THE LADWA CO-OP MARKETING CUM PROCESSING SOCIETY LTD ,HARYANA V. INCOME TAX OFFICER, WARD-1, KURUKSHETRA

ITA 814/CHANDI/2024

AI Insights

The case involves The Ladwa Coop. Marketing Cum Processing Society Ltd, which appealed against the decision of the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi. The primary issue was the denial of deduction under Section 80P(2)(a)(iii) for the Assessment Year 2017-18, concerning commission income from marketing agricultural produce and interest income from bank accounts. The Assessing Officer had initially treated these incomes as 'income from other sources', denying the deduction. However, the Tribunal, after considering the nature of the society's activities and the direct nexus between the income sources and the marketing activities, ruled in favor of the society.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 707212 (ITAT-CHANDIGARH)
• Duration Of Justice: 11 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-07-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2017-2018
• Appeal Filed On: 01-08-2024
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RANJIT KAUR LD.
• Assessee Lawyers: PARIKSHIT AGGARWAL LD
• Keywords: Business income; FORM 26AS
• Section: 143(3)

Judgement Text

"1 IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH, CHANDIGARH PHYSICAL HEARING BEFORE HON’BLE SHRI RAJPAL YADAV, VICE PRESIDENT AND HON’BLE SHRI MANOJ KUMAR AGGARWAL, AM आयकर अपील सं./ ITA No. 814/CHANDI/2024 (िनधाŊरणवषŊ / Assessment Year: 2017-18) The Ladwa Coop. Marketing Cum Processing Society Ltd Shop No. 35-36 New Grain Market Ladwa-136132 Haryana. बनाम/ Vs. ITO Mandi. ̾थायीलेखासं./जीआइआरसं./PAN/GIR No. AAAAT-5704-H (अपीलाथŎ/Appellant) : (ŮȑथŎ / Respondent) अपीलाथŎकीओरसे/ Appellant by : Shri Parikshit Aggarwal (CA) – Ld. AR ŮȑथŎकीओरसे/Respondent by : Dr Ranjit Kaur (Addl. CIT) – Ld. Sr. DR सुनवाईकीतारीख/Date of Hearing : 08-07-2025 घोषणाकीतारीख /Date of Pronouncement : 10-07-2025 आदेश / O R D E R Manoj Kumar Aggarwal (Accountant Member) 1. Aforesaid appeal by assessee for Assessment Year (AY) 2017-18 arises out of an order of learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi [CIT(A)] dated 06-02-2024 in the matter of an assessment framed by Ld. Assessing Officer [AO] u/s. 143(3) r.w.s. 147 of the Act on 23-03-2022. The sole grievance of the assessee is denial of deduction u/s 80P(2)(a)(iii) for Rs.27.20 Lacs. Having heard rival submissions and 2 upon perusal of case records, the appeal is disposed-off as under. The registry has noted 117 days of delay in the appeal, the condonation of which has been sought by Ld. AR on the strength of condonation petition which is accompanied by affidavit of manager of the assessee society. It has been stated that the delay occurred due to change in counsel. Considering the same, we condone the delay and proceed for adjudication of the appeal on merits. 2. The assessee’s case was reopened since the assessee did not file return of income and Form 26AS reflected receipt of commission / brokerage and interest by the assessee society. The assessee indulged in trading of paddy / wheat on behalf of its members and it credited commission income of Rs.36,26,905/- and interest on savings bank account for Rs.11,11,172/- to its Profit & Loss Account. The net profit was arrived at Rs.27,20,598/-, the whole of which was claimed as business income exempt u/s 80P(2)(a)(iii). However, Ld. AO held that the commission and interest income would fall under the head ‘income from other sources’ and accordingly, the impugned deduction was denied to the assessee. The Ld. CIT(A) confirmed the stand of Ld. AO against which the assessee is in further appeal before us. 3. From case records, it emerges that the assessee is a cooperative society and engaged in procuring agricultural produce from its members and selling the same to canalizing agencies of state government like HAFED. The marketing of product may happen by buying the goods in its own name and selling it further or arranging for sale of agricultural produce directly to the canalizing agencies against 3 which the assessee is suitable reimbursed the margin of profit by way of commission. In the present case, the assessee has earned commission while marketing the agricultural produce of its members. The primary object of assessee entity is to facilitate marketing of agricultural produce of its members. The surplus so earned would be nothing but profit arising out of marketing of agricultural produce grown by the members of the society which is duly covered u/s 80P(2)(a)(iii). The same could not be considered as income from other sources since the primary function of the assessee is to perform marketing functions for its members. This income is duly covered under the provisions of Sec. 80P(2)(a)(iii) and therefore, the assessee would be entitled to lay claim on the deduction to that extent. We order so. 4. So far as the interest from bank is concerned, the same has arisen out of normal business operations of the assessee. The assessee markets the products on behalf of its members and receives sale proceeds thereof in the bank account. The same are thereafter distributed to the members. During this transitional period, the assessee’s funds have earned interest income. On the facts of the case, it could be well said that there was direct nexus between the interest income and the marketing activities of the assessee. Both the activities could be held to be intrinsically connected. Therefore, the same has rightly been offered to tax as business income which would also qualify for deduction under Sec. 80P(2)(a)(iii). We order so. No other ground has been urged in the appeal. 4 5. The appeal stand allowed. Order pronounced on 10-07-2025. Sd/- Sd/- (RAJPAL YADAV) (MANOJ KUMAR AGGARWAL) VICE PRESIDENT ACCOUNTANT MEMBER Dated: 10-07-2025 आदेश की Ůितिलिप अŤेिषत /Copy of the Order forwarded to : 1. अपीलाथŎ/Appellant 2. ŮȑथŎ/Respondent 3. आयकरआयुƅ/CIT 4. िवभागीयŮितिनिध/DR 5. गाडŊफाईल/GF ASSISTANT REGISTRAR ITAT CHANDIGARH "