Commr. of Income Tax,
Chennai Vs. M/S Modern Eng. Constrn. Co-Op. Sty. Ltd. [2008] INSC 1503 (4
September 2008)
Judgment
IN THE SUPREME COURT
OF INDIA CIVIL APPELLATE JURISDICTION CIVIL APPEAL NO. 5497 OF 2008 (Arising
out of SLP (Civil) No.22746 of 2007) Commissioner of Income Tax, Chennai
...Appellant Versus M/s Modern Engineers Construction Cooperative Society Ltd.
...Respondent
Dr. ARIJIT PASAYAT,
J.
1.
Leave
granted.
2.
In
the instant appeal, challenge is to the judgment of a Division Bench of the
Madras High Court dismissing the appeals filed under Section 260-A of the
Income Tax Act, 1961 (in short `the Act'). The issue related to the claim of
deduction made by the respondent under Section 80P (2)(a)(i) of the Act. The
assessing officer negatived the claim on the ground that the income reflected
by the assessee can neither be attributed to actual labour of the members nor can
be treated as arising out of collective disposal of its labour. The
Commissioner of Income Tax (Appeals) following the earlier orders, allowed the
appeal. The Revenue filed appeals before the Income Tax Appellate Tribunal,
Chennai-`A' Bench (in short the `Tribunal') which dismissed the appeals.
3.
Learned
counsel for the appellant submitted that the assessing officer had rightly
observed that the claim of deduction in terms of Section 80P(a)(i) is not
allowable.
Unfortunately, the
Commissioner (Appeals) and the Tribunal held otherwise. The High Court failed
to notice that the profit earned by the Society in executing the work was
retained by the members themselves.
4.
There
is no appearance on behalf of the assessee in spite of service of notice.
5.
The
High Court seems to have proceeded on the factual premises as if the dispute
related to interest received from members. This confusion appears to have
arisen because the High Court mixed up the factual position of some other case
which related to credit society engaged in Banking. On that score alone, the
High Court's order is indefensible.
6.
Apart
from that we find that the decision of this Court in Madas Autorickshaw Drivers
v. Commissioner of Income Tax (2001 (10) SCC 175), which has prima facie
relevance, was not noticed by the High Court. We, therefore, set aside the
impugned order of the High Court and remit the matter to it for a fresh
consideration in the light of the aforesaid decision, keeping in view the
correct factual position. We make it clear that we have not expressed any
opinion on the merits of the case.
7.
The
appeal is disposed of accordingly.
.........................................J.
(Dr. ARIJIT PASAYAT)
..........................................J.
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