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TMI Blog2016 (5) TMI 800X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to as "the Tribunal") in ITA No. 24/Chd/2015 for the assessment year 2008-09, claiming the following substantial question of law:- Whether in facts and circumstances of the case, the Income Tax Appellate Tribunal was correct in law in denying the benefit of deduction under Section 80P(2) (a)(vi) of the Income Tax Act to the appellant? 3. A few facts necessary for adjudication of the instant appeal as narrated therein may be noticed. The assessee was registered as a Labour and Construction Society with the Assistant Registrar, Cooperative Society, Naraingarh on 26.9.2005 and is following its Bye Laws dated 26.9.2005 (Annexure A-1). The assessee filed its return of income on 21.10.2008 for the assessment year 2008-09 claiming deduction u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he orders of the authorities below are not sustainable in law as the society fulfilled the conditions enumerated under Section 80P(2)(a)(vi) of the Act and as such was entitled for deduction thereunder. In support of her submission, learned counsel has relied upon the judgment of the Apex Court in Kerala State Co-operative Marketing Federation Ltd. and others v. Commissioner of Income Tax (1998) 231 ITR 814 (SC) and of this Court in Commissioner of Income Tax v. Punjab State Cooperative Bank Ltd.(2008) 300 ITR 24 (P&H). 6. The point that arises for consideration in this appeal relates to the scope of Section 80P(2)(a)(vi) of the Act. 7. Section 80P(2)(a)(vi) of the Act, which is the bone of contention in this appeal, reads thus:- "Deduc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case of the assessee-cooperative society of graduate engineers undertaking labour contracts in the State of Orissa who had claimed benefit of Section 80P(2)(a)(vi) of the Act. The claim of the assessee was negatived as there was no direct proximate connection between the work executed and the speciality of the members of the society as diploma holders or graduate engineers. It was held that a mere overall supervision by them would not entitle them to the benefit of this provision. The relevant observations recorded therein are quoted below:- "This brings us to the consideration of the proper meaning of the provision of section 80P(2)(a)(vi). It is candidly admitted by learned counsel for both sides that there are no decided cases on the q ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s members that the income is directly attributable and to such disposal by the society the benefit is earned. The society cannot be said to have at its disposal, in that manner, the labour of paid employees as they are not its members. Since the members themselves did not exert their own labour in the execution of the work but as has been found by the statutory forums, they only confined themselves to overall supervision mostly at the office like any other prudent businessmen, it has to be taken that the speciality of their discipline was never put to labour in the execution of the work. In other words, as has been rightly submitted by Mr. Roy, learned standing counsel, there has been no direct proximate connection between the work executed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Semi Government Organization during the year under consideration. The contract work undertaken by the society was not solely executed by the members of the society but by engagement of Supervisors, Chowkidars and daily wages earning labourers who were not members of the society. As per the income and expenditure account, the assessee had paid labour charges amounting to Rs. 11,14,862/- which indicated that substantial amount on account of labour charges were paid to labourers engaged on daily basis and who were not members of the appellant-society. Therefore, the income derived by the appellantsociety could not be considered as income derived by the labour cooperative society from the activity of collective disposal of labour of its member ..... X X X X Extracts X X X X X X X X Extracts X X X X
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