K6705 BOMMANAICKENPALAYAM PRIMARY AGRICULTURAL COOP CREDIT SOCIETY LIMITED,GOBICHETTIPALAYAM TALUK vs. THE INCOME TAX OFFICER WARD 2(1), ERODE

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ITA 2800/CHNY/2024Status: DisposedITAT Chennai03 February 2025AY 2017-2018Bench: HON’BLE SHRI ABY T. VARKEY (Judicial Member), SHRI MANOJ KUMAR AGGARWAL (Accountant Member)1 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal restored the appeal back to the file of the CIT(A) for de novo adjudication. This was due to the assessee failing to file requisite documents to substantiate its claim and demonstrate the applicability of case laws, and also because no adjudication was done on the disallowance under Section 37(1).

What were the facts?

The assessee challenged the disallowance of a deduction claimed under Section 80P(2)(a)(i) and the disallowance of expenditure under Section 37(1). The AO denied the deduction as the credit facility was provided to B-Class members who were not allotted shares or voting rights.

What were the issues?

Whether the deduction under Section 80P(2)(a)(i) is admissible for credit facilities provided to B-Class members, and whether the expenditure disallowed under Section 37(1) was justified.

Which sections of the Income-tax Act were involved?

Section 80P(2)(a)(i),Section 37(1),Section 143(3)

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Income Tax Appellate Tribunal, “A” BENCH, CHENNAI

Before: HON’BLE SHRI ABY T. VARKEY, JM & HON’BLE SHRI MANOJ KUMAR AGGARWAL, AM

आदेश / O R D E R Manoj Kumar Aggarwal (Accountant Member) 1. Aforesaid appeal by assessee for Assessment Year (AY) 2017-18 arises out of the order of learned Addl. / Joint Commissioner of Income Tax (Appeals)-1, Lucknow [CIT(A)] dated 03-10-2024 in the matter of an assessment framed by the Ld. AO u/s 143(3) of the Act on 19-11-2019. The grievance of the assessee is two-fold i.e., (i) Disallowance of deduction claimed u/s. 80P(2)(a)(i) for Rs.16,587/-; (ii) Disallowance of expenditure u/s 37(1) for Rs.4.65 Lacs.

2.

The deduction for Rs.16587/- has been disallowed on the ground that the assessee provided credit facility to B-Class Members who were admitted to society mainly for the purpose of availing loans against specified security on payment of non-refundable admission fees and their membership existed only for limited period (maximum 3 years). Such members were not allotted shares and they do not have right to vote and participate in meetings. The Ld. AO, considering the decision of Hon’ble Supreme Court in the case of M/s Citizen Co-operative Society Ltd. (84 Taxmann.com 114), denied impugned deduction u/s 80P(2)(a)(i). The Ld. AO also disallowed expenses u/s 37(1) for Rs.4.65 Lacs since the same were in the nature of provision for overdraft interest, gratuity and depreciation.

3.

During appellate proceedings, the assessee relied on the decision of Hon’ble Supreme Court in the case of Mavilayi Service Co-operative Bank Ltd. (123 Taxmann.com 161) and various other decisions. However, Ld. CIT(A) rejected the same on the ground that the assessee did not provide factual evidence regarding its income structure. The assessee failed to file the requisite documents and accordingly, the action of Ld. AO was upheld. No finding was rendered on disallowance u/s 37(1).

4.

Considering the aforesaid facts, we deem to restore the appeal back to the file of Ld. CIT(A) since the assessee has failed to file the requisite documents to substantiate its claim. The assessee failed to demonstrate that the aforesaid case law was applicable to it. Further, no adjudication has been done on disallowance u/s 37(1). For all these reasons, the appeal is restored back to the file of Ld. CIT(A) for de novo adjudication with a direction to the assessee to substantiate its case.

5.

The appeal stand allowed for statistical purposes. Order pronounced on 3rd February, 2025 Sd/- Sd/- (ABY T. VARKEY) (MANOJ KUMAR AGGARWAL) �ाियक सद� /JUDICIAL MEMBER लेखा सद� / ACCOUNTANT MEMBER चे4ई Chennai; िदनांक Dated :03-02-2025 DS आदेश की Fितिलिप अ$ेिषत / Copy of the Order forwarded to : 1. अपीलाथ�/Appellant 2. � थ�/Respondent 3. आयकरआयु=/CIT Coimbatore/Madurai/Chennai. 4. िवभागीय�ितिनिध/DR 5. गाडBफाईल/GF

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