COMMISSIONER OF INCOME TAX, CHENNAIversusM/S. MODERN ENGINEERS CONSTRUCTION COOPERTIVE SOCIETY LTD.

          _,                          [2008] 13 S.C.R. 63


                          COMMISSIONER OF INCOME TAX, CHENNAI                   A
                                               v
                          M/S. MODERN ENGINEERS CONSTRUCTION
                                 COOPERTIVE SOCIETY LTD.
                                (Civil Appeal No.5497 of 2008)
          ...
                                   SEPTEMBER 4, 2008                            B

                     [DR. ARIJIT PASAYAT AND DR. MUKUNDAKAM
                                    SHARMA, JJ.]

                      Income Tax Act, 1961 - s.80P(2)(a)(i) - Deduction under   c
                 - Claim for - High Court did not consider matter in proper
~                perspective - Matter remitted to High Court for fresh
                 consideration.
                     The assessee-respondent made a claim for deduction
         __.,,   under s.80P(2)(a)(i) of the Income Tax Act, 1961, which D
                 was rejected by the Assessing Officer. The aggrieved
                 assessee filed appeal which was allowed by the
                 Commissioner (Appeals). The Tribunal and High Court
                 upheld the same. Hence the present appeal.
                     Disposing of the appeal and remitting the matter to E
                 High Court, the Court
                      .
                       HELD: The High Court proceeded on the factual
                 premises as if the dispute related to interest received from
    . _......
                 members. This confusion arose because the High Col!rt F
                 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. Apart from
                 that, the decision of this Court in Madras Autorickshaw
                 Drivers* which has prima facie relevance, was not noticed G
                 by the High Court. [Paras 5, 6] [65-A-C] •
          )-          Madas Autorickshaw Drivers v. Commissioner of Income
                 Tax (2001) 10 SCC 175 - referred to.

                                              63                                H
    64       SUPREME COURT REPORTS                 [2008] 13 S.C.R. .


A                         Case Law Reference
         (2001) 10 sec 175          referred to.            Para 6
         CIVILAPPELLATE JURISDICTION: Civil Appeal No.5497
    of 208
B        From the final Judgment and Order dated 26.2.2007 of
    the High Court of Judicature at Madras in TC. (A) No. 136 of
    2007

         V. Shekhar, Ranbir Chandra and B.V. Balaram Das for
c the Appellant.
         The Judgment of the Court was delivered by
         Dr. ARIJIT PASAYAT, J. 1. Leave granted.
        2. In the instant appeal, challenge is to the judgment of a
D Division Bench of the Madras High Court dismissing the appeals        ,_,_
  filed under Section 260-A of the Income Tax Act, 1961 (in short·
  'the Act'). The issue related to the claim of deduction made by
  the respondent under Section BOP (2)(a)(i) of the Act. The
  assessing officer negatived the claim on the ground that the
E 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
F 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 BOP(a)(i) is not allowable. Unfortunately, the
G 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
H spite of service of notice.
        COMM. OF INCOME TAX, CHENNAI v. M/S. MODERN 65
·l   ENGINEERS CONS. COOP SOCIETY LTD. [DR ARIJIT PASAYAT, J]

          5. The High Court seems to have proceeded on the factual          A
     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.                  B
            6. Apart from that we find that the decision of this Court in
     Madas Autorickshaw Drivers v. Commissioner of Income Tax
     (2001 (10)   sec 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        C
     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.
                                                                            D
            7. The appeal is disposed of accordingly.
     D.G.                                         Appeal disposed of.




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