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2015 (5) TMI 1042 - AT - Income TaxDisallowance claimed under section 80P(2)(a)(vi) - assessee society is registered with the Assistant Registrar of Co-operative Societies, Naraingarh - Held that:- As per the provisions of section 80P(2)(a)(vi) of the Act, eligibility for deduction is available where the profit and gains of the co-operative society is attributable to the collective disposal of the labour of its members. The above provision is meant for grant of exemption to labour oriented co-operative societies constituted by the actual labour force. In my opinion the assessee society is not eligible for exemption under section 80P(2)(a)(vi) of the Act. Both the authorities below have relied on the decision of Hon’ble Orissa High Court in case of Nilagiri Engineering Co-operative Society Ltd. Vs. CIT and Others [1994 (4) TMI 70 - ORISSA High Court ], wherein, the Hon’ble High Court has categorically held that as regard to benefit under section 80P(2)(a)(iv) of the Act, eligibility to earn exemption is where the whole amount of profits and gains of a business is attributable to the collective disposal of the labour of its members. The Hon’ble High Court further observed that in the said case the works undertaken by the society was executed by deployment of outside labour through sub-contractors and the members acted like any other businessmen and therefore the assessee was not entitled to benefit under section 80P(2)(a)(vi) of the Act. Considering the entire facts and circumstances of the present case the profit earned by the assessee society cannot be regarded as profit derived by the labour co-operative society from the activity of collective disposal of labour of its members. I fully agree with the observations made by the Ld. CIT(A) that in the instant case the profit earned by the society is not solely from the “collective disposal of labour of its members” as all the members were not engaged in the labour work and the work done by the assessee was through outside employees and labourers who are not members of the society nor those employee and labourers were having any voting rights of the society. - Decided against assessee
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