TMI Blog2015 (9) TMI 506X X X X Extracts X X X X X X X X Extracts X X X X ..... society, it cannot be said that the sum referred to in section 80P(1) entitling the society for deduction is generated out of the collective disposal of the labour of the appellant societies. For the aforesaid reasons, the Tribunal is fully justified in holding that the appellant societies are not eligible for the benefit of section 80P(2)(a)(vi) - Decided in favour of the Revenue - I.T.A. Nos. 141, 145 & 146 of 2014 - - - Dated:- 13-8-2015 - Antony Dominic And Shaji P. Chaly, JJ. For the Appellant: Sri S Arun Raj For the Respondent : Sri Jose Joseph, SC, Adv. And Sri P K R Menon (SR) JUDGMENT Antony Dominic, J. 1. The captioned appeals are filed by three co-operative societies registered under the Kerala Co-operative Societies Act, 1969, impugning the common order passed by the Income Tax Appellate Tribunal, Cochin Bench in ITA.547/13, 399/13 and 548/13 respectively. ITA.Nos.547/13 and 548/13 pertains to the assessment year 2008-09 while ITA.399/13 pertains to the assessment year 2009-2010. 2. In the returns filed by the societies, they claimed the benefit of deduction under section 80P (2) (a) (vi) of the Income Tax Act. Denying that claim, the Ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he State Government; 6. Reading of the above provision shows that in the case of a co-operative society, the gross total income includes any income generated out of the collective disposal of the labour of its members, such income shall be deducted in accordance with and subject to the condition in the proviso to the section in computing the total income of the society. The scope of this provision came up for consideration of the Orissa High Court in the judgment in Nilagiri Engineering Co-operative Society Ltd. v. Commissioner of Income Tax [(1994)208 ITR 326]. The appellant therein was a society, the membership of which was confined to unemployed diploma holders and graduates in Engineering. During the assessment year in question, the society had undertaken some contract works. But so far as the member engineers were concerned, their contribution to the execution of the contract works was only supervisory work confined to the office and the actual supervision of the works at the field was done by paid employees of the society and the members exercised only overall supervision. 7. The claim of the society for the benefit of section 80P(2)(a)(vi) of the Act was declined by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s never put to labour in the execution of the work. In other words, as has been rightly submitted by Mr.Roy, learned standing counsel, there has been no direct proximate connection between the work executed and the speciality of the members of the society as diploma holders or graduate engineers. Mr.Dash has brought to our notice that the question was raised before the two-member Tribunal even earlier to the order, annexure-3, in the appeals relating to the assessment years 1974-75 to 1978-79. The order is annexure-2 to the writ petition. There the two-member Tribunal held that section 80P(2)(a)(vi) would restrict the exemption to the income earned from the labour of its members. It further explained: . . . . In other words, if besides the labours of its members the income has been earned from labour employed by the society or out of the benefit of any capital available with the society it would not come under clause (vi) though it may fall under any other clause so that in the present case, the income actually derived from the labour of the members of the assessee would be exempt but not any income derived as a result of investment of capital or execution of any jobs by empl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t High Court in Gora Vibhag Jungle Kamdar Mandali v. Commissioner of Income Tax [(1986) 161 ITR 658], this Court in Commissioner of Income Tax v. Palghat Food Corporation of India Labour Contract Co-operative Society Ltd. [(2004) 266 ITR 315] and Madras High Court in Commissioner of Income Tax v. Salem District Printers Service Industrial Cooperative Society Ltd. [(2007) 290 ITR 371], we find that the controversies resolved in these cases are not helpful for the purpose of disposal of these appeals and therefore, we are not making any reference to those judgments. 10. Reading of the judgments of the Orissa High Court and this Court make it clear that the earning of the society must be through utilisation of the particular kind of labour in which the members are specialised. It is also clear that it is only when collective disposal of a disposable commodity over which the society has control is made, the benefit is earned by the society. Such disposal shall be of the labour of the members of the society. This position is also clear from the judgment of this Court in M/s.Uralungal labour Contract Cooperative society (supra). 11. Understanding the scope of the provisions in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... our. In fact, these societies have generated income only through sale of toddy. There should not be any dispute that the activities of tapping of toddy and the activities of sale of toddy are two different activities. As contended by the Ld D.R, the main objective of these societies is to run toddy shops. Accordingly, we notice that the incidental object of these societies appear to be to ensure that their members earn reasonable wages on tapping of toddy. Hence, in order to achieve the said objectives, these societies have only utilized the labour of its members for the activity of tapping the toddy and through that process, these societies have only ensured that the members earn reasonable wages. Thus, in our view, these societies have only generated only employment opportunities to its members. 13.4 It is not the case that these societies have engaged themselves in the business of tapping of toddy by utilizing the labour of its members and in that process they have earned income, in which case, it can be said that they have earned income on Collective disposal of labour . On the contrary, these societies have been carrying on the business of sale of toddy and in that proce ..... X X X X Extracts X X X X X X X X Extracts X X X X
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