Collective labour exemption upheld for a co-operative society engaged in foodgrain loading and unloading work.
A co-operative society engaged in loading and unloading foodgrain bags was treated as deriving income from the collective labour of its members, bringing it within the exemption for labour contract societies. The clause allowing outside labour applied only when members were unavailable, and no material showed actual engagement of outside labour or absence of the required Registrar's permission. The voting-rights objection was rejected because the co-operative law itself governed voting and elections, and the statutory scheme did not confer voting rights on outsiders or non-members. The society was held to satisfy the proviso-linked voting condition and to fall within the class entitled to exemption under section 80P(2)(a)(vi).
Issues: Whether the assessee-society was entitled to exemption under section 80P(2)(a)(vi) of the Income-tax Act as a co-operative society engaged in collective disposal of labour of its members and satisfying the voting-rights condition in the proviso.
Analysis: The society's objects, membership structure, and actual work of loading and unloading foodgrain bags showed that its income arose from the collective labour of its members. The clause permitting engagement of outside labour operated only when sufficient members were unavailable and no material showed that such outside labour had in fact been engaged or that the Registrar's permission had been obtained. The objection based on voting rights was rejected because the governing co-operative law itself regulated voting and elections, and the statutory scheme did not confer voting rights on outsiders or non-members. The Tribunal also held that the assessee satisfied the condition reflected in the proviso to section 80P(2)(a), and that the assessee fell within the class of labour contract societies entitled to the exemption.
Conclusion: The assessee was entitled to exemption under section 80P(2)(a)(vi), and the Revenue's challenge failed.
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AI Drafter ✕
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