M/S JAI AMBA CO-OP LABOUR & CONSTRUCTION SOCIETY vs. COMMISSIONER OF INCOME TAX PANCHKULA AND ANR

ITA/473/2015HC Punjab & HaryanaPHHC01110132201525 April 2016Author: REGISTRAR-JUDICIAL,MR. JUSTICE SURINDER GUPTA9 pages
AI SummaryDismissed

What were the facts?

The assessee, M/s Jai Amba Co-op Labour & Construction Society, Panchkula, filed its return for assessment year 2008-09 claiming deduction under Section 80P(2)(a)(vi) of the Income Tax Act. The Assessing Officer disallowed this deduction, adding back ₹4,05,733/-. Further disallowances were made for consumable stores, labour and welfare, and travelling expenses. The CIT(Appeals) upheld the Assessing Officer's order. The Income Tax Appellate Tribunal (ITAT) also dismissed the assessee's appeal. The assessee then filed an appeal before the High Court against the ITAT's order dated 28.5.2015.

What did the High Court hold?

The High Court held that the eligibility for deduction under Section 80P(2)(a)(vi) requires the entire profits and gains of the cooperative society to be attributable to the 'collective disposal of the labour of its members'. This means the society's earnings must be through the utilization of the actual labour of its members. The Court noted that the assessee-society engaged Supervisors, Chowkidars, and daily wage labourers who were not members. The payment of ₹11,14,862/- as labour charges indicated substantial reliance on outside employees. Therefore, the income derived by the appellant could not be considered as derived from the collective disposal of its members' labour. The Tribunal was correct in upholding the disallowance. The Court distinguished the precedents cited by the assessee, noting that Kerala State Co-operative Marketing Federation Ltd. dealt with clause (iii) and Punjab State Cooperative Bank Ltd. was factually distinguishable. The finding that the profit was not derived from the collective disposal of the labour of its members was concurrently recorded by the authorities below, warranting no interference.

What were the issues?

1. Whether, in the facts and circumstances of the case, the Income Tax Appellate Tribunal was correct in law in denying the benefit of deduction under Section 80P(2)(a)(vi) of the Income Tax Act to the appellant? Assessee's contention: The assessee argued that it fulfilled the conditions under Section 80P(2)(a)(vi) and was therefore entitled to the deduction. It relied on the Supreme Court judgment in Kerala State Co-operative Marketing Federation Ltd. and others v. Commissioner of Income Tax (1998) 231 ITR 814 (SC) and this Court's judgment in Commissioner of Income Tax v. Punjab State Cooperative Bank Ltd. (2008) 300 ITR 24 (P&H). Revenue's contention: The judgment records no specific contention for the revenue, but it upholds the orders of the lower authorities who disallowed the deduction.

Which sections of the Income-tax Act were involved?

Section 80P,Section 80P(2)(a)(vi),Section 143(2),Section 260A

AI-generated summary — verify with the full judgment below

ITA No. 473 of 2015 -1- IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH ITA No. 473 of 2015 (O&M) Date of Decision: 25.4.2016 M/s Jai Amba Co-op Labour & Construction Society, Panchkula ....Appellant. Versus Commissioner of Income Tax, Panchkula and another ...Respondent.

1.

Whether the Reporters of the local papers may be allowed to see the judgment?

2.

To be referred to the Reporters or not? YES

3.

Whether the judgment should be reported in the Digest? CORAM:- HON'BLE MR. JUSTICE AJAY KUMAR MITTAL. HON'BLE MR. JUSTICE DARSHAN SINGH. PRESENT: Ms. Rinku Dahiya, Advocate for the appellant. AJAY KUMAR MITTAL, J.

1.

Delay of 18 days in refiling the appeal is condoned.

2.

The present appeal has been filed by the assessee under Section 260A of the Income Tax Act, 1961 (in short “the Act”) against the order dated 28.5.2015 (Annexure A-5) passed by the Income Tax Appellate Tribunal, Chandigarh Benches “SMC”, Chandigarh (hereinafter referred to as “the Tribunal”) in ITA No. 24/Chd/2015 for the assessment year 2008-09, claiming the following substantial question of law:- Whether in facts and circumstances of the case, the Income Tax Appellate Tribunal was correct in l

The order continues below.

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