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Facts
The assessee filed an appeal against the order of the CIT(A) which upheld the Assessing Officer's disallowance of certain deductions under Section 80P of the Income Tax Act, 1961. The assessee claimed deductions amounting to Rs. 31,42,770, but the AO allowed only Rs. 50,000 under Section 80P(2)(c). The CIT(A) dismissed the appeal, primarily focusing on deductions claimed under Section 80P(2)(d) concerning interest earned from co-operative banks.
Held
The Tribunal noted that the assessee had presented a detailed chart of trading and profit and loss accounts showing various deductions claimed under Section 80P. It was observed that the CIT(A) had focused only on Section 80P(2)(d) and ignored other deductions claimed by the assessee. Therefore, the Tribunal held that the assessee did not get a proper opportunity to be heard and that the order of the CIT(A) needed to be set aside.
Key Issues
Whether the CIT(A) erred in not considering all the deductions claimed by the assessee under Section 80P of the Act and whether the case should be remanded to the Assessing Officer for fresh adjudication.
Sections Cited
143(3), 144B, 80P, 80P(2)(c), 80P(2)(d)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, RAJKOT BENCH (SMC
Before: DR. ARJUN LAL SAINI
Date of Hearing : 28/08/2025 Date of Pronouncement : 29/08/2025 आदेश / O R D E R Per, Dr. Arjun Lal Saini AM Captioned appeal filed by the assessee, pertaining to Assessment Year 2020- 21, is directed against the order passed by Learned Commissioner of Income Tax (Appeal), vide order dated 22.10.2024, which in turn arises out of an order passed by the Assessing Officer, dated 26.09.2022, under section 143(3) r.w.s. 144B of the Income Tax Act, 1961.
When this appeal was called out for hearing, learned Counsel for the assessee, submitted before me a statement showing trading account and profit and loss account, claiming various deductions under section 80P of the Act. The Learner Counsel submitted that assessing officer had disallowed the various deductions, claimed by the assessee, under section 80P of the Act, to the tune of (AY 2020-21) SH. BANTVA SAYUKTA SEVA SAHKARI MANDALI LTD. v. ITO Rs.31,42,770/-. The assessing officer had allowed the deduction under section 80P(2) ( c ) of the Act, to the tune of Rs.50,000/-. However, other deductions claimed by the assessee, which is mentioned below ( in Trading account and profit and loss account), had not been allowed by the assessing officer.
(AY 2020-21) SH. BANTVA SAYUKTA SEVA SAHKARI MANDALI LTD. v. ITO
On appeal by the assessee, the learned CIT(A) had adjudicated the issue, on different footing, altogether, stating that assessee is not eligible to claim deduction under section 80P(2) (d) of the Act, in respect of interest earned by the assessee from Co-operative banks. Hence, assessee is not eligible for deduction under section 80P(2) (d) of the Act. Findings of the learned CIT(A) is reproduced below; “4.3.6 As per para 22-23 in Mavilayi case referred above, when a cooperative society becomes cooperative bank after RBI license. The cooperative bank is not a species of genus Cooperative society. Similar discussion can be found in Karnataka High Court order of Totagar Society (2017) 395 ITR 0611. The same was affirmed by Gujarat High Court in Katlary Kiryana (2022) 327 CTR 0128. As far as Gujarat ad Karnataka are concerned it has been held in context of 80P(2)(d) that cooperative banks are not a species of Cooperative society and interest on FD / dividend deposited in cooperative bank is taxable. Respectfully following the decisions as cited above, it is held that the interest earned by the appellant Co-operative society from Co-operative banks is not eligible for deduction u/s 80P(2)(d) of the Act. Therefore the action of the Assessing officer restricting the deduction claimed under sec. 80P is upheld. The grounds of appeal are dismissed.”
Therefore, learned Counsel for the assessee, submitted that in the assessee`s case under consideration, not only the issue pertaining to deduction under section 80P(2)(d) of the Act, exists, but other deductions under section 80P of the Act, are to be allowed, as per the above chart of trading and profit and loss account. Therefore, learned Counsel for the assessee, contended that entire issue involved in the appeal of the assessee, should be restored back to the file of the assessing officer for fresh adjudication.
On the other hand, learned DR for the Revenue, did not have any objection, if the appeal of the assessee, is restored back to the file of the assessing officer for fresh adjudication.
(AY 2020-21) SH. BANTVA SAYUKTA SEVA SAHKARI MANDALI LTD. v. ITO
I have heard both the parties and carefully gone through the submission put forth on behalf of the assessee along with the documents furnished and the case laws relied upon, and perused the fact of the case including the findings of the ld CIT(A) and other materials brought on record. I note that assessee has submitted a complete chart (trading and profit and loss account) showing details of deductions under section 80P of the Act, which is reproduced above. I note that assessing officer has disallowed the various deductions claimed by the assessee under section 80P of the Act. The learned CIT(A) adjudicated the issue on different footing, stating that as if the assessee has claimed the deduction under section 80P(2)(d) of the Act, only, and other various deductions claimed by the assessee, under section 80P of the Act, mentioned in the chart above, have been ignored. Therefore, the above chart submitted by the assessee is additional evidence before the Bench, hence, I am of the view that an opportunity should be given to the assessing officer to examine the above chart, alongwith documentary evidences, and adjudicate the issue in accordance with Law.
Therefore, considering the above facts, I am of the view that the assessee did not have proper opportunity of being heard before CIT(A), as the ld.CIT(A), has adjudicated the issue taking into account only one deduction, namely, under section 80P(2) (d) of the Act, whereas, assessee has claimed other deductions also, which are mentioned in the above chart, therefore, order of the ld. CIT(A) dismissing the appeal of the assessee, has to be set aside. The ld. Counsel for the assessee also pointed out that order of CIT(A) may be set aside and the issues raised before CIT(A) be remanded to the assessing officer for fresh consideration. It has also been submitted that at the assessment stage the assessee could not produce proper evidences. The ld. DR did not object to the prayer made by the ld. Counsel for the assessee. I, accept the prayer of the assessee and, (AY 2020-21) SH. BANTVA SAYUKTA SEVA SAHKARI MANDALI LTD. v. ITO therefore, I set aside the order of CIT(A) and remand the various issues raised by the assessee in the grounds of appeal before CIT(A) for fresh consideration by the assessing officer, with a liberty to the assessee to prove his case by producing sufficient evidence/material to the satisfaction of the assessing officer. For statistical purposes, the appeal of the assessee is allowed.
In the result, the appeal of the assessee is allowed, for statistical purposes.
Order pronounced in the open court on 29/08/2025.