TMI Blog2018 (6) TMI 1515X X X X Extracts X X X X X X X X Extracts X X X X ..... toddy is a product which is extracted from a tree just as any other agricultural produce is extracted. AO in his order as also his report before the first appellate authority had waxed eloquent about there being no activity of sawing and tilling and so on and so forth. A coconut or palm cultivation would not require such sawing and tilling as is required with a paddy cultivation. The mere fact of a particular agricultural activity having not been carried out would not be the sole ground for denying the exemption as available to the marketing of an agricultural produce when carried out by the Co-operative Society. The fact of the tree tax being paid by the Society is only on account of the license of tapping and vending having been obtain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... MENT Vinod Chandran, J: Co-operative Societies engaged in tapping of toddy and vending it through licensed shops are the assessees in all these appeals. The question raised in one of the appeals [I.T.A.No.273 of 2015] is whether the Society-assessee can claim a deduction when no return was filed. In all the other cases, returns were filed; but the question arises as to whether the Societies were entitled to claim deduction under Section 80P(2)(iii) of the Income Tax Act, 1961 [for brevity IT Act ]. 2. The questions of law framed in the appeals are re-framed as follows: I.T.A.No.273/2015: Whether the Tribunal was correct in having affirmed the orders of the lower authorities declining deduction under Section 8 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iled, the Assessing Officer [AO] ought to have allowed the deduction at the point of computing of gross total income as provided under Chapter IV. 4. Yokogawa India Ltd. was a case in which the question arose as to when the deduction available under Section 10A has to be allowed. The Hon'ble Supreme Court found that the deduction under Section 10A has to be made from the gross total income at the time of computing the total income under Chapter IV of the Act and not at the stage of computation under Chapter VI. We do not think that the said proposition would apply here, since it is not the particular income that is granted a deduction, but the institution which is granted it on the ground of it being a Co-operative Society, as de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... duction as spoken of in Section 80A(1) with reference to the provision under sub-chapter 'C' being 80P, is with respect to the institution being a Co-operative Society. Only when a return is filed claiming deduction under Section 80P, the AO will be enabled to first consider the question of eligibility of the assessee and then consider the allowability of deduction from the total income. We, hence, answer the question of law framed in I.T.A.No.273 of 2015 against the assessee and in favour of the Revenue. The I.T.A. would stand dismissed. 6. The Income Tax Appeals filed by the Revenue are on the premise that toddy cannot be termed to be an 'agricultural produce'. The learned Standing Counsel appearing for the Revenue woul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ized that essentially the Society is engaged in vending of toddy under license, which cannot be said to be marketing of agricultural produce. What is intended by the exemption provision is to grant an incentive to the agricultural activity, which cannot be extended to 'toddy' coming under the definition of 'liquor' as defined under the Abkari Act. 7. We are unable to agree with the contentions of the learned Standing Counsel. We have considered the issue in the light of the findings on facts elaborately taken note of by the first appellate authority and the Tribunal. As has been found by the first appellate authority and the Tribunal, toddy is a product which is extracted from a tree just as any other agricultural produce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng and vending having been obtained by the Society. The tax so paid is on behalf of the members of the Society. We also have to notice that tapping of toddy is a traditional agricultural enterprise within the State and the State also encourages it; as distinguished from the foreign liquor trade. We, hence, do not find any reason to interfere with the orders of the Tribunal. We answer the questions of law as framed by us in the appeals filed by the Revenue, against the Revenue and in favour of the assessee. 9. One other question raised by the Revenue is as to the perversity of the findings of the Tribunal on facts in having granted exemption to the entire income when it was seen that the toddy tapped is also from trees belonging to person ..... X X X X Extracts X X X X X X X X Extracts X X X X
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