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Commissioner of Income Tax, Bikaner Versus Rajasthan Rajya Sahakari Kray Vikray Sangh Ltd. And Commissioner of Income Tax, Jaipur-II, Jaipur Versus Rajasthan Rajya Sahakari Kray Vikray Sangh Ltd.

2016 (9) TMI 1385 - RAJASTHAN HIGH COURT

Granting benefit of Sec.80P(2)(d) - Held that:- The interest income has been earned from short-term deposits with Co-operative Banks and Cooperative Societies and is fully exempted u/s 80P(2)(d). See Kerala State Co-operative Marketing Federation Ltd. & Ors. ETC. vs. Commissioner of Income Tax [1998 (5) TMI 6 - SUPREME Court] - D.B. Income Tax Appeal No.139/2002, D.B. Income Tax Appeal No. 20, 24, 27/2004 - Dated:- 1-9-2016 - K. S. Jhaveri And Ajay Rastogi, J. For the Appellants : R. B. Mathur F .....

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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 ass .....

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deration Ltd. & Ors. ETC. vs. Commissioner of Income Tax: (1998) 147 CTR 0029. The Supreme Court in the judgment aforesaid in Paragraphs 5 & 7 has observed as under:- 5. We have carefully considered the rival submissions of the parties perused the material placed on record and also the judgements relied upon by them. We find that the AO and the CTT(A) have rejected the claim of the assessee of allowing deduction u/s 80P(2)(iv) in view of the decision of Hon'ble Supreme Court in the c .....

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r societies which members thereof who may have purchased such goods from the agriculturists. Thus, we allow the civil appeal by setting aside the order made by the High Court and answering the question referred to us in the affirmative in favour of the assessee and against the Revenue . Respectfully following the above judgement, we direct the AO to consider the claim of the assessee as per provisions of Section 80P(2)(a) (iv) and allow the deduction acording to law. 7. The Id. A.R. Submits that .....

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to be the investment. The CTT(A) has also confirmed the disallowance. He further submits that the interest income has been earned from short-term deposits with Co-operative Banks and Cooperative Societies and is fully exempted u/s 80P(2)(d). The CTT(A), in the subsequent assessment year, i.e., assessment year 1993-94, has allowed the same. The reliance was also placed upon the judgement of Hon'ble Punjab & Haryana High Court in the case of CTT vs. Haryana State Co-operative Housing Socie .....

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on 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 busi .....

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. It is, therefore, necessary to construe the expression "members" in Section 80P(2)(a)(i) of the Act in the light of the definition of that expression as contained in Section 2(n) of the Co-operative Societies Act. The said provision reads as under: Section 2(n). Member means a person who joined in the application for registration of a society or a person admitted to membership after such registration in accordance with the provisions of this Act, the rules and the bye-laws for the ti .....

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e individual cane growers who were members of the cane growers unions were not the members of the Federation. In this context, it may be mentioned that in Clause (b) of Sub-section (2) of Section 80P, reference has been made to primary society as well as federated co-operative (societies which indicates that while enacting Section 80P was conscious of the 'distinction between the various types of co-operative societies that the functioning in the country, namely, the federated cooperative so .....

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rs of the said society, were members of another co-operative society which is a member of the co-operative society seeking exemption. The meaning of 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 conte .....

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here 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. 7. Per contra, counsel for the respondent has relied upon the decision of the Supreme Court in Kerala State Cooperative Marketing Federation Lt .....

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the marketing of agricultural produce of its members would mean not only such societies which deal with the produce raised by the members who are individuals or societies which are members thereof who may have purchased such goods from the agriculturists. Thus, we allow the civil appeal by setting aside the order made by the High Court and answering the question referred to us in the affirmative in favour of the assessee and against t he revenue. There shall be no order as to costs. 8. In Commi .....

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998, w.e.f. 1st April, 1968. The validity of the amendment has been upheld by the apex Court in the case ofNational Agricultural Co-operative Marketing Federation of India Ltd. and Anr. v. Union of India(2003) 181 CTR (SC) 1 : (2003) 260 ITR 548 (SC). However, no such amendment has been made in Clause (iv) of Section 80P(2)(a) of the Act which reads as follows : (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) .....

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y 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 Deduct .....

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t provisions for both the years in question. The parties are left to bear their own costs. 11. In Kota Cooperative Marketing Society Ltd. vs. Commissioner of Income Tax: (1994) 207 ITR 608 (Raj.) in para no.2 which reads as under:- 2. The brief facts of the case are that the assessee has filed the return initially in which the deduction under s. 80P of the IT Act, 1961, was claimed on proportionate basis as the assessee was having income which was partly taxable and partly nontaxable. Subsequent .....

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ers was in the figure of ₹ 4,60,385. This income was claimed as exempt before the ITO, but the ITO found that the business of rice mill, trucks and tractors, etc., is separate and divisible businesses and, therefore, relying upon the decision of the Gujarat High Court in the case of CIT vs. Sabarkantha Zilla Kharid Vechan Sangh Ltd. (1977) 107 ITR 447 (Guj) : TC26R.864, it was held that the income of the co-operative society from nontaxable activity has to be computed by setting off agains .....

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t side of the profit and loss account was taken into consideration and the total expenses on the debit side of the profit and loss account were taken into consideration and the proportionate expenses come to 67 per cent. Applying this 67 per cent to the figure of ₹ 4,60,385, the figure of ₹ 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 .....

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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 Commissioner of .....

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funds. It is further contended by Mr. Gupta that the assessee has paid interest to Jalandhar Central Cooperative Bank and has also received interest from the said cooperative bank, thereby showing that the assessee has on the aggregate paid interest to the bank and, therefore, no deduction under Sec.80P(2)(d) can be allowed. To appreciate this argument, we have to look to the provisions of Section 80P(2)(d) of the Act, For facility of reference, it is reproduced as under: 80P.(2)(d) in respect .....

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y about a tax. There is no presumption as to a tax. Nothing is to be read in, nothing is to be implied. One can only look fairly at the language used, 7. The principle laid down by Rowlatt J., has alsobeen time and again approved and applied by the Supreme Court in different cases including the one, Hansraj Gordhandas vs. H.H. Dave, Assistant Collector of Central Excise and Customs, AIR 1970 SC 755, 759. 8. Sec.80P(2)(d) of the Act allows whole deductionof an income by way of interest or dividen .....

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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 ded .....

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