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

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