COMMISSIONER OF INCOME TAX vs. M/S PUNJAB STATE COOP MILK PRODUC. FED.

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ITA/584/2006HC Punjab & HaryanaPHHC01075322200610 September 2007Bench: MR. JUSTICE M.M. KUMAR,MR. JUSTICE AJAY KUMAR MITTAL2 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that the substantial question of law raised by the Revenue had been rightly answered against the Revenue by the Income Tax Appellate Tribunal. The Court found no case made out for referring the question as it had already been answered. The Tribunal's decision was supported by the judgment of the Hon'ble Supreme Court in Commissioner of Income-Tax, Lucknow vs. U.P. Co-operative Federation Ltd. (1989) 176 I.T.R. 435 SC and a Division Bench judgment of the High Court itself in Commissioner of Income-Tax vs. Haryana Co-operative Sugar Mills Ltd. (1989) 180 I.T.R. 631 (P&H). The ratio decidendi is that interest income earned by a co-operative society on funds advanced to another co-operative society, when such activity is part of its overall business, is eligible for deduction under Section 80P(2)(d). The operative direction was to dismiss the appeal.

What were the facts?

The Revenue, Commissioner of Income Tax Chandigarh-II, filed an appeal under Section 260-A of the Income Tax Act, 1961, against the order dated 27.04.2006 passed by the Income Tax Appellate Tribunal (ITAT), Chandigarh Bench-A, in ITA No. 1608/Chandi/2005. The appeal concerns the assessment year(s) not explicitly stated in the provided text. The core of the dispute revolves around the eligibility of interest income earned by the assessee, M/s Punjab State Co-op. Milk Producers Federation Ltd., Chandigarh, on 'working capital' advanced to another co-operative society for a deduction under Section 80P(2)(d) of the Income Tax Act, 1961. The ITAT had ruled in favor of the assessee.

What were the issues?

1. Whether on the facts and circumstances of the case, the interest income earned by the assessee on the 'working capital' advanced to another co-operative society is eligible for deduction under Section 80P(2)(d) of the Income Tax Act, 1961 (a question of law). Assessee's Contention: The judgment does not record any specific arguments made by the assessee before the High Court. However, the fact that the ITAT ruled in their favor implies they contended for the eligibility of the deduction. Revenue's Contention: The Revenue contended that the interest income earned on 'working capital' advanced to another co-operative society is not eligible for deduction under Section 80P(2)(d) of the Income Tax Act, 1961. They sought to have this question determined by the High Court.

Which sections of the Income-tax Act were involved?

Section 260-A,Section 80P(2)(d)

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH ITA No. 584 of 2006 Date of decision: 10.09.2007 Commissioner of Income Tax Chandigarh-II .....Appellant Versus M/s Punjab State Co-op. Milk Producers Federation Ltd. Chandigarh

.....Respondent Coram: Hon'ble Mr. Justice M.M.Kumar Hon'ble Mr. Justice Ajay Kumar Mittal Present: Mr. S.K.Garg Narwana, Advocate, for the revenue. *** M.M.Kumar, J. The revenue has approached this Court by filing the instant appeal under Section 260-A of the Income Tax Act, 1961 challenging order dated 27.04.2006 of the Income Tax Appellate Tribunal, Chandigarh Bench-A in ITA No. 1608/Chandi/2005 claiming that following substantial question of law would arise for the determination of this Court:- “ Whether on the facts and circumstances of the case the interest income earned by the assessee on the 'working capital' advanced to another co-operative society is eligible for deduction u/s 80P(2)(d) of the I.T. Act, 1961.” We have perused the judgment of the Tribunal and find that the question raised has been rightly answered against the revenue. We are further of the view that the Tribunal has rightly relied upon the judgment of Hon'ble the Supreme Court in the case of Commissioner of Income- Tax, Lucknow vs. U.P. Co-operative Federation Ltd. (1989) 176 I.T.R. 435 SC and a Division Bench judgment of this Court in the case of Commissioner of Income-Tax vs. Haryana Co-operative Sugar Mills Ltd. (1989) 180 I.T.R. 631 (P&H).

ITA No. 584 of 2006 -2- No case is made out for referring the question as the same has been answered. Dismissed. ( M.M.KUMAR ) JUDGE ( AJAY KUMAR MITTAL ) September 10, 2007 JUDGE pj

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