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TMI Blog2019 (5) TMI 704X X X X Extracts X X X X X X X X Extracts X X X X ..... s entitled to deduction as mentioned in the said provision upto an amount of ₹ 50,000/-, whereas case of the Revenue is that as the activities of the assessee are not eligible for deduction under any of the clauses - HELD THAT:- This issue is no more resintegra as various high court and tribunal had decided this issue in favour of assessee. See FILM NAGAR CO-OPERATIVE HOUSING SOCIETY LTD. VERSUS INCOME-TAX OFFICER. [ 2002 (7) TMI 233 - ITAT HYDERABAD-B] , TAMIL NADU BRICK AND TILE MANUFACTURERS INDUSTRIAL SERVICE CO-OPERATIVE SOCIETY LTD. VERSUS COMMISSIONER OF INCOME-TAX. [ 2002 (12) TMI 24 - MADRAS HIGH COURT] In view of the above the assessee is entitle to deduction under section 80P( 2) (c) of the Act as the assessee was carrying the cooperative activities within the meaning of law - Decided in favour of assessee - I.T.A Nos.1500 & 1501/Bang/2018, 77/Bang/2019 (Assessment Years: 2009-10 & ITA.2013-14, 2015-16) - - - Dated:- 22-3-2019 - Shri. A. K. Garodia And Shri. Laliet kumar, JJ. Assessee by: Shri. C. Sandeep, CA Revenue by: Shri. R. N. Siddappaji, Addl. CIT ORDER Laliet Kumar, These are three appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from the gross income of the co-operative society in order to assess its total income. Therefore, the Assessing Officer was not justified in denying the said deduction to the assessee respondent. It was fairly conceded by the Ld AR that the issue in the present case was subsequently decided by the jurisdictional High Court in the matter of Pr. CIT . Totgars Co-op Sale Society [395 ITR 611] against the assessee , wherein at para 18, it was held as under : 18. The contention of the learned counsel for the assessee that a Co-ordinate Bench of this court dismissed the Revenue's appeals by referring, but not applying the decision of the hon'ble Supreme Court, we observe with greatest respects that we do not find any detailed discussion of the facts and law pronounced by the hon'ble Supreme Court in the case of the respondent-assessee in the said order passed by the Coordinate Bench and therefore, we are unable to follow the same in the face of the binding precedent laid down by the hon'ble Supreme Court. We find in paragraph 8 of the said order passed by a Co-ordinate Bench that the learned judges have observed that the issue whether a co-operative b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n section 14. In Jaipuria China Clay Mines (P.) Ltd.'s case [1966] 59 ITR 555 (SC), the facts were these : the total income of the respondentassessee for the assessment year 1952-53 before charging depreciation was ₹ 14,041. After deducting depreciation of ₹ 5,360, the Income-tax Officer computed the profit at ₹ 8,681. Against this profit, he set off the losses of an earlier year. Having done this, the Income-tax Officer computed the income of the assessee from dividends at ₹ 2,01,130 and levied tax on it. The assessee claimed that the unabsorbed depreciation aggregating to ₹ 76,857 should be deducted from the dividend and if it is so done, the total income would get reduced to ₹ 1,32,955. The Income-tax Officer rejected the claim. When the matter was ultimately carried to this court, it took note of the opening words of the sub-section, viz., where, in the assessment of the assessee or if the assessee is a registered firm, in the assessment of its partners, full effect cannot be given to any such allowance. . . . and held on that basis that the expression profits or gains chargeable in the said sub-section is not confined to profits and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that in the case of a co-operative society falling under sub-clause (vi) or sub-clause (vii) the rules and bye-laws of the society restrict the voting rights to the following classes of its members, namely:-- (1) the individuals who contribute their labour or, as the case may be, carry on the fishing or allied activities ; (2) the co-operative credit societies which provide financial assistance to the society: (3) the State Government ; (b) in the case of a co-operative society, being a primary society engaged in supplying milk, oilseeds, fruits or vegetables raised or grown by its members to- (i) a federal co-operative society, being a society engaged in the business of supplying milk, oilseeds, fruits or vegetables, as the case may be ; or (ii) the Government or a local authority ; or (iii) a Government company as defined in section 617 of the Companies Act, 1956 (1 of 1956), or a corporation established by or under a Central, State or Provincial Act (being a company or corporation engaged in supplying milk, oilseeds, fruits or vegetables, as the case may be, to the public), the whole of the amount of profits a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... emption u/s 80P(2)(d) to the assessee. However, once lower authorities and the Tribunal had denied the deduction of ₹ 63,16,231/-, then the question arises whether the assessee is still entitled for deduction of ₹ 50 000/- under 80P(2)(c) or not . In our view this issue is no more resintegra as various high court and tribunal had decided this issue in favour of assessee . In the following matters various courts/ tribunal held in favour of the assessee to the following effect : 1 .Film Nagar Co-operative Housing Society Ltd. [2004] 91 ITD 27 (Hyderabad) 5. Normally, profits and gains refer to the net income from business or profession. The learned author in Sampath lyengar's Law of lncome-tax (9th Edition) at page 477 of Vol. 1 has observed that the term income' is a wider concept than the term profits and gains because profits and gains' refers to the net proceeds. whereas income relates to incomings without regard to outgoings'. He further proceeded to observe at the same page as under- Profits and gains' are the resultant from the carrying on of a business or the exercise of a profession or vocation. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd such, the CIT(A) was not justified in confirming the action of the Assessing Officer. In the circumstances, I set aside the orders of the CIT(A) on this aspect, and delete the addition of ₹ 20.000 in each of these two years, made by the Assessing Officer denying the claim of the assessee under section 80P(2)(c) of the Act. 2. Maker Tower co-op. Hsg. Society Ltd. [20081 20 SOT 253 (Mumbai) 17. Ground No. 6. in both the appeals, relating to set off of losses has not been argued before us and, therefore, the same is dismissed as not pressed 18. The last ground relates to deduction under section It has been submitted by the learned counsel for 'he assessee that the assessee is entitled to deduction of Rs. in view e/' the above provisions. On the other hand, the learned DR has submitted that no deduction is allowable in view (L sub-section of section 8()P. 19. After hearing both the parties, we find merit in the submission of learned counsel for the assessee. Section 80P(2)(c) reads as under: (c)in the case of a co-operative society engaged in activities other than those specified in clause (a) or clause (eith ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntly of; or in addition to, all or any of the activities so specified). so much of its profits and gains attributable to such activities as does not exceed (i) where such co-operative society is a consumers ' co-operative society, forty thousand rupees: and (ii) in any other case, twenty thousand rupees only shall be deducted. The consumer society as defined under section 2(10) of the Co-operative Societies Act to mean a registered society which has its principal object the supply of the requirements of its members for the consumption of such members. The activity of the assessee society cannot be considered as a consumer society since the members of the society did not consume the articles supplied by the society, but They used it for the manufacture of bricks and tiles. Explanation (i) to Rule 14 of the Co-operative Societies Rules defines industrial society ' to mean a society which has as its principal Object the production of articles or finished goods through or with the help of its members or the provision of service facilities to its members who are artisans, technicians or small producers who are its members and includes any society which has as it ..... X X X X Extracts X X X X X X X X Extracts X X X X
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