2011 (2) TMI 1431 - AT - Income Tax

Summary

Issues involved:
The judgment involves appeals and cross objections arising from a common order of the CIT(A)-II dated 18/1/2010 for the assessment years 1997-98 to 1999-2000.

Deduction u/s 80P(2)(vi) of the Act:
The assessee, a cooperative society providing marketing assistance to its members, claimed deduction u/s 80P for the relevant assessment years. The AO initially restricted the deduction to a nominal amount u/s 80P(2)(c) of the Act. Upon remand by the Tribunal, the AO re-assessed the income, concluding that the service charges earned by the society were akin to commission and not eligible for deduction u/s 80P(2)(a)(vi). However, the CIT(A) allowed the deduction after considering the society's activities and the nature of income derived, emphasizing that the service charges were related to marketing goods manufactured by its members.

Interpretation of Tribunal's earlier order:
The Tribunal's previous order had determined that certain activities of the society fell under u/s 80P(2)(a)(vi) based on the bye-laws and nature of operations. The CIT(A) directed the AO to examine the gross profit from various activities and apply the relevant provisions of u/s 80P accordingly. The Tribunal's finding regarding the specific activities entitled to deduction u/s 80P(2)(a)(vi) was upheld, emphasizing the finality of the Tribunal's decision and the correctness of the CIT(A)'s order.

Conclusion:
The appeals filed by the revenue were dismissed, affirming the CIT(A)'s order allowing deduction u/s 80P(2)(a)(vi) for the society's relevant activities. The cross objections filed by the assessee were deemed infructuous due to the dismissal of the revenue's appeals. The judgment was pronounced on February 28, 2011, in Bangalore.