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Issues Involved:
1. Entitlement to deduction under section 80P(2)(a)(i) of the IT Act, 1961. 2. Entitlement to deduction under section 80P(2)(a)(ii) of the IT Act, 1961. 3. Entitlement to deduction under section 80P(2)(e) of the IT Act, 1961. Issue-wise Detailed Analysis: 1. Entitlement to Deduction Under Section 80P(2)(a)(i): The primary contention of the assessee-societies was that they were engaged in the business of providing credit facilities to their members and thus entitled to deduction under section 80P(2)(a)(i). The Assessing Officer (AO) and the CIT(A) rejected this claim, emphasizing that the societies were primarily marketing societies and not credit societies. The AO noted that the main function of the societies was marketing the finished goods of silk sarees deposited by its members and that advancing loans was merely incidental. The CIT(A) supported this view, noting that the major source of income for the societies was from marketing activities and not from interest on loans. The Tribunal upheld the findings of the lower authorities, stating that the societies were classified as marketing societies under the relevant Co-operative Societies Acts and that the principal object of the societies was marketing, not providing credit facilities. The Tribunal also referenced several judicial precedents, including the Kerala High Court's decision in Kerala Co-operative Consumers' Federation Ltd. v. CIT and the Allahabad High Court's decision in U.P. Co-operative Cane Union, which supported the view that providing credit facilities must be the primary business of the society to qualify for deduction under section 80P(2)(a)(i). The Tribunal concluded that the societies were marketing societies and not credit societies, and thus not entitled to the deduction under section 80P(2)(a)(i). 2. Entitlement to Deduction Under Section 80P(2)(a)(ii): The assessee-societies also claimed that they were engaged in a cottage industry and thus entitled to deduction under section 80P(2)(a)(ii). The AO and CIT(A) rejected this claim, noting that the societies were marketing societies and not engaged in any industrial activity. The Tribunal examined the judicial interpretations of "cottage industry" and noted that the essential attributes of a cottage industry include small-scale operations, family labor, and production in homes or small workshops. The Tribunal found that the societies did not meet these criteria as they did not own looms, did not supply raw materials, and did not control the weaving activities of their members. The Tribunal referenced several cases, including the Allahabad High Court's decision in District Co-operative Federation Ltd. v. CIT and the Delhi High Court's decision in Indian Co-operative Union Ltd., which supported the view that mere marketing activities do not qualify as cottage industry. The Tribunal concluded that the societies were not engaged in a cottage industry and thus not entitled to the deduction under section 80P(2)(a)(ii). 3. Entitlement to Deduction Under Section 80P(2)(e): The assessee-societies raised a new claim before the Tribunal for deduction under section 80P(2)(e), arguing that they provided godown facilities to their members. The Tribunal declined to entertain this claim as it was not raised before the AO or CIT(A) and required factual inquiry. The Tribunal dismissed the related grounds in limine. Conclusion: The Tribunal upheld the findings of the lower authorities and dismissed the appeals filed by the assessee-societies. The societies were classified as marketing societies and not credit societies or cottage industries, and thus not entitled to deductions under sections 80P(2)(a)(i) and 80P(2)(a)(ii). The claim under section 80P(2)(e) was dismissed as it was not raised at the appropriate stages.
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