The answer to the question whether a member of a primary cooperative society will automatically become a member of the apex society will determine the income tax liability of the apex body, the Supreme Court stated in the case, Commissioner of Income Tax vs Rajasthan Rajya Bunker Samiti. In this case, Samiti, the apex body was the assessee. It provided raw materials like yarn to primary societies of weavers who manufactured cloth. The apex society claimed tax concessions under Section 80P(2) of the Income Tax Act on the ground that it was a cottage industry. It denied that it was engaged in the collective disposal of labour of its members under the provision. The revenue department contended that the weavers are not the members of the apex society. They are members of the primary societies. The Supreme Court stated that an answer to the problem lies in the bye-laws of the societies. These were not examined by the authorities. While rejecting the claim of the authorities for tax claims in the relevant years, the court asked them to examine, in future, the actual position according to the bye-laws of the cooperative societies.

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June 2021