ANNAPURNA MAHILA CO OPERATIVE CREDIT SOCIETY LIMITED,PUNE vs. INCOME TAX OFFICER WARD 2(2), PUNE

In appeal the Ld. CIT(A) / NFAC deleted both the additions. On appeal by the Revenue, the Tribunal restored the issue of addition of Rs.1,31,84,194/- made by the Assessing Officer u/s 69C r.w.s. 115BBE to the file of the Ld. CIT(A) / NFAC on the ground that his findings on this issue were very cryptic and does not address the issue based on which the Assessing Officer made the addition.

During such remand proceedings the Ld. CIT(A) / NFAC called for various details from the assessee in response to which the assessee filed the requisite details. After considering the submissions made by the assessee, the Ld. CIT(A) /

Aggrieved with such order of the Ld. CIT(A) / NFAC the assessee is in appeal before the Tribunal by raising the following grounds: The following grounds are taken without prejudice to each other- On facts and in law, 1] The Ld. CIT(A) erred in confirming the addition made of Rs.1,31,84,194/- u/s. 69C r.w.s. 115BBE of the Act without appreciating that no such addition was warranted on the facts of the case. 2] The Ld. CIT(A) failed to appreciate that the amount of Rs.1,31,84,194/- was in respect of the excess claim of depreciation which was inadvertently claimed by the assessee while filing the return of income and the same was accepted in the course of the assessment proceedings and hence, question of making any addition u/s. 69C r.w.s. 115BBE simply did not arise. 3] The Ld. CIT(A) erred in not appreciating that on account of the disallowance of the excess claim of depreciation, the business income of the assessee society increased and hence, the deduction u/s. 80P ought to have been allowed on the enhanced income and hence, no addition was warranted in the hands of the assessee society. 4] The Ld. CIT(A) failed to appreciate that the assessee society was entitled to claim deduction u/s. 80P and the same was allowed to it and hence, increase in the business income of the assessee on account of the disallowance of the excess claim of depreciation was entitled to deduction u/s. 80P and accordingly, no addition was warranted in the hands of the assessee society. 5] The appellant craves leave to add, alter, amend or delete any of the above grounds of appeal.

The Ld. Counsel for the assessee made 2 fold arguments. In his first plank of argument he submitted that the provisions of section 69C are not applicable to the facts of the case since the assessee has not claimed any unexplained expenditure and it was a clerical error on computation. In his second plank of argument, the Ld. Counsel for the assessee referred to the CBDT Circular No.37/2016 dated 02.11.2016 and submitted that if by disallowance u/s 69C the business income of the assessee increases, then the assessee is entitled to claim higher deduction under Chapter VI-A. He accordingly submitted that if the addition made by the Assessing Officer and upheld by the Ld. CIT(A) / NFAC is sustained, then in view of the CBDT Circular No.37/2016, the business income of the assessee will be increased and the assessee will be entitled to the enhanced deduction u/s 80P.

The Ld. DR on the other hand heavily relied on the order of the Ld. CIT(A) / NFAC.

We have heard the rival arguments made by both the sides, perused the orders of the Assessing Officer and Ld. CIT(A) / NFAC and the paper book filed on behalf of the assessee. We find the Ld. CIT(A) / NFAC in the instant case after the matter was restored by the Tribunal to his file sustained the addition of Rs.1,31,84,194/- made by the Assessing Officer u/s 69C r.w.s. 115BBE of the Act, the reasons of which have already been reproduced in the preceding paragraphs. It is the submission of the Ld. Counsel for the assessee that since the assessee is entitled to deduction u/s 80P, therefore, if the addition is made by the Assessing Officer u/s 69C, then the business income of the assessee will go up and the 7 assessee is entitled to the enhanced deduction because of the higher business income.

We find some force in the above arguments of the Ld. Counsel for the assessee. We find the CBDT vide Circular No.37/2016 has issued the guidelines for deduction on enhanced profits which read as under:

In view of the above, we accept the alternate claim of the Ld. Counsel for the assessee that the assessee is entitled to claim higher deduction u/s 80P on account of enhanced business profits. Accordingly grounds of appeal No.3 and 4 raised by the assessee are allowed. Since the alternate claim of the assessee is accepted and the income so determined is allowed as deduction u/s 80P, therefore, the other grounds raised by the assessee become academic in nature and are not being adjudicated.

In the result, the appeal filed by the assessee is allowed.

The concerned Pr.CIT, Pune

DR, ITAT, ‘A’ Bench, Pune ग र्ड फ ईल / Guard file. 5. आदेशानुसार/ BY ORDER, ////