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TMI Blog2022 (12) TMI 762X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome Tax Act, 1961. There is no discussion as to whether the petitioner is an Apex Society or a Central Society . Instead, the case was argued on the strength of the G.O.Ms. No.555 dated 21.3.1980. Neither the AO nor the Appellate Commissioner or the Appellate Tribunal have examined the status of the appellant from the point of the view of the definition of a Primary Society in Section 2(21) of the Tamil Nadu Co-operative Societies Act, 1983. Since the issue as to whether the appellant is an Apex Society or a Central Society or not has not been examined by any of the lower authority, viz the Assessing Officer, Appellate Commissioner or the Appellate Tribunal, we are forced to interfere with the impugned orders. We are therefore of the view, the impugned common order passed by the Income Tax Appellate Tribunal have to be set aside and the cases be remitted back to the Assessing Officer for re-examine the issue as to whether the appellant would be Primary Society or whether the appellant was an an Apex Society or a Central Society or not. We, therefore remit the case back to the Assessing Officer to re-examine the issue in the light of the def ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It means a primary co-operative society is considered to be a society where the activities are channelized at a primary level. As far as supplying of milk is concerned, the milk is supplied at the primary level by individual farmers to the local primary milk societies. The District societies like the assessee collect the milk from those primary societies at village or taluk level and thereafter process the milk and pass on to the affiliated federal societies. Therefore, the assessee is one step higher to primary co-operative societies. Strictly speaking, under the scheme argued by the Id. Chartered Accountant, there are two level of federal societies the first level federal societies are at State/Zonal level. The only difference is that the area of operation of the State federal society/Zonal federal society is much wider than the District federal society. But for this difference in the extent of area of operation, the District Co-operative Milk Producers Union Ltd. Like the assessee is a federal co-operative society and not a primary co-operative society. 11. The Supreme Court in the case of Assam Cooperative Apex Marketing Society Ltd. V. (Addl.) (1993) 201 ITR 339(SC) had ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... processing the milk. 14. As already stated, the specific expression used in Section 80P(2)(b) being a primary society engaged in supplying the milk , the processing activities carried on by the assessee does not match with the declared intent of the law. 15.As argued by the Id. Chartered Accountant appearing for the assessee, we do agree that the courts have held that the provisions of exemption applicable to the co-operative societies must be construed liberally. But, that does not mean that the interpretation could overstep the clear and specific meaning provided in the language of the statute. The law has consciously used certain terms in the body of Section 80P. In respect of items covered by clause(a) of sub-section(2), as already stated , the status of the assessee needs to be a co-operative society. This is the case with clauses(c), (d) and (f). But, in respect of assessee falling under clause (b), the law has purposefully stated that the status of the co-operative society shall be a primary society. In the case of supplying milk, the assessee must be a cooperative society being a primary society engaged in supplying milk. The members of the assessee society are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd hence unsustainable in law? 8. Earlier, the appellant suffered adverse Assessment Orders in the hands of the Assessing Officer. The Appellate Commissioner vide Common Order dated 28.3.2003 allowed I.T.A.Nos.219-20/02-03 filed by the Appellant. 9. By a Common Order dated 20.1.2005 the Appellate Tribunal in I.T.A.Nos.1013-15 and 1326 /Mds/2003 and Cross Objection Nos.29 to 31 and 33/Mds/2004, has set aside Common Order dated 28.2.2003 of the Appellate Commissioner and remanded the cases back to the Appellate Commissioner to pass a fresh order on merits. 10. Pursuant to the aforesaid remand order dated 20.1.2005 of the Appellate Tribunal, the Appellate Commissioner passed a fresh order dated 28.8.2006. 11. The appeals were renumbered as I.T.A.No.305,306,307 308 of 05-06 in the remand proceeding. Vide order dated 28.8.2006, the Appellate Commissioner once again allowed the appeal of the appellant and directed the Assessing Officer to allow the exemption to the appellant under Section 80P(2)(b)(i) of the Income Tax Act,1961. 12. Details of the respective assessment orders which led to the adverse orders being in the respective appeals are as under:- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the return of income filed and the annexures. 15. It is submitted that the assessing officer had come to conclusion that the appellant is entitled to the deduction , which was also granted in the earlier assessment years. Therefore, in violation of the provision to Section 147 of the Act for reopening the assessment beyond the period of 4 years from the end of the relevant assessment was barred by limitation. 