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Income Tax Appellate Tribunal, “B” BENCH KOLKATA
Before: Shri Sanjay GargandShri Sanjay Awasthi
order : September, 30, 2024 आदेश / ORDER संजय गग�, �याियक सद�य �ारा/ Per Sanjay Garg, Judicial Member: The present appeal has been preferred by the assessee-society against the order dated 30.06.2022 of the National Faceless Appeal Centre [hereinafter referred to as ‘CIT(A)’] passed u/s 250 of the Income Tax Act (hereinafter referred to as the ‘Act’).
As per the note of the Registry, the appeal is time barred by 105 days. A separate application for condonation of delay has been filed. Considering the averments made in the application, the delay in filing the appeal is hereby condoned.
The assessee-society in this appeal has taken the following grounds of appeal:
1. Assessment Year: 2017-18 Enayetpur S K U S Ltd “1. For that on the facts and circumstances of the case, the Ld. CIT(A) was not justified in confirming the action of the A.O in denying the deduction of Rs.36,50,389/- claimed by the assessee u/s 80(P) of the Act.
2. For that on the facts and circumstances of the case, the Ld. CIT(A) was not justified in confirming the action of the A.O in treating the interest income from FDs etc. as unqualified for deduction 80P(2)(a)(i) of the Act.
3. For that on the facts and circumstances of the case, the Ld. CIT(A) was not justified in confirming the additions made by the A.O to the tune of Rs.1,46,74,500/- being cash deposits during the demonetization period, by wrongly treating the same as unexplained cash credits u/s 68 of the Act.
4. For that on the facts and circumstances of the case, the Ld. CIT(A) was not justified in confirming the addition of Rs.1,01,718/- made by the A.O on account of contingent liabilities.
5. The appellant craves leave to add further grounds of appeal or alter the grounds at the time of hearing.” Ground No.1 – The assessee vide Ground no.1 has agitated 4. against the non-grant of benefit of deduction u/s 80P of the Act in respect of income earned from deposits with bank. The assessee claimed deduction in respect of interest income earned from the activity which was done for non-agricultural purposes. The Assessing Officer has discussed this issue at length, the relevant part of the order of the Assessing Officer is reproduced as under:
“3.5 No specific details were filed regarding the nature of loans, whether they are eligible for the purpose of sec.80P, whether loans are given to members only, etc., to support their claim for deduction u/s 80P. For the Asst. Year(s) 2015-16 and 2016-17 also, scrutiny proceedings were conducted in the case and the deduction claimed u/s 80P was disallowed as the assessee could ot substaintate the nature and eligibility of the loans, and it was found that loans were advanced to non-members also, the loans were sanctioned for business purposes also and hence as the assessee had failed to pass the test of eligibility and mutality.
3.6. In the instant also, the assessee has failed to pass the test of eligibiliy and mutuality as in none of the responses, the assessee has Assessment Year: 2017-18 Enayetpur S K U S Ltd given the details of financials, members wise and non-members wise, though the information was called for. At the same time, he has not confirmed that transactions are not done with non-members. The details of nature of loans etc. are also not filed.
3.7 The provision of Sec.80P read as under:
"80P. (1) Where, in the case of an assessee being a co-operative society, the gross total income includes any income referred to in sub-section(2), there shall be deducted, in accordance with and subject to the provisions of this section, the sums specified in subsection(2), in computing the total income of the assessee.
(2) The sums referred to in sub-section (1) shall be the following namely: - (a) in the case of a co-operative society engaged in - (i) carrying on the business of banking or providing credit facilities to its members, or (ii) a cottage industry, or iii) the marketing of agricultural produce grown by its members, or (iv) the purchase of agricultural implements, seeds, livestock or other articles intended for agriculture for the purpose of supplying them to its members, or (v) …… (vi) ….. (vii) …… the whole of the amount of profits and gains of business attributable to any one or more of such activities.”.
3.8 In spite of giving several opportunities, the assessee has failed to give the specific details of financials, members wise and non members wise and further has not confirmed that the transactions are not done with non-members.
