VASNA RATHOD DUDH UTPADAK SAHAKARI MANDALI,GANDHINAGAR vs. THE INCOME TAX OFFICER, WARD-1 (PREVIOUSLY WARD-4), GANDHINAGAR

The brief facts of the case are that the assessee is engaged the business of collecting milk from its members and supplying the same to the member union Uttam Dairy. Further, besides earning income from sale of milk to Member Union, the assessee also earned interest income, dividend income etc. The assessee, during the course of assessment gave details of exemption claimed with respect to income referred to above and also claimed deduction of ₹50,000/- u/s 80P(c) of the Act. During the course of assessment, the assessing officer denied the claim of deduction of ₹50,000/- u/s 80P(2)(c) of the Act on the ground that since the assessee, being a cooperative society engaged in supply of milk, has claimed deduction on the entire profits u/s 80P(2)(b) of the Act, it is not eligible for further deduction u/s 80P(2)(c) of the Act on this amount of ₹50,000/-. Accordingly, the assessing officer added this amount of ₹50,000/- as “income from other sources” in the hands of the assessee. In appeal, Ld. CIT(Appeals) dismissed the appeal of the assessee.

We observe that the assessee had given computation of income before the assessing officer and from the same, it is observed that the assessee has derived income from other activities, other than supply of supply of milk, on which assessee has claimed deduction of ₹50,000/- u/s 80P(2)(c) of the Act. A reading of section 80P(2)(c) of the Act states that when the society is engaged in “activities” other than those specified in clause (b), so much of its profits and gains as are attributable to such activities, as does not exceed ₹50,000/- is eligible for deduction u/s 80P(c) Asst.Year –2017-18 - 3– of the Act. In the instant case, the Ld. DR has not disputed that the assessee had earned income from activities other than that from supply of milk and the same was duly reflected in the computation of income submitted by the assessee. In the case of Venus Parkland Co-Op. Housing Service Society Ltd. vs. Income-tax Officer [2024] 166 taxmann.com 673 (Ahmedabad - Trib.)/[2024] 209 ITD 229 (Ahmedabad - Trib.)[07-08- 2024], the Tribunal held that where assessee, a housing co-operative society, showed surplus in its Profit and Loss account after netting out all maintenance expenses, assessee was eligible for deduction under section 80P(2)(c)(ii) of the Act. In the case of Baroda Citizen Community Co-op. Credit Society Ltd. vs. Income-tax Officer [2022] 134 taxmann.com 290 (Ahmedabad - Trib.)/[2022] 193 ITD 113 (Ahmedabad - Trib.)[01-12-2021], the Tribunal held that in case of co- operative credit society, income to which benefit of section 80P(2)(a)(i) is not allowed, basic exemption of Rs. 50,000/- as provided in section 80P(2)(c)(ii) must be granted. Accordingly, looking into the instant facts, we are of the view that Ld. CIT(Appeals) erred in holding that the assessee is not eligible for grant of deduction under section 80P(2)(c)(ii) of the Act for a sum of Rs.50,000/-

In the result, the appeal of the assessee is allowed. This Order is pronounced in the Open Court on 08/01/2025 (DR. BRR KUMAR) JUDICIAL MEMBER Ahmedabad; Dated 08/01/2025 TANMAY, Sr. PSITA No. 1829/Ahd/2024 Asst.Year –2017-18 - 4–

""थ" / The Respondent. 3. संबंिधत आयकर आयु" / Concerned CIT 4. आयकर आयु"(अपील) / The CIT(A)- 5. िवभागीय "ितिनिध, आयकर अपीलीय अिधकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाड" फाईल / Guard file. आदेशानुसार/ BY ORDER,