16. It is further submitted that the assessing officer has no jurisdiction to issue notice under Section 148 of the Act, when the original assessment was completed under Section 143(3) in absence of fresh material that was not disclosed by the appellant at the time of assessment for issuance of notice under Section 148 of the Act for reopening after the period of four years. 17. Learned counsel for the appellant further submitted that the Income Tax Appellate Tribunal has wrongly concluded that the appellant is not a primary society carrying on the activity of supply of milk to a federal society. On the contrary, it is submitted that as per the G.O.Ms.No.555, dated 21.3.1980 issued by the Tamil Nadu State Government , that the appellant is a Union of producers So ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee tier structure or dairy co-operatives, the tier 2 district level is stated as The District Co-operative Milk Producers Unions (DCMPU) are the intermediary Societies at District Level and the Village Level MPCS functioning in the jurisdiction of the respective unions. 24. Learned counsel for the respondent further submitted that only a primary society engaged in supplying milk by its members is entitled for the deduction provided under Section 80P(2)(b)(i) and not the member society as is the case of the appellant which is a Union of Primary Society. It is submitted that the appellant did not produce the bye laws before any authority of Tribunal or even before this Court to show who is eligible to be the members. Rather the appellant has produced the G.O which shows that the District Union is a Co-operative Union of its members being primary producers society and not producers directly. 25. Learned counsel for the respondent further submitted that the Commissioner of Income Tax Appeal passed vide its common order dated 20.01.2005 on merits only without passing any orders on the reopening of the assessment under Section 147 of the Act. It is clear that there was no fail ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g or providing credit facilities to its members, or ii) a cottage industry, or iii) the marketing of agricultural produce grown by its members, or] iv) the purchase of agricultural implements, seeds, livestock or other articles intended for agriculture for the purpose of supplying them to its members, or v) the processing, without the aid of power, of the agricultural produce of its members, or 2 vi) the collective disposal of the labour of its members, or vii) fishing or allied activities, that is to say, the catching, curing, processing, preserving, storing or marketing of fish or the purchase of materials and equipment in connection therewith for the purpose of supplying them to its members,] the whole of the amount of profits and gains of business attributable to any one or more of such activities: Provided 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) th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ans a society for the benefit of the consumers within the limits of a municipal corporation, municipality, municipal committee, notified area committee, town area or cantonment. 3) In a case where the assessee is entitled also to the deduction under 4 [ 5 *** 6 [section 80HH or section 80HHA] 7 [or section 80HHB 8 [or section 80HHC 9 [or section 80HHD]]] 10[or section 80-I] 11[or section 80-IA]] 12*** 13***], the deduction under sub-section (1) of this section, in relation to the sums specified in clause (a) or clause (b) or clause (c) of sub-section (2), shall be allowed with reference to the income, if any, as referred to in those clauses included in the gross total income as reduced by the 14[deductions under 15[section 80HH, 16[section HHA, 17[section 80HHB, section HHC, 18[section 80HHD], section 80-I, 19[section 80-IA], 20[section 80J and section 80JJ]]] [(4) The provisions of this section shall not apply in relation to any co-operative bank other than a primary agricultural credit society or a primary co-operative agricultural and rural development bank. Explanation.- For the purposes of this subsection,-( a)-co-operative bank and -primary agricultural ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es for the operations of, other registered societies affiliated to it and classified as a central society by the Registrar and includes any registered society notified by the Government as a Ccntral society. 36. Thus, only if the appellant is neither an Apex Society or a Central Society , as defined above, it will not be entitled to the benefit of the deduction under Section 80 P(2)(b)(i) of the Income Tax Act, 1961. 37. There is no discussion as to whether the petitioner is an Apex Society or a Central Society . Instead, the case was argued on the strength of the G.O.Ms. No.555 dated 21.3.1980. 38. Neither the Assessing Officer, nor the Appellate Commissioner or the Appellate Tribunal have examined the status of the appellant from the point of the view of the definition of a Primary Society in Section 2(21) of the Tamil Nadu Co-operative Societies Act, 1983. 39. Since the issue as to whether the appellant is an Apex Society or a Central Society or not has not been examined by any of the lower authority, viz the Assessing Officer, Appellate Commissioner or the Appellate Tribunal, we are forced to interfere with the impugned orders ..... X X X X Extracts X X X X X X X X Extracts X X X X
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