C I T, PATIALA vs. THE HY. STATE CO-OP. SUP. & MARK., CHD

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ITR/11/1997HC Punjab & HaryanaPHHC01035347199722 November 2006Author: MR. JUSTICE RAJESH BINDAL,MR. JUSTICE ADARSH KUMAR GOEL2 pages
AI SummaryDismissed

What did the High Court hold?

The High Court answered the question of law in favour of the revenue and against the assessee. The Court noted that the issue had been considered in ITR No.9 of 1989, The Commissioner of Income Tax, Patiala v. The Haryana State Cooperative Marketing Federation Limited, Chandigarh, decided on September 26, 2006. This earlier decision was made in light of a retrospective clarificatory amendment to the Income Tax Act, which had been upheld by the Hon'ble Supreme Court in National Agricultural Cooperative Marketing Federation of India Limited and another v. Union of India and others, AIR 2003 SC 1329 = (2003) 260 ITR 548. The principle derived is that the eligibility for deduction under Section 80P(2)(a)(iii) is subject to the specific conditions laid down by the law, including any subsequent clarificatory amendments that have legal precedent. The Court disposed of the reference accordingly.

What were the facts?

The Commissioner of Income Tax (CIT), Patiala, is the petitioner (revenue), and The Haryana State Cooperative Marketing Federation Limited, Chandigarh, is the respondent (assessee). The assessment year in question is 1983-84. The appeal arises from an order of the Income Tax Appellate Tribunal (ITAT), Chandigarh Bench, dated April 21, 1993, in ITA No.707/Chandi/1988. The assessee, an Apex Society, derives income from commission on sales and claimed a deduction under Section 80P(2)(a)(iii) of the Income Tax Act, 1961, for profits from marketing food-grains. This claim was initially rejected on the grounds that marketing should be of members' produce, and the assessee's members were societies, not farmers. The CIT(A) allowed the assessee's claim, which was upheld by the ITAT, relying on a previous High Court judgment concerning the assessee for an earlier assessment year.

What were the issues?

1. Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in law in holding that the Society's income of Rs. 2,12,43,892/- was exempt under section 80P(2)(a) of the Income Tax Act, 1961? Assessee's contentions: The assessee contended that its income from commission on sales of food-grains was eligible for deduction under Section 80P(2)(a)(iii) of the Income Tax Act, 1961. The assessee relied on the ITAT's order for an earlier assessment year and a judgment of the High Court in CIT v. Haryana State Cooperative Supply and Marketing Federation Limited (1990) 182 ITR 53. Revenue's contentions: The revenue argued that the deduction under Section 80P(2)(a)(iii) was allowable only if the marketing was of the produce of its members. The revenue pointed out that the assessee, being an Apex Society, had societies as its members, who were neither farmers nor owned farms, implying the marketing was not of members' produce.

Which sections of the Income-tax Act were involved?

Section 80P(2)(a)(iii)

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances
ITR No.11 of 1997 1 IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH ITR No.11 of 1997 Date of decision:22.11.2006 The Commissioner of Income Tax, Patiala. ....Petitioner versus The Haryana State Cooperative Marketing Federation Limited, Chandigarh ....Respondent CORAM: HON'BLE MR. JUSTICE ADARSH KUMAR GOEL HON'BLE MR. JUSTICE RAJESH BINDAL Present: Mr. Yogesh Putney, Advocate, for the revenue. Mr. Jatin Sehrawat, Advocate for Mr. ML Garg, Advocate, for the assessee.

JUDGMENT: Following question of law has been referred for opinion of this Court by the Income Tax Appellate Tribunal, Chandigarh Bench, Chandigarh, arising out of its order dated 21.4.1993 in ITA No.707/Chandi/1988 in respect of assessment year 1983-84:- “Whether on the facts and in the circumstances of the case, the Appellate Tribunal was right in law in holding that Society's income of Rs.2,12,43,892/- was exempt under section 80P(2)(a) of the Income Tax Act, 1961?” The assessee derives income from commission on sales. The assessee claimed deduction under section 80P(2)(a)(iii) of the Income Tax Act, 1961 (for short, 'the Act') in respect of profits and gains derived from marketing of food-grains, which was rejected on the ground that the deduction was allowable only if marketing was of members of the society. The assessee being Apex Society, its members were societies who were neither farmers nor had their own farms. The CIT(A) upheld the claim of the assessee, which was further upheld by the Tribunal following judgment of this Court in CIT v. Haryana State Cooperative Supply and Marketing

ITR No.11 of 1997 2 Federation Limited, (1990) 182 ITR 53, following the view taken by the Tribunal in respect of earlier assessment year in the case of the assessee. The issue has been gone into by this Court in ITR No.9 of 1989, The Commissioner of Income Tax, Patiala v. The Haryana State Cooperative Marketing Federation Limited, Chandigarh, decided on 26.9.2006 in the light of retrospective clarificatory amendment which has been upheld by the Hon'ble Supreme Court in National Agricultural Cooperative Marketing Federation of India Limited and another v. Union of India and others, AIR 2003 SC 1329 = (2003) 260 ITR 548. In view of the above, the question referred is answered in favour of the revenue and against the assessee. Reference is disposed of accordingly. (Adarsh Kumar Goel) Judge November 22, 2006 (Rajesh Bindal) 'gs' Judge

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