TaxTMI 
TaxTMI 
TaxTMI 
2022 (3) TMI 666
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....) by learned Assessing Officer (hereinafter called " the AO") for ay: 2014-15 and secondly assessment order dated 29.12.2017 passed u/s 143(3) of the 1961 Act by AO for ay: 2015-16. Since both these appeals filed by Revenue involves common issues, both these appeals were heard together and are now adjudicated by this common order. Both these appeals were heard by Division Bench of the Income Tax Appellate Tribunal, Allahabad Bench, Allahabad , U.P, in Open Court through physical hearing of the appeals. 2. The Revenue has raised following grounds of appeal in memo of appeal filed with Income Tax Appellate Tribunal, Allahabad Bench, Allahabad, U.P. (hereinafter called " the tribunal"), in ITA no. 92/Alld./2020 for ay; 2014-15 (similar grounds of appeals are raised by Revenue in memo of appeal filed with tribunal in ITA no. 93/Alld/2020 for ay: 2015-16) :- " 1. Whether the learned CIT(A) was right, without giving a finding of facts, of efforts made in earning, " commission" from sugar mills on sugarcane independently supplied made by sugarcane growers in catchment area to sugar mills at rates determined by the State Government, to conclude that such receipts were " business' receip....
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....essee is not entitled for deduction u/s 80P of the 1961 Act because deduction u/s 80P is only allowable to Co-operative Societies. The assessee on its part contended that it is registered as a Co-operative Society being registered under the provisions of Section 8 of U.P. Sahkari Samiti Adhiniyam ,1912. The assessee submitted before the AO that the assessee being a society is engaged in providing services to the farmers of territorial jurisdiction of the District Ambedkar Nagar who claimed to be the members of the society for marketing of their crops, and in providing them with the needs of fertilizers , seeds, pesticides and agricultural equipment's at subsidized rates , which are obtained directly by purchasing from companies on no profit or loss basis, and thus it was claimed that the assessee society is entitled for deduction u/s 80P of the 1961 Act. The AO being dissatisfied with the above assessee's submissions on the ground that the assessee got itself registered from the Registrar of Cane Co-operative Societies, U.P. who is departmental authority of Cane department of U.P. and not a competent authority under the Societies Registration Act, and hence the deduction under Sect....
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....oduces of members. It is pertinent to mention that the appellant society has received commission in lieu of sale of sugar made by the cane growers to the sugar mills but for carrying out the developmental activities as specified under U.P. Sugar Cane (Regulation of Supply and Purchases) Act 1953 r/w the U.P. Sugar Cane (Regulation of Supply and Purchases) Rules, 1954. 7.In view of the above facts and above binding judgments of the Hon'ble Apex Court, it is held that the Interest Income are liable to be taxed u/s 56 as income from Other sources and the appellant is not entitled to get deduction u/s 80P(2) on the above incomes. It is further held that the assessee Society is entitled to claim deduction u/s 80P(2) on the Commission Income which it derived from the marketing of agricultural produces of members. 8. The appeal of the appellant is thus partly allowed." 4. Aggrieved by the decision of ld. CIT(A) granting relief to the assessee by grant of deduction u/s 80P of the 1961 Act, the Revenue has filed an appeal before the tribunal . The ld. Sr. DR brought to the notice of the Bench, the grievances of the Revenue by drawing our attention to the grounds of appeal including add....
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....peal filed by the assessee . The assessee has claimed itself to be Co-operative society engaged in marketing of crops and providing fertilizers, seeds and agricultural equipment's to farmers who are claimed to be its members. The assessee has claimed deduction u/s 80P of the 1961 Act (the relevant applicable clauses being Section 80P(2)(a)(iii) and(iv) of the 1961 Act), on the grounds that it is Co-operative Society and is engaged in marketing of agricultural produce of the members and purchase of fertilizers, seeds etc. intended for agriculture for the purposes of supplying to its members . Before proceeding further, it will be useful to refer to the provisions of Section 2(19) and 80P of the 1961 Act as it stood at the relevant point of time, which reads as under: "Definitions. 2. In this Act, unless the context otherwise requires,- *** *** (19) "co-operative society" means a co-operative society registered under the Co-operative Societies Act, 1912 (2 of 1912), or under any other law for the time being in force in any State for the registration of co-operative societies ; *** *** Deduction in respect of income of co-operative societies. 80P. (1) Where, in the c....
