1998 (3) TMI 694 - HC - Income Tax

Summary

Issues Involved:
The judgment involves the issue of whether the assessee, a co-operative marketing federation, is entitled to exemption under section 80P(2)(a)(iv) of the Income Tax Act for certain amounts related to the sale of scrap and profits from the fertiliser business.

Summary:

Issue 1: Exemption under Section 80P(2)(a)(iv) for Sale of Scrap
The Income Tax Officer rejected the claim of exemption for the sale proceeds of scrap from the fertiliser granulation plant. However, the Commissioner (Appeals) allowed the exemption for the scrap sale. The Tribunal also upheld the exemption, stating that the sale of scrap qualifies for exemption under section 80P of the Act, limited to sales to members. The High Court affirmed the Tribunal's decision, citing a previous judgment in a similar case.

Issue 2: Exemption under Section 80P(2)(a)(iv) for Profits from Fertiliser Sales
The disputed amounts of &8377; 13,55,933 and &8377; 17,68,237 were related to rectifying double debits from earlier years in the fertiliser business. The Appellate Assistant Commissioner allowed exemption for these amounts under section 80P(2)(a)(iv) as they represented profits from the sale of fertiliser to the assessee's members. The Tribunal agreed with this decision, emphasizing that the profits from fertiliser sales are eligible for exemption under section 80P of the Act. The High Court upheld the Tribunal's decision based on the principle established in a previous case involving the same assessee.

Conclusion:
The High Court ruled in favor of the assessee, confirming their entitlement to exemption under section 80P of the Income Tax Act for both the sale of scrap and profits from fertiliser sales. The Court found no fault in the Tribunal's decision and answered the question of law in the affirmative, against the revenue. No costs were awarded in this case.