, we do not find any error in the order ofthe Tribunal. Accordingly, no substantial question of law arises in thisappeal. The appeal stands dismissed. (AJAY KUMAR MITTAL) JUDGE July 25, 2011gbs (ADARSH KUMAR GOEL) ACTING CHIEF JUSTICE