2006 (10) TMI 139 - HC - Income Tax

Assessee is a co-operative society engaged in the marketing of agricultural products - interest received on loans advanced to its members - held that the assessee is entitled to deduction in respect of interest income received on advances made to his customers for the purpose of deduction under Section 80P

Summary

Issues:
Interpretation of Section 80P(2)(a)(i) of the Income Tax Act for a cooperative society engaged in marketing agricultural products.

Analysis:
The High Court judgment addressed the appeal against the Income-tax Appellate Tribunal's order concerning the assessment year 1996-1997. The appellant was the Revenue, while the respondent was a cooperative society involved in marketing agricultural products. The issue revolved around the deduction claimed by the assessee under Section 80P(2)(a)(i) of the Income Tax Act. The Assessing Officer initially denied the deduction, stating that the primary objective of the assessee was not that of a credit society engaged in banking. However, the Commissioner of Income tax (Appeals) allowed the deduction based on previous appellate orders for other assessment years. This decision was upheld by the Tribunal, leading to the Revenue's appeal.

The primary question raised in the appeal was whether the cooperative society, engaged in marketing agricultural produce, was eligible for the benefit of Section 80P(2)(a)(i) of the Income Tax Act concerning the interest received from members. The learned counsel for the Revenue acknowledged that a previous judgment by the High Court had ruled in favor of a cooperative society engaged in running a sugar mill, granting them exemption under the same section. The court cited this precedent and held that the cooperative society in question, involved in marketing agricultural produce, was indeed entitled to the benefits under Section 80P(2)(a)(i) of the Income Tax Act for the interest received from its members.

Consequently, the court dismissed the appeal, stating that no substantial question of law arose for consideration in this case. The judgment reaffirmed the eligibility of the cooperative society engaged in the marketing of agricultural produce for the benefits provided under Section 80P(2)(a)(i) of the Income Tax Act.