Disputed facts on member labour deduction under section 80P justified remand for verification before final allowance

Entitlement to deduction under section 80P(2)(a)(vi) depended on disputed facts as to whether the assessee-society's income arose from the collective disposal of the labour of its own members. The record showed conflicting assertions on whether the work was performed by members or by outside labour and paid employees, so the claim could not be finally decided on the existing material. The matter was therefore remitted to the Assessing Officer for limited factual verification, with the deduction to be allowed only if the statutory conditions were established on examination of the books and supporting records.

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Issues: Whether the assessee's claim for deduction under section 80P(2)(a)(vi) of the Income-tax Act, 1961 was to be finally allowed on the existing record or the matter required fresh verification by the Assessing Officer.

Analysis: The assessment order had denied the deduction on the ground that the assessee had not established, with supporting material, that its income arose from the collective disposal of the labour of its members. The appellate record also showed conflicting factual assertions on whether the work was executed by members themselves or through outside labour and paid employees. In view of these disputed facts, and considering the assessee's readiness to produce books of account for examination, the matter was found suitable for limited verification rather than a final adjudication on merits.

Conclusion: The issue was restored to the Assessing Officer for limited verification of whether the works were executed by the collective disposal of the assessee-society's own members, with deduction to be granted if the statutory conditions were satisfied.

Final Conclusion: The appellate relief was confined to a remand for factual verification, and the substantive claim for deduction was left to be determined afresh by the Assessing Officer.

Ratio Decidendi: Where entitlement to a fiscal deduction depends on disputed facts regarding the statutory conditions, the proper course is to remit the matter for verification and decide the claim only after the relevant factual foundation is established.

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