TaxTMI 
TaxTMI 
2019 (10) TMI 397
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....out from the material on record are as under :- Assessee is a Co-operative Society registered under the Co-operative Societies Act. The society is engaged in the business of collecting milk from primary societies and supplying the same to federal society as well as non-federal parties. The assessee filed its return of income for A.Y. 2014-15 on 29-11-2014 declaring total income at Nil by claiming deduction of Rs. 43,36,867/- u/s. 80P of the Act. The case was selected for scrutiny and thereafter assessment was framed u/s 143(3) of the Act vide order dated 26-10-2016 and the total income was determined at Rs. 47,15,250/- by inter alia denying the claim of deduction u/s. 80P of the Act. Aggrieved by the order of AO, assessee carried the matter before Ld. CIT(A), who vide order dated 04-07-2017 (in appeal No. SLI/126/16-17) dismissed the appeal of assessee. Aggrieved by the order of Ld. CIT(A), assessee is now in appeal and has raised following effective grounds : • "On the facts and in the circumstances of the case and in law the Lower Authorities have erred in denying the deduction u/s. 80P(2)(b), to the society for the reason that Society has supplied the Milk col....
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....ha and its capacity is 1000000 liters per day. Excess over this capacity cannot be purchased by the Mahananda as there are more than 100 members of this federal society and every member is ready to supply the milk. As the collection capacity of the federal society is insufficient to purchase milk from every member of the society, Mahahanda has permitted members to sell the milk to other customers. He submitted that though the assessee was ready to supply the entire milk to Mahananda but due to the limitation of the capacity of Mahananda and due to the highly perishable nature of the goods, assessee could not sell the entire milk to Mahananda and was forced to sell it to outsider. In such a situation, he submitted that assessee be granted deduction on entire profits out of sale of milk. He further submitted that on identical facts in the case of Fattesinghrao Naik (Appa) Sahakari Dudh Utpadak Sangh Limited Vs. ITO in ITA No. 2326/PUN/2017 for assessment year 2009-10, order dated 05-09-2019, the Co-ordinate Bench of Tribunal has allowed the assessee's claim of deduction on the milk sold to the outsider. He submitted that the facts of the case in the year under appeal are identical to....
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....aim of deduction u/s 80P(2)(b) of the Act. It is an undisputed fact that assessee is a Co-operative Society engaged in the business of collecting milk from farmers / primary societies and supplying the same to Federal Societies as well as non-federal parties. It is an undisputed fact that for the year under consideration assessee society has made sale of milk and other milk products to the tune of Rs. 13,56,51,168/- to the parties which are not covered under the provisions of Sec.80P(2)(b) of the Act. Provisions of Sec.80P(2)(b) contemplates that deduction can be claimed on the amount of gains of business of a co-operative society on sale to Federal Society, the Government or local authority or Government company. In the present case, it is an admitted fact that the sale to the tune of Rs. 13.56 crores is not to the parties covered u/s 80P(2)(b) of the Act. 7. Before us, assessee has submitted that the assessee was forced to sell milk to outside parties as Mahanand Dairy which is a Federal Cooperative Society to whom assessee society use to supply the milk, had expressed its inability to accept and process the milk collected from the assessee society. Mahanand Dairy had ad....
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....has actually sold in the open market or price at which milk is sold to Federal Society, whichever is less. For the month of August, 2008, there is no sale of milk by the assessee to the Federal Society and the sale of Rs. 1,24,34,116/- is only to outsiders, hence, we are of the view that benefit of deduction should not be extended on sale of milk for the month of August, 2008. We therefore direct the AO to re-compute the deduction u/s 80P(2)(b) of the Act by excluding the sale made to outsiders in the month of August, 2009. Thus, the ground No.1 of the assessee is partly allowed." 7. Since, the facts in the present case are identical to that in the case of Fattesinghrao Naik (Appa) Sahakari Dudh Utpadak Sangh Limited Vs. ITO (supra) I therefore, for the reasons stated in the decision in the case of Fattesinghrao Naik (Appa) Sahakari Dudh Utpadak Sangh Limited Vs. ITO (supra) and for similar reasons restore the issue back to the file of Assessing Officer. The Assessing Officer is directed to decide the issue in line with the decision in the case of Fattesinghrao Naik (Appa) Sahakari Dudh Utpadak Sangh Limited Vs. ITO (supra), in accordance with law and after considering the submi....