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Facts
The assessee, a primary agricultural credit society, filed an appeal against an order dismissing its appeal for non-compliance. The Assessing Officer had disallowed a deduction claimed under Section 80P of the Income Tax Act.
Held
The Tribunal held that the CIT(A) failed to decide the issue on merits and only dismissed the appeal for non-prosecution. The appeal was restored to the CIT(A) to decide the allowability of deduction under Section 80P(2)(d) on merits.
Key Issues
Whether the CIT(A) erred in dismissing the appeal for non-prosecution instead of deciding the issue of deduction under Section 80P on merits. Whether the assessee is entitled to deduction under Section 80P(2)(d) of the Act.
Sections Cited
143(3), 80P, 80P(2)(a)(i), 80P(2)(d)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “SMC” BENCH : BANGALORE
Before: SHRI PRASHANT MAHARISHI
Date of hearing : 12.06.2025 Date of Pronouncement : 11.08.2025 O R D E R
This appeal is filed by L.S.M.P. Co-operative Society Ltd. (the assessee/appellant) for the assessment year 2017-18 against the appellate order passed by the CIT(Appeals), Gwalior [ld. CIT(A)] dated 21.1.2025 wherein the appeal filed by the assessee against the assessment order passed u/s. 143(3) of the Income-tax Act, 1961 [the Act] dated 24.12.2019 by the ITO, Ward 1, Sirsi was dismissed for non-compliance. The assessee is aggrieved and is in appeal claiming deduction u/s. 80P(2)(d) of the Act of Rs.6,07,415.99.
The brief facts show that assessee is a primary agricultural credit society registered under the Karnataka Co-operative Societies Act, 1959, engaged in the business of providing credit facilities to farmers
and also accepting deposits from farmers. Assessee is conducting its business activities according to the bye laws and in terms of the provisions of the Act. It has made investments in shares & fixed deposits of Kanara Districut Central Co-op. Bank [KDCC Bank] and have earned interest income of dividend income therefrom. Assessee filed its return of income at a gross total income of Rs.74,81,168 and net taxable income was disclosed at Rs.6,870. Assessee has claimed deduction u/s. 80P(2)(a)(i) of the Act of Rs.6,07,415.
The ld. AO during the course of assessment proceedings passed an order u/s. 143(3) dated 24.12.2019 disallowing deduction u/s. 80P of the Act which are consisting of trading profit of Rs.4,17,701, godown rent of Rs.21,228, dividend income of Rs.1,64,636 and net dividend income of Rs.3,850, totalling to Rs.6,07,415. The total income was assessed at the above sum.
Assessee preferred appeal before the ld. CIT(A) who issued 5 notices to the assessee, but none of them were complied with and therefore he held that it seems that assessee is not interested to pursue the appeal and dismissed the appeal of the assessee. Against this order of appellate authority, assessee is in appeal before us.
I have heard the rival contentions and found that the ld. CIT(A) has not decided the issue on the merits of the case, whether assessee is entitled to deduction u/s. 80P of the Act or not. He has merely dismissed the appeal for non-prosecution. The ld. CIT(A) is mandated to decide the issue only on the merit of the case and not on the issue whether assessee is willing to prosecute the appeal or not.
In view of the above facts, we restore the whole appeal back to the file of ld. CIT(A) with a direction to decide the issue about the allowability of deduction u/s. 80P(2)(d) of the Act, after considering the decision of Hon’ble Supreme Court in the case of Mavilayi Service Co-operative [TS-12-SC-2021] and Bank Ltd. Kerala State Co-Operative Agricultural & Rural Development Bank Ltd. [TS-528-SC-2023] dated 14.9.2023 wherein it has been held that co-operative societies are entitled to deduction u/s. 80P of the Act and provisions are to be interpreted liberally.
Assessee is directed to make submission before the CIT(A), who after giving opportunity of hearing to the assessee, may decide the issue in accordance with law considering the above decisions of Hon’ble Supreme Court.
In the result, the appeal of the assessee is allowed for statistical purposes.
Pronounced in the open court on this 11th day of August, 2025.