Kerala High Court
M/S.Hosdurg Range Kallu Chethu ... vs The Commissioner Of Income Tax on 23 November, 2021
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR.JUSTICE S.V.BHATTI
&
THE HONOURABLE MR.JUSTICE BASANT BALAJI
TUESDAY, THE 23RD DAY OF NOVEMBER 2021 / 2ND AGRAHAYANA, 1943
ITA NO. 57 OF 2019
AGAINST THE ORDER IN ITA 267/2015 OF I.T.A.TRIBUNAL,COCHIN BENCH,
ERNAKULAM
APPELLANT/S:
M/S.HOSDURG RANGE KALLU CHETHU THOZHILALI VYAVASAYA
SAHAKARANA SANGHAM,
KOTTACHERY, KANHANGAD, KASARAGOD DISTRICT - 671 315.
BY ADVS.
S.ARUN RAJ
SMT.C.T.SUJA
RESPONDENT/S:
THE COMMISSIONER OF INCOME TAX,
AAYAKAR BHAVAN, MANANCHIRA, CALICUT - 673 001.
OTHER PRESENT:
SC CHRISTOPHER ABRAHAM
THIS INCOME TAX APPEAL HAVING COME UP FOR HEARING ON 23.11.2021,
ALONG WITH ITA.58/2019, 44/2019, THE COURT ON THE SAME DAY DELIVERED
THE FOLLOWING:
I.T.A. No.57, 44 & 58/2019
-2-
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR.JUSTICE S.V.BHATTI
&
THE HONOURABLE MR.JUSTICE BASANT BALAJI
TUESDAY, THE 23RD DAY OF NOVEMBER 2021 / 2ND AGRAHAYANA, 1943
ITA NO. 58 OF 2019
AGAINST THE ORDER IN ITA 266/2015 OF I.T.A.TRIBUNAL,COCHIN BENCH,
ERNAKULAM
APPELLANT/S:
M/S.HOSDURG RANGE KALLU CHETHU THOZHILALI VYAVASAYA
SAHAKARANA SANGHAM,
KOTTACHERY, KANHANGAD, KASARAGOD DISTRICT - 671 315.
BY ADVS.
S.ARUN RAJ
SMT.C.T.SUJA
RESPONDENT/S:
THE COMMISSIONER OF INCOME TAX,
AAYAKAR BHAVAN, MANANCHIRA, CALICUT -673 001.
SC CHRISTOPHER ABRAHAM
THIS INCOME TAX APPEAL HAVING COME UP FOR HEARING ON 23.11.2021,
ALONG WITH ITA.57/2019 AND CONNECTED CASES, THE COURT ON THE SAME DAY
DELIVERED THE FOLLOWING:
I.T.A. No.57, 44 & 58/2019
-3-
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR.JUSTICE S.V.BHATTI
&
THE HONOURABLE MR.JUSTICE BASANT BALAJI
TUESDAY, THE 23RD DAY OF NOVEMBER 2021 / 2ND AGRAHAYANA, 1943
ITA NO. 44 OF 2019
AGAINST THE ORDER IN ITA 265/2015 OF I.T.A.TRIBUNAL,COCHIN BENCH,
ERNAKULAM
APPELLANT/S:
M/S.HOSDURG RANGE KALLU CHETHU THOZHILALI VYAVASAYA
SAHAKARANA SANGHAM
KOTTACHERY, KANHANGAD, KASARAGOD DISTRICT.
BY ADVS.
S.ARUN RAJ
SMT.C.T.SUJA
RESPONDENT/S:
THE COMMISSIONER OF INCOME TAX,
AAYAKAR BHAVAN, MANANCHIRA, CALICUT- 673001.
SC CHRISTOPHER ABRAHAM
THIS INCOME TAX APPEAL HAVING COME UP FOR HEARING ON 23.11.2021,
ALONG WITH ITA.57/2019 AND CONNECTED CASES, THE COURT ON THE SAME DAY
DELIVERED THE FOLLOWING:
I.T.A. No.57, 44 & 58/2019
-4-
JUDGMENT
[ITA Nos.57/2019, 58/2019, 44/2019]
S.V.Bhatti, J.
Heard learned Advocate Mr Arun Raj S for appellant and
learned Standing Counsel Mr Christopher Abraham for
respondent.
2. M/s. Hosdurg Range Kallu Chethu Thozhilali
Vyavasaya Sahakarana Sangham/assessee is the appellant.