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....s the case may be, to the public), the whole of the amount of profits and gains of such business;] (c) in the case of a co-operative society engaged in 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-operative society is a consumers' co-operative society, [one hundred] thousand rupees; and (ii) in any other case, [fifty] thousand rupees. Explanation.-In this clause, "consumers" co-operative society" means a society for the benefit of the consumers;] (d) in respect of any income by way of interest or dividends derived by the co-operative society from its investments with any other co-operative society, the whole of such income; (e) in respect of any income derived by the co-operative society from the letting of godowns or warehouses for storage, processing or facilitating the marketing of commodities3, the whole of such income; (f) in the case of a co-operative society, not being a housing society or an urban consumers' society or a society carrying on transpor....
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...., therefore, refers only to the factum of a co-operative society being registered under the 1912 Act or under the State law. Then, there are several other conditions which are stipulated in Section 80P of the 1961 Act which are to be met by the tax-payer, before any deduction from the income of the Co-operative Societies can be allowed u/s 80P of the 1961 Act . The assessee has claimed that it was registered under the Co-operative Societies Registration Act as is enacted under the State Law in the State of Uttar Pradesh being U.P. Sahkari Samiti Adhiniyam ,1912, which the AO is disputing as we would see in this order. The relevant statute is The U.P. co-operative Societies Act, 1965 (U.P. Act No. 11 of 1966) read with The Uttar Pradesh Co-operative Societies Rules, 1968 . Section 2(f) of the 1965 State Act provides that 'Co-operative Society' means a society registered or deemed to be registered under the 1965 Act. The provisions of Section 1(2) of the 1965 State Act stipulates that it extends to the whole of the State of Uttar Pradesh. The provision of Section 2(q-1) of the 1965 State Act reads as under: "2. Definitions. - In this Act, unless the context otherwise requires - *....
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....h has as its object the promotion of the economic interests of its members in accordance with co-operative principles or a society established with the object of facilitating the operations of such a society, may be registered under this Act. Explanation. - Co-operative principles shall include - (a) advancement of economic interest of the members in accordance with public morals, decency and the relevant directive principles of State policy enunciated in the Constitution of India; (b) regulation and restriction of profit motive; (c) promotion of thrift, mutual aid and self-help; (d) voluntary membership; and (e) democratic constitution of the society" The provisions of Section 6 to 9 of the 1965 State Act deals with Registration of the Co-operative Society are relevant, which reads as under:- "6. Application for registration. - (1) An application for the registration of a society shall be made in the manner prescribed to the Registrar in such forms as the Registrar may from time to time specify; and the applicants shall furnish to him all such informations about the society as he may require. (2) Every such application shall conform to the following requirements, ....
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....e Registrar, passes an order for registration of society, the society shall be deemed to have been duly registered from the date of communication of such order to the Registrar. (2) Where the Registrar refuses to register a society he shall communicate the order of refusal together with the reasons therefore to such applicant as has been named in the application for this purpose and in default of such naming to any one of the applicants. 8. Registration certificate. - (1) Where a society is registered under this Act or deemed to be registered under the proviso to sub-section (1) of Section 7, the Registrar shall issue a certificate of registration signed by him which, unless the registration is proved to have been cancelled, shall be conclusive evidence that the society therein mentioned is a co-operative society duly registered under this Act. (2) No person or society shall commence business in the name of, or professing to be, a co-operative society unless a certificate of registration has been obtained under subsection (1) for such society and every person or member of society carrying on business in contravention of this sub-section shall be personally liable for all liab....
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.... observed that the assessee has not explained the sources of gross receipts or income claimed as marketing commission as are found credited in its books of accounts nor any explanation was furnished as to payments made or investments made, and also that the assessee did not get its accounts audited as are required u/s 44AB of the 1961 Act and no tax-audit report was furnished by the assessee. The AO held the assessee's accounts to be not reliable as no evidence to substantiate the nature of gross receipts or income claimed as marketing commission income nor any details as to payments or investments made by the assessee, were furnished by the assessee before the AO during the course of assessment proceedings, despite being called upon by AO to submit the same during the course of assessment proceedings. The assessee being aggrieved filed first appeal with ld. CIT(A), who was pleased to grant deduction u/s 80P to the assessee on the income so claimed to be from marketing commission. The relevant paragraphs of the ld. CIT(A) appellate order are reproduced in the preceding para's of this order. The ld. CIT(A) simplicitor granted relief to the assessee by allowing deduction u/s 80P of t....