Ita/620/2009 Of Commissioner Of Income Tax, Kottayam v. C.n.ramachandran Nair) Judge

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE C.N.RAMACHANDRAN NAIR & THE HONOURABLE MR. JUSTICE C.K.ABDUL REHIM TUESDAY, THE 28TH JULY 2009 / 6TH SRAVANA 1931 ITA.No. 620 of 2009() --------------------- ITA.750/COCH/2004 of I.T.A.TRIBUNAL,COCHIN BENCH .................... APPELLANT: ------------------------------ THE COMMISSIONER OF INCOME TAX, KOTTAYAM. BY ADV. SRI.P.K.R.MENON,SR.COUNSEL, GOI(TAXES) SRI.JOSE JOSEPH, SC, FOR INCOME TAX RESPONDENT(S): RESPONDENT: -------------------------- THE KERALA STATE CO-OPERATIVE COIR MARKETING FEDERATION LIMITED, P.B.NO.4616 ALAPPUZHA. THIS INCOME TAX APPEAL HAVING COME UP FOR ADMISSION ON 28/07/2009, ALONG WITH ITA 683/2009 THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: -------------------------------------------- I.T.A. Nos. 620 & 683 OF 2009 -------------------------------------------- Dated this the 28th day of July, 2009 JUDGMENT Ramachandran Nair,J. The question raised in the connected appeals filed by the revenueis whether the Tribunal was justified in confirming the order of the CIT(Appeals) who held that the respondent-assessee is entitled todeduction of entire profits and gains of business attributable to cottageindustry under Section 80P (2)(a)(ii) of the I.T. Act. On going throughthe orders of the authorities below, including the Tribunal, and afterhearing standing counsel for the appellants, we notice that respondent-society was formed with 97% of the capital provided by theGovernment and three per cent from primary co-operative societieswhich are the members of the society. The object of the society is tohelp coir workers to market their produce, namely, coir yarn, fibre, etc.In fact during the years 1997-98 and 1998-99, there was completeslump in the market and the coir workers were facing starvation.Therefore the Government provided massive sum of Rs. 5 crores to the respondent-society to purchase coir yarn, fibre and other products fromthe artisans and primary societies at the price fixed by the committee tobe appointed by the Government to save them from financial crisis,they were otherwise facing. This contribution is taken as revenuereceipt and the profits assessed to tax. According to the department,the purpose of contribution made by the Government is immaterial andsince it is a fund given by the Government to purchase raw materials,income earned is revenue taxable under the Act. However, the firstappellate authority and the Tribunal following the decision of theSupreme Court in KERALA STATE CO-OPERATIVE MARKETINGFEDERATION LTD. V. COMMISSIONER OF INCOME TAX, 231ITR 814 and the decision of the Rajasthan High Court in CIT V.RAJASTHAN RAJYA BUKER SAHAKARI SANGH LTD., 258 ITR88 held that the assessee is entitled to deduction under Section 80P(2)(a)(ii) of the I.T. Act. Detailed findings about the constitution andoperation of the respondent-society are contained in first appellateorder . We are of the view that the findings entered by the firstappellate authority and confirmed by the Tribunal justify respondent's eligibility for exemption in terms of Section 80P(2)(a)(ii) as held bythe Supreme Court in the above referred decision. Consequentlyappeals are dismissed. Since appeals are disposed of without issuingnotice to the respondent, Registry is directed to forward a copy of thisjudgment to the respondent-assessee for information. (C.N.RAMACHANDRAN NAIR)Judge. (C. K. ABDUL REHIM) Judge. kk