TMI Blog2014 (12) TMI 766X X X X Extracts X X X X X X X X Extracts X X X X ..... ut was not withdrawn - the Tribunal had taken a view that the income of a Coop. Society was exempt but that decision was not accepted by the department and a reference was filed u/s. 256(2) of the Act, 1961 – revenue contented that it is well settled principle of law that once the new Act comes, unless there is specific mention in the earlier Act and the notifications issued therein cannot be made applicable - under the new Act, the notification issued under the earlier Act stood repealed and the present case will be governed by Sections 80P and 80T of the Act - since the basis of the assessment order was erroneous, notice under Section 263 is justified - the old notification could not have been relied by the Appellate Tribunal or the Assessing Officer and the Appellate Tribunal cannot be said to be right in setting aside the order of the CIT - thus, the order of the CIT(A) is restored and the matter is remitted back to decide the same afresh by the ITO to decide the case u/s 80P of the 1961 Act – Decided in favour of revenue. - INCOME TAX REFERENCE NO. 16 of 2003 - - - Dated:- 2-12-2014 - MR. KS JHAVERI AND MR. K.J.THAKER, JJ. FOR THE APPELLANT : MR. MANISH BHATT WITH MRS ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee took a number of objections to the show cause notice issued to it and mainly contended that its income was exempt as per notification No.SRO/998 dated 22.12.50 which was though issued under the Act of 1922 but was not withdrawn. The assessee has contended that on behalf of the assessee that like contention was accepted by the Tribunal in ITA No.1946/Ahd/82 for A.Y.1984 and in ITA No.2319/Ahd/92 for A.Y. 1978-79 in the case of Shri Moti Marad Juth Vividh Karyakari Sahakari Mandli Ltd., the Tribunal had taken a view that the income of a Coop. Society was exempt but that decision was not accepted by the department and a reference was filed u/s. 256(2) of the Act, 1961. The said references had been admitted by the Hon'ble High Court. Holding thus, the CIT set aside the order made by the ITO with a direction to him to reframe the assessment in which the income of the Coop. society i.e. the assessee should not be treated as complete exemption. He further directed the ITO to consider provisions of Section 80P while framing the fresh assessment order. Being aggrieved against said directions of CIT, the assessee had preferred appeal before the ITAT. The Tribunal followed the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this Act, a notice under section 148 may, subject to the provisions contained in section 149 or section 150, be issued with respect to that assessment year and all the provisions of this Act shall apply accordingly. (e) [subject to the provisions of clause (g) and clause (j) of this sub-section,] section 23A of the repealed Act shall continue to have effect in relation to the assessment of any company or its shareholders for the assessment year ending on the 31st day of March, 1962 or any earlier year, and the provisions of the repealed Act shall apply to all matters arising out of such assessment as fully and effectually as if this Act had not been passed; (f) any proceeding for the imposition of a penalty in respect of any assessment completed before the first day of April, 1962, may be initiated and any such penalty may be imposed as if this Act had not been passed; (g) any proceeding for the imposition of a penalty in respect of any assessment for the year ending on the 31st day of March, 1962, or any earlier year, which is completed on or after the 1st day of April, 1962 may be initiated and any such penalty may be imposed under this Act. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as under: Revision of orders prejudicial to revenue. 263. (1) The [Principal Commissioner or] Commissioner may call for and examine the record of any proceeding under this Act, and if he considers that any order passed therein by the [Assessing] Officer is erroneous in so far as it is prejudicial to the interests of the revenue, he may, after giving the assessee an opportunity of being heard and after making or causing to be made such inquiry as he deems necessary, pass such order thereon as the circumstances of the case justify, including an order enhancing or modifying the assessment, or cancelling the assessment and directing a fresh assessment. [Explanation-For the removal of doubts, it is hereby declared that, for the purposes of this sub-section,- (a) an order passed [on or before or after the 1st day of June, 1988] by the Assessing Officer shall include- (i) an order of assessment made by the Assistant Commissioner [or Deputy Commissioner] or the Income-tax Officer on the basis of the directions issued by the [Joint] Commissioner under section 144A. (ii) an order made by the [Joint] Commissioner in ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome-tax Act, 1961, Indian Income tax Act, 1922 is applicable only for specified objects narrated in clauses (a) to (m) thereof and none of the clauses specifically provides for exemption in respect of PartB State's co-operative Societies. (3) Under Section 297(2)(1) of the Income-tax Act, 1961 any notification issued under Section 60A of the Indian Income-tax Act 1922 is applicable under the Income-tax Act, 1961 only if no provision had been made under the said Act. Section 80-P of the Income-tax Act, 1961 contains specific provisions for all co-operative societies in all the taxable territories. (4) The notification under the old Act has not been withdrawn so as to preserve the validity of orders made under the old Act in respect of Co-operative Societies. 6. Under the circumstances, the argument of the assessee that income of 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 no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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] (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 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;] ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... otified area committee, town area or cantonment. (3) In a case where the assessee is entitled also to the deduction under [section 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) p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... its 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 being the old notification could not have been relied by the Appellate Tribunal or the Assessing Officer and the Appellate Tribunal cannot be said ..... X X X X Extracts X X X X X X X X Extracts X X X X
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