SHRI RISHABH SAHKARI SAKH SANSTHA MARYADIT,SHUJALPUR MANDI DISTRICT SHAJAPUR vs. INCOME TAX OFFICER, SHAJAPUR

Appellant by Shri Yogesh Bhargav, A.R. Respondent by Shri Puneet Kumar, Sr. D.R. Date of Hearing: 11.12.2019 Date of Pronouncement: 26.12.2019 आदेश / O R D E R PER KUL BHARAT, J.M: This appeal by the assessee is against order of the CIT(A), Ujjain dated 14.12.2017 pertaining to the assessment year 2012-13. The assessee has raised following grounds of appeal:

[ Rishabh Sahkari Sakh Sanstha Mydt. Dist. Shajapur]

either before or at the time of hearing of the appeal, if it is considered necessary.

5. It is, therefore, prayed that the unwarranted additions made by the Ld. A.O. and erroneously upheld by the Ld. CIT(A) of Rs.3,95,032/- may kindly be deleted.”

2. The facts giving rise the present appeal are that the case of the assessee was reopened on the basis of AIR information regarding cash deposits in the savings bank account of the assessee society. Thereafter, after issuing the requisite notice u/s 148 of the Income Tax Act, 1961 (hereinafter called as ‘the Act’) was passed vide order dated 28.6.2016, thereby the A.O. made addition of Rs.50,000/- u/s 43B of the Act in respect of unkeshan fees disallowance of Rs.95,032/-, commission paid to Shri Manoj Jain and an amount of Rs.3 lakhs on account of [ Rishabh Sahkari Sakh Sanstha Mydt. Dist. Shajapur] disallowance of provision for bad debt. Aggrieved against this order, the assessee preferred an appeal before Ld. CIT(A), who after considering the submissions, partly allowed the appeal, thereby the addition of Rs.3,00,000/-, Rs.50,000/- and Rs.95,002/- were confirmed. Now the assessee is in appeal against this order.

3. Ground No.1 is against allowing the deduction u/s 80P of the Act. Ld.Counsel for the assessee reiterated the submissions as made before the authorities below. Ld. Counsel placed reliance on the decision of the coordinate bench rendered in the case of ACIT Circle-4 Vs. Buldana Urban Co-operative Credit Society Ltd. in support of the contention that the assessee society is eligible for deduction u/s 80P of the Act.

[ Rishabh Sahkari Sakh Sanstha Mydt. Dist. Shajapur] (supra), wherein the coordinate bench has decided the issue as under:

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“Ground No.5:- Through this ground of appeal the appellant has challenged for not allowing the deduction u/s 80P of the I.T. Act on the addition made. The A.O. made the addition on the expenses which are not allowable. The A.O. is justified in not allowing the exemption u/s 80P of the I.T. Act on the addition made. Therefore, the appeal on this ground is Dismissed.”

6. From the above finding of the Ld. CIT(A), it can be inferred that the deduction u/s 80P of the Act is not allowed on the ground that the expenses claimed by the assessee are not allowable. The coordinate bench of this Tribunal has decided the issue related to allowance of deduction u/s 80P of the Act and the expenditure disallowed by the A.O. whether this would qualify for deduction u/s 80P of the Act. A bare reading of provision of section 80P(2) of the Act makes it clear that the deduction would be available in respect of the profit & gains of business attributable to any one or more of search activities, which is prescribed u/s 80P(2) of the Act. As per

[ Rishabh Sahkari Sakh Sanstha Mydt. Dist. Shajapur] the assessee, the assessee is providing credit facilities to its members. Therefore, it would qualify for claim of deduction u/s 80P of the Act. The coordinate bench under the identical facts has allowed deduction u/s 80P of the Act in respect of the activity similar or same, which is being undertaken by the assessee society. Now the issue would be whether the disallowances made in respect of bad debts and commission payment claimed by the assessee would qualify for deduction u/s 80P of the Act or not? In respect of the bad debt, the assessee is required to demonstrate that the debt which is claimed is in the nature of profit & gains and business attributable to such activity. In the present case, the assessee had made provision for bad debt. If the assessee had not done this provision, this amount would have not been deducted from the profit & loss account. Therefore, in my considered view, this amount is certainly attributable to the profit & gains of the [ Rishabh Sahkari Sakh Sanstha Mydt. Dist. Shajapur] assessee society. Further, disallowance of payment of commission. The commission is claimed as business expenditure, deducted from the profit & gains account.

Therefore, this would also be in the nature of profit & gains of the assessee society. Therefore, I am of the considered view that in the light of the decision of the coordinate bench rendered in the case of ACIT Circle-4 Vs. Buldana Urban Co-operative Credit Society Ltd. (supra), the assessee is entitled for benefit of deduction u/s 80P of the Act. I therefore, direct the A.O. to grant deduction u/s 80P of the Act to the assessee.

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Order was pronounced in the open court on 26.12.2019.