SHRI ARYA CHANAKYANAGARI SAHKARI PATSANSTHA MARYADIT,ICHALKARANJI vs. INCOME TAX OFFICER, ICHALKARANJI

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ITA 2528/PUN/2025Status: DisposedITAT Pune27 May 2026AY 2022-233 pages
AI SummaryAllowed

What did the Tribunal hold?

The tribunal held that disallowances related to business activity against which Chapter VI-A deductions are claimed result in enhanced profits, and deductions are admissible on these enhanced profits. Following CBDT Circular No. 37/2016, the tribunal directed the AO to allow the deduction.

What were the facts?

The assessee, a cooperative society, claimed a deduction under Section 80P(2)(a)(i). The Assessing Officer (AO) and CIT(A) allowed a deduction but disallowed an amount of Rs. 1,82,200 under Section 36(1)(va). The assessee argued that this disallowed amount should also be eligible for deduction under Section 80P.

What were the issues?

Whether a disallowance under Section 36(1)(va) leads to an enhancement of eligible business profits for the purpose of deduction under Section 80P(2)(a)(i).

Which sections of the Income-tax Act were involved?

Section 80P,Section 36(1)(va),Section 250

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, PUNE BENCH “SMC”, PUNE

Before: SHRI Dr. DIPAK P. RIPOTE & SHRI VINAY BHAMORE

For Respondent: Shri Sandeep Sathe, JCIT-DR

PER Dr. DIPAK P. RIPOTE, A.M : This is an appeal filed by the assessee against the order u/s 250 of the Income Tax Act 1961 dated 11.09.2025 for AY 2022-23.

2.

Grounds of appeal raised by the assesse are as under:

“1. On the facts and circumstances of the case and in law the CIT(A), NFAC erred in confirming the action of the AO of denying enhanced deduction u/s 80P(2)(a)(i) in respect increase in its Gross Total Income of Rs.1,82,200 on account disallowance u/s 36(1)(va) in terms of circular of CBDT No.37/2016 dated 02.11.2016.

The appellant prays that the AO be directed to allow the deduction u/s 80P(2)(a)(i) on such enhancement in Gross Total Income. The appellant craves leave to add, amend, alter, modify, delete or add a new ground of appeal before or at the time of hearing.”

ITA No. 2528/PUN/2025

3.

We have heard both the parties and peruse the records.

4.

In this case the only issue for our consideration io denial of deduction u/s 80P(2)(a) of the Act with reference to disallowance of Rs. 1,82,200/- u/s 36(1)(va). In this case the Assessing Officer and CIT(A) had allowed assesse deduction u/s 80P of the Act of Rs. 2,37,03,396/-, however, there was a disallowance of Rs. 1,82,200/- u/s 36(1)(va). The assesse pleaded that though there is a disallowance and respective addition, finally the amount added is eligible for deduction u/s 80P(2)(a) of the Act.

5.

This issue is covered by CBDT Circular No. 37/2016 dated 02.11.2016.

6.

The relevant part of the CBDT Circular No. 37/2016 dated 02.11.2016 is reproduced as under: Quote“3. In view of the above, the Board has accepted the settled position that the disallowances made under sections 32, 40(a)(ia), 40A(3), 43B, etc. of the Act and other specific disallowances, related to the business activity against which the Chapter VI-A deduction has been claimed, result in enhancement of the profits of the eligible business, and that deduction under Chapter VI-A is admissible on the profits so enhanced by the disallowance.”Quote 7. Thus, CBDT has specifically directed AO to allow deduction under Chapter VI A wherein disallowance has increased eligible business profit. In this case there is no dispute that this disallowance made u/s 36(1)(va) of the Act is emanating from the business of assessee. The CBDT circulars are binding on AO. Accordingly the AO is directed to allow deduction of Rs. 1,82,200/- u/s 80P(2)(a) of the Act. Accordingly the sole ground raised by assesse is allowed.

8.

In the result, the appeal of the assessee is allowed.

Order pronounced in the open Court on 27th May, 2026

Sd/- Sd/- (VINAY BHAMORE) (Dr. DIPAK P. RIPOTE) JUDICIAL MEMBER ACCOUNTANT MEMBER पुणे/Pune; दिन ांक/Dated : 27-05-2026 TNMM

ITA No. 2528/PUN/2025

आदेश की प्रतितिति अग्रेतिि/Copy of the Order is forwarded to: अपील र्थी / The Appellant 1. प्रत्यर्थी / The Respondent 2. 3. The concerned Pr.CIT, Pune 4. DR, ITAT, ‘SMC’ Bench, Pune 5. ग र्ड फ ईल / Guard file. आदेशानुसार/ BY ORDER, // True Copy // Assistant Registrar आयकर अपीलीय अदिकरण ,पुणे / ITAT, Pune

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