Madras High Court
M/S.The Salem District Co-Op. Milk vs The Commissioner Of Income Tax on 2 December, 2022
Author: C.Saravanan
Bench: C.Saravanan
1 TCA.Nos.2128 to 2131 of 2008 & 327 of 2010
IN THE HIGH COURT OF JUDICATURE AT MADRAS
RESERVED ON : 01.12.2022
PRONOUNCED ON : 02.12.2022
CORAM
THE HON'BLE MR. JUSTICE VAIDYANATHAN
and
THE HON'BLE MR. JUSTICE C.SARAVANAN
T.C.A.Nos.2128 TO 2131 OF 2008
& 327 OF 2010
M/s.The Salem District Co-op. Milk
Producers Union Ltd.
Thalavaipatty P.O. Sithanur,
Salem 636 302. .. Appellant in all W.Ps.
vs
The Commissioner of Income Tax,
Salem. ... Respondent in all W.Ps.
Prayer in TCA.Nos.2128 to 2131 of 2008: Tax Case Appeals filed
under Section 260-A of the Income Tax Act, 1961, against the common
order of the Income Tax Appellate Tribunal, Chennai 'D' Bench, dated
30.06.2008 passed in I.T.A.Nos.2200 to 2203/Mds/06
Prayer in TCA.No.327 of 2010: Tax Case Appeal filed under Section
https://www.mhc.tn.gov.in/judis
260-A of the Income Tax Act, 1961, against the order of the Income Tax
2 TCA.Nos.2128 to 2131 of 2008 & 327 of 2010
Appellate Tribunal, Chennai 'D' Bench, dated 10.07.2009 passed in
I.T.A.No.32/Mds/09.
In all cases
For Appellant : Mr.R.Janakiraman
For Respondent : M/s.V.Puspha
Standing Counsel.
COMMON JUDGMENT
VAIDYANATHAN,J AND C.SARAVANAN,J By this Common order, all the five Tax Case Appeals are being disposed .
2. The appellant has filed these appeals against the impugned common order(s) dated 30.06.2008 and dated 10.07.2009 passed by the Income Tax Appellate Tribunal [Appellate Tribunal for brevity] in I.T.A.Nos.2200 to 2203/Mds/2006 and I.T.A.No.32/Mds/2009 respectively.
https://www.mhc.tn.gov.in/judis 3 TCA.Nos.2128 to 2131 of 2008 & 327 of 2010
3. By the impugned order dated 30.06.2008, the Appellate Tribunal has allowed the I.T.A.Nos.2200 to 2203 /Mds/2006 filed by the Income Tax Department against Order dated 28.6.2006 by the Commissioner of Income Tax (Appeals) [Appellate Commissioner for brevity].
4. By order dated 10.07.2009 in I.T.A.No.32/Mds/2009 (impugned in TCA.No.327 of 2000), the Appellate Tribunal followed its earlier order dated 30.06.2008 in I.T.A.Nos.2200 to 2203 /Mds/2006 (impugned in T.C.A.Nos.2128 to 2131 of 2008) and dismissed the Appellant’s aforesaid appeal against Order dated 25.11.2008 in I.T.A. No.228/06-07 passed by the Appellate Commissioner.
5. Operative portion of the impugned common order dated 30.06.2008 of the Appellate Tribunal reads as under:-
10. Therefore, it is very important to examine whether the assessee society is a primary society or not. The CIT (Appeals) has made an observation in his order that the Section does not defined a co-operative society and a primary society. But, the Andhra Pradesh High Court in the case of CIT v. Mulkanoor Co-operative Rural https://www.mhc.tn.gov.in/judis Bank Ltd., (1988) 173 ITR 628 (AP) , while 4 TCA.Nos.2128 to 2131 of 2008 & 327 of 2010 considering the case of exemption in the case of agricultural produce marketed by co-operative society, had held that the agricultural produce marketed by society should belong at all points of time to the agriculturists. It means a primary co-operative society is considered to be a society where the activities are channelized at a primary level. As far as supplying of milk is concerned, the milk is supplied at the primary level by individual farmers to the local primary milk societies. The District societies like the assessee collect the milk from those primary societies at village or taluk level and thereafter process the milk and pass on to the affiliated federal societies. Therefore, the assessee is one step higher to primary co-operative societies. Strictly speaking, under the scheme argued by the Id.
