1983 (2) TMI 92 - AT - Income Tax

Summary

Issues:
1. Exemption of commission earned by a cooperative society under section 80P(2)(a)(iii) of the IT Act, 1961.
2. Allowance of depreciation on godowns leased by the cooperative society.

Analysis:

Issue 1:
The primary issue in this appeal was whether the commission earned by the appellant cooperative society from the District Food & Supplies Controller is exempt under section 80P(2)(a)(iii) of the IT Act, 1961. The lower authorities had denied the exemption, stating that the Government of Punjab was not a shareholder or member of the society. However, upon examining the society's bylaws, it was established that the State Government, through its agencies, was indeed a member of the society by contributing capital. The Appellate Tribunal noted that the membership was open to the Assistant Registrar, Cooperative Societies, without incurring any liability or holding any share. Additionally, clauses in the bylaws outlined the State Government's contribution to the share capital and limited liability in case of winding up. The Tribunal concluded that the commission earned by the society was covered by the provisions of section 80P(2)(a)(iii) and therefore exempt, ruling in favor of the assessee.

Issue 2:
The second issue pertained to the allowance of depreciation on godowns leased by the cooperative society. The society had entered into an agreement with the Punjab State Cooperative Supply & Marketing Federation Ltd. for the construction of godowns. The agreement specified the terms of purchase, construction, repayment of costs, and eventual transfer of ownership to the society. The Tribunal, after reviewing the agreement terms and the treatment of godown rent by the assessing authorities, concluded that the assessee was entitled to claim depreciation as requested. In reaching this decision, the Tribunal considered relevant case laws cited by the revenue, such as Sardar Tara Singh vs. CIT and CIT vs. Hindustan Cold Storage & Refrgn. P. Ltd.

In summary, the Appellate Tribunal allowed the appeal of the assessee, granting exemption for the commission earned and permitting the depreciation claimed on the leased godowns.