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TMI Blog2011 (2) TMI 1431X X X X Extracts X X X X X X X X Extracts X X X X ..... her and disposed of by this consolidated order for the sake of convenience and brevity. 3. In these appeals, the assessee had raised identical grounds; hence, grounds raised in ITA No.726/Bang/2010 are reproduced below:- i) The CIT(A) has erred in allowing the deduction u/s 80P(2)(vi) of the Act. ii) The CIT(A) would have appreciated the fact that the entire profit shown is attributable to the service charges only and the profit attributable to the service charges cannot be considered to be on account of the collective disposal of the labour of its members. iii) The CIT(A) ought to have been appreciated the fact that the profit if any from the sale of goods alone falls under the scope of collective disposal of the labour of its ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e products manufactured by them to various government departments and in exhibitions. For the asst. years 1997-98, 1998-99 and 1999-2000, the assessee society filed NIL return of income after claiming deduction u/s 80P amounting to ₹ 5,79,628/-, ₹ 3,84,985/- and ₹ 11,84,703/- respectively. 4.1 The case was reopened u/s 147 of the Act by issuance of notice u/s 148 for the above three years in question. Assessments u/s 143 rws 147 of the Act for the three asst. years under consideration were completed on 27.3.2002, determining the total income at ₹ 3,92,711/-, ₹ 3,64,900/- and ₹ 11,34,700/- respectively. In the assessments completed, the AO restricted the deduction to ₹ 20,000/- u/s 80P(2)(c) of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ments completed pursuant to the direction of the Hon ble Tribunal, the assessee carried the matter in appeal before the first appellate authority for solace. The CIT(A), after considering the objects, activities, trading and profit and loss account, was of the view that the major activity of the assessee society was entitled to deduction u/s 80P(2)(a)(vi), whereas certain other activities are only entitled to deduction u/s 80P(2)(c) of the Act. The CIT(A) allowed the appeals of the assessee subject to his observation in para 3.5 of his impugned order. The relevant finding of the CIT(A) reads as follows:- In the instant case, the appellant is giving assistance to SSI units and it carries on artisan work with government aid and sells the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons are filed by the assessee society supporting the impugned order of the CIT(A). 7. The learned DR submitted that the entire profit shown is attributable to service charges only and the profits attributable to service charges cannot be considered to be on account of collective disposal of its labour. It was further argued that the service charges realized by the society are in the nature of commission and hence, not entitled to deduction u/s 80P(2)(a)(vi). 8. The learned AR, on the other hand, submitted that pursuant to the direction of the CIT(A) in the impugned order, the AO had examined the activities of the assessee society and the gross income derived there from and had given effect to the CIT(A) s order. In the order giving ef ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en this being the factual position, in our view, section 80P(2)(e)(f) is not applicable to the case of the assessee. From the objects, it is seen that apart from carrying out the objects mentioned, which relates to purchase and sale of the products manufactured by the members, the assessee also sells necessary raw materials to the members by purchasing the same from wholesalers or manufacturers in bulk. Besides that, the assessee also sells required tools and machineries to the members after they are purchased from the wholesalers and manufacturers. In our view, the activity mentioned under clause-c as above, falls under the provisions of section 80P(2)(vi). But in so far as the other two activities, (a) and (b) they fall under section 80P( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tivities mentioned in clause (c) of the bye-laws of the assessee society are entitled to deduction u/s 80P(2)(a)(vi) of the Act and the order of Tribunal having attained finality, we are of the view that the direction/observation of the CIT(A) is perfectly in order and no interference is called for. Therefore, we hold that the impugned order of the CIT(A) is correct and in accordance with law. 9.4 In the result, the appeals filed by the revenue are dismissed. 10. The cross objections filed by the assessee are only supporting the order of the CIT(A). Since we have dismissed the appeals filed by the revenue, the cross objections become infructuous. 10.1 In the result, the cross objections filed by the assessee are dismissed. The o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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