Chartered Accountant, there are two level of federal societies – the first level federal societies are at State/Zonal level. The only difference is that the area of operation of the State federal society/Zonal federal society is much wider than the District federal society. But for this difference in the extent of area of operation, the District Co-operative Milk Producers Union Ltd. Like the assessee is a federal co-operative society and not a primary co-operative society.
11. The Supreme Court in the case of Assam Co- operative Apex Marketing Society Ltd. V. (Addl.) (1993) 201 ITR 339(SC) had considered an analogous issue. In that case, the assessee, a registered co-operative society at the apex, was appointed as procuring agent for paddy by the Assam Government. The members of the appellant were primary marketing societies. Village service co-operative societies were https://www.mhc.tn.gov.in/judis members of the primary marketing societies, and 5 TCA.Nos.2128 to 2131 of 2008 & 327 of 2010 only the members of the village societies were agriculturists who produced agricultural produce. No Agriculturist who produced agricultural produce was a member of the appellant. The reason being it was an apex society. The village societies procured the agricultural produce of its members at the prescribed price and made it over to the primary marketing societies and these societies made the appellant society as an apex society. While considering the question of exemption under Section 81(1)(c), the Court held that the intention behind the provision was to encourage basic level societies their members and those engaged in purchasing and supplying agricultural implements, seeds etc to their members and so on. The words “ agricultural produce of its members” must be understood consistent with this object. If it is not so understood, even a co-operative society comprising traders dealing in agricultural produce would become entitled to the exemption which could never have been the intention of Parliament.
12. The above decision underlines the basic character of a primary society where the members are the persons who are directly producing agricultural and similar products. In the present case, it is the village level primary societies which are collecting milk produced by its member-farmers. Those societies are supplying milk to federal societies like the assessee. The assessee thereafter supplies milk to State apex society.
13. In this context, it is also to be noticed that where the primary societies are supplying milk alone, the District Co-operative Societies like the https://www.mhc.tn.gov.in/judis assessee are supplying not only milk but also its 6 TCA.Nos.2128 to 2131 of 2008 & 327 of 2010 by-products. This is because District Unions like the assessee are running milk processing plants and in processing the milk produces, by-products such as butter, ghee, etc., and also different grades of milk like full cream milk, toned milk, skimmed milk etc. Therefore, at the level of District Unions like the assessee, there is not only an activity of collecting and supplying of milk but also the activity of processing the milk.
14. As already stated, the specific expression used in Section 80P(2)(b) “ being a primary society engaged in supplying the milk”, the processing activities carried on by the assessee does not match with the declared intent of the law.
15.As argued by the Id. Chartered Accountant appearing for the assessee, we do agree that the courts have held that the provisions of exemption applicable to the co-operative societies must be construed liberally. But, that does not mean that the interpretation could overstep the clear and specific meaning provided in the language of the statute. The law has consciously used certain terms in the body of Section 80P. In respect of items covered by clause(a) of sub-section(2), as already stated , the status of the assessee needs to be a co-operative society. This is the case with clauses(c), (d) and (f). But, in respect of assessee falling under clause (b), the law has purposefully stated that the status of the co-operative society shall be a primary society. In the case of supplying milk, the assessee must be a co- operative society being a primary society engaged in supplying milk. The members of the assessee society are not the farmers who are producing milk. The members of the assessee https://www.mhc.tn.gov.in/judis society are the primary milk societies who alone 7 TCA.Nos.2128 to 2131 of 2008 & 327 of 2010 collect the milk directly from the producers and supplying to the District Societies like the assessee. Therefore, even in a distant dream it is not possible to hold that the assessee is a primary society engaged in supplying the milk. As already stated, the assessee is standing one step higher to primary society engaged in supplying milk
16. In the facts and circumstances of the case, we hold that the assessee is not entitled for deduction provided under Section 80P.
17. Therefore, the order of the CIT (Appeals) in this regard is set aside. The order of the Assessing Authority is restored.
18. In the result, all the four appeals filed by the Revenue are allowed.”
6. The dispute in these appeals pertain to claim of the appellant for deduction under Section 80P(2)(b)(i) of the Income Tax Act, 1961 which has been denied to it.
