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June 2009

Appeal — Order set aside to the High Court as the relevant decision was not considered.

By Kishor Karia, Chartered Accountant
Atul Jasani, Advocate
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New Page 2

 12. Appeal — Order set aside to the High Court as the
relevant decision was not considered.

[CIT vs. Madras Engineering Construction Co-op. Society
Ltd., (2008) 306 ITR 10 (SC)].

The Assessing Officer negatived the claim of deduction
under Section 80P(2)(a)(i) of the Act 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 Tribunal dismissed the Revenue’s appeals. Before the Supreme
Court, the Revenue contended that the High Court had failed to notice that the
profit earned by the Society in executing the work was retained by the members
themselves. The Supreme Court, however, found that its decision in Madras
Auto Rickshaw Drivers’ Co-op. Society vs. CIT, (2001) 249 ITR 330 (SC),
which had prima facie relevance, was not noticed by the High Court. The
Supreme Court therefore set aside the order of the High Court and remitted the
matter to it for a fresh consideration in the light of the aforesaid decision.

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