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Facts
The assessee, a Primary Agricultural Cooperative Society, filed its return for A.Y 2021-22 claiming nil income after deducting under Section 80P(2)(a)(i) for dividend, interest, and rental income. The Assessing Officer (AO) denied the deduction and assessed these incomes under 'other sources' and 'house property' heads, citing failure to provide a registration certificate and evidence for expenditure. The Commissioner of Income Tax (Appeals) upheld the AO's decision.
Held
The Tribunal found that the assessee had furnished a registration certificate confirming its status as a Primary Agricultural Cooperative Credit Society, making it eligible for the Section 80P(2)(a)(i) deduction. It clarified that while unsubstantiated expenditures can be disallowed, the deduction itself cannot be denied solely for lack of evidence for expenses. Thus, the Tribunal set aside the orders of the lower authorities and directed the AO to allow the claimed deduction.
Key Issues
Whether the deduction under Section 80P(2)(a)(i) of the Income Tax Act can be denied to a Primary Agricultural Cooperative Credit Society for interest, dividend, and rental income merely due to the initial non-furnishing of a registration certificate or lack of supporting evidence for expenditures.
Sections Cited
80P, 80P(2)(a)(i)
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Income Tax Appellate Tribunal, Visakhapatnam Bench
करदाता का प्रतततितित्व/ : Shri ASRSS Siva Prasad, C.A. Assessee (HYBRID) Represented by राजस्व का प्रतततितित्व/ : Dr. Aparna Villuri, Sr.AR Department Represented by सुिवाई समाप्त होिे की ततति/ : 14.10.2025 Date of Conclusion of Hearing घोर्णध की तधरीख/ : 17.10.2025 Date of Pronouncement O R D E R PER MANJUNATHA G., A.M :
This appeal filed by the assessee is directed against the order of the learned Commissioner of Income Tax (Appeals), 2 National Faceless Appeal Centre [in short “NFAC”], Delhi, relating to the assessment year 2021-22.
The brief facts of the case are that the assessee, the Rudrapaka Primary Agricultural Cooperative Society Limited H1249, filed its return of income for A.Y 2021-22 on 11-07-2022, declaring total income at Rs. Nil after claiming deduction under Section 80P(2)(a)(i) of the Income Tax Act, 1961 (for short “the Act”). The case was selected for scrutiny, and during the course of the assessment proceedings, the A.O. called upon the assessee to furnish relevant supporting evidences in respect of deduction claimed under Section 80P of the Act, in respect of dividend income, interest income, and rental income. Although initially the assessee had not responded to the notices issued by the A.O., but vide submission dated 12-12-2022, furnished relevant details, and also explained the deduction claimed under Section 80P(2) of the Act, in respect of dividend income, interest income, and rental income. The A.O. after considering the relevant submissions of the assessee, observed that, although the assessee has furnished financial statements in support of its return of income, but failed to file certificate from the concerned authorities to prove that it is 3 a Primary Agricultural Cooperative Credit Society, registered under Andhra Pradesh Cooperative Societies Act, 1964. The A.O. further observed that, the assessee could not furnish relevant bye- laws of the society, and also evidencing the supporting of the expenditure debited in the Profit and Loss Account. Therefore, the A.O. rejected the explanation of the assessee and assessed the interest income, dividend income under the head “Income from other sources”, and rental income under the head “Income from house property”, and denied the claim under Section 80P(2)(a)(i) of the Act.
Aggrieved by the assessment order, the assessee preferred appeal before the Ld. CIT(A).
Before the Ld. CIT(A), the assessee submitted that it is a Primary Agricultural Cooperative Credit Society registered under Andhra Pradesh Cooperative Societies Act, 1964, and engaged in the business of providing credit facilities to its members and also engaged in sale of fertilizers to its members and marketing of agricultural produce grown by the farmers. The assessee further submitted that the income earned from interest income, dividend 4 income, and rental income is exempt under Section 80P(2)(a)(i) of the Act. The Ld. CIT(A), after considering the relevant submissions of the assessee and also taking note of the reasons given by the A.O. for denial of deduction under Section 80P of the Act, rejected the explanation of the assessee and upheld additions made by the A.O. on the ground that the onus was on the assessee to produce certificate of registration as a cooperative society. Further, the assessee has not been provided any supporting evidence before the Ld. CIT(A) to alter the findings of the A.O., therefore, the Ld. CIT(A) sustained the additions made by the AO.
Aggrieved by the order of Ld. CIT(A), the assessee is in appeal before the Tribunal.
The learned counsel for the assessee Shri ASRSS Siva Prasad, C.A. submitted that the Ld. CIT(A) erred in sustaining the additions made by the A.O. towards interest income, dividend income under the head “Income from other sources”, and rental income under the head “Income from house property” by denying deduction under Section 80P of the Act, even though, the assessee is entitled to the said deduction as per the provisions of the Act.
5 The learned counsel for the assessee, further referring to the Certificate of Registration issued by the Commissioner for Cooperation and