7. Following substantial questions of law were framed for being answered in these appeals:-
i) Whether on the facts and in the circumstances of the case the Tribunal was justified in holding that the assessee is not entitled to deduction under Section 80P(2)(b)(i) in respect of milk procured from member-village societies and marked to the federal Society?
https://www.mhc.tn.gov.in/judis 8 TCA.Nos.2128 to 2131 of 2008 & 327 of 2010
ii) Whether the Tribunal was right in following 201 ITR 338 which was reconsidered by the Apex Court in 231 ITR 814 laying down the ratio decidendi that the exemption under Section 80 P is available to the society engaged in the marketing of agricultural produce of its members would mean not only such societies which deal with the produce raised by the members who are individuals or societies which are members thereof who may purchased such goods from the agriculturists?
iii) Whether on the facts and circumstances of the case, the Tribunal was right in not holding the issue of reopening of assessment when it had decided the issue on merits against the assessee and especially when the CIT (A) has held the question of reopening as redundant after having decided on merits in favour of the assessee?
iv) Whether the Tribunal ought to have applied the Supreme Court decision in 41 ITR 191 and 264 ITR 566 and held that the issue of notice and the assessment under Section 147 are bad in law in as much as it was based on a mere change of opinion and hence unsustainable in law?”
8. Earlier, the appellant suffered adverse Assessment Orders in the hands of the Assessing Officer. The Appellate Commissioner vide Common Order dated 28.3.2003 allowed I.T.A.Nos.219-20/02-03 filed by the Appellant.
https://www.mhc.tn.gov.in/judis 9 TCA.Nos.2128 to 2131 of 2008 & 327 of 2010
9. By a Common Order dated 20.1.2005 the Appellate Tribunal in I.T.A.Nos.1013-15 and 1326 /Mds/2003 and Cross Objection Nos.29 to 31 and 33/Mds/2004, has set aside Common Order dated 28.2.2003 of the Appellate Commissioner and remanded the cases back to the Appellate Commissioner to pass a fresh order on merits.
10. Pursuant to the aforesaid remand order dated 20.1.2005 of the Appellate Tribunal, the Appellate Commissioner passed a fresh order dated 28.8.2006.
11. The appeals were renumbered as I.T.A.No.305,306,307 & 308 of 05-06 in the remand proceeding. Vide order dated 28.8.2006, the Appellate Commissioner once again allowed the appeal of the appellant and directed the Assessing Officer to allow the exemption to the appellant under Section 80P(2)(b)(i) of the Income Tax Act,1961.
12. Details of the respective assessment orders which led to the adverse orders being in the respective appeals are as under:-
https://www.mhc.tn.gov.in/judis 10 TCA.Nos.2128 to 2131 of 2008 & 327 of 2010 T.C.A.No. Assessment Date of of ITA.No. ITA.No. ITA.No. ITA.No. Assessme Year. (Commissioner (Income (Commissioner Income Tax nt of Tax Order of of Income Appellate Appellate Income Tax Tribunal)/ Tax Tribunal/ (Appeals)/ (Appeals)/ dated dated dated 2128/2008 1989-90 28.03.2002 219 to 221/02- 1013 to 305 to 308/05 2200 to 03 /28.02.03 1015 & 2203/
-06.
1326/Mds/ Mds/06.
dt.28.8.06
2003/20.01. Dt.30.06.08
05
2129/2008 1992-93 28.03.2002 219 to 221/02 1013 to 305 to 308/05 2200 to
1015 & 2203/
-03 /28.02.03 -06
1326/Mds/
Mds/06
dt.28.8.06
2003/20.01.
Dt.30.06.08
05
2130/2008 1993-94 28.03.2002 219 to 221/02 1013 to 305 to 308/05 2200 to
1015 & 2203/
-03 /28.02.03 -06
1326/Mds/
Mds/06
dt.28.8.06
2003/20.01.
