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Income Tax Appellate Tribunal, BENGULURU BENCH, BENGULURU
Before: SHRI CHANDRA POOJARI, AM
Per CHANDRA POOJARI, AM
This appeal filed by the assessee is directed against the order of the CIT(A) The relevant assessment year is 2015-16.
The assessee has raised the following grounds of appeal:
1. That the order of the learned Commissioner of Income-tax(Appeals) in so far as it is prejudicial to the interests of the appellant is bad and erroneous in law and is against the facts and circumstances of the case.
2. That the learned Commissioner of Income-tax(Appeals) erred in law and on facts in not allowing the deduction of Rs.32,39,442/- claimed u/s.80P(2)(a)(i) on the ground that the appellant is not a Co-operative Society.
3. That the learned Commissioner of Income-tax(Appeals) erred in law and on facts in making an addition of Rs.5,72,250/-holding that the income earned from nominal members is not allowed as deduction u/s.80P(2)(a)(i) of the Act on the ground that such members do not hold voting rights and do not participate in the management of the appellant. 4. That the learned Commissioner of Income-Tax(Appeals) ought to have appreciated that the Karnataka Co-operative Societies Act, 1959 allows the Co-operative Society to admit nominal members and therefore, deduction u/s. 80P(2)(a)(i) of the Act be allowed. 5. That the learned Commissioner of Income-Tax(Appeals) erred in law and on facts in not allowing the interest income of Rs.26,67,162/-as deduction u/s. 80P(2)(a)(i) of the Act even though the investments were made out of surplus fund and attributable to the business activity of the appellant. 6. That the learned Commissioner of Income-Tax(Appeals) erred in law and on facts in not allowing the interest income of Rs.26,67,162/- earned from Co-operative Banks as deduction u/s. 80P(2)(d)of the Act. 7. That the learned Commissioner of Income-tax(Appeals) erred in law and on facts in not allowing expenditure incurred for earning the interest income from the investments.
3. The assessee has also filed additional grounds which read as follows:
1. 1. Ground regarding Limitation 1.1 That the order u/s. 143(3) is barred by limitation as the same is issued on 01.01.2018 i.e. beyond twenty one months from the end of the financial year in which the return of income is filed.
2. Grounds regarding deduction u/s. 80P of Income-tax Act, 1961(Act)
2.1. That the learned lower authorities ought to have appreciated that if the income from nominal members is not entitled for deduction u/s. 80P of the Act, the business carried on with its regular members would result in a loss of Rs.17,43,445/- and the same is to be set off against the aforesaid income of Rs.32,39,412/-. 2.2 Without prejudice to the ground that the appellant is entitled to deduction u/s. 80P of the Act, that the learned lower authorities ought to have computed the net income at Rs.14,95,967/- instead of Rs.32,39,412/-. 2.3 Without prejudice to the other grounds, that the disallowance cannot exceed Rs.14,95,967/- being the deduction claimed u/s. 80P of the Act in the return of income.
Submissions on Admission of Additional Grounds 3.1 Ground No.1 – Ground regarding Limitation 3.1.1 This ground is legal in nature. The relevant facts and materials are available on record. No new or fresh material is required to decide the above ground. This ground was raised before the learned Commissioner of Income-tax(Appeals) and the same is adjudicated. By oversight, the same was not raised in the grounds of appeal filed before ITAT. 3.2 Ground Nos. 2 to 4 – Grounds regarding deduction u/s. 80P of Income-tax Act, 1961 (Act) 3.2.1 These grounds are part of the assessment order. The relevant facts and materials are available on record. No new or fresh material is required to decide the above grounds. During the first appeal proceedings, the appellant was advised that the same will be rectified during the appeal proceedings and no specific ground is required to be raised. However, on advice of the consultants representing the case before the Tribunal, specific grounds are being raised.
Hence, it was prayed to admit the additional grounds and decide them on merits. The appellant relied on the following decisions of the Supreme Court: a. CIT vs. NTPVC (229 ITR 383) b. Jute Corporation of India vs. CIT(187 ITR 688) 4. The assessee has raised the additional grounds due to inadvertences and requested the Tribunal to admit the above additional grounds. 5. The Ld. DR objected to the admission of the additional grounds.
I have heard both the parties on these issues. The assessee has bonafide reasons in raising the additional grounds and due to inadvertences, the assessee failed to raise these grounds on earlier occasion. By placing reliance on the judgment of the Supreme Court in the case of CIT vs. NTPC (229 ITR 383), I am inclined to admit the additional grounds on the reason that all the facts relevant to these grounds are on record and there is no necessity of fresh investigation. into all the facts relevant to these grounds. Accordingly, the additional grounds are admitted for adjudication.
Regarding the first additional ground, the facts of the case are that the assessment order in this case was passed after the due date of passing the assessment order. The assessee submitted that the due date for passing the assessment order was on 31/12/2017. According to the Ld. AR, though the assessment order was passed on 29/12/2017, but actually it was sent by registered post to the assessee only on 02/01/2018. Being so, according to him, the assessment order should have left the desk of the Assessing Officer before 31/12/2017. Since the assessment order was sent by Registered Post only on 02/01/2018, it cannot be said that the order was passed within the due date. For this purpose, he relied on the judgment of the Karnataka High Court in the case of CIT vs. BJN Hotels Limited (382 ITR 110). 8. On the other hand, the Ld. DR submitted that 30/12/2017 and 31/12/2017 were Saturday and Sunday. Being so, it cannot be considered as working days and it was rightly posted to the assessee on 01/01/2018.
I have heard the rival submissions and perused the record. Admittedly, in this case, the assessment order was passed on 29/12/2017. However, it was received by the assessee through Speed Post on 02/01/2018. Now the contention of the assessee is that it should have been posted on or before 31/12/2017. However, I find that 30/12/2017 and 31/12/2017 were Saturday and Sunday being Government holidays. Being so, the assessment order was rightly sent by Speed Post on 01/01/2018 and it cannot be said that the assessment order was barred by limitation. Accordingly, I reject this additional ground taken by the assessee.
The next additional ground is with regard to deduction u/s. 80P of the I.T. Act. The Assessing Officer should have considered the net income at Rs.14,95,967/- instead of Rs.32,39,412/- by setting off the loss incurred on account of business carried on with the regular members which resulted in loss of Rs.17,43,445/-. The same is to be set off against the above said income of Rs.32,39,412/-. 11. I have heard both the parties on this issue. The assessee has raised this additional ground first time before the Tribunal and the lower authorities had no to consider this ground. In view of this, I am inclined to remit this issue to the file of the CIT(A) for fresh consideration. Accordingly, this additional ground of the assessee is allowed for statistical purposes.
Coming to the main grounds of the assessee, these grounds are to be considered after adjudicating the second additional ground as discussed above. The assessee is at liberty to agitate this ground before us after adjudication by the CIT(A), if so advised.
In the result, the appeal of the assessee is partly allowed for statistical purposes. Order pronounced in the open Court on this 8th September, 2020.