2009 (12) TMI 274 - HC - Income Tax

Co-operative Society- Deduction u/s 80P- The assessee was a co-operative institution registered to promote agricultuaral activities to give benefit to the farmers who were its members. The Assessing officer having noticed that the assessee was also getting income from hiring its lorry disallowed deduction on the ground that it di not fall under section 80P(2)(a)(iv). The Tribunal held that the income from hiring its lorry was entitled to special deduction on the ground that the assessee was not engaged in the marketing of agricultural produce for the benefit of its member. Held that- it was not in dispute that the assesee was engaged in the marketing of agricultural produce of its members. Even if the Assessing Officer was of the opinion that the case of the assessee did not fall under section 80P(2)(a)(iv) since it fell under section 80(2)(a)(iii) the assessee was entitled to special deduction.

Summary

Issues:
Challenge to the order passed by the Income-tax Appellate Tribunal regarding the legality and correctness of disallowing exemption on lorry hire charges under section 80P(2)(a)(iv) of the Income-tax Act.

Analysis:
The respondent, a co-operative institution promoting agricultural activities, filed a return of income for the assessment year 1998-99, which was processed under section 143(1)(a). The Assessing Officer disallowed the exemption on lorry hire charges, claiming it does not fall under section 80P(2)(a)(iv). The assessee's appeal before the Commissioner of Income-tax (Appeals) was dismissed, leading to an appeal before the Tribunal. The Tribunal allowed the appeal, citing the assessee's engagement in marketing agricultural produce for its members. The Revenue challenged this decision, arguing that hire charges received by the assessee were not covered under section 80P(2)(a)(iv).

The court examined section 80P, which provides deductions for co-operative societies engaged in various activities, including marketing agricultural produce. It noted that the assessee's activities fell under marketing, as defined in a previous judgment. Even if the Assessing Officer believed the case did not fall under section 80P(2)(a)(iv), it could still qualify under section 80P(2)(a)(iii). Therefore, the court ruled in favor of the assessee, dismissing the appeal by the Revenue.

In conclusion, the court upheld the Tribunal's decision, emphasizing that the assessee's activities in marketing agricultural produce qualified for the benefits under section 80P. The judgment highlights the importance of correctly interpreting the provisions of the Income-tax Act to determine eligibility for deductions, even in cases where different subsections may apply.