Dt.30.06.08
05
2131/2008 1997-98 16.02.2000 5/2000-01 1013 to 305 to 308/05 2200 to
1015 & 2203/
dt.02.04.03 -06
1326/Mds/
Mds/06
dt.28.8.06
2003/20.01. Dt.30.06.08
05
327/2010 2004-05 30.11.2006 228/06-07 32/Mds/09 Nil Nil
Dt.25.11.2008 Dt.10.07.09
13. The learned counsel for the appellant submits that the assessing officer examined the claim of deduction under Section 80P92)(b) and accepted the claim of appellant. For the Assessment https://www.mhc.tn.gov.in/judis 11 TCA.Nos.2128 to 2131 of 2008 & 327 of 2010 Years 1992-93 and 1993-94, the assessing officer issued notices under Section 148 of the Act for reopening the assessment. In the assessment order for 1989-90, it was held that the appellant had made incorrect claim under Section 80P(2)(b)(i) to the tune of Rs.18,32,843/-. Therefore, the appellant is not entitled to deduction under Section 80P(2)(b)(i).
14. The learned counsel for the appellant further submits that there was no failure on the part of the appellant to disclose the material facts necessary for assessment. The details regarding the claim of deduction were available in the return of income filed and the annexures.
15. It is submitted that the assessing officer had come to conclusion that the appellant is entitled to the deduction , which was also granted in the earlier assessment years. Therefore, in violation of the provision to Section 147 of the Act for reopening the assessment beyond the period of 4 years from the end of the relevant assessment was barred by limitation.
16. It is further submitted that the assessing officer has no jurisdiction to issue notice under Section 148 of the Act, when the https://www.mhc.tn.gov.in/judis 12 TCA.Nos.2128 to 2131 of 2008 & 327 of 2010 original assessment was completed under Section 143(3) in absence of fresh material that was not disclosed by the appellant at the time of assessment for issuance of notice under Section 148 of the Act for reopening after the period of four years.
17. Learned counsel for the appellant further submitted that the Income Tax Appellate Tribunal has wrongly concluded that the appellant is not a “primary society” carrying on the activity of supply of milk to a federal society. On the contrary, it is submitted that as per the G.O.Ms.No.555, dated 21.3.1980 issued by the Tamil Nadu State Government , that the appellant is a Union of producers’ Societies at the District level. Therefore, the appellant was a “primary society” engaged in the supply of milk to the federal society. Hence, he prayed for allowing these appeals.
18. It is submitted that the decision of the Hon’ble Supreme Court in Assam Co-operative Apex Marketing Society Limited vs. Commissioner of Income Tax ( Additional), 1993(2) TMI 8 is not relevant in the facts of the case.
https://www.mhc.tn.gov.in/judis 13 TCA.Nos.2128 to 2131 of 2008 & 327 of 2010
19. In connection with the case, the learned counsel for the appellant has relied on the following decisions:-
“i) Parashuram Pottery Works Co., Limited vs. Income Tax Officer, Circle I, Ward A, Rajkot, 1976(11) TMI 1;
ii) Commissioner of Income Tax, Delhi vs. M/s.Kelvinator of India Limited, 2010(1) TMI 11;
iii) Viren Sureshchandra Shah vs. Assistant Commissioner of Income Tax Circle 1(1)(2) & 1, 2015(5) TMI 1085;
iv) Commissioner of Income Tax, Trichy vs. City Union Bank ltd., 2019(5) TMI 1206;
v) Kerala State Co-operative Marketing Federation Ltd., and Others vs. Commissioner of Income Tax ( and other cases), 1998 (5) TMI 6
vi) Assam Co-operative Apex Marketing Society Limited vs. Commissioner of Income Tax ( Additional), 1993(2) TMI”.
20. The learned counsel for the respondent submits that all the Unions in the State form a co-operative federation at the State level (State Dairy Development Co-operative Federation). Federation appointed the Chief Executive Officer to every union, who administers and runs the day to day activities of the Union.
https://www.mhc.tn.gov.in/judis 14 TCA.Nos.2128 to 2131 of 2008 & 327 of 2010
21. The learned counsel for the respondent submit that the Federation in turn supplied all the inputs to the Union, markets the produce for all the Unions, collects the money and gives it to the Union of onward transmission to the Primary Societies. Hence, the intermediary Union is nothing but the extension of the federation Apex body as the entire functioning of the Union is by the federation.
22. Learned counsel for the respondent further submitted that in the present case, the milk was being supplied to the federal society is actually by the producer society at village level which is a primary society consisting of milk producers who are its members.
23. It was submitted that the appellant was in the middle rung in the three tier system i.e. Village Level, District Level and State Level.