3.9 The Hon’ble Supreme Court in the case of The Citizen Co-operative Society Limited 397 ITR 1 (SC) has held that “the assessee was engaged in the activity of granting loans to members of the general public as well and this was done without approval from Registrar of Societies and that therefore, the activity of the assessee was in violation of the Co-operative Societies Act and that it was a Co-operative Credit Society which was not Assessment Year: 2017-18 Enayetpur S K U S Ltd entitled to deduction under section 80P(2)(a)(i) of the Act. A specific finding was also rendered that the assessee failed to satisfy the test of mutuality. These findings of fact remained undisturbed. Therefore, the assessee could not be treated as a co-operative society meant only for its members and providing credit facilities to its members. Such a society could not claim the benefit of section 80P of the Act.”
3.10 In the instant case, the assessee has failed to prove that the business transactions of lending loans and advances, acceptance of deposits, the sale and purchase of agricultural implements, seeds, fertilizers, etc. was done only with its members. The case was selected for scrutiny for the Asst. Year(s) 2016-17 and the assessments were completed disallowing the deduction claimed u/s.80P as the assessee could not furnish the list of members details and details of loans and advances, etc. and hence could not pass the test of eligibility and mutuality. Hence, in view of the above and in view of the judgement of the Hon’ble Supreme Court in the case mentioned above, it is held that the assessee co-operative society is a society not eligible for deduction u/s.80P. Accordingly, the claim of deduction u/s.80P is disallowed and added to the income returned.
Income from Other Sources 3.11 Notwithstanding the above disallowance of deduction u/s 80P, on verification on the information filed, it is found that the investments are Rs. 16,27,00,879/- in deposits and FDs and the loans and advances to Members/Others is only Rs.2,20,22,748/-. It is clear from the above, that the main activity of the cooperative society is not extending credit facility to its Members. The interest received/receivable on such FDs/investment is Rs.1,55,34,257/- whereas the interest on the loand and advances to members/others is only Rs.29,89,241/-,which can be claimed/eligible for deduction u/s 80P, if any. It is clear from the above, that the main acitivity of the cooperative society is not extending credit facility to its Members or sale and purchase of agricultural implements and other allied activities. The interest income derived from FDs/Investments do not qualify for deduction u/s.80P(2)(a)(i). The Hon’ble Supreme Court in the case of M/s Totgars Cooperative Sale Society Limited 322 ITR 283 (SC), held that (i) Sec.80P(2)(a)(i) allows a deduction in the case of a co-operative society engaged in carrying on the business of providing credit facilities Assessment Year: 2017-18 Enayetpur S K U S Ltd to its members of the whole of the amount of profits and gains of business attributable to such activity. The words ‘Profits and Gains of Business” means “business profits” and not “Income from other sources”.
(ii) The interest on surplus invested in short term deposits not being attributable to the business of providing credit facilities to the members or marketing of agricultural produce of the members, is assessable as “other income” and not as “business income”.
(iii) The words “the whole of the amount of profits and gains of business” attributable to one of the activities specified in Sec.80P(2(a)(i) mean that the source of income is relevant and that the income must be operational income”
3.12 Though the assessee has submitted that the cooperative society is required to keep certain portion of their deposits with mother bank, etc., no evidence in support of the same has been furnished. In view of the above, the interest income on FDs, etc., is assessable as Income from Other Sources and does not qualify for deduction u/s.80P.”
The ld. CIT(A) has upheld the order of the Assessing Officer finding no infirmity in the same.
