VASNA RATHOD DUDH UTPADAK SAHAKARI MANDALI,GANDHINAGAR V. THE INCOME TAX OFFICER, WARD-1 (PREVIOUSLY WARD-4), GANDHINAGAR

ITA 1829/AHD/2024

AI Insights

The case involves Vasna Rathod Dudh Utpadak Sahakari Mandali, a cooperative society engaged in collecting and supplying milk, which also earned income from other sources such as interest and dividends. The primary legal issue was the denial of a Rs. 50,000 deduction under section 80P(2)(c) of the Income Tax Act by the assessing officer, which was upheld by the CIT(Appeals). The Tribunal, however, found that the assessee was entitled to this deduction as the income was derived from activities other than those specified in section 80P(2)(b), and thus should not be excluded from the benefits of section 80P(2)(c).

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 25820 (ITAT-AHMEDABAD)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-01-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2017-2018
• Other Referred Cases: Venus Parkland Co-Op. Housing Service Society Ltd. vs. Income-tax Officer, Baroda Citizen Community Co-op. Credit Society Ltd. vs. Income-tax Officer
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V K MANGLA
• Assessee Lawyers: P. F. JAIN
• Keywords: Earning of tax free income
• Section: 113

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “SMC” BENCH, AHMEDABAD BEFORE DR. BRR KUMAR, VICE PRESIDENT & SHRI SIDDHARTHA NAUTIYAL, JUDICIAL MEMBER I.T.A. No.1829/Ahd/2024 (Assessment Year: 2017-18) Vasna Rathod Dudh Utpadak Sahakari Mandali, Brahmanvas, Vasna Rathod, Gandhinagar-382305 Vs. Income Tax Officer, Ward-4, Gandhinagar Present ITO Income Tax Officer, Ward-1, Gandhinagar-382010 [PAN No.AAAAV6736F] (Appellant) .. (Respondent) Appellant by : Shri P. F. Jain, A.R. Respondent by: Shri V K Mangla, Sr. DR Date of Hearing 16.12.2024 Date of Pronouncement 08.01.2025 O R D E R PER SIDDHARTHA NAUTIYAL - JUDICIAL MEMBER: This appeal has been filed by the Assessee against the order passed by the Ld. Commissioner of Income Tax (Appeals), (in short “Ld. CIT(A)”), ADDL/JCIT(A)-8, Mumbai vide order dated 07.10.2024 passed for A.Y. 2017-18. 2. The assessee has taken the following grounds of appeal:- “(1) The Ld. CIT(A) has erred in law and facts in confirming the finding of the assessing officer that appellant is not entitled to deduction of Rs. 50,000/- u/s 80P(2)(c) of the act without properly appreciating the fats of the assessee in as much as that the assessee is having taxable income other than the exempt income for which deduction upto 50,000/- is eligible as per the section itself. (2) On the facts of the assessee the deduction of 50,000/- claimed by the assessee while filing return of income ought to have been allowed u/s 80(P)(2)(c) of the act. ITA No. 1829/Ahd/2024 Vasna Rathod Dudh Utpadak Sahakari Mandali vs. ITO Asst.Year –2017-18 - 2– (3) The appellant craves, leave, to add, to alter and or modify any ground of appeal.” 3. The brief facts of the case are that the assessee is engaged the business of collecting milk from its members and supplying the same to the member union Uttam Dairy. Further, besides earning income from sale of milk to Member Union, the assessee also earned interest income, dividend income etc. The assessee, during the course of assessment gave details of exemption claimed with respect to income referred to above and also claimed deduction of ₹50,000/- u/s 80P(c) of the Act. During the course of assessment, the assessing officer denied the claim of deduction of ₹50,000/- u/s 80P(2)(c) of the Act on the ground that since the assessee, being a cooperative society engaged in supply of milk, has claimed deduction on the entire profits u/s 80P(2)(b) of the Act, it is not eligible for further deduction u/s 80P(2)(c) of the Act on this amount of ₹50,000/-. Accordingly, the assessing officer added this amount of ₹50,000/- as “income from other sources” in the hands of the assessee. In appeal, Ld. CIT(Appeals) dismissed the appeal of the assessee. 