DEPUTY COMMISSIONER OF INCOME TAX, UDAIPUR vs. UDAIPUR DUGDH UTPADAK SAHAKARI SANGH LIMITED, UDAIPUR

IN THE INCOME TAX APPELLATE TRIBUNAL JODHPUR BENCH, JODHPUR

BEFORE DR. MITHA LAL MEENA, HON’BLE ACCOUNTANT MEMBER AND SHRI SUDHIR PAREEK, HON’BLE JUDICIAL MEMBER ITA No. 799/Jodh/2025 (Assessment Year 2017-18) Deputy Commissioner of Income Udaipur Dugdh Utpadak Tax, Udaipur Sahakari Sangh Limited Govardhan Vilas Udaipur, Rajasthan- 313001 PAN-AAAFU4403B Assessee by Shri Amit Kothari, CA (Physical) Revenue by Shri Anil Kumar Bharadwaj CIT (Virtually) Date of Hearing 28 / 04 / 2026. Date of Pronouncement 21 / 05 / 2026.

ORDER DR. MITHA LAL MEENA, A.M.: This appeal is filed by revenue against the order of the National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as the NFAC/CIT(A)] dated 28.07.2025 with respect to the assessment years 2017-18, challenging disallowance of deduction claimed under Chapter VI-A.

2 ITA No. 799/Jodh/2025 (Assessment Year 2017-18) 2. At the outset, the Ld. CIT (DR) submitted that the assessee has filed revised return on 20.11.2018 claiming 100% deduction under Chapter VI-A amounting to Rs. 4,41,93,433/- thereby declaring Nil income as against the income declared of Rs. 3,80,74,030/- in the original ITR filed by the assessee. The Ld. DR submitted that from the bare reading of the section it becomes clear that if the assessee has derived any income on account of sale to a federal cooperative society or the Government or a local authority or a Government Company, then such income would be eligible for the deduction under Section 80P(2)(b) of the IT Act, 1961. The assessee has not brought any proof or evidence that it is claiming deduction under Section 80P(2)(b) of the Act because of the fact that it has sold milk/milk products to any of the entities mentioned above. The assessee has major source of income is from open sale and supply of milk/milk product and as per the assessee's submissions, thus the assessee is making open sales to everyone and not to entities mentioned in Section 80P(2)(b) of the Act, therefore, the assessee was not eligible for deduction under Section 80P(2)(b) of the Act. The Ld. CIT(DR) contended that the CIT(A) was not justified in deleting the addition of Rs. 3,80,74,030/- on account of disallowances of deduction under Section 80P(2)(b) of the Act of 1961, whereas, the assessee's major

3 ITA No. 799/Jodh/2025 (Assessment Year 2017-18) source of income has been from open sales and supply of milk/milk products in Udaipur and Rajasamand district except the sale/ supply to a federal cooperative society or the government or a local authority or a Government company or a Corporation established by or under Central, State or Provincial Act, which is requisite condition under Section 80P(2)(b) of the Act for claiming such deduction. He accordingly pleaded that the impugned order may be reversed and the assessment order be restored.

4 ITA No. 799/Jodh/2025 (Assessment Year 2017-18) Society". The Ld. AR argued that in the instant case it is apparently clear that the appellant Society is not a Apex or Federal Society because its area of operation is not the whole State of Rajasthan but of Udaipur and related jurisdictions only. So, for the purpose of Income Tax, as defined in the Rajasthan Cooperative Societies Act, 2001, the society is certainly not an Apex or Federal Society covered under the Primary Society. In support the AR has placed reliance on the following judgments:-

 Bardhaman Co-operative Milk Producers Union Ltd. Vs. Acit, Circle-1, ITA No. 1841/Kol/2014, AY 2007-08.  Sundalpura Dudh Utpadak Sahakari Mandli Ltd. Vs. ITO, Ward-2 ITA No. 175/AHD/2018, Α.Υ. 2013-14.  Kumbarara Gudi Kaigarika Sahakar Sangha Niyamith Vs. ITO, ITA No. 1463 and 1464/Bang/2025, A.Y. 2017-18 and 2019-20.  Surendranagar District Co-operative Milk Producers Union Ltd. Vs. DCIT. 4. The Ld. AR has also relied on the judgments referred by the Ld. CIT(A) in the impugned order. He pleaded that the decision of the CIT(A) may be upheld.

