TaxTMI 
TaxTMI 
TaxTMI 
2011 (10) TMI 156
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.... facts and in the circumstances of the case and in law the action of the CIT (Appeals) the disallowance of deduction under section 80-P of the Income Tax Act, 1961 is erroneous and illegal; 3. On the facts and in the circumstances of the case and in law the action of the CIT (Appeals) in case of consequential application of interest under sections 234-B, 244-A and 234-C on the above additions is erroneous and illegal. " 3.1 The first issue, which is common in both the appeals for consideration relates to set off of brought forward losses against the income of the relevant assessment years. The facts of the case stated in brief are that the assessee is a Co-operative Society under the administrative control of the Managing Director, Haryana Dairy Development Co-operative Federation Ltd., Chandigarh. It is engaged in the supply of milk and manufacture milk products. The assessee society was created by bifurcation of old society, known as Gurgaon Rohtak Co-operative Milk Producers Ltd., having its head office at Milk Plant, Gohana Road, Rohtak. During the previous year 2003-04, this old society was split into two co-operative societies, namely, Rohtak Milk Producers Union Ltd.....
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....-op. Society was the loss of the assessee after bifurcation and it should be allowed against the income of the assessee under the year under consideration. It was also submitted that provisions of section 72 should be construed so as to result in equity and justice. It was also submitted that in case of a company the un-absorbed depreciation allowance and accumulated losses are allowed whereas there was no provision in the Income Tax Act applicable to co-operative societies. It was, therefore, submitted that the words "de-merged company" and "co-operative society" could be used inter-changeably as it leads to a more realistic interpretation of the section. The assessee placed reliance on the following decisions:- 1. Saroj Aggarwal v. CIT [1985] 156 ITR 497 (SC); 2. CIT v. MadhuKant M. Mehta [1981] 132 ITR 159(Guj.); 3. CIT v. J. H. Gotla [1985] 156 ITR 323(SC); 4. K.P. Verghese v. ITO [1981] 131 ITR 597 (SC); 5. Tirath Singh v. Bachhittar Singh AIR 1955 (SC) 830; 6. Mysore Minerals Ltd. v. CIT [1999] 239 ITR 775 (SC); 7. Bajaj Tempo Ltd. v. CIT [1992] 196 ITR 188 (SC). 5. In view of the above decisions it was submitted that the assessee should be allowed to carry forward th....
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.... He further submitted that where the language of statute, in its ordinary meaning and grammatically construction leads to a manifest contradiction of the apparent purpose of the enactment, or to some inconvenience or absurdity, hardship or injustice, presumably not intended, a construction may be put upon it which modifies the meaning of the words and even the structure of the sentence. He placed reliance on the decision of Hon'ble Supreme Court in the case of Tirath Singh (supra). He further submitted that the interpretation of the taxing statute should be so as to give effect to the object of the provision and the statute has to be interpreted liberally so as to advance the object of the provision and not frustrate it. The ld. AR of the assessee relying on the decision of Hon'ble Supreme Court in the case of CIT v. Shaan Finance (P.) Ltd. [1998] 231 ITR 308(SC) submitted while interpreting the statute the exemption provisions should be given full effect. The ld. AR of the assessee also relied on the decision relied upon by the assessee before the ld. CIT (Appeals). On the other hand, the ld. Sr. DR, however, strongly supported the order of the ld. CIT (A). She submitted that ther....
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....fic provision in case of co-operative societies, the provisions of section 72A(4) cannot be interpolated in the case of co-operative societies on the principle of equity and justice. During the course of hearing the ld. AR of the assessee could not specify the law under which the brought forward losses of parent society allocated to the assessee society could be set off against the business income of the assessee. In the absence of any such provision liberal interpretation cannot be resorted to. Therefore, the decisions relied upon by the ld. AR of the assessee are not applicable to the facts of the assessee's case. Hon'ble Supreme Court in the case of Shaan Finance (P.) Ltd. (supra) has held that in interpreting a fiscal statute, the court cannot proceed to make good the deficiency if there be any. The court must interpret the statute as it stands and in case of doubt, a manner favourable to the taxpayer. In the case before us the ld. AR of the assessee could not demonstrate that the loss of parent society could be allowed to be set off against the assessee society. The Legislature has not provided in law any mechanism under which loss can be allowed to be set off. The provisions ....
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....ial available on record. Admittedly, the assessee's case does not fall under clause (a) or clause (b) of section 80P(2) of the Act. Under section 80P(2)(c) in case of a co-operative society engaged in the activities other than those specified in clause (a) or clause (b) [either independently of or in addition to, all or any of the activities, so specified] so much of its profits and gains attributable to such activities as does not exceed : (i) where such co-op. society is a consumer's co-op. society Rs. One lakh; & in any other case Rs. 50,000/-. Admittedly, the assessee is engaged in the business of supply/manufacture of milk products and, therefore, the assessee's activities are not covered in clause (a) or clause (b) of section 80P(2) of the Act. The assessee is also not a consumers' Co-op. Society. Therefore, the assessee's case falls in residuary sub-clause (ii) of clause (c) of section 80P(2) of the Act. Therefore, the income of the assessee society attributable to the activity of supplying milk/manufacture of milk products will be eligible for deduction of Rs. 50,000/- from profits and gains attributable to such activities. The AO had not examined the case of the assessee a....