M/S.INDIA COFFEE BOARD WORKERS CO-OPERATIVE SOCIETY vs. THE COMMISSIONER OF INCOME TAX

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR.JUSTICE S.V.BHATTI & THE HONOURABLE MR. JUSTICE BECHU KURIAN THOMAS TUESDAY, THE 10TH DAY OF AUGUST 2021 / 19TH SRAVANA, 1943 ITA NO. 86 OF 2015 AGAINST THE COMMON ORDER OF THE INCOME TAX APPELLATE TRIBUNAL, COCHIN BENCH, DATED 12.04.2013 IN ITA.NO.590/COCH/2011 (D) AND C.O.NO.01/COCH/2012(A) FOR THE ASSESSMENT YEAR 2008-09 APPELLANT/ RESPONDENT/ ASSESSEE : M/S.INDIA COFFEE BOARD WORKERS CO-OPERATIVE SOCIETY LTD., MACHINGAL LANE, THRISSUR - 680 001, REPRESENTED BY ITS SECRETARY, SRI.V.T.VARGHESE. BY ADVS. SRI.T.M.SREEDHARAN (SR.) SMT.DIVYA RAVINDRAN SRI.V.P.NARAYANAN RESPONDENT/ APPELLANT/ REVENUE : THE COMMISSIONER OF INCOME TAX, AAYAKAR BHAVAN, SHAKTHAN THAMPURAN NAGAR, TRICHUR - 680 001. BY ADV. SRI.JOSE JOSEPH, SC, FOR INCOME TAX THIS INCOME TAX APPEAL HAVING COME UP FOR ADMISSION ON 10.08.2021, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

ITA NO. 86 OF 2015 2 JUDGMENT Dated this the 10th day of August, 2021 Bechu Kurian Thomas, J. Appellant is a co-operative society. The questions raised for consideration in this appeal arise from the assessment year 2008-09 and are as follows :- “(a). TDS was not applied on rent payments made totalling Rs.1,81,247/- and the latter amount had not been disallowed and assessed under Section 40(a)(ia) r.w.s.194J; (b) Interest incomes received from the assessee's members totalling Rs.16,93,3334/- was omitted to be taxed”. 2. Appellant had filed a return of income for the year in question declaring a loss of Rs.2,97,446/-. The assessment was completed by the assessing officer demanding a total income of Rs.35,65,424/-. In the computation of income, a deduction of Rs.50,000/- only was allowed under Section 80P of the Income Tax Act (for short, 'the Act) and demanded an amount of Rs.10,60,290/- as income tax and interest. The assessee preferred an appeal contending that the entire income of the society is exempted from assessment as per Section 80P(2)(a)(6) of the Act. The CIT (Appeal) by its order dated 28.06.2011 allowed the appeal after finding that the assessee was a society engaged in the collective disposal of labour of its members, thereby satisfying Section 80P(2)(a) (vi) of the Act. Dissatisfied with the order of the First Appellate

ITA NO. 86 OF 2015 3 Authority, the department preferred a 2nd appeal before the Income Tax Appellate Tribunal, Cochin. After considering the contentions raised, the Tribunal held that the issue relating to eligibility of the assessee for deduction under Section 80P(2)(a)(vi) of the Act required a detailed examination of the bye law and other relevant materials from the side of the assessing officer and accordingly remanded the matter for fresh consideration. The assessee has preferred this appeal under Section 260A of the Act which was admitted on two questions of law. 3. However, during the course of the hearing, it was felt that the questions of law are required to be re-framed. The questions of law arising in this appeal are therefore re-framed as follows :- 1. Whether the Income Tax Appellate Tribunal was justified in remanding the claim for exemption under Section 80P(2)(a)(vi) to the assessing officer for fresh adjudication. 2. Is the appellant eligible for deduction of its income as income exempt from income tax under Section 80P(2)(a) (vi) of the Act. 4. As per Section 80P(2)(a)(vi) of the Act, if the gross total income of a co-operative society engaged in the collective disposal of the labour of its members, includes any income from such collective disposal of the labour of its members, then, while computing the total income of

ITA NO. 86 OF 2015 4 the assessee, the whole of the amount of profits and gains of business, attributable to such activity of the society shall be deducted. The question for consideration before the Tribunal was whether the assessee was engaged in the collective disposal labour of its members. Society’s functions are based upon its bye laws. The bye laws itself would have thrown light upon the question that arises for consideration in the instant case. On an examination of the bye laws, the Tribunal could have easily come to a conclusion whether the income derived by the society was through collective disposal of the labour of its members. Materials like the bye laws were already on record for the Tribunal to appreciate the claim of the assessee. We find on a consideration of the order of the Tribunal that the remand to the assessing officer was not necessary in the peculiar facts of the case and on the other hand, as a final fact finding authority Tribunal itself could have appreciated the facts by itself. The assessment relates to the assessment year 2008-09 and at this distance of time, it is not in the interests of all to remand it to the assessing officer. In view of the above, we set aside the order of the Tribunal in ITA.No.590/Coch./2011 dated 12.04.2013 and remand the same for fresh consideration by the Tribunal itself. The Tribunal shall examine the issue arising under Section 80P(2)(6)(a) of the Act, as expeditiously as possible, preferably within six months. The assessee is given liberty to

ITA NO. 86 OF 2015 5 place additional materials if so advised, in support of the claim under Section 80P(2)(a)(6) of the Act, in accordance with law. This appeal is therefore allowed. Sd/- S.V.BHATTI, JUDGE

Sd/- BECHU KURIAN THOMAS, JUDGE RKM

ITA NO. 86 OF 2015 6 APPENDIX OF ITA 86/2015 PETITIONER'S ANNEXURES : ANNEXURE A TRUE COPY OF THE ASSESSMENT ORDER DATED 17.12.2010 PASSED BY THE INCOME TAX OFFICER, WARD - 2(2), THRISSUR ANNEXURE B TRUE COPY OF THE ORDER DATED 28.06.2011 IN I.T.A. NO.40/R-II/TCR/CIT(A)-V/2010-11 PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS-V), COCHIN ANNEXURE C TRUE COPY OF THE INCOME TAX APPELLATE TRIBUNAL'S ORDER IN I.T.A.NO.590/COCH/2011(D) AND C.O.NO.01/COCH/2012(A) DATED 12.04.2013