2015 (4) TMI 141 - AT - Income Tax

Denial of deduction under section 80P(2)(a)(iii) - Held that - Undisputedly, the assessee is not a Co-operative Society and is also not engaged either in marketing of agricultural produce or providing credit facilities to its members. Therefore, the assessee is not entitled for deduction under section 80P(2)(a)(iii) of the Act. Since the ld. CIT(A) has properly adjudicated the issue in the light of relevant provisions of the Act, we find no infirmity therein. Accordingly, we confirm his order. - Decided against assessee.

Summary

Issues:
1. Denial of deduction under section 80P(2)(a)(iii) of the Income-tax Act, 1961.

Analysis:

1. The appellant challenged the rejection of the first appeal by the commissioner of income Tax (Appeal)-I Lucknow, citing an error in appreciating the facts and circumstances of the case. The appellant, a Cane Development Council, claimed to be engaged in the marketing of agricultural produce and providing credit facilities to its members. The appellant argued that being a semi-government body, its income is 100% deductible under section 80-P and cannot be penalized by another government department. The order under appeal was dated 04.04.2012, and the appellant contended that the appeal was filed within the stipulated time.

2. The core issue revolved around the denial of deduction under section 80P(2)(a)(iii) of the Act due to the appellant not being registered under the Cooperative Society's Registration Act and not engaged in marketing agricultural produce grown by its members. The Assessing Officer disallowed the deduction, emphasizing that only registered cooperative societies engaged in marketing agricultural produce qualified for the deduction. The appellant's activities were found not to fall within the scope of marketing, leading to the disallowance of the deduction.

3. The appellant argued that it was established by the Cane Commissioner, Uttar Pradesh, to assist farmers in sugarcane production and development, receiving commissions from sugar mills based on government rules. The appellant cited case laws where similar deductions were allowed. However, the Departmental Representative contended that the appellant was not a registered Cooperative Society, a prerequisite for the deduction under section 80P(2)(a)(iii). The Tribunal noted that the appellant was not registered under the Cooperative Society's Registration Act and was not engaged in marketing agricultural produce or providing credit facilities to its members.

4. The Tribunal upheld the disallowance of the deduction, emphasizing that only Cooperative Societies were eligible for the deduction under section 80P, not other entities like the appellant Council. Since the appellant was not a Cooperative Society and did not engage in the specified activities, it was deemed ineligible for the deduction. The Tribunal found no merit in the appellant's reliance on previous judgments where deductions were allowed to registered Cooperative Societies engaged in similar activities.

5. Ultimately, the Tribunal dismissed the appellant's appeal, affirming the decision to deny the deduction under section 80P(2)(a)(iii) of the Act. The Tribunal concluded that since the appellant was not a Cooperative Society and did not fulfill the criteria for the deduction, the disallowance was justified based on the relevant provisions of the Act.