1991 (3) TMI 174 - AT - Income Tax

Summary

Issues Involved:
1. Whether the assessee-society formed in 1968 is a continuation of the old society formed in 1948.
2. Applicability of the notification issued under the IT Act, 1922 for tax exemption.
3. Entitlement of the assessee-society to exemptions/deductions under section 80P of the IT Act, 1961.

Detailed Analysis:

1. Continuation of the Old Society:
- The assessee, a co-operative society, claimed tax exemption under a notification from the IT Act, 1922, arguing it was the same society formed in 1948. The ITO disagreed, stating the society formed in 1948 ceased to exist upon its division into five societies in 1968.
- The CIT(A) held that the division did not affect the identity of the original society, which retained its character and thus was entitled to the exemption.
- The Tribunal, however, found merit in the argument that the division resulted in the dissolution of the original society and the creation of a new society in 1968. The Registrar's order on 27-9-1968, which sanctioned the division and granted new registrations, effectively dissolved the old society and established new entities, including the assessee.

2. Applicability of the Notification under IT Act, 1922:
- The notification under the IT Act, 1922, provided tax exemptions to co-operative societies registered in Part B States. However, this notification was superseded by the specific provisions of section 80P in the IT Act, 1961.
- The Tribunal clarified that the notification issued under the 1922 Act ceased to be in force upon the enactment of the IT Act, 1961, which provided specific provisions for deductions to co-operative societies.
- The Tribunal stated that the notification did not continue to apply to societies registered under the Gujarat Co-operative Societies Act after the commencement of the IT Act, 1961.

3. Entitlement to Exemptions/Deductions under Section 80P:
- The Tribunal emphasized that the assessee-society, being a new entity registered in 1968, is subject to the provisions of the IT Act, 1961.
- The CIT(A) did not examine the assessee's claim for deductions under section 80P. Therefore, the Tribunal remanded the case back to the CIT(A) to consider and decide the deductions under section 80P after hearing both sides.
- The Tribunal concluded that the assessee-society is entitled to deductions under section 80P but not to the exemption under the old notification from the 1922 Act.

Conclusion:
- The Tribunal set aside the order under appeal, recognizing the assessee-society as a new entity formed in 1968 and thus subject to the IT Act, 1961.
- The case was remanded to the CIT(A) for a decision on the deductions under section 80P.
- The appeals were allowed for statistical purposes, emphasizing the need for a thorough examination of the assessee's claims under the current legal framework.