2021 (12) TMI 103 - HC - Income Tax

High Court upholds denial of deduction under Section 80P(2)(a)(vi) for appellant society, remits for reconsideration.

The High Court of Kerala upheld the Tribunal's denial of qualification for deduction under Section 80P(2)(a)(vi) of the Income Tax Act for the appellant ... Deduction u/s 80P - Tribunal holding that the appellant society cannot be considered as Co operative Societies engaged in the collective disposal of labour of its 2016 members as contemplated under section 80P(2) (a) (vi) of the Act and therefore not eligible for deduction under section 80P - contention of the revenue that the appellant society having granted registration under the Kerala Co-operative Societies Act, 1969 and the Rules as a 'Miscellaneous Society' and therefore assessee cannot be treated as a society engaged in collective disposal of labour of its members and therefore is not eligible/entitled for the deduction under Section 80P(2)(a)(vi) - HELD THAT:- The statement is placed on record, accepted and accordingly by following the principle laid down in Peravoor Range Kallu Chethu Vyavasaya Thozhilali Sahakarana Sangham [2015 (9) TMI 506 - KERALA HIGH COURT] case the questions are answered in favour of the Revenue and against the assessee. Eligibility of the appellant for deduction under section 80 P (2) (a) (iii) - HELD THAT:- We have taken note of the limited submissions made in this behalf and we are persuaded to accept the second limb of assessee's argument, namely that the matter needs to be reexamined by the Tribunal. For, our examining the question of law independently, the possibility of treading into pure and simple facts cannot be obliterated. Which, for informed reasons in law, we do not want to undertake. Therefore, the question is answered, to the extent indicated above, in favour of the assessee and against the Revenue. Substantial question no.3 is remitted to Tribunal for consideration and disposal, in accordance with law. Issues Involved:1. Eligibility for deduction under Section 80P(2)(a)(vi) of the Income Tax Act.2. Eligibility for deduction under Section 80P(2)(a)(iii) of the Income Tax Act.3. Remanding the matter to the assessing officer for reconsideration under Section 80P(2)(a).4. Consideration of voting rights under the bye-laws for eligibility under Section 80P(2)(a).5. Consideration of claims made in a belated return under Section 80A(5) of the Act.Detailed Analysis:I.T.A. No. 44/2019Substantial Question Nos. 1 & 2:- The primary issue was whether the appellant society qualifies as a cooperative society engaged in the collective disposal of labor of its members under Section 80P(2)(a)(vi) of the Income Tax Act, thus being eligible for the corresponding deduction.- The Tribunal's decision, which denied this qualification, was challenged as illegal, arbitrary, and perverse.- The judgment referenced the precedent set in Peravoor Range Kallu Chethu Vyavasaya Thozhilali Sahakarana Sangham v. Commissioner of Income Tax [2016] 380 ITR 34 (Ker.), concluding that the appellant's situation was similar, and thus the questions were answered in favor of the Revenue and against the assessee.Substantial Question No. 3:- This question addressed whether the Tribunal erred in not considering the appellant’s eligibility for deduction under Section 80P(2)(a)(iii) of the Act, which pertains to the marketing of agricultural produce grown by its members.- The court noted that the Tribunal had not independently examined this issue, and thus it was remitted back to the Tribunal for reconsideration and disposal in accordance with the law.Substantial Question Nos. 4 & 5:- These questions dealt with whether the Tribunal should have remanded the matter back to the assessing officer to consider if the appellant society falls under any other category eligible for deduction under Section 80P(2)(a).- The court decided not to address these questions, as the decision on substantial question no. 3 rendered them moot.I.T.A. No. 57/2019- The substantial questions in this appeal were identical to those in I.T.A. No. 44/2019.- The court adopted the same reasoning and answered the questions accordingly.I.T.A. No. 58/2019Substantial Question Nos. 1 & 2:- These questions were similar to those in I.T.A. No. 44/2019 regarding the eligibility under Section 80P(2)(a)(vi).- The court adopted the same reasoning and answered them accordingly.Substantial Question No. 3:- This question was also similar to that in I.T.A. No. 44/2019 regarding eligibility under Section 80P(2)(a)(iii).- The court remitted the matter back to the Tribunal for reconsideration.Substantial Question Nos. 4 & 5:- These questions were similar to those in I.T.A. No. 44/2019, with an additional question regarding the rejection of claims under Section 80A(5) due to a belated return.- The court followed the same reasoning and answered these questions accordingly.Conclusion:The High Court of Kerala addressed multiple substantial questions regarding the eligibility of the appellant society for deductions under various sections of the Income Tax Act. The court upheld the Tribunal's findings on some issues while remanding others back to the Tribunal for further consideration. The court's decisions were guided by precedent and a detailed examination of the statutory provisions involved.