TMI Blog2016 (9) TMI 1385X X X X Extracts X X X X X X X X Extracts X X X X ..... tered under the Cooperative Societies Act,1912. 2.1 The case of the department is that the assessee claimed benefit under Section 80P(2)(a)(iv) 80P(2)(d)of the Income Tax Act, 1961 which reads as under:- 80P(1) ... . (2) (a)... (iv) the purchase of agricultural implements, seeds, livestock or other articles intended for agricultural for the purpose of supplying them to its members, or 3. It manifests from the material on record that the assessing officer while considering the law prevailing at the relevant point of time for the assessment years in question has rejected the claim of the assessee in view of the judgment in Assam Co-operative Apex Marketing Society Ltd. Vs. Additional CIT: (1993) 113 CTR (SC) 58, which came to be further confirmed by the CIT (Appeals) while dismissing the appeal preferred by the assessee against the order of the Assessing Officer. However, the tribunal has also thoroughly examined the matter in detail in the light of the decision of the Supreme Court in Kerala State Co-operative Marketing Federation Ltd. Ors. ETC. vs. Commissioner of Income Tax: (1998) 147 CTR 0029. The Supreme Court in the judgment aforesaid in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4. Counsel for the Department, Mr. Sanjay Jhanwar, has drawn our attention to the provisions contained in Section 80P(2)(a)(iv) of the Income Tax Act, 1961 which reads as under:- 80P(1) ... . (2) (a)... (iv) the purchase of agricultural implements, seeds, livestock or other articles intended for agricultural for the purpose of supplying them to its members, or 5. Counsel for the respondent in support of submission has relied on the decision of the Supreme Court in case of UP Co-operative Cane Union Federation Ltd. Vs. Commissioner of Income Tax: (1997) 11 SCC 287 and more particularly paragraph no 7, 8 and 9 which reads as under:- 7. The relevant part of Section 80P(2)(a)(i) of the Act is reproduced as under: Section 80P Deduction in respect of income of co-operative societies: (2) The sums referred to in Sub-section (1) shall be the following, namely: (a) in the case of a co-operative society engaged in (i) carrying on the business of banking or providing credit facilities to its members, or... 8. The expression members is not defined in the Act.Since a co-operative society has to be established under the provisions of the law made b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the expression members cannot, therefore, be extended to include the members of a primary co-operative society which is a member of the federated co-operative society seeking exemption. The principle of lifting the corporate veil which was invoked by Shri Tripurari Rai in support of his submission cannot have any application in the context of the provisions contained in Section 80P(2)(a)(i) of the Act. 6. The learned counsel further contended that the present substantial questions of law framed by this Court in examining the claim of the assessee are squarely covered by the judgments of the Supreme Court (supra) and in the light thereof the assessee is not entitled for the benefit under Section 80P(2)(a)(iv), since the Parliament in its wisdom was conscious of the distinction between various types of cooperative societies and there appears no intention to grant exemption as being claimed by the assessee and therefore this Court cannot go beyond that there are also some stipulations in granting benefit of Sec.80P(2)(d) to the assessee and therefore, the view taken by the Assessing Officer and the CIT (Appeals) requires confirmation tribunal decision may be reversed. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Kerala State Cooperative Marketing Federation Ltd. (supra) would still be applicable for interpreting the provision of Clause (iv). 7. Applying the principles laid down by the apex Court to the facts of the present case, it is not in dispute that the apex society supplied/sold gypsum, seeds and fertilizers to its members. These goods were intended for agricultural purposes and, therefore, benefit of Section 80P(2)(a)(iv) of the Act was available. 9. In Commissioner of Income Tax, Tamilnadu-I vs. Tamilnadu Co-operative Marketing Federation Ltd. (1999) 151 CTR 0232 in para no.5, it has been held as under:- 5. The other sub-sections not being material for the discussion, they are not referred to. As already stated, the marginal heading of S. 80P is Deduction in respect of Income of Cooperative Societies. 10. In Commissioner of Income Tax vs. Haryana Cooperative Sugar Mills Ltd: (1989) 180 ITR 631 (P H) in para no.8 which reads as under:- 8. For the reasons recorded above, we answer both the questions in favour of the assessee, in the affirmative and hold that the Tribunal was right in coming to the conclusion that short-term call deposits were invest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ₹ 3,10,253 was arrived at which was considered as expenses not liable to deduction under s. 80P(2) of the IT Act. It was not disputed that the income from the trucks and tractors was not exempt and other activity which was the main source of income, i.e., supply of fertilizers and agricultural implements to its members and marketing of agricultural produce was exempted. The staff which was employed by the assessee was looking after both the businesses, namely, the business of supply of fertilizers, agricultural implements, etc., to its members and carrying on the activity of running of the rice mill and deriving income from trucks and tractors. The income which was derived by the assessee from the rice mill or from operating the tractors and trucks was wholly divisible and was neither connected nor having any proximate relationship with the other non-taxable activity of the assessee. The criteria which has to be adopted for the purpose of determining the liability and deducting the expenses is as to whether the business is a single and indivisible one or separate businesses are being carried on by the assessee. 12. In Surat Vankar Sahakari Sangh Ltd. Vs. Assistant Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erest paid to the cooperative society exceeds the interest received from the bank on investments. The Revenue is not required to look to the nature of the investment whether it was from its surplus funds or otherwise. The Act does not speak of any adjustment as sought to be made out by learned counsel for the Revenue. The provision does not indicate any such adjustment in regard to interest derived from the cooperative society from its investment in any other cooperative society. Therefore, we do not agree with the argument advanced by the learned counsel for the Revenue. In our opinion, the learned Tribunal was right in allowing deduction under Sec.80P(2)(d) of the Income Tax Act, 1961. In respect of interest of ₹ 4,00,919/- on account of interest received from Nawanshaln Central Cooperative Bank without adjusting the interest paid to the bank. Therefore, the reference is answered against the Revenue in the affirmative and in favour of the assessee.' 8.2 Moreover, the Bombay High Court in the case of Bai Bhuriben Lallubhai (supra) has held that the purpose for which the assessee borrowed money had no connection whether direct or indirect with the income which she ea ..... X X X X Extracts X X X X X X X X Extracts X X X X
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