SHRI NA vs. ARI KHEDUT SAHKARI SOCIETY LTD.,NAVSARIVS.ACIT , NAVSARI CIRCLE, NAVSARI

ITA 362/SRT/2025Status: DisposedITAT Surat09 October 2026AY 2016-177 pages
AI SummaryAllowed

What were the facts?

The assessee, Shri Navsari Khedut Sahkari Society Ltd., filed its return for AY 2016-17, declaring nil total income after claiming a deduction of Rs. 26,87,815/- under Section 80P. The return was processed under Section 143(1), disallowing Rs. 9,72,930/- of the Section 80P deduction, specifically on interest income (Rs. 2,55,865/-) and rental income (Rs. 7,17,065/-). The assessee filed a rectification application under Section 154. The Assessing Officer (AO) allowed the deduction for rental income but rejected it for interest income in an order dated 14.08.2020. The assessee's appeal to the Commissioner of Income-Tax (Appeals)-NFAC, Delhi, was unsuccessful. The assessee then filed an appeal before the Income Tax Appellate Tribunal (ITAT).

What did the Tribunal hold?

The Tribunal admitted the additional evidence furnished by the assessee, including the Chartered Accountant's certificate, under Rule 29 of the Income-tax (Appellate Tribunal) Rules, 1963, finding it to have a direct and material bearing on the nature and character of the impugned receipts. The Tribunal noted the assessee's contention that Rs. 58,968/- and Rs. 93,089/- of the interest income were inter-departmental, and the remaining was eligible for deduction under Section 80P(2)(a)(iii). Since these factual aspects had not been examined or verified by the lower authorities, the Tribunal, in the interest of substantial justice, restored the matter to the file of the AO. The AO was directed to examine the additional evidence, verify the nature and character of the receipts, and then adjudicate the assessee's claim for deduction under Section 80P, providing the assessee with a reasonable opportunity of being heard. The issue of whether the remaining interest income is eligible for deduction under Section 80P(2)(a)(iii) was left to be decided by the AO.

What were the issues?

1. Whether the ITAT has jurisdiction to admit additional evidence in appeal, specifically a Chartered Accountant's certificate regarding the nature of interest income, under Rule 29 of the Income-tax (Appellate Tribunal) Rules, 1963? Assessee's Contention: The assessee argued that the amounts of Rs. 58,968/- and Rs. 93,089/- within the impugned interest income of Rs. 2,55,865/- represented inter-departmental interest, which is neither income nor expenditure in a true sense. The remaining interest income was claimed to be eligible for deduction under Section 80P(2)(a)(iii). The assessee contended that these factual aspects were not examined by the lower authorities and requested the matter be restored to the AO for verification and fresh adjudication. The assessee relied on its application under Rule 29 and the accompanying index of additional evidence. Revenue's Contention: The Revenue, while relying on the orders of the lower authorities, did not seriously object to the restoration of the matter to the file of the AO.

Which sections of the Income-tax Act were involved?

Section 154,Section 80P,Section 80P(2)(a)(iii),Section 80P(2)(e)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, SURAT BENCH, SURAT

For Appellant: Shri Darshit J Naik, CA
For Respondent: Shri Ashish Kumar, Sr. DR

Per B.M. Biyani, A.M.: Feeling aggrieved by the order of first appeal dated 28.01.2025 passed by learned Commissioner of Income-Tax (Appeals)-NFAC, Delhi [“Ld. CIT(A)”], which in turn arises out of the rectification-order dated 14.08.2020 passed by learned ACIT, Navsari Circle, Navsari [“Ld. AO”] u/s 154 of Income-tax Act, 1961 [“the Act”] for Assessment-Year [“AY”] 2016-17, the assessee has filed this appeal on the grounds as mentioned in Appeal Memo (Form No. 36). Shri Navsari Khedut Sahkari Society Ltd. – AY 2016-17

2.

The background facts leading to present appeal are such that the assessee-society filed it

The order continues below.

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