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To claim deduction under section 80P the status of the co-operative society shall be a primary society

8. As seen in section 80P(2)(b), the deduction in respect of income of co-operative societies has been dealt in under different parts. In respect of the sums referred in clause (a) of sub-section (2), the assessee needs to be a co-operative society engaged in various activities specified therein. In the case of sums referred to in clauses(c) and (d) of sub-section (2), again it is sufficient that the assessees be co-operative societies

RELEVANT PARAGRAPH

8. As seen in section 80P(2)(b), the deduction in respect of income of co-operative societies has been dealt in under different parts. In respect of the sums referred in clause (a) of sub-section (2), the assessee needs to be a co-operative society engaged in various activities specified therein. In the case of sums referred to in clauses(c) and (d) of sub-section (2), again it is sufficient that the assessees be co-operative societies. But, in the case of sum referred in clause (b) of sub-section (2), a co-operative society must be a primary society. It is in clause (b), the sum eligible for deduction in respect of supplying milk is provided for.

9. Therefore, the language of the statute is very clear that only a primary society engaged in supplying milk is entitled for the deduction provided under section 80P(2)(b)(i) .

15. As argued by the Id. Chartered Accountant appearing for the assessee, we do agree that the courts have held that the provisions of exemption applicable to the co-operative societies must be construed liberally. But, that does not mean that the interpretation could overstep the clear and specific meaning provided in the language o the statute. The law has consciously used certain terms in the body of section 80P. In respect of items covered by clause (a) of sub-section (2), as already stated, the status of the assessee needs to be a co-operative society. This is the case with clauses (c),(d) and (f). But, in respect of assessee falling under clause(b), the law has purposefully stated that the status of the co-operative society shall be a primary society. In the case of supplying milk, the assessee must be a co-operative society being a primary society engaged in supplying milk. The members of the assessee society are the primary milk societies who alone collect the milk directly from the producers and supplying to the District societies like the assessee. Therefore, even in a distant dream it is not possible to hold that the assessee is a primary society engaged in supplying the milk. As already stated, the assessee is standing one step higher to primary society engaged in supplying milk.

16. In the facts and circumstances of the case, we hold that the assessee is not entitled for deduction provided under section 80P.

NF
Categories: Income Tax

View Comments (3)

  • Respected Sir,

    I want to know the definition of Primary Co-operative Society u/s 80P of the Income Tax Act.

    Kindly assist me for the same.

  • Respected Sir,

    I want to know the defination of Co-operative society deduction U/s 80P of the Income Tax Act.

    Our Co-Operative Society is engaged in trading business Jatropha Plants so i want to know which deduction provide under section 80P of the Income Tax Act.

    Kindly Assist me for the same.

    Thanks & Regards

  • a) Profits and gains of any business of banking carried on by a co-operative society with its members included in the definition of income [Insertion of sub-clause (viia) in section 2(24)]
    Sub-clause (viia) has been inserted in section 2(24) to include within the scope of definition of income, the profits and gains of any business of banking (including providing credit facilities) carried on by a co-operative society with its members
    (Effective from A.Y.2007-08)

    (b) Withdrawal of tax benefit to co-operative banks [Section 80P]
    Related amendment in section: 2(24)
    (i) Section 80P provides for deduction in respect of income of co-operative
    societies.
    (ii) The Finance Act, 2006 has withdrawn this benefit w.e.f. A.Y.2007-08 in respect of all co-operative banks, other than primary agricultural credit societies (i.e. as defined in Part V of the Banking Regulation Act, 1949) and primary cooperative agricultural and rural development banks (i.e. societies having its area of operation confined to a taluk and the principal object of which is to provide for long-term credit for agricultural and rural development activities).
    (iii) This is for the purpose of treating co-operative banks at par with other commercial banks, which do not enjoy similar tax benefits.
    (iv) The scope of the definition of ‘income’ as given in section 2(24) has accordingly been widened to include within its ambit, the profits and gains of any business of banking (including providing credit facilities) carried on by a co-operative society with its members.
    (Effective from A.Y.2007-08)

    Pl suggest or guide what we do for the same

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