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TMI Blog2014 (12) TMI 766X X X X Extracts X X X X X X X X Extracts X X X X ..... RO/992 dated 22.12.1950 of the old Act, 1922 was not withdrawn and, therefore, it provided a good basis to the Co-operative Society to seek exemption of its income from business." 2. The relevant facts of the present case are that the assessee is a co-operative society and was assessed by the Income-tax Officer in the status of A.O.P. The assessee had returned its income at Rs. 3,63,435/-. At the assessment proceedings, it was contended on behalf of the assessee that its business was to supply fertilizer, crude oil, sugar, oil seeds etc. to the members and nonmembers. However, it prayed that its income was exempt under notification issued in 1950. The Income-tax officer agreed that the income of the assessee was exempted under certain notifications issued in 1950. However, while examining the record of the proceedings, the learned CIT, Rajkot was of the view that the income of the assessee was not entirely exempt in accordance with the I.T.Act, 1961 but that it was entitled to certain exemptions governed by section 80P of the I.T.Act. The learned CIT was, therefore, of the opinion that the assessment made by the ITO was erroneous and prejudicial to the interest of revenue to the e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Indian Income-tax Act, 1922 (11 of 1922) is hereby repealed. (2) Notwithstanding the repeal of the Indian Income-tax Act, 1922 (11 of 1922) (hereinafter referred to as the repealed Act)- (a) where a return of income has been filed before the commencement of this Act by any person for any assessment year, proceedings for the assessment of that person for that year may be taken and continued as if this Act had not been passed; (b) where a return of income is filed after the commencement of this Act otherwise than in pursuance of a notice under section 34 of the repealed Act by any person for the assessment year ending on the 31st day of March, 1962, or any earlier year, the assessment of that person for that year shall be made in accordance with the procedure specified in this Act; (c) any proceedings pending on the commencement of this Act before any incometax authority, the Appellate Tribunal or any court, by way of appeal, reference, or revision, shall be continued and disposed of as if this Act had not been passed; (d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent completed before the commencement of this Act, a refund falls due after such commencement or default is made after such commencement in the payment of any sum due under such completed assessment, the provisions of this Act relating to interest payable by the Central Government on refunds and interest payable by the assessee for default shall apply; (j) any sum payable by way of income-tax, super-tax, interest, penalty or otherwise under the repealed Act may be recovered under this Act, but without prejudice to any action already taken for the recovery of such sum under the repealed Act; (k) any agreement entered into, appointment made, approval given, recognition granted, direction, instruction, notification, order or rule issued under any provision of the repealed Act shall, so far as it is not inconsistent with the corresponding provision of this Act, be deemed to have been entered into, made granted, given or issued under the corresponding provision aforesaid and shall continue in force accordingly; (l) any notification issued under sub-section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the [Joint] Commissioner in exercise of the powers or in the performance of the functions of an Assessing Officer confirmed on, or assigned to, him under the orders or directions issued by the [Principal Chief Commissioner or] Chief Commissioner or [Principal Director General or] Director General or [Principal Commissioner or Commissioner authorised by the Board in this behalf under section 120; (b) "record" [shall include and shall be deemed always to have included all records relating to any proceeding under this Act available at the time of examination by the [Principal Commissioner or] Commissioner; (c) where any order referred to in this sub-section and passed by the Assessing Officer had been the subject matter of any appeal [filed on or before or after the 1st day of June, 1988], the powers of the [Principal Commissioner or] Commissioner under this sub-section shall extend [and shall be deemed always to have extended] to such matters as had not been considered and decided in such appeal.] (2) No order shall be made under sub-section (1) after the expiry of two years ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a co-operative society in Saurashtra is exempt is not acceptable. The order made by the Income-tax Officer is erroneous and prejudicial to the interest of revenue. I, therefore, set aside the order made by the Income-tax Officer with a direction to reframe the assessment in which the income of co-operative society should not be treated as completely exempt. The Income-tax Officer is directed to consider the provisions of Section 80P. A suitable fresh order should be made after hearing the assessee." 6. Being aggrieved by the decision, the assessee has filed appeal before the Tribunal and the Tribunal by following its view taken in the earlier decisions, has opined in para 6 of its order as under: "6. We appreciate the force in the argument of the learned D.R., but at the same time we find that the Tribunal has consistently taken the view on the subject that the notifications issued under the old Act, 1922 having not been withdrawn by the authorities concerned provide good basis to the coop. society to seek exemption of its income from business. Therefore, consistently with the view taken by the Tribunal, we hold t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quipment 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 byelaws 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 authori ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 80HH] for section 80HHA [or section 80HHB] [or section 80HHC] [or section 80HHD] [or section 80-I] [or section 80-IA} or section 80J 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, 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 deductions under [section 80HH] [section 80HHA,] [section 80HHB], [section 80HHC.] [section 80HHD,] [section 80I], [section 80IA,] [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 sub-section, (a) "co-operative bank" and "primary agricultural credit society" shall have the meanings respectively assigned to them in Part V of the Banking Regulation Act, 1949 (10 of 1949) (b) "primary co-operative agricultural and rural development bank" means a society having it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he firm or any member of the association or any individual of the body. Explanation. - For the purposes of this section, "time deposits" means the deposits repayable on expiry of fixed periods.] 8. In view of the above sections, the present case will be governed by the said sections. In that view of the matter, notice under Section 263, since the basis of the assessment order was erroneous, is justified. 9. Learned counsel for the respondent Mr.Divetia submitted that the notice under Section 263, in as much as while considering assessment order, the Assessing Officer, ITO has applied its mind and stated that exemption notification will govern the field and therefore, the jurisdiction exercised under Section 263 is uncalled for. 10. We have heard counsel for both the sides. The questions which are referred has been gone into detail in view of the order passed by the ITO, relying on alteration of 1922 Act, which is repealed by the Act of 1961. The notification also stands repealed. Those notifications issued under Sections 60 and 60A will govern the field. 11. The question of law as it is framed will have to be answered in favour of the Revenue, the reason bei ..... X X X X Extracts X X X X X X X X Extracts X X X X
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