Assessee co-operative society worked for socio-economic development of milk producers. It claimed deductions u/s 80P(2) on interest received of Rs 9,90,224 and on profit from business of Rs. 5,99,231. AO allowed deduction on interest income and denied the other claim. CIT(A) confirmed AO’s order. ITAT allowed the exemption as it was available to basic societies as also to a union (Apex Society) of which members are primary cooperative societies.-501308
1. The assessee co-operative society was a Central/Apex/Federal co-operative Mils Producers' Union within the area of Burdwan District and was registered with the Additional Registrar of Co-operative Societies, West Bengal. Its main objective was to carry out activities conducive to the economic and socio-economic development of the milk producers by organizing effective production, processing and marketing of commodities. It claimed deductions on Interest received from BCBB Ltd. u/s. 80P(2) of Rs. 9,90,224 and on Profit from business u/s. 80P(2)(b) of Rs. 5,99,231, from the net profit of Rs.15,89,455/- in computing the net income from business as per P/L Account. Accordingly, assessee declared net profit from business as nil. The AO held the income from interest amounting to Rs.9,90,224/- as eligible for deduction under clause (d) of sec. 80P(2) of the Act. He, however, disallowed the deduction of Rs.5,99,231/- claimed u/s. 80P(2)(b) of the Act.
2. CIT(A) confirmed the action of AO.
3. On appeal, the ITAT held as under:
“Before us Ld. Counsel for the assessee Shri Soumitra Chowdhury, Advocate argued on the issue of consistency for the reason that revenue in AY 2003-04 and 2004- 05 has already allowed the claim of deduction u/s. 80P(2)(b)(i) of the Act while framing assessment u/s. 143(3) of the Act in both the years. Even otherwise Ld. Counsel for the assessee in view of the above given facts argued that the issue is covered by the decision of Hon'ble Supreme Court in the case of Kerala State Cooperative Marketing Federation Ltd. Vs. CIT (1988) 231 ITR 814 (SC), wherein Hon'ble Supreme Court has discussed the issue of Apex Cooperative Society as well as Primary Cooperative Society as under:
"It was held that this deduction was also available to an apex society where the members were Cooperative Societies and it did not matter if they were not agriculturists themselves but purchase from agriculturists. It is also the settled position of law that, where a federal coopeative society, a local authority, a public sector, company or a Govt. collects milk or oil seeds, fruits and vegetables from a primary cooperative society for distribution to the public, the whole income of the primary society is exempt u/s. 80P(2)(b) of Income tax Act. It means that the exempt u/s. 80P(2)(b) of the Act is available at every layer""to the basic societies as also to an union (Apex Society) of which the members are the primary cooperative Societies.”
I find from the above facts that the issue is covered by the decision of Hon'ble Supreme Court in the case of Kerala State Cooperative Marketing Federation Ltd., supra and respectfully following the same, I allow the appeal of the assessee.”
Case Reference- Bardhaman Co-operative Milk Producers Vs. Assistant Commissioner of Income-tax
IN THE INCOME TAX APPELLATE TRIBUNAL "SMC" BENCH: KOLKATA
[Before Shri Mahavir Singh, JM]
I.T.A No.1841/Kol/2014
Assessment Year: 2007-08