Commissioner of Income Tax, Calicut/Revenue is the
respondent. The details of orders from which respective
appeals arise are stated in the following tabular statement:
I.T.A. No.57, 44 & 58/2019
Sl. Assessment Year & Order of Commissioner of Income Tax ITA No.
No. Date of Assessment Income Tax (Appeals) Appellate Tribunal
Order
1 2009-10; ITA ITA 44/2019
dtd.28.03.2013 NO.101/KSD/CIT/CLT/2013-14 NO.265/COCH/2015
DT.16.02.2015 DTD 26.09.2017
2 2011-12; ITA ITA 57/2019
dtd.19.02.2014 NO.367/KSD/CIT/CLT/2013-14 NO.267/COCH/2015
DT.16.02.2015 DTD 26.09.2017
3 2010-11; ITA ITA 58/2019
dtd.08.03.2013 NO.71/KSD/CIT/CLT/2013-14 NO.266/COCH/2015
DT.16.02.2015 DTD 26.09.2017
2. The assessee is a registered Co-operative Society
formed in the year 2001. The Society is formed for enabling
financial and social welfare of toddy tappers/workers; for
tapping and selling toddy within Hosdurg jurisdiction. The
assessee claimed exemption under Section 80P(2)(a)(vi) of the
Act.
2.1 ITA No.44/2019 is treated as representative appeal
for considering and disposing of the substantial questions
raised by the assessee in the set of appeals since the question
I.T.A. No.57, 44 & 58/2019
are same. The issues for adjudication substantially arise under
Section 80P(2) of the Income Tax Act 1961 (for short 'the Act').
I.T.A. No.44/2019
3. Substantial question nos.1 and 2 read thus:
"1. Whether, on the facts and in the circumstances of the case,
the Tribunal is right in holding that the appellant society
cannot be considered as Co operative Societies engaged in the
collective disposal of labour of its 2016 members as
contemplated under section 80P(2) (a) (vi) of the Act and
therefore not eligible for deduction under section 80 P of the
Act.? Is not such a finding of the Tribunal illegal, arbitrary and
perverse?
2. Whether the Tribunal is right in law and facts of the case in
upholding the finding of the assessing officer/contention of the
revenue that the appellant society having granted registration
under the Kerala Co-operative Societies Act, 1969 and the Rules
as a "Miscellaneous Society" and therefore assessee cannot be
treated as a society engaged in collective disposal of labour of
its members and therefore is not eligible/entitled for the
deduction under Section 80P(2)(a)(vi) of the Act?"
I.T.A. No.57, 44 & 58/2019
3.1 The learned Counsel appearing for the assessee and
the Revenue state that the questions are concluded by the
judgment in Peravoor Range Kallu Chethu Vyavasaya Thozhilali
Sahakarana Sangham v. Commissioner of Income Tax1.
3.2 The statement is placed on record, accepted and
accordingly by following the principle laid down in Peravoor
Range Kallu Chethu Vyavasaya Thozhilali Sahakarana Sangham case
the questions are answered in favour of the Revenue and
against the assessee.
Substantial Question No.3
4. Substantial question no.3 is framed as follows:
3. Whether the Tribunal was right in law and facts of the case in
not considering the issue of eligibility of the appellant for
deduction under section 80 P (2) (a) (iii) of the Act?
4.1 Reference to Section 80P(2)(a)(iii) of the Act would be
useful and reads thus:
1 [2016] 380 ITR 34 (Ker.)
I.T.A. No.57, 44 & 58/2019
"80P. (1) Where, in the case of an assessee being a co-operative
society, the 57gross total income includes any income referred
to in sub-section (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 -
xxx xxx xxx
(iii) the marketing of agricultural produce grown by its
members,
xxx xxx xxx"
4.2 A Division Bench of High Court of Telangana and
Andhra Pradesh in Vavveru Co-operative Rural Bank Ltd v. Chief
Commissioner of Income Tax2, has succinctly tabulated the
Societies and the benefits to which each one of the category of
Societies is entitled to, would be benefiting in our narrative to
excerpt the relevant portion as under:
2 [2017] 396 ITR 371 (T&AP)
I.T.A. No.57, 44 & 58/2019
"28. We have carefully considered the above submissions. Before
considering the effect of the various decisions cited on both sides,
we think it would be ideal to look at the statutory prescription in
pure and simple form. As we have indicated earlier, Section 80P(2) is
actually divided into six parts, categorised under clauses (a), (b), (c),
(d), (e), and (f). Each one of these clauses deal with different types of
co-operative societies engaged in different types of activities. The
benefit made available to each one of them is also different from the
other. Therefore, it may be useful to present a tabular form, the six
categories of co-operative societies covered by clause (a) to (f) and
the nature and extent of the benefit available to each one of them,
as follows:
Category of Co-Op., Societies covered by Nature and Extent of benefit available
sub-clauses (a) to (f)
(a) (1) Co-operative society carrying on The whole of the amount of profits and
the business of banking or providing gains of business attributable to any one
credit facilities to its members; or more of such activities.
