THE BHANOKI CO-OP.AGRI.MULTIPUPOSE SOCIETY LTD, ,PHAGWARA vs. DEPUTY COMMISSIONER OF INCOME ATX , PHAGWARA

The Registry is pointed out that the appeal filed by the assessee is barred by limitation by 277 days. The assessee furnished the application for codonation of delay stating therein as under:

The assessee also furnished the affidavit of the ld. Counsel for the assessee, stating therein as under:-

During the course of hearing the learned counsel for the assessee reiterated the contents of the aforesaid application and the affidavit dated 11th September, 2017.

In his rival submission, the learned DR opposed the condonation of delay and stated that there was no reasonable cause.

In the present case, it appears that the impugned order was not served upon the assessee but on the counsel of the assessee. The said counsel could not inform the assessee and therefore the appeal before the learned CIT(A) could not be filed within time. I, therefore, considering this vital fact that the assessee is not on fault for filing the appeal belated, condon the delay and the appeal is admitted.

Following grounds have been raised in this appeal: “1. That the CIT(A) was not justified in sustaining the disallowance of Rs. 177069/- made by the AO u/s80-P of the Income Tax Act, 1961. 2. That CIT(A) while sustaining the disallowing failed to appreciate that the provisions of section 80P(2)(a)iv were duly applicable to the rent charges received on the agricultural implements from the members of the society. 3. That the orders of CIT(A) and AO are against the law and facts of the case.”

The only grievance of the assessee in this appeal relates to the sustenance of disallowance of Rs. 177069/- under section u/s80-P of the Income Tax Act, 1961.

Facts of the case in brief are that the assessee derived income from banking business and filed the return of income declaring nil income after claiming deduction under section 80P of the Income Tax Act, 1961 (hereinafter referred to as the Act). Later on the case was selected for scrutiny. During the course of assessment proceedings, the AO noticed that the assessee had earned rental income of machinery amounting to Rs. 1,77,069/-. He asked the assessee to explain as to why the deduction claimed under section 80P of the Act on the aforesaid amount should not be disallowed. The assessee submitted that the income arose from the rental income of agricultural equipments/implements given on rental to the members, therefore, it was eligible by deduction under section 80P(a)(2)(iv) of the Act. However, the AO did not find merit in the submission of the assessee and made the disallowance.

Being aggrieved the assessee carried the matter to the learned CIT(A) and submitted that the object of the assessee was to provide the agricultural services and banking services to its members and that one of the object of the assessee society was to provide agricultural machinery from a common pool such as Tractor, Seed drill, Spray Pumps and other agricultural machinery. It was further submitted that the assessee purchased implements which were kept in common pool for use of the members after charging the rent which was clearly exempt under section 80P of the Act. The learned CIT(A) did not find merit in the submissions of the assessee by observing that the rental income from machinery earned by the asessee society did not fall within the scope of the provisions of Section 80P(a)(2)(iv) of the Act.

Now the assessee is in appeal.

The learned counsel for the assessee reiterated the submissions made before the authorities below and further submitted that the implements were purchased by the assessee which were given to the members, therefore, the deduction was allowable under section 80P(a)(2)(iv) of the Act.

In his rival submissions, the learned DR supported the orders of the authorities below.

I have considered the submissions of both the parties and carefully gone through the material available on the record. In the present case, the whole controversy revolves around the deduction under section 80P of the Act. The provisions contained section 80P(a)(2)(iv) of the Act, 1961 reads as under:- “80P. (1) Where, in the case of an assessee being a cooperative society, the gross total income includes any income referred to in sub-section (2), there shall be deducted, in accordance with and subject to the provisions of this section, the sumps specified in sub-section (2), in computing the total income of the assessee. (2). The sums referred to in sub-section (1) shall be the following, namely:-- ---- ---- ---- (iv) the purchase of agricultural implements, seeds, livestock or other articles intended for agriculture for the purpose of supplying them to its members, or.”

In the result, appeal of the assessee is allowed.