PR. COMMISSIONER OF INCOME TAX-12 vs. THE COOPERATIVE STORES LTD.

The facts surrounding the assessment undertaken for the Multi- State Co-operative Society [“Co-operative Society”] / the respondent assesee herein stands succinctly noticed in paragraph 2 of the judgment which is reproduced hereinbelow: “2. The facts in brief are the assessee is a Co-operative Store Limited, popularly known as the Super Bazar, Delhi and was originally registered in 1966 under the Bombay Coop. Societies Act (1925) as applicable in Delhi and with the enactment of the Delhi Coop. Societies Act, 1972, the Super Bazar functioned under the Act till 22-01-1966. In order to extend the business activities of the Store and protect the interest of consumers, the Management of Super Bazar had decided to function as Multi State Cooperative Society and finally registered under the Multi- State Cooperative Societies (MSCS) Act, 1984 (amended in the year 2002) with its area of operation being the entire country since 22nd January, 1966. The Union of India (through Ministry of Consumer Affairs) was holding equity of 72.00% in the Store. On account of the co-operative society running into huge losses running into hundreds of crores of rupees, the same was ordered to be liquidated vide an order dated 05-07-2002 passed by the Central Registrar acting under the Multi- State Cooperative Societies Act, 2002. On a petition filed before the Hon'ble Supreme Court by the employees union, the Hon'ble Supreme Court passed various orders for revival of the Cooperative society and inter alia directed: In terms of our order dated 7th May, 2008, an amount of Rs. 54.31 crore being arrears of wages upto 31st December, 2007, was directed to be disbursed by the highest bidder Rs. 55 crores stands deposited by highest bidder. The sum of Rs. 20 crore out of Rs. 55 crore which lies with the Registry of the Supreme Court, will be This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 27/03/2026 at 14:04:13

The ITAT has taken into consideration the steps which were taken by the Supreme Court for the revival of the cooperative society and has consequently proceeded to come to the following conclusions: “8.1 On the other hand relying judgment of Hon’ble Supreme Court dated 07.05.2008 and 13.08.2010, Ld. AR submitted that the quantum of amount payable to workers on account of wages/ salaries/ PF etc. and sums payable to other authorities was not a liability of the assessee till it was determined by Hon’ble Supreme Court. This aspect has been rightly relied by Ld. CIT(A) to benefit the assessee.”

On an overall consideration of the background surrounding the steps which were taken for revival of the cooperative society concerned, we are of the considered opinion that in the facts and circumstances of the case there would exist no justification to interfere with the ultimate conclusions rendered by the ITAT. 8. That only leaves us to examine the issue pertaining to the waiver of the loans which were extended by the Union Government to the respondent assessee. Undisputedly, those loans were not used for the acquisition of a capital asset. It is in the aforesaid context that Mr. Kumar, learned counsel for the appellant, contends that the provisions of Section 41 of the Income Tax Act, 1961 [“Act”] would apply. The appeal would merit further consideration on the said question. This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 27/03/2026 at 14:04:13

For reasons aforenoted, we admit the appeal on the following question of law: 1. Whether on the facts and in the circumstances of the case, the ITAT has erred in law in deleting the additions on the loan amount sanctioned by the Union Government of INR 68,51,00,000/- held by the Assessing Officer as value of benefit arising from business under Section 28(iv) of the Act? 10. Let the appeal be called again on 10.07.2024.