Commr.Of Income Tax,Chennai vs M/S Modern Eng.Constrn.Co-Op.Sty.Ltd
- Neutral2008 INSC 1015
- SCR[2008] 13 SCR 63
Ratio decidendi
The rule this decision rests on
When a High Court decides a case involving a statutory deduction under Section 80P(2)(a)(i) of the Income Tax Act, 1961, it must correctly identify the factual basis of the dispute (such as whether the case concerns interest from members or profits from work execution) and not conflate the facts of the case before it with those of other cases, whether involving different types of entities or different forms of income. The High Court erred in proceeding on a factual premise (relating to interest received from members) that did not match the actual facts in dispute, and this confusion—arising from mixing up the facts of another case involving a credit society engaged in banking—rendered its order indefensible and warranted reconsideration in light of the correct factual position.
Written by Miss Lucy from the judgment below, not taken from a headnote.
Judgment
As delivered
(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.
2
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.
3 (Dr. ARIJIT PASAYAT)
..........................................J. New Delhi: (Dr. MUKUNDAKAM SHARMA) September 4, 2008
4
This page reproduces a public judgment and a summary of it. It is research material, not legal advice, and it is no substitute for advice from an advocate on your own facts.
Research this judgment with Miss Lucy
Ask what it holds, what has followed it, and what it means for your matter — in plain English, with the citations.
Try Miss Lucy free