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Facts
The assessee, a co-operative society, faced various additions to income during assessment, including disallowances under Section 40A(ia) and for capital reserve. A previous ITAT order had already remanded the case for adjudication on the assessee's eligibility for Section 80P deduction. The current appeal arises because the Ld. CIT(A) upheld the additions and noted no Section 80P claim was made in the return, while the assessee contends a technical defect in its PAN status prevented such a claim in the e-filing system.
Held
The Tribunal found that a fresh verification by the Assessing Officer is necessary to examine the assessee's submission regarding the technical defect in its PAN status affecting the Section 80P deduction claim. Consequently, the Tribunal set aside the orders of the lower authorities concerning this issue and restored the case back to the AO for fresh adjudication, allowing the appeal for statistical purposes.
Key Issues
Whether the assessee is eligible for Section 80P deduction despite a technical error in its PAN status preventing the claim in the e-filing system, and the correctness of various disallowances made in the assessment.
Sections Cited
40A(ia), 80P, 263, 143(3), Chapter VI-A
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “A” BENCH: KOLKATA
Before: Shri Rajesh Kumar&Shri Pradip Kumar Choubey]
ORDER / आदेश Per Pradip Kumar Choubey, JM: This is the appeal preferred by the assessee against order of Commissioner of Income Tax (Appeal)- NFAC, Delhi (hereinafter referred to as the Ld. CIT(A)] dated 18.06.2024 for AY 2008-09.
Brief facts of the case of the assessee are that the assessee being a co-operative society filed return of income declaring total income of Rs. 64,55,805/-. The case was Assessment Year: 2008-09 Bardhaman Dishari Shramik O Janakalyan Samabay Samity limited selected for scrutiny and assessment was completed adding back AMC charges of Rs. 1,06,050/-, meeting soil testing charges of Rs.2,02,997/-, rent of Rs. 1,25,000/- and survey and drawing charges of Rs. 9,01,255/- u/s 40a(ia) of the Act. In absence of evidence, donation of Rs. 5,000/- was added back. Excess claim of depreciation of Rs. 2,54,175/- was also disallowed. The AO further noticed that Rs. 9,00,000/- was given as a grant to Cyber Research & Training Institute and the same was not related to the business activity of the assessee. Accordingly, the same was also disallowed and added back to the income of the assessee.
Aggrieved by the said order the assessee preferred an appeal before the Ld. CIT(A) wherein the Ld. CIT(A) vide its order dated 21.10.2011 allowed the relief of Rs. 1,42,700/- out of addition made u/s 40a(ia) of the Act. Further addition of Rs. 5,000/- on account of donation was also deleted but balance additions were confirmed. Aggrieved by the said order the assessee preferred an appeal before the ITAT. The ITAT in its order dated 03.03.2015 set aside the case back to the file by the Ld. CIT(A) with the following comments:
“4. We have gone through the order of Ld. CIT(A) and also gone through the grounds raised
. It is clear that the assessee has raised this ground before Ld. CIT(A), though not specific, but against each of the grounds it was claimed that all of profits of the society shall be exempt u/s 80P of the Act. According to Ld. Counsel, this was never adjudicated upon by Ld. CIT(A). On query from the bench, the Ld. S.R.DR fairly conceded that this issue can be sent back to the file of Ld. CIT(A) for re-adjudicated by Ld. CIT(A). Hence, we direct the Ld. CIT(A) to adjudicate the issue whether the assessee is eligible for deduction u/s 80P of the act on the above disallowance and even on merits. Accordingly, appeal of assessee is allowed for statistical purposes.
2. In the meanwhile, original assessment dated 28.12.2010 was subjected to revisionary procedure by an order u/s 263 of the Act dated 26.12.2012. In this order Ld. CIT(A), Burdwan observed: On careful verification of the assessment record it is noticed that the assessee had debited Rs. 65,00,000/- on account of Capital Reserve in the P/L account for the accounting year 2007-08, relevant to the AY 2008-09. As per provision as laid down in the Income Tax Act, 1961 this is not allowable revenue expenditure, however, the assessing officer while making assessment u/s 143(3) of the Act had allowed this capital reserve, treating the same as revenue expenditure. Hence, by allowing the capital reserve without examining actual provision, as laid down in Income Tax Act, 1961, the AO has rendered the assessment order both erroneous and prejudicial to the interest of Revenue.
3. Pursuant to this order, the case was re-fixed. During this proceedings, the AO observed:
Assessment Year: 2008-09 Bardhaman Dishari Shramik O Janakalyan Samabay Samity limited In response to the notice Shri Bisweswar Ghosh, advocate/ Authorized Representative of the society appeared and made submission. It has furnished the working of capital gain on sale of land purchased in the year 2000. But it has not been able to explain the claim of deduction of capital reserve. Copy of agreement for purchase of land during the year under consideration has also not been furnished in spite of repeated requests and notices. 3.1 A neither before the Ld. CIT, Burdwan nor before the AO, adjustment of Capital Reserve of Rs. 65,00,000/- through the P & L account could be explained by the appellant, the AO by an order u/s 143(3)/263/ 143(3) of the Act dated 20.02.2014, added back the impugned sum. Aggrieved, the assessee has preferred this appeal.”
