The Commissioner Of Income Taxcoimbatore v. M/S.k 883 The Chennimalai Wcs Ltd. Post Box

IN THE HIGH COURT OF JUDICATURE AT MADRAS DATE : 05.09.2014 CORAM THE HONOURABLE MR. JUSTICE R.SUDHAKARANDTHE HONOURABLE MR. JUSTICE G.M.AKBAR ALI T.C.A. NOS. 65 TO 68 OF 2013ANDM.P. NOS. 1 OF 2013 The Commissioner of Income TaxCoimbatore....Appellant in all the appeals - Vs - M/s.K 883 The Chennimalai WCS Ltd. Post Box No.32Chennimalai....Respondent in TCA 65 & 66/13 M/s.CH-2, The Chennimalai Srigiri Murugan WCS Ltd.Chennimalai. ..Respondent in TCA 67/13 M/s.AA 399 The ChennimalaiIndustrial WCS Ltd.Chennimalai. ...Respondent in TCA 68/13 Appeals filed under Section 260-A of the Income Tax Act againstthe order dated 12.6.12 passed by the Income Tax Appellate Tribunal,Madras “D” Bench, in ITA Nos.2007/Mds/2011, 2008/mds/2001,2009/mds/2011 and 2010/mds/2011 respectively against the order of theCommissioner of Income Tax (Appeals) - 1, Coimbatore and dated08.09.2011 in Appeal No.246/10-11 247/2010-11 and for the Assessmentyear 2005-2006, 261/10-11 for the respectively Assessment year 2008-09 against the order of the Commissioner of Income Tax - II,Coimbatore, dated 28.10.2009 in C.No.220(2) CFT II/CBE/09-10 for theAssessment year 2005-2006 (in TC(A) 65 & 66/13 order of the IncomeTax Officer Ward - II (2), Erode, dated Nil. in PAN / GIR No. for the Assessment year 2005-2006 (in TC(A) 67/13) and theorder of the Income Tax Officer Ward - II (2), Erode, dated31.12.2010 in PAN/ GIR No. for the Assessment year 2008-2009 (in TC (A) 68/13) respectively and against the order of theIncome Tax Officer Ward II (2) Erode, dated 26.12.2007 in PA/GIRNo.22SC0001/AAAAC1223E dated 26.12.2007 for the Assessment year 2005- https://hcservices.ecourts.gov.in/hcservices/ 2006 (in TC (A) 65 & 66/13) and the order of the Commissioner ofIncome Tax -II, Coimbatore, dated 28.10.2009 in PA No.AAAAT6076E forthe Assessment year 2005-2006 respectively. For Appellant: Mr. M.SwaminathanFor Respondent: No Appearance COMMON JUDGMENT (DELIVERED BY R.SUDHAKAR, J.) These appeals have been filed by the Revenue against the orderdated 12.6.12 passed by the Income Tax Appellate Tribunal, Madras 'D'Bench, in ITA Nos.2007/Mds/2011 to 2010/Mds/2011. 2. At the time of admission, the following questions of law wereframed for consideration in all these appeals :-a) Whether under the facts and circumstances of thecase, the Income Tax Appellate Tribunal was right inholding that the assessee society eligible foravailing the benefits of deduction under Section 80 P(2) (a) (ii) of the Income Tax Act?b) Whether under the facts and circumstances of thecase the Income Tax Appellate Tribunal is right in lawin holding that the assessee society is a cottageindustry and therefore is eligible for deduction underSection 80 P (2) (a) (ii)?c) b) Whether under the facts and circumstances ofthe case the Income Tax Appellate Tribunal is right inlaw in holding that the assessee society has satisfiedall the criteria laid down in the Board circularNo.722 dated 19.9.95 for availing benefits underSection 80 P (2) (a) (ii)? 3. The respondents/assessees in all these cases are Co-operativeSocieties, engaged in textile manufacturing and are registered underthe Industrial Co-operative Societies Act of Tamil Nadu. Theassessees have claimed deduction of income under Section 80 P (2) (a)(ii). The claim for deduction, made by the respective assessees, wasrejected by the Assessing Officer. The appeals, filed before theCommissioner of Income Tax (Appeals), was allowed holding that theassessees are eligible to claim deduction. 3. The respondents/assessees in all these cases are Co-operativeSocieties, engaged in textile manufacturing and are registered underthe Industrial Co-operative Societies Act of Tamil Nadu. Theassessees have claimed deduction of income under Section 80 P (2) (a)(ii). The claim for deduction, made by the respective assessees, wasrejected by the Assessing Officer. The appeals, filed before theCommissioner of Income Tax (Appeals), was allowed holding that theassessees are eligible to claim deduction. 