2022 (4) TMI 317 - AT - Income Tax

Exemption u/s 80P(2)(a)(vi) - assessee, Indian Coffee Board Workers Co-Op Society is a co-opertive society which is running restaurants in the name and style of Indian Coffee House - HELD THAT - Objective of the assessee is to conduct coffee houses and restaurants for employment of the workers retrenched from the Coffee Board and the members of the society - after examining the bylaws he also confirmed that the society itself is constituted by the workers for their own mutual benefit and they themselves do the work and run the coffee house. Revenue has not been able to produce any evidence to dislodge this finding. That would not in any way violate the objective of the society. CIT(A) gives a finding that no other person is employed in the society and the income is wholly derived from the collective disposal of labour of its members only. Even this finding has not been dislodged nor any evidence produced to the contrary. CIT(A) mentions that the requirements of the proviso to Section 80P(2)(a)(vi) are also satisfied in the case of the appellant society because the voting rights are confined to the individuals who contribute their labour. Here the bylaws show that the society was constituted by the workers for their mutual benefit consisting of the workers who were retrenched from the Coffee Board and the members of the society. We are of the view that the findings of the learned CIT(A) in directing the AO to grant deduction under Section 80P(2)(a)(vi) of the Act is clearly in line with the facts and calls for no interference. - Decided against revenue.

Summary

Issues:
Appeal against order of CIT(A)-V, Kochi for AY 2008-09 regarding deduction under Section 80P(2)(a)(vi) of the Act.

Analysis:
The appeal filed by the Revenue challenged the order of CIT(A)-V, Kochi regarding the deduction under Section 80P(2)(a)(vi) of the Act for the assessment year 2008-09. The assessee, a cooperative society running restaurants, claimed deduction under Section 80P(2)(a)(vi) which was initially disallowed by the Assessing Officer (AO). The CIT(A) accepted the assessee's contentions and directed the AO to grant the deduction. However, the Tribunal remanded the issue back to the AO for fresh examination. The High Court reframed the question of law related to the deduction under Section 80P(2)(a)(vi) for readjudication by the Tribunal.

The primary issue revolved around whether the appellant was eligible for deduction under Section 80P(2)(a)(vi) of the Act. The Tribunal examined the bylaws of the assessee society, which clearly indicated that only members had voting rights and were involved in the operations of the coffee house. The society was formed for the mutual benefit of workers retrenched from the Coffee Board and its members. The CIT(A) found that the income was derived solely from the collective labor of its members, satisfying the requirements of the proviso to Section 80P(2)(a)(vi). The Revenue failed to provide evidence to challenge these findings, leading to the dismissal of the appeal.

In conclusion, the Tribunal upheld the CIT(A)'s decision to grant the deduction under Section 80P(2)(a)(vi) to the assessee cooperative society. The Tribunal found that the society's operations aligned with the objectives of the provision, and the income was generated through the labor contributions of its members. The appeal filed by the Revenue was dismissed, affirming the benefit of deduction under Section 80P(2)(a)(vi) for the assessee society.