DUDH SAGAR DAIRYS EMPLOYEES CREDIT AND SUPPLY CO OP SCO LTD Vs. ASSTT COMMI OF INCOME TAX
LAWS(GJH)-2014-11-108
HIGH COURT OF GUJARAT
Decided on November 11,2014

Dudh Sagar Dairys Employees Credit And Supply Co Op Sco Ltd Appellant
VERSUS
Asstt Commi Of Income Tax Respondents

JUDGEMENT

K.S.JHAVERI, J. - (1.) BEING aggrieved and dissatisfied with the impugned judgment and orders passed by the Income Tax Appellate Tribunal, Ahmedabad 'C' Bench (hereinafter referred to as 'the Tribunal') dated 15.05.2002 in ITA Nos. 3321/AHD/1996, 3115/Ahd/1996, 1222/Ahd/1996, 3320/Ahd/1996 and order dated 18.10.2003 in 2258/Ahd/1997 for the Assessment Years 1994 -95, 1993 -94, 1992 -93, 1991 -92 and 1995 -96 respectively, the revenue has preferred the present Tax Appeals for consideration of the following substantial questions of law in the following appeals: Tax Appeal No. 245 of 2002 : " (1) W hether, on the facts and in the circumstances of the case, loss of Rs. 8,43,313/ - incurred by the assessee in the sale of ghee to the members of the society and the sale of notebooks to their children in accordance with the resolution of the society is the loss allowable to the assessee in the computation of its total income and is not at all covered by section 40A(2) of the Income tax Act, 1961? (2) W hether, on the facts and in the circumstances of the case, the expenditure of Rs. 3,20,425/ - expended after giving one presentation article to every member in accordance with the resolution of the managing committee is an allowable business expenditure under section 37(1) of the Income -tax Act, 1961 - Tax Appeal No. 246 of 2002 : " (1) W hether, on the facts and in the circumstances of the case, loss of Rs. 6,79,151/ - incurred by the assessee in the sale of ghee to the members of the society and the sale of notebooks to their children in accordance with the resolution of the society is the loss allowable to the assessee in the computation of its total income and is not at all covered by section 40A(2) of the Income tax Act, 1961? (2) W hether, on the facts and in the circumstances of the case, the expenditure of Rs. 2,79,427/ - expended after giving one presentation article to every member in accordance with the resolution of the managing committee is an allowable business expenditure under section 37(1) of the Income -tax Act, 1961 - Tax Appeal No. 247 of 2002 : Tax Appeal No. 247 of 2002 : " (1) W hether, on the facts and in the circumstances of the case, loss of Rs. 5,26,296/ - incurred by the assessee in the sale of ghee to the members of the society and the sale of notebooks to their children in accordance with the resolution of the society is the loss allowable to the assessee in the computation of its total income and is not at all covered by section 40A(2) of the Income tax Act, 1961? (2) W hether, on the facts and in the circumstances of the case, the expenditure of Rs. 2,10,127/ - expended after giving one presentation article to every member in accordance with the resolution of the managing committee is an allowable business expenditure under section 37(1) of the Income -tax Act, 1961 - Tax Appeal No. 248 of 2002 : "(1) W hether, on the facts and in the circumstances of the case, the expenditure of Rs. 1,41,568/ - expended after giving one presentation article to every member in accordance with the resolution of the managing committee is an allowable business expenditure under section 37(1) of the Income -tax Act, 1961 - Tax Appeal No. 408 of 2003 : " (1) W hether, on the facts and in the circumstances of the case, loss of Rs. 1,79,299/ - incurred by the assessee Co -operative Society in the sale of notebooks to the children of the members, in accordance with the resolution of the society is an allowable loss? (2) W hether, on the facts and in the circumstances of the case, the expenditure of Rs. 3,47,136/ - expended after giving one presentation article to every member in accordance with the resolution of the managing committee is an allowable business expenditure under section 37(1) of the Income -tax Act, 1961 -
(2.) THE assessee is a co -operative society and during the assessment years in question, the Assessing Officer disallowed the assessee's claim of disallowance of expenditure on ghee, notebooks as well as presentation to the members and/or their children. The assessee filed appeal before CIT(A) and the appellate authority deleted the addition made by the A.O and allowed the appeal. On appeal before the Tribunal by the revenue, the Tribunal set aside the order of CIT(A) and confirmed the findings of the A.O. Hence the assessee is before us by way of the present appeals.
(3.) MR . Manish Shah, learned advocate appearing for the assessee in these appeals contended that the Tribunal erred in holding that though the society had in fact incurred loss in selling Ghee and note books to the members and their children respectively, the same is not allowable in the computation of its total income. He submitted that ghee was sold to the members at concessional rate only on two or three festive occasions in a year and not round the year. He submitted that the Tribunal also erred in holding that expenditure incurred in giving presents to the members is not an allowable business expenditure. 3.1 Mr. Shah has also relied upon a decision of the Apex Court in the case of Madras Industrial Investment Corporation Ltd. vs. Commissioner of Income -Tax, 1997 225 ITR 802 and submitted that question no. 2 in Tax Appeals No. 245 to 247 of 2002 and 408 of 2003 as well as the sole question in Tax Appeal No. 248 of 2002 are squarely covered by the said decision and therefore the same may be answered in favour of the assessee. Mr. Mehta, learned advocate appearing for the revenue strongly supported the impugned orders passed by the Tribunal and submitted that in view of the observations made by the Tribunal in the impugned orders the expenditures incurred shall not be admissible under the Act.;


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