The Ld. CIT(A) in its order dated 18.06.2024 has held that issue of deduction u/s 80P of the Act, it was noticed that no claim of deduction u/s 80P of the Act was made by the assessee in the return of income though the matter remitted back to the file of CIT(A) for fresh adjudication. The Ld. CIT(A) has further held that addition in the original assessment order is concerned no additional verifiable documents was produced before the undersigned to deviate from the conclusion raised by the Ld. CIT(A) in his order dated 21-10-2011. Accordingly, ground no. 2 is decided against the assessee.
Being aggrieved and dissatisfied the present appeal has been preferred by the assessee.
The ld. Counsel of the assessee submitted that the assessee is a co-operative society registered under the West Bengal Co-operative Societies Act, 2006 and assessee filed return with PAN no. AABTB 3502B, the status code of which was Trust, but the actual code of the assessee is Association of persons. The status code in the PAN AABTB 3502B was wrong, it was Trust and Trust is not allowed to get deduction u/s 80P of the Act. It is only the Co-operative Society must have a PAN with correct status code of Association of person. In the instant case due to the wrong status code of Trust the system software did not allow to put any figure in “K” of schedule- VIA of the return as a result of which deduction under Chapter VIA in point number-10 in part B TI computation of total income is zero, the system software did not allow the deduction under Section 80P of the Act due to the wrong status code of Trust in the PAN of the assessee. There were technical defects is the return for filing up the column “K” in schedule- VIA in the return as a result of which the Column-10 in the part B-TI Assessment Year: 2008-09 Bardhaman Dishari Shramik O Janakalyan Samabay Samity limited Computation of Total income relating to deduction u/s 80P is zero but the assessee claimed the deduction u/s 80P of the Act by not offering the income from business or profession for payment of tax. There is no tax paid on the income from Business or profession of Rs. 4,43,526/- in the return. The Ld. Counsel submits that it is a matter of fresh verification by AO in the context of the submissions made by the assessee.
The Ld. D.R supports the impugned order.
We have gone through the order passed by the Ld. CIT(A) as well as the AO. Upon going over the order passed by the Ld. CIT(A), it appears to us that the Ld. CIT(A) in its order has held that so far, the issue of deduction u/s 80P of the Act is concerned order of Ld. CIT(A) was closely gone through. It was noticed that no claim of deduction u/s 80P of the Act was made by the assessee in the return of income. The submission of the ld. Counsel for the assessee as we have discussed above that there were technical defects in the return for filing up the column K in schedule VIA in the return, as a result of which, the column 10 in the part B-TI computation of total income relating to deduction u/s 80P is zero but the assessee claimed the deduction u/s 80P of the Act by not confirming the income from business or profession or deduction of tax. There is no tax paid on the income from business or profession of Rs. 4,43,526/- in the return. The Ld. Counsel for the assessee submitted that the Computation of Total income relating to deduction u/s 80P is zero but the assessee claimed the deduction u/s 80P of the Act by not offering the income from business or profession for payment of tax. There is no tax paid on the income from Business or profession of Rs. 4,43,526/- in the return. We found that the status code for income tax purposes of the assessee is an association of persons but the status code in PAN AABTB 3502 B was trust, as a result of which, the system application did not allow the deduction u/s 80P which is applicable only for co-operative society. The Ld. Counsel filed a chart of details of tax paid as per return which is as follows:
Assessment Year: 2008-09 Bardhaman Dishari Shramik O Janakalyan Samabay Samity limited Particulars Tax & Interest Paid Deduction u/s 80P Total Tax & Interest (Rs.) claimed paid Income from House 0.00 0.00 0.00 Property Income from 4,43,526/- 4.43,526/- Nil Business or Profession Capital Gains 20.08.890/- 0.00 20,08,890/- Total 24,52,416/- 4,43,526/- 20,08,890/-
Going over the submission made by the assessee and order passed by the lower authorities, the interest of justice demands for verification with regards to the issue raised by the assessee by the AO., as a result of which, the appeal of the assessee is restored into the file of AO for fresh verification in the light of submission made by the assessee. Accordingly, the order passed by the AO confirmed by the Ld. CIT(A) on this issue are hereby set aside. The case is restored back to the file of AO for fresh adjudication in the light of submission made by the assessee.
In the result, the appeal of the assessee is allowed for statistical purposes.
Order is pronounced in the open court on 10th March, 2025