Commissioner Of Income-Tax Salem v. M/S.attur Agricultural Producers Cooperative Marketing Society Ltd

IN THE HIGH COURT OF JUDICATURE AT MADRAS Dated: 26.10.2006 Coram The Honourable Mr.Justice P.D.DINAKARANand The Honourable Mr.Justice P.P.S.JANARTHANA RAJA Commissioner of Income-TaxSalem....Appellant Vs. M/s.Attur Agricultural ProducersCooperative Marketing Society Ltd.,363, Kamarajnagar RoadPudupet, Attur-636 141....Respondent PRAYER: Appeal under Section 260A of the Income-Tax Act, 1961 againstthe order of the Income Tax Appellate Tribunal, Madras ‘C’ Bench,dated 6.1.2006 made in I.T.A. No.689/Mds/2001 for the assessment year1996-1997 (ITA No.828/99-2000 dagted 30.1.2001 on the file of theCommissioner of Income-Tax (Appeals), Chennai-34 against PAN/GIRNo.T.620/JCIT/SR/SLM dated 23.12.1998 on the file of the JointCommissioner of Income-Tax, Special Range, Salem-636 007). The above tax case is directed against the order of the Income-tax Appellate Tribunal made in I.T.A.No. 689/Mds/2001, dated 6.1.2006with reference to the assessment year 1996-1997. 2. The Revenue is the appellant. The assessee is a co-operativesociety engaged in the marketing of agricultural products. Theassessee advanced loans to its members and received interesttherefrom. The assessee had claimed deduction under Section 80P(2)(a)(i) of the Income Tax Act and the Assessing Officer negatived theclaim of the assessee as the primary objective of the assessee is notthat of the credit society that is engaged in the business ofbanking. On appeal, by the assessee, the Commissioner of Income tax(Appeals), following the appellate order for the assessment years https://hcservices.ecourts.gov.in/hcservices/ 1993-94 and 1994-95 held that the assessee is entitled to deductionin respect of interest income received on advances made to hiscustomers for the purpose of deduction under Section 80P of theIncome Tax Act. The said order of the Commissioner of Income Tax(Appeals), on appeal by the Revenue, was confirmed by the Tribunal. 3. Exasperated, the Revenue has preferred this appeal byraising the following substantial question of law:- "Whether in the facts and under thecircumstances of the case, the Tribunal wasright in holding that the respondent Co-operative Society which is engaged in themarketing of the agricultural produce iseligible for the benefit of Section 80P(2)(a)(i)of the Income Tax Act in respect of the interestreceived from members ?" 4. It is fairly conceded by the learned counsel appearing forthe Revenue that the issue raised in the above question is squarelycovered against the Revenue by the judgment of this Court dated12.12.2005 made in T.C.No.54 of 2001 (The Commissioner of IncomeTax, Coimbatore v. The Salem Co-operative Sugar Mills Ltd., Salem),wherein the Division Bench of this Court, taking note that the primeobject of the assessee therein is running a sugar mill, and that theobject clause or/and the business activities of the assessee thereinis also granting loans and advances to the members, held that theassessee therein is entitled to exemption under Section 80P(2)(a)(i)of the Income Tax Act. The said decision was also followed in thejudgment dated 2.1.2006 made in T.C.(A) No.1627 of 2005(Commissioner of Income Tax, Chennai v. The Madurantakam Co-operative Sugar Mills Ltd., Chengai Anna District). 5. In view of the above settled proposition of law, we holdthat the respondent Co-operative Society which is engaged in themarketing of the agricultural produce is eligible for the benefit ofSection 80P(2)(a)(i) of the Income Tax Act in respect of theinterest received from members. Finding no substantial question of law arises forconsideration, the appeal stand dismissed.Sd/Asst.Registrar Sub Asst.Registrar sasi 5. In view of the above settled proposition of law, we holdthat the respondent Co-operative Society which is engaged in themarketing of the agricultural produce is eligible for the benefit ofSection 80P(2)(a)(i) of the Income Tax Act in respect of theinterest received from members. Finding no substantial question of law arises forconsideration, the appeal stand dismissed.Sd/Asst.Registrar Sub Asst.Registrar sasi To:1. The Assistant Registrar, Income-tax Appellate Tribunal, Rajaji Bhavan, Besant Nagar, Chennai 600 090 2. The Commissioner of Income-tax (Appeals), Chennai.3. The Commissioner of Income Tax Salem.4.The Joint Commissioner of Income-Tax,Special Range, Salem-636 007+1cc to Mr.N.Muralikumaran, Advocate Sr 50149JRG (CO)km/24.11.T.C.(A) No.2451 of 2006