THE CHANDRASEKARAPURAM CO-OPERATIVE WHOLESALE STORES LTD.,THANJAVUR vs. ITO, WARD-1,, KUMBAKONAM

The present appeal is filed against the order of the Ld.CIT(Appeals) / First Appellate Authority dated 29.02.2024 in DIN & Order No. ITBA/NFAC/S/250/2023-24/1061754096(1).

At the outset, we find that there is a delay of 161 days in appeal filed by the assessee, for which the assessee has filed affidavit along with petition for condonation of delay in filing the appeal stating the reasons for delay, wherein, it is submitted that the delay in filing the appeal was due to the circumstances beyond the control of the assessee. Hence, there was a delay in filing the appeal by the assessee. After considering the Affidavit filed by the assessee and also hearing both the parties, we find that there is a reasonable cause for the assessee in not filing appeal on or before the due date prescribed under the law and thus, in the interests of justice, we condone delay in filing of appeal and admit the appeal filed by the assessee for adjudication.

The only solitary ground raised by the assessee in their appeal is denial of the deduction claimed u/s.80P of the Act by the ld.CIT(A).

The brief facts of the case is that the assessee is a Co-operative Society owned by the Tamilnadu State Government. The Stores is Servicing 426 Ration shops situated in Kumbakonam, Thiruvidaimaruthur and Papanasam Taluks by distributing essential commodities. The assessee Co-operative Society further runs five “Amma Marunthagam” medical shops in Kumbakonam for selling medicines at the discounted price as well as supplies necessary goods to government departments including Courts, Temples, Jails, College Hostels, School Hostels, Transport Corporation.

The return of income was filed for the Assessment Year 2020-21 by the assessee by claiming deduction u/s.80P of the Act to the extent of Rs.62,52,888/-, which comprises of - (a) deduction in terms of Section 80(P)(2)(c)(1) to the tune of Rs.1,00,000/-, - (b) Deduction under Section 80(P) (d) to the tune of Rs. 4,500/- & Rs. 36,70,483/- - (c) Rs. 24,75,931/- as profit attributable to member business.

The said return of income filed was selected for scrutiny by way of issuance of notice u/s.143(2) of the Act dated 29.06.2021 through CASS to examine the issue of “Deduction from total income under chapter VI-A (Business ITR)”

The assessee had filed its replies along with the documentary evidence in support of the return of income filed for the assessment year under consideration and thereafter the scrutiny assessment order was passed on 28.09.2022 in disallowing the entire claim of deduction u/s.80P of the Act forming part of the return of income filed for the assessment year under consideration to the extent of Rs.62,52,888/-.

The Ld.CIT(A) had placed reliance upon the decision co-ordinate bench University Agricultural v. ACIT dated 18.05.2023 as well as the decision rendered in the case of M/s.Uppinangady Catholic Multipurpose Coop Society v. ITO Ward-1, Puttur, dated 0.7.06.2023.

The ld. CIT(A) while concluding, had directed the AO to allow the assessee’s claim of deduction u/s.80P of the Act forming part of the return of income filed for the assessment year under consideration. However, the Ld.CIT(A) had held that said claim of deduction would not available for the assessee for the sums / income earned from running of activity in the nature of providing credit to Associate / nominal members and further the claim of deduction would not be allowed for the sums received in the nature of interest from accounts maintained and operated with other cooperative societies/ banks which are governed by RBI Banking Regulation Act.

We have heard the rival contentions perused the material available on record and gone through the orders of the authorities. The Ld. AR during the course of hearing had brought to our notice that the AO had passed the order giving effect to the directions of the First Appellate Authority, wherein the AO had allowed the claim to the extent of Rs.36,72,457/-, i.e. the component of the deduction u/s.80P of the Act which was directed by the First Appellate Authority for verification.

The ld.DR of the revenue placed reliance upon the order of the First Appellate Authority and pleaded for confirming the order of the Ld. CIT(Appeals) as well as the Assessing Officer.

We find that since the AO had allowed the claim of deduction u/s.80P of the Act in pursuant to the directions of the Ld.CIT(A), which directions is being challenged in the present appeal, the relevant grounds of appeal raised by the assessee are accordingly reckoned as academic.

We find that the action of the AO in arbitrarily disallowing the claim of deduction u/s.80P of the Act on the disputed sums received in the nature of profit attributable to member business in the absence of any material change in the provisions of law nor in the change in the nature of activities carried out by the assessee. Hence, by following the rule of consistency, we are inclined to accept the arguments of the assessee.

The Hon’ble Supreme Court in the case of Bharat Sanchar Nigam Ltd. v.

In the present facts and circumstances of the case, we respectfully following the decision of the Apex Court and in view of the fact of the earlier return(s) of income filed by the assessee being accepted by the AO in toto, the disallowance made on the sums received in the nature of profit attributable to member business, claimed as deduction u/s.80P of the Act is hereby deleted by following the principles of consistency as well as principles of judicial discipline.

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