2011 (8) TMI 96 - HC - Income Tax

Deduction u/s 80P (2)(a)(iii) - in the manufacturing process, in fact, the assessee incurred all the expenditure on its own and marketed the sugar in its own name and as such it cannot be said that the sugar which was sold by the assessee belonged to its members - assessee filed an appeal before this Court (ITA No. 165 of 2005) and this Court vide order dated 12.10.2009 set aside the order of the Tribunal and remanded the matter for fresh decision in accordance with law - the issue had already been decided in favour of the assessee by relying upon the Full Bench decision of this Court in Bhudewal Cooperative Sugar Mills v. Commissioner of Income Tax 2009 (5) TMI 63 - PUNJAB AND HARYANA HIGH COURT

Summary

Issues:
Appeal under Section 260A of the Income Tax Act, 1961 against the order of the Income Tax Appellate Tribunal regarding deduction under Section 80P(2)(a)(iii) for manufacturing sugar from sugarcane.

Analysis:
The appeal was filed by the revenue under Section 260A of the Income Tax Act, 1961 against the order of the Income Tax Appellate Tribunal related to the deduction claimed by the assessee under Section 80P(2)(a)(iii) for manufacturing sugar from sugarcane for the assessment year 1995-96. The main question of law raised was whether the Tribunal was correct in holding that manufacturing sugar from sugarcane constitutes marketing of agricultural produce grown by the members of the assessee society, making the society eligible for the deduction despite the emergence of a new commercial product and the society incurring all the expenses and marketing the sugar in its own name.

The facts of the case revealed that the assessee, a sugar manufacturer, claimed a substantial deduction under Section 80P(2)(a)(iii) of the Act. The Assessing Officer initially rejected the claim, which was upheld by the Commissioner of Income Tax (Appeals). Subsequently, the Tribunal dismissed the appeal, but the High Court set aside the Tribunal's order and remanded the matter for fresh decision. The Tribunal, in its subsequent order, allowed the appeal of the assessee based on a Full Bench decision of the High Court in a similar case, leading to the revenue's appeal.

The High Court noted that the revenue conceded that the Full Bench judgment was applicable to the present case. Consequently, the Court found no merit in the appeal, stating that no substantial question of law arose, and thus dismissed the appeal. The judgment emphasized the application of the Full Bench decision in determining the eligibility of the assessee society for the deduction under Section 80P(2)(a)(iii) for manufacturing sugar from sugarcane, ultimately upholding the Tribunal's decision in favor of the assessee society.

In conclusion, the High Court's judgment affirmed the Tribunal's decision, highlighting the relevance of the Full Bench decision in similar cases and dismissing the revenue's appeal against the deduction claimed by the assessee society for manufacturing sugar from sugarcane under Section 80P(2)(a)(iii) of the Income Tax Act, 1961 for the assessment year 1995-96.