TaxTMI 
TaxTMI 
TaxTMI 
2005 (9) TMI 498
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.... The sums specified in sub-section (2), in computing the total income of the assessee. (2) The sums referred to in sub-section (1) shall be the following, namely: (a ) in the case of a co-operative society engaged in : (i) and (ii) ****** (iii) marketing of the agricultural produce of its members, (iv) to (vii) ****** the whole of the amount of profits and gains of business attributable to any one or more of such activities." In Assam Co-operative Apex Marketing Society Ltd. v. Addl. CIT [1993] 201 ITR 3381, the Hon'ble Supreme Court held that the words "agricultural produce of its members" must be held to mean the agricultural produce produced by its members. The Supreme Court was of the view "that the idea and intention behind the provision was to encourage basic level societies engaged in cottage industries, in marketing the agricultural produce of their members and those engaged in purchasing and supplying agricultural implements, seeds, etc., to their members and so on. The words "agricultural produce of its members" must be understood consistent with this object and if so understood, the words mean the agricultural produce produced by the members. If it is not so under....
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.... it was entitled to exemption in respect of the profits derived from the marketing of the same. Whether the members came by the produce because of their own agricultural activities or whether they acquired it by purchasing it from cultivators was of no consequence for the purpose of determining whether the assessee was entitled to the exemption. The only condition required for qualifying the assessee's income for exemption was that the assessee's business must be that of marketing, the marketing must be of agricultural produce and that agricultural produce must have belonged to the members of the assessee-society before they came up for marketing by it, whether on its own account or on account of the members themselves. Thus, there is no scope to limit the exemption. The co-operative societies are engaged in marketing of an agricultural produce both of its members as well as of non-members. In the later case, there is no difference between a co-operative society or any other business organisation and so will not be entitled to exemption. The exemption is intended to cover all cases where a co-operative society is engaged in marketing agricultural produce of its members. Section 80P....
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....,33,310 Less : 1. Expenditure disallowed u/s. 43B in the previous year ending 31-3-1997 to be allowed as expenditure since paid this year 34,210 2. Ex Gratia to employees 1,13,80,021 Rs. 3. Rebate to members 1,00,29,000 (2,14,43,231) 9,30,29,000 Less : Deductions Chapter VI-AU/s. 80P(2)(d) interest and dividend received from Co-operative societies 53,36,000 2. U/s. 80P(2)(a)( iii) income from marketing of agricultural produce of its members. 10,19,95,000 10,73,31,000 Limited to the extent of Total income 9,30,90,079 Nil Note : 1.The aforesaid items added back disallowed are based on the report under section 44AB. The Corporation is contesting such items. The same will be discussed at the time of hearing. 2.The Federation is entitled for deduction for payment of interest and principal liability of M/s. Alimenta as per arbitration award of FOSFA. 3.The assessee is entitled for deduc....
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....d that deduction under section 80P(2)(d) was to be allowed. 9. The Assessing Officer passed an order dated 1-11-1999 on such application by the assessee allowing claim of the assessee for deduction under section 80HHC. With regard to the claim for deduction under section 80P(2)(d) the Assessing Officer held that the assessee had claimed the deduction and in the intimation the same was allowed and, hence, there was no apparent mistake calling for rectification. Regarding the claim for deduction under section 80P(2)(a)( iii) being a debatable issue and hence not amenable to disallowance by way of prima facie adjustment, the Assessing Officer held that since the provisions were amended retrospectively from 1-4-1968, the assessee's claim was clearly not allowable and therefore, the prima facie adjustment was proper. With regard to the claim for deduction of liability payable to M/s. Alimenta of Geneva, the Assessing Officer held that the assessee did not claim this sum as a deduction either in the Profit & Loss Account or in the computation of income and, therefore, the same will not be of any consequence as the claim for deduction was never the subject-matter of the intimation under ....
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....law was passed by the Parliament and notified in the Official Gazette. He further drew our attention to the fact that the assessee challenged the constitutional validity of the amendment before the Hon'ble Delhi High Court and also before the Hon'ble Supreme Court which petitions were dismissed on 16-2-2001 and 25-3-2002, respectively. According to him, the assessee, as per the law prevailing on 31-10-1998 when assessee filed a return of income had made a claim for deduction which was valid in law. He contended that the assessee could not foresee a retrospective amendment to the law when he filed the return of income. In the circumstances, according to him, a prima facie adjustment could not be made by the Assessing Officer by relying on a law which comes into force retrospectively. In this regard he drew our attention to the decision of the Supreme Court in the case of CIT v. Hindustan Electro Graphites Ltd. [2000] 243 ITR 482 wherein an identical fact, the Hon'ble Supreme Court had held that to no additional tax under section 143(1A) could be levied. 13. The learned DR relied on the orders of the revenue authorities. It was contended by him that between the time the retrospectiv....
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....onal tax was unjustified. The stand of the revenue was that under section 143(1A), the Assessing Officer has no choice and he has to levy additional tax once he finds that the assessee has not shown the amount of the cash compensatory support in his return, whatever the reason be. The Supreme Court referred to the decision of the Hon'ble Calcutta High Court in the case of Modern Fibotex India Ltd. v. Dy. CIT [1995] 212 ITR 496 where one of the two issues before the Court related to the validity of an intimation under section 143(1)(a) of the Act. The assessee in the said case, for the assessment year 1989-90 received cash compensatory support from the Central Government amounting to about Rs. 8 lakhs. In its return of income the company claimed the amount received by it on account of cash compensatory support as not taxable. The Assessing Officer assessed the company applying the amended provision of section 28 of the Act thus levying additional tax under section 143(1A) of the Act. The company filed a writ petition in the High Court challenging the very constitutionality of section 143(1)(a) read with section 143(1A) and section 4 and also the intimation sent by the Assessing Offi....
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....ity of the amendment of section 28, but is merely determining the scope of the power under section 143(1)(a). The assessee's return could have been taken up by the Assessing Officer under section 143 prior to the amendment. In that event, no adjustment would have been made and no intimation would have been sent. An assessee's liability cannot be made to depend upon such a fortuitous circumstance." (p. 512) High Court allowed the writ petition to the extent that the impugned intimation and adjustment under section 143(1)(a) were set aside and quashed. The Hon'ble Supreme Court after referring to the aforesaid judgment of the Hon'ble Calcutta High Court held as follows : "7. Decision of the Calcutta High Court in Modern Fibotex India Ltd. (supra) squarely covers the issue involved in the present appeal. Then we have to see the law on the date of filing of the return. To attract penal provisions there has been same element of lack of bona fides unless the law specifically provides otherwise. The case before us does not represent even a bona fide mistake. In fact it is not a case where under some mistaken belief the assessee did not disclose the cash compensatory support received by....