(2) Co-op society engaged in Cottage
Industry;
(3) Co-operative engaged in marketing
of agricultural produce grown by its
members.
(4) Co-operative society engaged in
purchase of agricultural implements,
seeds etc., for the purpose of supplying to
its members;
(5) Co-operative society engaged in
processing of agricultural produce of its
members without the aid of power (6) Co-
operative society engaged in collective
disposal of the labour of its members (7)
Co-operative society engaged in fishing
or allied activities.
I.T.A. No.57, 44 & 58/2019
(b) Primary co-operative society The whole of the amount of profits and
engaged in supplying milk, oil seeds, gains on such business
fruits or vegetables grown by its
members to
1) a federal co-operative society,
engaged in the same business;
2) the Government or a local authority;
3) the Government company or
Corporation engaged in the same
business;
(c) So much of the profits and gains
1) A consumer co-operative society attributable to such activities not
engaged in activities other than those exceeding Rs.100,000/- (one hundred
specified in clause (a) or clause (b) thousand rupees).
either independently of, or in addition
to, all or any of the activities so
specified.
2) Co-operative society other than a So much to these profits and gains
consumer co-operative society engaged attributable to such activities not
in activities other than those specified exceeding Rs.50,000/- (fifty thousand
in clauses (a) and (b). rupees).
(d) Interest or dividends derived by the The whole of such income.
co-operative society from its
investments with any other co-
operative society;
(e) Any income derived by the co- The whole of such income.
operative society from the letting of
godowns or warehouses for storage,
processing or facilitating the marketing
of commodities;
(f) A co-operative society other than The income by way of interest on
1) A housing society; securities and the income from house
2) An urban consumer society; property chargeable under Section 22.
3) A society carrying on transport
business;
4) A society engaged in the performance
of any manufacturing operations with
the aid of power, where the gross total
income does not exceed Rs.20,000/-
(twenty thousand rupees)
I.T.A. No.57, 44 & 58/2019
29. From the Tabular form presented above, it may be clear that the
deductions available under Clauses (a) to (c) are activity-based. The
deduction available under Clauses (d) and (e) are investment-based
and the deduction under Clause (f) is institution-based. To put it
differently,
(A) to be eligible for deduction under Clause (a), the claim should
relate to the profits and gains of business attributable to anyone or
more of the activities listed in Clause (a),
(B) to be eligible for deduction under Clause (b), the society should
be a primary society engaged in supplying milk, oilseeds, fruits, etc.
to named institutions, such as, Government, Local Authority,
Federal Co-operative Society, or Government Company,
(C) to be eligible for deduction under Clause (c), the institution must
be engaged in activities other than those covered by Clauses (a) and
(b) subject to the further condition that such profits and gains
should not exceed a particular limit,
(D) to be eligible for deduction under Clause (d), the income should
be derived from investments with another Co- operative Society,
(E) to be eligible for deduction under Clause (e), the income should
be derived from letting of godowns or warehouses, etc."
4.3 The argument of Mr Arun Raj is that each one of the
seven sub-clauses deals with different criteria and combinations
of computation. Sub-clause (iii) deals with marketing of
I.T.A. No.57, 44 & 58/2019
agricultural produce grown by its members. According to him,
toddy vending by the members of assessee/Society is, for all
purposes, marketing an agricultural produce. Therefore, its
claim for deduction of income earned by the Society under sub-
clause (iii) of Section 80P(2)(a) is a legitimate deduction claimed
by the assessee. The Tribunal has noted the grounds covered by
Section 80P(2)(a)(iii) in its order dated 26.09.2017, but has not
considered or recorded a finding on the entitlement of assessee
in this regard. Trying to impress this Court for availing
deduction as agricultural produce, he invites our attention to
the judgment dated 20.06.2018 of this Court in I.T.A.