4. The Revenue, aggrieved by the said order of the Commissionerof Income Tax (Appeals), preferred appeals before the Tribunal. TheTribunal held that the assessees are duly recognised as cottageindustries by the competent authorities under the various provisionsof the relevant Act and also taking note of the earlier decisions ofthe Tribunal in ITA No.422/Mds/2011 dated 26.8.2011 for theassessment year 2007-2008, came to the conclusion that the assessees https://hcservices.ecourts.gov.in/hcservices/ have clearly made out a case that they are co-operative societiesand, consequently, entitled to the benefit of Section 80 P (2) (a)(ii) of the Income Tax Act. While coming to the above conclusion,the Tribunal held that the term “cottage industry” is not definedanywhere in the Income Tax Act and the said classification isavailable only under the Industrial Development and Regulation Actand further held that the assessee is getting all other favours andconcessions both from the Central and State Governments and in viewof their recognition under the Industrial Development Regulation Act,their status as cottage industry is relevant for the purpose of theIncome Tax as well. For better clarity, it is pertinent to extractthe reasoning given by the Tribunal in its order, as hereunder :- ”5. We have perused the orders of the authoritiesbelow and heard the contentions. Grounds raised byRevenue in its appeal in the case of AA-399, TheChennimalai Industrial WCS Ltd., (supra) are exactlysimilar to its grounds in these appeals. It was heldby this Tribunal at para Nos.6 to 8 of its order dated26.08.2011 as under :- “The very same issue was considered by theIncome-Tax Appellate Tribunal, Chennai 'C' Benchin the case of AA-399, The Chennimalai IndustrialWCS Ltd., through their order dated 26.8.2011passed in ITA No.422/Mds/2011 for the assessmentyear 2007-08. The Tribunal in the said orderfound that the term “cottage industry” is notdefined anywhere in the Income-Tax Act, 1961, butthe classification of a cottage industry isavailable under the Industrial Development andRegulation Act. The assessee-society enjoys thestatus of a cottage industry under the said Act.The assessee is also getting all other favours andconcessions from both Central and StateGovernments to promote the hand loom industry inits status as a cottage industry. The Tribunalfurther observed that the assessee is mainlyproducing hand loom bed sheets which sold throughthe outlets of co-optex hand loom, an apexmarketing society formed by the Government ofTamil Nadu. In that case also, the main reasonpointed out by the Assessing Officer to deny thebenefit of cottage industry to the assessee wasthat the size of the assessee's establishment wastoo big, where it employed more than 2000 workers.Its turnover is crores and crores of rupees and itis a very big co-operative society engaged inproducing hand loom goods etc. But we do not findthat these objections raised by the AssessingOfficer on the size and extent of the operation ofthe assessee-society are legally valid todisqualify the assessee from the category of cottage industry for the purpose of the Income TaxAct, 1961. The Industrial Development andRegulation Act has classified the parametersnecessary to qualify something as a cottageindustry. The assessee is having the recognisedsttus as a cottage industry under the Act. ......”Following its abovesaid judgment, the Tribunal, accordingly,dismissed the appeals preferred by the Revenue. Aggrieved by thesaid dismissal, the Revenue is before this Court by filing the aboveappeals. 5. Though the respective respondents have been served, however,none appears for the respective respondents. However, when thematters were taken up for hearing, Mr.M.Swaminathan, learned standingcounsel appearing for the appellant brought to the notice of thisCourt that the issue raised in the present appeals is covered by thejudgment dated 04.09.2014, passed by this Court in TCA Nos.67 to 74of 2014 and, therefore, similar order may be passed in these appealsas well. 6. Accordingly, following the judgment of this Court in TCANos.67 to 74 of 2014 dated 4.9.2014, all these appeals are dismissed.Consequently, connected miscellaneous petitions are closed. Sd/-Asst. Registrar (CS-II) //True Copy// Sub Asst. Registrar. GLNTo1.The Income Tax Appellate Tribunal,'D' Bench, Chennai.2.The Commissioner of Income Tax (Appeals)-I,Coimbatore.3.The Commissioner of Income TaxCoimbatore.4.The Income Tax Officer,Ward - II (2), Erode. 4CCs to Mr.M.Swaminathan, Advocate, SR 41889 T.C.A. NOS. 65 TO 68 OF 2013 JSV PSI 22/09/2014