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Facts
The assessee filed an appeal before the ITAT against the order of the Ld.CIT(A)/NFAC which dismissed their appeal due to erroneous grounds related to the assessment year. The disallowance was due to cash deposited during demonetisation and disallowance of interest on fixed deposits.
Held
The Tribunal noted that the authorities below did not consider relevant CBDT circulars. The Assessing Officer is directed to verify the demonetised cash deposits and the assessee is to provide depositor details. The grounds raised by the assessee are partly allowed for statistical purposes.
Key Issues
Whether the disallowance of interest on fixed deposits and cash deposits during demonetisation is justified, considering the nature of the assessee as a co-operative society and relevant CBDT circulars.
Sections Cited
80P(2)(a)(i), 80P(2)(d)
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Income Tax Appellate Tribunal, SMC-‘B’ BENCH : BANGALORE
Before: SMT. BEENA PILLAI & SHRI LAXMI PRASAD SAHU
ORDER PER BEENA PILLAI, JUDICIAL MEMBER Present appeal arises out of order dated 04.03.2024 passed by Ld.CIT(A)-12/NFAC, Mumbai for A.Y. 2017-18.
2. At the outset, it is submitted by the Ld.AR that in the appeal filed by the assessee before the Ld.CIT(A)/NFAC, erroneous grounds were taken on an assessment order that did not pertain to the relevant assessment year under consideration. The observations of Ld.CIT(A) in paras 3.4-3.5 is quite clear on this aspect.
The Ld.CIT(A) therefore dismissed the appeal since assessee could not remove the defects even after pointing out the anomaly.
Aggrieved by the order of the Ld.CIT(A), the assessee is in appeal before this Tribunal.
The assessee has filed the correct assessment order before this Tribunal for the year under consideration, and is noted that, the disallowance made is due to the cash deposited during the demonetisation period and the disallowance of interest earned by the assessee on fixed deposits.
Considering the fact that assessee is a co-operative society and had filed a valid return within the period of limitation, the claim of the assessee u/s. 80P(2)(a)(i)/(d) deserves to be analysed in the light of the decisions of Hon’ble Supreme Court in case of Mavilayi Service Co- operative Bank Ltd. v. CIT reported in 431 ITR 1 and Kerala State Co-operative Agricultural and Rural Development Bank Ltd. vs. AO reported in (2023) 154 taxmann.com 305.
6. It is noted that the authorities below has not considered the following CBDT Circulars. a) The 1st instruction was issued on 21/02/2017 by instruction number 03/2017. b) The 2nd instruction was issued on 03/03/2017 instruction number 4/2017. c) The 3rd instruction was in the form of a circular dated 15/11/2017 in F.No. 225/363/2017-ITA.II and the last one dated 09/08/2019 in F.no.225/145/2019-ITA.II.
The assessing officer is also directed to verify the demonetised cash deposited during the year under consideration based on the circular applicable to the assessee to the present facts. The assessee is directed to furnish the PAN and KYC details of all the depositors in order to assist the Ld.AO to consider the claim in accordance with law. Accordingly, the grounds raised by the assessee stands partly allowed for statistical purposes. In the result, the appeal filed by the assessee stands partly allowed for statistical purposes. Order pronounced in the open court on 12th August, 2024.