4. We observe that the assessee had given computation of income before the assessing officer and from the same, it is observed that the assessee has derived income from other activities, other than supply of supply of milk, on which assessee has claimed deduction of ₹50,000/- u/s 80P(2)(c) of the Act. A reading of section 80P(2)(c) of the Act states that when the society is engaged in “activities” other than those specified in clause (b), so much of its profits and gains as are attributable to such activities, as does not exceed ₹50,000/- is eligible for deduction u/s 80P(c) ITA No. 1829/Ahd/2024 Vasna Rathod Dudh Utpadak Sahakari Mandali vs. ITO Asst.Year –2017-18 - 3– of the Act. In the instant case, the Ld. DR has not disputed that the assessee had earned income from activities other than that from supply of milk and the same was duly reflected in the computation of income submitted by the assessee. In the case of Venus Parkland Co-Op. Housing Service Society Ltd. vs. Income-tax Officer [2024] 166 taxmann.com 673 (Ahmedabad - Trib.)/[2024] 209 ITD 229 (Ahmedabad - Trib.)[07-08- 2024], the Tribunal held that where assessee, a housing co-operative society, showed surplus in its Profit and Loss account after netting out all maintenance expenses, assessee was eligible for deduction under section 80P(2)(c)(ii) of the Act. In the case of Baroda Citizen Community Co-op. Credit Society Ltd. vs. Income-tax Officer [2022] 134 taxmann.com 290 (Ahmedabad - Trib.)/[2022] 193 ITD 113 (Ahmedabad - Trib.)[01-12-2021], the Tribunal held that in case of co- operative credit society, income to which benefit of section 80P(2)(a)(i) is not allowed, basic exemption of Rs. 50,000/- as provided in section 80P(2)(c)(ii) must be granted. Accordingly, looking into the instant facts, we are of the view that Ld. CIT(Appeals) erred in holding that the assessee is not eligible for grant of deduction under section 80P(2)(c)(ii) of the Act for a sum of Rs.50,000/- 5. In the result, the appeal of the assessee is allowed. This Order is pronounced in the Open Court on 08/01/2025 Sd/- Sd/- (DR. BRR KUMAR) (SIDDHARTHA NAUTIYAL) VICE PRESIDENT JUDICIAL MEMBER Ahmedabad; Dated 08/01/2025 TANMAY, Sr. PS TRUE COPY ITA No. 1829/Ahd/2024 Vasna Rathod Dudh Utpadak Sahakari Mandali vs. ITO Asst.Year –2017-18 - 4– आदेश की Ůितिलिप अŤेिषत/Copy of the Order forwarded to : 1. अपीलाथŎ / The Appellant 2. ŮȑथŎ / The Respondent. 3. संबंिधत आयकर आयुƅ / Concerned CIT 4. आयकर आयुƅ(अपील) / The CIT(A)- 5. िवभागीय Ůितिनिध, आयकर अपीलीय अिधकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाडŊ फाईल / Guard file. आदेशानुसार/ BY ORDER, उप/सहायक पंजीकार (Dy./Asstt.Registrar) आयकर अपीलीय अिधकरण, अहमदाबाद / ITAT, Ahmedabad 1. Date of dictation 06.01.2025 (Dictated over dragon software) 2. Date on which the typed draft is placed before the Dictating Member 06.01.2025 3. Other Member………………… 4. Date on which the approved draft comes to the Sr.P.S./P.S 06.01.2025 5. Date on which the fair order is placed before the Dictating Member for pronouncement 08.01.2025 6. Date on which the fair order comes back to the Sr.P.S./P.S 08.01.2025 7. Date on which the file goes to the Bench Clerk 08.01.2025 8. Date on which the file goes to the Head Clerk…………………………………... 9. The date on which the file goes to the Assistant Registrar for signature on the order…………………….. 10. Date of Dispatch of the Order…………………………………… "