Law: Income Tax Act, 1922

Section: 14(3)(a),60,14(3)(b)(ii)

Income-tax Act, 1922 -- Sections 14(3), 14(3)(a), 14(3)(b)(ii), 34(1)(a), 60 read with -- Notification No. S.R.O. 25(k)/69 dated 20-11-1968 -- Exemption -- Co-operative society -- Profits derived from dealings with non-members -- Whether exempt from tax - Held no -- Exemption -- Co-operative society -- Cottage industry -- Activities of the society multifarious and substantial -- Whether entitled to claim exemption as cottage industry under sub-clause(ii) of clause(b) of Sec. 14(3) -- Held no -- Exemption -- Co-operative society -- Income derived from manufacture and sale of agricultural implements -- Whether exempt from tax -- Held yes -- Profits of Co-operative Society derived as a result of dealings with non-members -- Held, no longer enjoy exemption from tax -- Profits derived from manufacturing of and dealing in agricultural implements -- Claim of exemption of such profits inadvertently ignored by all officers concerned -- Income-tax Officer directed to scrutinize question of such exemption under Notification of 20-11-1968 -- ORDER The order was passed by M.T. SIDDIQUI, President.---These three appeals by a co-operative society, manufacturing agricultural implements, will be disposed of by the same order in view of the identical nature of objections which arise more or less from the same facts. 2. The appellant is admittedly a cooperative society which derives income from the manufacture of agricultural implements and also repairs etc. For the three years under appeal it disclosed incomes of Rs. 992/- Rs. 1162/-, and is 1229/- and claimed the same to be exempt under the provision of Section 14(3)(a) or in the alternative under the provisions of Section 14(3)(b)(ii) and in any case under S,R.O. 25(k)/69 dated 20-11-1968 issued under Section 60 of the Income Tax Act. The Income Tax Officer refused the exemption under all the three provision and in view of the defective nature of accounts and the past history of the case, he estimated the net taxable income for the first year at Rs. 25,000/- whereas for the last two years the total incomes were estimated at Rs. 16.000/- and Rs. 17,000/-, but the net taxable incomes were determined at Rs. 10,000/and Rs.…

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