As per the details provided by the Tamil Nadu Dairy Development department, the three tier structure or dairy co-operatives, the tier 2 district level is stated as “The District Co-operative Milk Producers Unions (DCMPU)” are the intermediary Societies at District Level and the Village Level MPCS functioning in the jurisdiction of the respective unions.
https://www.mhc.tn.gov.in/judis 15 TCA.Nos.2128 to 2131 of 2008 & 327 of 2010
24. Learned counsel for the respondent further submitted that only a primary society engaged in supplying milk by its members is entitled for the deduction provided under Section 80P(2)(b)(i) and not the member society as is the case of the appellant which is a Union of Primary Society. It is submitted that the appellant did not produce the bye laws before any authority of Tribunal or even before this Court to show who is eligible to be the members. Rather the appellant has produced the G.O which shows that the District Union is a Co-operative Union of its members being “ primary producers society” and not producers directly.
25. Learned counsel for the respondent further submitted that the Commissioner of Income Tax Appeal passed vide its common order dated 20.01.2005 on merits only without passing any orders on the reopening of the assessment under Section 147 of the Act. It is clear that there was no failure on the part of the appellant to disclose the material facts necessary for assessment. The details regarding the claim of deduction were available in the turn of income filed and the annexures.
https://www.mhc.tn.gov.in/judis 16 TCA.Nos.2128 to 2131 of 2008 & 327 of 2010
26. On the issue of reopening of assessment, the Commissioner of Income Tax Appeal held that since exemption is restored to the appellant, no substantive grievance of the appellant remains and hence the ground of appeal for the Assessment Years 1989-9-, 1992-93 & 1993-94 is considered redundant and is liable to be dismissed. For the Assessment Year 1997-98, this ground was not raised.
27. Learned counsel for the respondent further submitted that the order of the Commissioner of Income Tax Appeal dated 28.08.2006 , it has clearly stated that the Chartered Accountant appearing for the appellant society defended the order of the Commissioner of Income Tax Appeal and did not raise any dispute as regards the dismissal of the ground of reopening.
28. It is therefore submitted that the appellant is not entitled to raise the ground which has already been decided and accepted by the appellant, in the subsequent proceedings. Hence, he prayed for dismissal of these appeals.
https://www.mhc.tn.gov.in/judis 17 TCA.Nos.2128 to 2131 of 2008 & 327 of 2010
29. We have considered the arguments advanced by the learned counsel for the appellant and the learned counsel for the respondent.
Though the Court has admitted these appeals on the above substantial questions of law which we have extracted, we are of the view that the only substantial questions of law which arises for consideration in the facts of the present case is whether the appellant was a “primary society” or not for the purpose of Section 80 P(2)(b)(i) of the Income Tax Act, 1961? Certain deductions are available.
30. It will be useful to refer to Section 80 P of the Income Tax Act, 1961. It reads as under:-
SECTION 80P: DEDUCTION IN RESPECT OF INCOME OF CO-
OPERATIVE SOCIETIES.— (1) Where, in the case of an assessee being a co-
operative society, the gross total income includes any income referred to in subsection (2), there shall be deducted, in accordance with and subject to the provisions of this section, the sums specified in sub- section (2), in computing the total income of the assessee.