No.273/2015; firstly, prays for answering the question in favour
of the assessee and grant deduction under Section 80P(2)(a)(iii).
Alternatively, it is argued that the finding that the Tribunal
being a final Court of fact the questions covered by Section
80P(2)(a)(iii) can be remitted to the Tribunal for consideration
I.T.A. No.57, 44 & 58/2019
and disposal in accordance with law.
5. Mr Christopher Abraham objects to entertaining the
merits on the nature of toddy: whether it is an agricultural
produce or not. For, such an exercise could explore into the
realm of pure and simple facts. So, this Court if is convinced on
the objection of assessee that the Tribunal has not
independently examined the grounds raised under Section
80P(2)(a)(iii), the matter could be remitted to Tribunal for
consideration and disposal afresh. Stated briefly, after taking
note of the consideration by the Tribunal, the learned Standing
Counsel desires this question could be remitted to Tribunal for
consideration and disposal afresh, in accordance with law.
6. We have taken note of the limited submissions made
in this behalf and we are persuaded to accept the second limb of
assessee's argument, namely that the matter needs to be re-
examined by the Tribunal. For, our examining the question of
I.T.A. No.57, 44 & 58/2019
law independently, the possibility of treading into pure and
simple facts cannot be obliterated. Which, for informed reasons
in law, we do not want to undertake.
Therefore, the question is answered, to the extent indicated
above, in favour of the assessee and against the Revenue.
Substantial question no.3 is remitted to Tribunal for
consideration and disposal, in accordance with law.
7. Substantial question nos. 4 and 5 read thus:
"4. Whether, the Tribunal is right in law and facts of the case in
not remanding the matter back to the assessing officer to
consider whether the appellant society falls in any other
category as contemplated under section 80 P(2) (a) and eligible
for deduction under 80 P of the Act.?
5. Whether the Tribunal is right in law and facts and
circumstance of the case in not considering the issue on the
finding of the assessing officer that the bye-laws of the
appellant does not restrict the voting rights and therefore not
eligible for deduction under section 80 P (2) (a) of the Act?.
I.T.A. No.57, 44 & 58/2019
7.1 In our view and also from the tenor of arguments
made in this behalf, this Court records a finding that these
questions may not arise for the view already we have taken on
substantial question no.3.
The questions are not taken up nor any view expressed in
this behalf.
ITA No.57/2019
8. The substantial questions raised read as follows:
1. Whether, on the facts and in the circumstances of the case,
the Tribunal is right in holding that the appellant society
cannot be considered as Co operative Societies engaged in the
collective disposal of labour of its members as contemplated
under section 80P(2) (a) (vi) of the Act and therefore not
eligible for deduction under section 80 P of the Act.? Is not such
a finding of the Tribunal illegal, arbitrary and perverse?
2. Whether the Tribunal is right in law and facts of the case in
upholding the finding of the assessing officer/contention of the
revenue that the appellant society having granted registration
under the Kerala Co-operative Societies Act, 1969 and the Rules
as a "Miscellaneous Society" and therefore assessee cannot be
I.T.A. No.57, 44 & 58/2019
treated as a society engaged in collective disposal of labour of
its members and therefore is not eligible/entitled for the
deduction under section 80 P (2) (a) (vi) of the Act?
3. Whether the Tribunal was right in law and facts of the case
in not considering the issue of eligibility of the appellant for
deduction under section 80 P (2) (a) (iii) of the Act?
4. Whether, the Tribunal is right in law and facts of the case in
not remanding the matter back to the assessing officer to
consider whether the appellant society falls in any other
category as contemplated under section 80 P(2) (a) and eligible
for deduction under 80 P of the Act.?
8.1 Substantial question nos.1 and 2 are similar to
substantial question nos. 1 and 2; substantial question no. 3 is
similar to substantial question no.3; and substantial question
no.4 is similar to substantial question nos.4 and 5 in I.T.A. No.
44/2019.
By adopting the same reasoning these questions are answered
accordingly.
I.T.A. No.57, 44 & 58/2019
I.T.A. No.58/2019
9. The substantial questions raised read as follows:
1. Whether, on the facts and in the circumstances of the case,
the Tribunal is right in holding that the appellant society
cannot be considered as Co operative Societies engaged in the
collective disposal of labour of its members as contemplated
under section 80P(2) (a) (vi) of the Act and therefore not
eligible for deduction under section 80 P of the Act.? Is not such
a finding of the Tribunal illegal, arbitrary and perverse?