5 ITA No. 799/Jodh/2025 (Assessment Year 2017-18) or Federal Society but its activities were depending and relating to the Primary Cooperative Societies. It is noted that a Primary Cooperative Society could not operate without the assessee being a district level society and its activities are interlinked with the activities of the other Primary Cooperative Societies. The assessee has been claiming deduction under Section 80P(2)(b) of the Act consistently for last several assessment years and there was no disallowances even in the assessment framed under Section 143(3) of the Act pertaining to assessment years 2004-05, 2005-06, 2007-08, 2009-10 and 2010-11. Therefore, the Ld. CIT(A) has been justified in allowing the claim of the assessee on the basis of the Principle of Rule of Consistency. The relevant findings of the Ld. CIT(A) reads as under:-

6 ITA No. 799/Jodh/2025 (Assessment Year 2017-18) Rajsamand), and therefore, by exclusion, it qualifies as a "Primary Society. This is consistent with the ITAT Jodhpur ruling in the case of Sriganganagar Zila Dugdh Utpadak Sahakari Sangh Ltd. (ITA Nos. 40, 41 & 42/Jodh/2016). 3. The following judicial pronouncements support the contention of the appellant:- A Assam Cooperative Apex Marketing Society Ltd. v. ACIT (1993) 201 ITR 338 (SC): The SC clarified that only apex societies are ineligible for deduction under section 80P(2)(b); primary societies are eligible. B. Bardhaman Co-operative Milk Producers Union Ltd. v. ACIT (ITA No.1841/Kol/2014); ITAT Kolkata held that even a union (district-level) society, acting under Apex directions, is eligible for deduction under section 80P(2)(b). C. Surendranagar District Co-op. Milk Producers Union Ltd. v. DCIT [2019] 111 taxmann.com 69 (Rajkot - Trib.): Held that even where the assessee is not a primary society per se, but works integrally with primary societies, deduction under section 80P(2)(b) is allowable. D. The Bharuch District Co-op. Milk Producers' Union Ltd. v. Pr. CIT (ITA No. 370/Ahd/2020); Tribunal held that once AO had verified facts and allowed deduction u/s 80P(2)(d), Pr. CIT could not revise the order. Supports due process and factual verification. 4. The A.O. dismissed the ITAT Jodhpur precedent on a superficial technical ground- that the ruling pertained to reopening u/s 147. However, a careful reading of para 9 of the ITAT Jodhpur order shows

7 ITA No. 799/Jodh/2025 (Assessment Year 2017-18) that the core issue decided was the eligibility of the appellant under section 80P(2)(b), alongwith the validity of reopening. The appellant stated that the department's own appeal against the ITAT Jodhpur decision in the Sriganganagar case has been withdrawn. No contrary view has been taken by jurisdictional authorities. Therefore, in line with the principle of judicial discipline and consistency, the ratio laid down in that order should be followed. 5. In view of the above legal and factual matrix, I am of the considered view that the appellant society is eligible for deduction under section 80P(2)(b) of the Income Tax Act, 1961, for AY 2017-18. Furthermore, the right to claim deduction under 80P is closely tied to the timing and validity of the return of income filed by the cooperative society. The revised return must be filed within the time allowed under section 139(5) or otherwise permissible for that year. If the revision relies on a jurisdictional ITAT order in a similar case and the revised return is in time, the claim for deduction is allowable as per the prevailing judicial precedents. In this case the appellant has filed revised return within permissible time limits and therefore becomes eligible to claim deduction under 80P on that count. Since the eligibility for such deduction is also proved on all other counts, I see no reason for denial of claim of 80P to the appellant in this case. The disallowance made by the Assessing Officer is, therefore, not sustainable. These grounds of appeal are allowed. 6. We find that the department's own appeal filed against ITAT Jodhpur Bench decision in the Sriganganagar case has been withdrawn and that no contrary judgment with a contrary view taken by any

8 ITA No. 799/Jodh/2025 (Assessment Year 2017-18) Jurisdictional Authorities has been brought to our knowledge during the course of hearing. Therefore, the decision taken by the Ld. CIT(A) has been found to be in contravention to the line of the Principle of judicial discipline and rule of consistency.

Order pronounced on 21 / 05 / 2026 in the open court.

Sd/- Sd/- (SUDHIR PAREEK) (DR. MITHA LAL MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated : 21 / 05 / 2026. Pritesh Vaishnav PS

9 ITA No. 799/Jodh/2025 (Assessment Year 2017-18) True Copy Copies to : (1) The appellant. (2) The respondent. (3) CIT (4) CIT(A) (5) Departmental Representative (6) Guard File

BY ORDER,