(2) The sums referred to in sub-section (1) shall be the following, namely:—
(a) in the case of a co-operative society engaged in—
i) carrying on the business of banking or providing credit facilities to its https://www.mhc.tn.gov.in/judis members, or 18 TCA.Nos.2128 to 2131 of 2008 & 327 of 2010
ii) a cottage industry, or
iii) the marketing of agricultural produce grown by its members, or]
iv) the purchase of agricultural implements, seeds, livestock or other articles intended for agriculture for the purpose of supplying them to its members, or
v) the processing, without the aid of power, of the agricultural produce of its members, or 2
vi) the collective disposal of the labour of its members, or
vii) fishing or allied activities, that is to say, the catching, curing, processing, preserving, storing or marketing of fish or the purchase of materials and equipment in connection therewith for the purpose of supplying them to its members,] the whole of the amount of profits and gains of business attributable to any one or more of such activities:
Provided that in the case of a co-operative society falling under sub-clause (vi), or sub-clause (vii), the rules and bye-laws of the society restrict the voting rights to the following classes of its members, namely:— (1) the individuals who contribute their labour or, as the case may be, carry on the fishing or allied activities;
(2) the co-operative credit societies which provide financial assistance to the society;
(3) the State Government;]
(b)in the case of a co-operative society, being https://www.mhc.tn.gov.in/judis a primary society engaged in supplying milk, 19 TCA.Nos.2128 to 2131 of 2008 & 327 of 2010 oilseeds, fruits or vegetables raised or grown by its members to—
(i) a federal co-operative society, being a society engaged in the business of supplying milk, oilseeds, fruits, or vegetables, as the case may be; or
(ii) the Government or a local authority; or
(iii) a Government company as defined in section 617 of the Companies Act, 1956 (1 of 1956), or a corporation established by or under a Central, State or Provincial Act (being a company or corporation engaged in supplying milk, oilseeds, fruits or vegetables, as the case may be, to the public), the whole of the amount of profits and gains of such business;]
(c) in the case of a co-operative society engaged in activities other than those specified in clause
(a) or clause (b) (either independently of, or in addition to, all or any of the activities so specified), 4 [so much of its profits and gains attributable to such activities as does not exceed, —
(i) where such co-operative society is a consumers‘ co-operative society, 1 [one hundred thousand rupees]; and
(ii) in any other case, 2 [fifty thousand rupees].
Explanation.—In this clause, -consumers‘ co- operative society? means a society for the benefit of the consumers;]
(d) in respect of any income by way of interest or dividends derived by the co-operative society from its investments with any other co- https://www.mhc.tn.gov.in/judis operative society, the whole of such income;
20 TCA.Nos.2128 to 2131 of 2008 & 327 of 2010(e) in respect of any income derived by the co- operative society from the letting of godowns or warehouses for storage, processing or facilitating the marketing of commodities, the whole of such income;
(f) In the case of a co-operative society, not being a housing society or an urban consumers‘ society or a society carrying on transport business or a society engaged in the performance of any manufacturing operations with the aid of power, where the gross total income does not exceed twenty thousand rupees, the amount of any income by way of interest on securities 3 *** or any income from house property chargeable under section 22. Explanation.—For the purposes of this section, an -urban consumers‘ co-
operative society? means a society for the benefit of the consumers within the limits of a municipal corporation, municipality, municipal committee, notified area committee, town area or cantonment.
3) In a case where the assessee is entitled also to the deduction under 4 [ 5 *** 6 [section 80HH or section 80HHA] 7 [or section 80HHB 8 [or section 80HHC 9 [or section 80HHD]]] 10[or section 80-I] 11[or section 80-IA]] 12*** 13***], the deduction under sub-section (1) of this section, in relation to the sums specified in clause (a) or clause (b) or clause
(c) of sub-section (2), shall be allowed with reference to the income, if any, as referred to in those clauses included in the gross total income as reduced by the 14[deductions under 15[section 80HH, 16[section HHA, 17[section 80HHB, section HHC, 18[section 80HHD], section 80-I, 19[section 80-IA], 20[section 80J and section 80JJ]]] https://www.mhc.tn.gov.in/judis [(4) The provisions of this section shall not 21 TCA.Nos.2128 to 2131 of 2008 & 327 of 2010 apply in relation to any co-operative bank other than a primary agricultural credit society or a primary co-operative agricultural and rural development bank.
Explanation.—For the purposes of this sub- section,—
(a)-co-operative bank and -primary agricultural credit society shall have the meanings respectively assigned to them in Part V of the Banking Regulation Act, 1949 (10 of 1949);
(b) -primary co-operative agricultural and rural development bank means a society having its area of operation confined to a taluk and the principal object of which is to provide for long-
term credit for agricultural and rural development activities.]
31. To be eligible for deduction under the above provision, the petitioner should be a “Primary Society”. The expression “registered society” has been defined in Section 2(22) of the Tamil Nadu Co-
operative Societies Act, 1983 as follows:-
(22) “Registered Society” means a co-operative society registered or deemed to be registered under this Act.”
