High Court Of Rajasthan : Jaipur Bench
CIT vs. Rajasthan Rajya Bunker Sahakari Sangh Ltd.
Section 80P(2)(a)(ii)
Y.R. Meena & A.C. Goyal, JJ.
IT Appeal No. 26 of 2000
15th February, 2002
Counsel Appeared
R.B. Mathur, for the Appellant : A. Kasliwal, for the Respondent
JUDGMENT
BY THE COURT :
This appeal is directed against the judgment and order of Tribunal. The basic question for consideration in this appeal is whether the assessee-society is entitled for benefit of deduction under s. 80P(2)(a)(ii). The assessee is a co-operative society engaged in the marketing of the produce of members of primary society and to supply the members of primary society raw material for manufacturing through primary society. By this activity assessee has shown gross profit of Rs. 46,28,915. The AO has negatived the claim of the assessee on the ground that the assessee-society has no direct deal with the weavers, it helps the weavers through primary society. In appeal before CIT(A), CIT(A) has allowed the claim of the assessee following the decision of Kerala High Court in the case of CIT vs. Kerala State Co-operative Marketing Federation Ltd. (1991) 100 CTR (Ker) 230 : (1992) 193 ITR 624 (Ker) : TC 26R.786. In appeal before the Tribunal, the Tribunal has considered the decision of the Kerala High Court reported in (1991) 100 CTR (Ker) 230 : (1992) 193 ITR 624 (Ker) (supra) and also the decision of the Allahabad High Court Addl. CIT vs. Hast Kala Pital Udyog Sahkari Samiti Ltd. 1975 CTR (All) 119 : (1978) 114 ITR 723 (All) : TC 26R.745. The Tribunal has also considered the decision of Madhya Pradesh High Court in the case of CIT vs. Madhya Pradesh State Handloom Weavers Cooperative Society Ltd. (1997) 142 CTR (MP) 406 : (1998) 231 ITR 243 (MP) : TC S26.2723. Finally, the Tribunal has relied on the decision of Supreme Court in the case of Kerala State Co-operative Marketing Federation Ltd. & Ors. vs. CIT (1998) 147 CTR (SC) 29 : (1998) 231
ITR 814 (SC) : TC S26.2721 and confirmed the view taken by CIT(A). Mr. Mathur, learned counsel for the Revenue, submits that the decision of the apex Court in Kerala State Co-operative Marketing Federation Ltd. & Ors. (supra) the decision was on s. 80P(2) (a)(iii) and not on 80P(2)(a)(ii) while the assessee has claimed a deduction under s. 80P(2)(a)(ii). Mr. Mathur places reliance on the decision of Allahabad High Court and also on the decision of Supreme Court in the case of U.P. Co-operative Cane Union Federation Ltd. vs. CIT (1999) 157 CTR (SC) 569 : (1999) 237 ITR 574 (SC) wherein, their Lordships held that for assessee the meaning of word “Members” is normally used in the sense of, members of the society and not the members of the member society. If the weavers are the members of the member society, then apex body of the society is not entitled for benefit of deduction under s. 80P(2)(a)(ii).
Whether the assessee-society is entitled for benefit of the exemption under s. 80P(2)(a)(ii), we have to consider its activities and objects. The assessee-society is a co-operative society engaged in the manufacturing of cloth under Janta Cloth Scheme of Government of India through the conduct of primary societies carried out at grass-root level by individual weavers at their cottage for which the assessee purchases the yarn and gives it to weavers for weaving and in turn, the assessee gives weaving charges to the weavers through primary society and the whole production process is monitored/ supervised by the assessee. After manufacturing of cloth, the cloth is sold by the assessee. These facts are not in dispute that when the assessee-society has power to direct, supervise and control over the manufacturing of cloth through the primary societies which are the members of assessee-society.Members of primary society run cottage industries in their houses. In these circumstances, it cannot be said that assessee company (sic-society) is not engaged in the manufacturing activities carried on by the weavers. The weavers get the raw material i.e., yarn through their primary society, but thereafter weaving charges are paid by the assessee and it purchases those cloths through primary societies. When this society has full control over the manufacturing activities of weavers, the assesseesociety is engaged in the cottage industry. When the assessee is engaged in the cottage industry though through primary society, the benefit cannot be denied considering the scheme of the Act and object of the provision to be achieved to give benefit to the weavers and to encourage such societies for the benefit of the weavers. In the result, we find no force in this appeal. Consequently, the appeal is dismissed.
[Citation : 258 ITR 88]