2. Whether the Tribunal is right in law and facts of the case in
upholding the finding of the assessing officer/contention of the
revenue that the appellant society having granted registration
under the Kerala Co-operative Societies Act, 1969 and the Rules
as a "Miscellaneous Society" and therefore assessee cannot be
treated as a society engaged in collective disposal of labour of
its members and therefore is not eligible/entitled for the
deduction under section 80 P (2) (a) (vi) of the Act?
3. Whether the Tribunal was right in law and facts of the case
in not considering the issue of eligibility of the appellant for
deduction under section 80 P (2) (a) (iii) of the Act?
4. Whether, the Tribunal is right in law and facts of the case in
not remanding the matter back to the assessing officer to
I.T.A. No.57, 44 & 58/2019
consider whether the appellant society falls in any other
category as contemplated under section 80 P(2) (a) and eligible
for deduction under 80 P of the Act.?
5. Whether the Tribunal is right in law and facts of the case in
not considering the issue of rejection of claim under section 80
P by the Lower authorities as hit by Section 80 A (5) of the Act
as the claim made in a belated return, which issue is now
squarely covered in favour of the asssessee by the of this
Honourble Court in the case of Chirakkal Service Co operative
Bank Ltd. Vs CIT and other connected cases reported in
(2016)384 ITR 490 (Ker).
9.1 Substantial question nos.1 and 2 are similar to
substantial question nos. 1 and 2; substantial question no. 3 is
similar to substantial question no.3; and substantial question
no.4 and 5 are similar to substantial question nos.4 and 5 in
I.T.A. No. 44/2019.
By adopting the same reasoning these questions are answered
accordingly.
I.T.A. No.57, 44 & 58/2019
I.T. Appeal Nos. 44, 57 and 58/2019 are answered
accordingly.
Sd/-
S.V.BHATTI
JUDGE
Sd/-
BASANT BALAJI
JUDGE
jjj
I.T.A. No.57, 44 & 58/2019
APPENDIX OF ITA 57/2019
PETITIONER ANNEXURE
ANNEXURE A A TRUE COPY OF THE ASSESSMENT ORDER DATED
19.02.2014 PASSED BY THE ASSESSING OFFICER FOR THE
AY 2011-12.
ANNEXURE B A TRUE COPY OF ORDER DATED 16.02.2015 PASSED BY
THE COMMISSIONER OF INCOME TAX (APPEALS)-
KOZHIKODE FOR THE AY 2011-12.
ANNEXURE C A TRUE COPY OF THE ORDER DATED 26.09.2017 PASSED
BY THE INCOME TAX APPELLATE TRIBUNAL, COCHIN
BENCH, COCHIN FOR THE AY 2011-12.
I.T.A. No.57, 44 & 58/2019
APPENDIX OF ITA 58/2019
PETITIONER ANNEXURE
ANNEXURE A A TRUE COPY OF THE ASSESSMENT ORDER DATED
8/3/2018 PASSED BY THE ASSESSING OFFICER FOR THE
AY 2010-11.
ANNEXURE B A TRUE COPOY OF ORDER DATED 16/2/2015 PASSED BY
THE COMMISSIONER OF INCOME TAX (APPEALS)-
KOZHIKODE FOR THE AY 2010-11.
ANNEXURE C A TRUE COPY OF THE ORDER DATED 26/9/2017 PASSED
BY THE INCOME TAX APPELLATE TRIBUNAL, COCHIN
BENCH, COCHIN FOR THE AY 2010-11.
I.T.A. No.57, 44 & 58/2019
APPENDIX OF ITA 44/2019
PETITIONER ANNEXURE
ANNEXURE A A TRUE COPY OF THE ASSESSMENT ORDER DATED
28.03.2013 PASSED BY THE ASSESSING OFFICER FOR THE
AY 2009-10.
ANNEXURE B A TRUE COPY OF ORDER DATED 16.02.2015 PASSED BY
THE COMMISSIONER OF INCOME TAX (APPEALS)-
KOZHIKODE FOR THE AY 2009-10.
ANNEXURE C A TRUE COPY OF THE ORDER DATED 26.09.2017 PASSED
BY THE INCOME TAX APPELLATE TRIBUNAL, COCHIN
BENCH, COCHIN FOR THE AY 2009-10.
