SWABHIMAN VIJ TANTRIK NAGARI SEVA SAHAKARI SANSTHA,AMRAVATI vs. INCOME TAX OFFICER, WARD 4, AMRAVATI, AMRAVATI

Registry has pointed out that there is delay of 46 days in filing of the appeal before this Tribunal. Assessee has filed an affidavit explaining the reason which led to delay. On due consideration of the averments made in the affidavit, I am satisfied that ‘reasonable cause’ prevented the assessee to file the appeal within the stipulated time. I note that the delay is not intentional and assessee would not have gained from filing the appeal with a delay. I therefore in light of judgments of Hon’ble Apex Court in the case of Collector, Land Acquisition, Anantnag & Anr. Vs. Mst. Katiji & Ors. reported in (1987) 2 SCC 107 and in the case of Inder Singh Vs. State of Madhya Pradesh judgment dated 21.03.2025 (2025 INSC 382) condone the delay of 46 days in filing of the instant appeal before this Tribunal and admit the appeal for adjudication.

The grievance of the assessee are two fold, firstly the reassessment order u/s.147 of the Act when the facts were already available and have been examined during the course of assessment proceedings u/s.143(3) of the Act and secondly the disallowance of claim of deduction u/s.80P of the Act at Rs.2,31,994/-.

I have the heard the rival contentions and perused the record placed before me. I observe that the assessee is a Cooperative Society and filed its return of income on 13.10.2013 for A.Y. 201314 declaring Nil income. Case selected for regular scrutiny and assessment u/s.143(3) of the Act is concluded on 29.09.2015 assessing total income at Rs.28,210/-. Ld. Assessing Officer allowed the deduction u/s.80P of the Act at Rs.9,07,740/-and only made the addition for the interest income on fixed deposits receipts and bank interest at Rs.28,213/- and denied the deduction u/s.80P thereof. Subsequently, it came to the notice of the Assessing Officer that that there has been delay in deposit of employees provident fund/employees state insurance and invoking section 36(1)(va) r.w.s.2(24)(x) of the Act such delayed payment of PF/ESI amounted to Rs.7,31,994/-. Based on this information, re-assessment proceedings were carried out and even though the assessee challenged the reopening, however, ld. Assessing Officer concluded the proceedings withdrawing the deduction u/s.80P of the Act at Rs.7,31,994/- and assessed the income u/s.147 of the Act at Rs.7,60,200/-. Aggrieved assessee preferred appeal before ld.CIT(A) but failed to succeed as the assessee could not furnish necessary details as called for by ld.CIT(A) resulting into confirmation of the disallowance made by Assessing Officer. Now the assessee is in appeal before this Tribunal.

On going through the record, I notice that ld. Assessing Officer has not disputed the eligibility of the assessee of claiming deduction u/s.80P of the Act being a Cooperative Society and the other conditions required for availing the deduction u/s.80P of the Act has been examined and accepted. Now the impugned disallowance is on account of delay in deposit of employees contribution towards PF/ESI. Even though delay in deposit of such PS/ESI triggers the provisions of section 36(1)(va) and the amounts deserves to be disallowed, however, in the present case, I am dealing with an assessee which is a Cooperative Society and even if certain expenses are disallowed giving raise to the increase in income, the source of such income is from the activity of a Cooperative Society itself and the increased net profit is normally eligible for deduction u/s.80P of the Act.

Here, I would like to take into consideration the CBDT Circular No.37/2016 dated 02.11.2016 under the heading ‘Chapter VIA deduction on enhanced profits’ and states that the Board has accepted the settled position that if the disallowance made u/s.32, 40(a)(ia), 40A(3), 43B etc. and other specific disallowances related to the business activity against which the Chapter VIA deductions have been claimed, result in enhancement of the profits of the eligible business then deduction under Chapter VIA is admissible on the profits so enhanced by disallowance. Considering the CBDT circular (supra), I am of the considered view that the assessee is eligible for deduction u/s.80P of the Act on the increased profits post disallowance u/s.36(1)(va) of the Act. Finding of ld.CIT(A) is set-aside and grounds of appeal raised by the assessee on merit are allowed.

Since I have dealt with the issues on merit and deleted the disallowance, dealing with the legal issues raised by the assessee would be merely academic in nature and therefore are dismissed as Infructuous.

In the result, the appeal of the assessee is allowed as per the terms indicated hereinabove .

The Pr. CIT concerned. विभ गीय प्रतितनधि, आयकर अपीलीय अधिकरण, न गपुर SMC बेंच, 4. न गपुर / DR, ITAT, “Nagpur SMC Bench, Nagpur ग र्ड फ़ इल / Guard File. 5. आिेश नुस र / BY ORDER,