TMI Blog2017 (3) TMI 1802X X X X Extracts X X X X X X X X Extracts X X X X ..... NTANT MEMBER For the Assessee : Shri K.A. Sai Prasad, AR For the Revenue : Shri A. Sitarama Rao, DR ORDER This is an appeal by assessee against the order of the Commissioner of Income Tax (Appeals)-3, Hyderabad dated 02-11-2015 on the issue of deduction u/s. 80P of the Income Tax Act [Act]. 2. Briefly stated facts are that assessee is engaged in the business of civil contracts by its activities of collective disposal of labour of its members. Assessee is registered as a Labour Contract Co-operative Ltd., consisting of skilled and unskilled labour and executing contract works in various Government departments. For the impugned assessment year, assessee admitted income of ₹ 12,16,350/- claimed the entire amount of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the bank a/c as to how the surplus was distributed to the members of the society. However such details were not produced. With the hope that certain basic details like registration of the society, members of the society etc would be available in assessment record, the records were obtained from the Assessing Officer and were perused. No such information was available in assessment record. However interestingly in order sheet entry dated 24.11.2011 in assessment record was found which read as under: The assessee's AR appeared for hearing and case discussed. During the scrutiny proceedings the AR has been informed of various unverifiable nature of vouchers in material charges amounting to ₹ 4,40,000 and ₹ 2,00,000 towards ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in civil contracts and so the society was denied deduction. It was submitted that Ld.CIT(A) allowed proportionate deduction u/s. 80P to the extent of labour contract and vide corrigendum dt. 04-01- 2016 deduction to an extent of ₹ 5,20,700/- was directed to be allowed. In reply, Ld. Counsel submitted that assessee is eligible for deduction and in the alternate, the deduction should be allowed on the income determined by the AO but not on the income offered by assessee. 6. I have considered the rival contentions and perused the record. On similar facts as that of assessee, in the case of CIT Vs. M/s. Uralungal Labour Contract in ITA No. 1722 of 2009 dt. 29- 10-2009 (supra), it was held by Hon ble Kerala High Court as under: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... activities, then the Society itself should be held to be engaged in collective disposal of labour of it's members. Therefore, the income earned from construction work qualifies for deduction under Section 80P(2)(vi) of the Act. The remaining issue is only with regard to the trading done in construction materials like sand which are stated to have been purchased and sold by the Society. Here again, the transactions are incidental in nature and the members themselves are engaged in handling of the goods in the course of purchase and sale of the same. Construction material involved is also sand where the labour involved is substantial and the income earned is also not found to be attributable to profit in trading and not attributable to l ..... X X X X Extracts X X X X X X X X Extracts X X X X
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