32. There is no dispute that the petitioner is a Co-operative society registered under the provisions of the Tamil Nadu Co-operative Societies Act, 1983.
https://www.mhc.tn.gov.in/judis 22 TCA.Nos.2128 to 2131 of 2008 & 327 of 2010
33. The expression “Primary Society” has not been defined in the Income Tax Act, 1961. Only expression - primary co-operative agricultural and rural development bank has been defined. The expression “ Primary Society” has not been defined in the Income Tax Act, 1961.
34. The expression “Primary Society” has been defined in Section 2(21) of the Tamil Nadu Co-operative Societies Act, 1983. Section 2(21) of the Tamil Nadu Co-operative Societies Act, 1983, defines the expression “ Primary Society” as follows:-
Section 2(21): “Primary Society” means a registered society, but does not include-
i. An apex society; or ii. a central society
35. The expression “Apex Society” and “Primary Society” has been defined Tamil Nadu Co-operative Societies Act, 1983 as follows:-
Section 2(5) Section 2(9) “Apex Society” means (a State (9) "central society" means a level registered society) whose registered society whose area https://www.mhc.tn.gov.in/judis 23 TCA.Nos.2128 to 2131 of 2008 & 327 of 2010 Section 2(5) Section 2(9) area of operation extends to the of operation is confined to a whole of the State of Tamil part of the State of Tamil Nadu Nadu and which has as its and which has as its principal principal object, the promotion object, the promotion of the of the principal objects of, and principal objects of, and the the provision of facilities for the provisions of facilities for the operations of, other registered operations of, other registered societies affiliated to it and societies affiliated to it and classified as an apex society by classified as a central society the Registrar; by the Registrar and includes any registered society notified by the Government as a Ccntral society.
36. Thus, only if the appellant is neither an “Apex Society” or a “Central Society”, as defined above, it will not be entitled to the benefit of the deduction under Section 80 P(2)(b)(i) of the Income Tax Act, 1961.
37. There is no discussion as to whether the petitioner is an “Apex Society” or a “Central Society”. Instead, the case was argued on the strength of the G.O.Ms. No.555 dated 21.3.1980.
38. Neither the Assessing Officer, nor the Appellate Commissioner or the Appellate Tribunal have examined the status of the appellant from https://www.mhc.tn.gov.in/judis 24 TCA.Nos.2128 to 2131 of 2008 & 327 of 2010 the point of the view of the definition of a “Primary Society” in Section 2(21) of the Tamil Nadu Co-operative Societies Act, 1983.
39. Since the issue as to whether the appellant is an “Apex Society” or a “Central Society” or not has not been examined by any of the lower authority, viz the Assessing Officer, Appellate Commissioner or the Appellate Tribunal, we are forced to interfere with the impugned orders.
40. We are therefore of the view, the impugned common order order dated 30.06.2008 in I.T.A.Nos.2200 to 2203/Mds/2006 and order dated 20.01.2005 in. I.T.No.32/Mds/2009 passed by the Income Tax Appellate Tribunal have to be set aside and the cases be remitted back to the Assessing Officer for reexamine the issue as to whether the appellant would be “Primary Society” or whether the appellant was an an “Apex Society” or a “Central Society” or not.
41. We, therefore remit the case back to the Assessing Officer to re-examine the issue in the light of the definition of the Tamil Nadu Co-
operative Societies Act, 1989 and to pass a afresh order in the light of the https://www.mhc.tn.gov.in/judis 25 TCA.Nos.2128 to 2131 of 2008 & 327 of 2010 definition contained in the Tamil Nadu Co-operative Societies Act, 1989, within a period of six months from the date of receipt of a copy of this order by the Assessing Officer. The appellant shall produce documents to substantiate its status before the Assessing Officer.
42. These Income Tax Appeals are disposed with the above observations. No costs.
(S.V.N.,J.) (C.S.N.,J.)
02.12.2022
Index : Yes/No
Internet : Yes/No
Speaking : Non-speaking order
kkd
To
1. The Commissioner of Income Tax,
Salem.
2. The Income Tax Appellate Tribunal, Chennai 'D' Bench.
https://www.mhc.tn.gov.in/judis 26 TCA.Nos.2128 to 2131 of 2008 & 327 of 2010 S.VAIDYANATHAN,J.
and C.SARAVANAN,J.
kkd Pre-delivery Common Judgment in TCA.Nos.2128 to 2131 of 2008 & 327 of 2010 02.12.2022 https://www.mhc.tn.gov.in/judis