We have heard the rival contentions. The main contention of the ld. Counsel for the assessee has been that the assessee-society is engaged in the business of banking and that the aforesaid income was earned by the assessee by accepting deposits from its members and further reinvesting the same in cooperative banks and other commercial banks. It has been further pleaded that the assessee has taken loans from the cooperative banks and other commercial banks at a lesser rate and the same was paid to be members at a higher rate and the net of the interest income was eligible for deduction u/s 80P(2)(a)(i) of the Act. We find that the Assessing Officer has not only examined at length the details/facts including the details of the receipts, details of investments and income earned therefrom. The Assessing Officer, therefore, Assessment Year: 2017-18 Enayetpur S K U S Ltd concluded that the primary objective of the assessee-society was not to give loan for agricultural purposes. The Assessing Officer thereafter has deliberated upon provisions of section 80P of the Act as reproduced above in the relevant part of the order of the Assessing Officer. The reliance of the ld. AR of the assessee, regarding his claim of deduction, is on the provisions of section 80P(2)(a)(i) of the Act to state that the aforesaid income was earned from banking business. We find that however, the Assessing Officer has noted that the assessee-society was not authorised to run banking business on the same lines as run by other commercial/schedule banks. At this stage, section 80P(4) along with Explanation thereto is relevant, which, for the sake of convenience, is reproduced as under:
“80P(4) [The provisions of this section shall not apply in relation to any co-operative bank other than a primary agricultural credit society or a primary co-operative agricultural and rural development bank. Explanation. - For the purposes of this sub-section,- (a)"co-operative bank" and "primary agricultural credit society" shall have the meanings respectively assigned to them in Part V of the Banking Regulation Act, 1949 (10 of 1949); (b)"primary co-operative agricultural and rural development bank" means a society having its area of operation confined to a taluk and the principal object of which is to provide for long-term credit for agricultural and rural development activities.]” 6.1 A perusal of section 80P(4) r.w. Explanation thereto would reveal that the benefit of section 80P is not available even to a cooperative bank. However, the said benefit is available to a ‘primary agricultural credit society’. The assessee-society has also claimed itself to be a ‘primary agricultural credit society’. However, no document has been furnished on record to prove the same. As per the Explanation to section 80P of the Act, ‘primary agricultural credit society’ shall have the meanings as assigned to Part V of the Banking Regulation Act, Assessment Year: 2017-18 Enayetpur S K U S Ltd 1949. The ‘primary agricultural credit society’ has been defined as a cooperative society, the primary object or principal business of which is to provide financial accommodation to its members for agricultural purposes or for the purposes connected with agricultural activities including marketing of crops. Admittedly, the major loans were granted by the assessee-society for non-agricultural purposes, therefore, the assessee-society’s primary activity is not for granting loans for agricultural purposes or purposes connected with agricultural activities. Therefore, the Assessing Officer held that since the primary purposes of the assessee-society was not for loans and credits given for agricultural purposes, therefore, the assessee-society would not fall in the definition of primary agricultural cooperative society and therefore, could not be eligible for deduction u/s 80P(2)(a)(i) of the Act. Moreover, it is the own case of the assessee that the assessee-society had received cash in demonetized currency (Specified Bank Notes) during demonetization period and had deposited the same in cooperative bank/schedule bank and earned interest thereupon. The aforesaid affirmation on the part of the assessee-society would, itself, show the said activity of the assessee-society was not for providing financial accommodation to its members for agricultural purposes or purposes connecting with agricultural activities. Moreover, it has been also specifically observed by the Assessing Officer that the assessee has not denied that the transactions were also done with non-members. The assessee-society has not furnished list of members, the details of loans and advances etc., therefore, under the circumstances, the Assessing Officer rightly held that there were no confirmations that the deposits were not accepted from non-members. The plea of the ld. AR that the assessee-society is working in a rural area and that the villagers/farmers and members were totally dependent upon it and that Assessment Year: 2017-18 Enayetpur S K U S Ltd is why the assessee accepted deposits from them during demonetization period and is doing banking activity, cannot be a ground for granting of deduction u/s 80P of the Act. To claim deduction u/s 80P, the assessee-society must fulfil the requisite conditions as stipulated in the statutory provisions. However, considering that the assessee-society has also been doing the activity of granting credit facilities to its members for agricultural purposes and activities connecting thereto, and further the assessee-society is involved in the activity of purchase, sale and marking of agricultural implements, therefore, the interest income earned by the assessee for providing credit facilities to its members for agricultural activities and activities relating thereto will be eligible for deduction u/s 80P(2)(a)(i) of the Act and further the income of the assessee earned from the activity of purchase, sale and agricultural implements etc. will also be eligible u/s 80P(2)(a)(iv) of the Act. The assessee-society, therefore, is given an opportunity to provide necessary details before the Assessing Officer in this respect. The matter is accordingly restored to the file of the Assessing Officer for the limited purpose that on furnishing of necessary details, the Assessing Officer will bifurcate the interest income earned by the assessee from the credit facilities granted to its members for agricultural purposes or purposes connecting with agricultural activities and further after netting off such interest income with the expenditure/interest incurred by the assessee-society for getting deposits in respect of such income, the Assessing Officer would accordingly allow deduction in respect of the said amount out of total interest income u/s 80P(2)(a)(i) of the Act and further the Assessing Officer will also bifurcate the income earned by the assessee-society from the purchase, sale and agricultural implements intended for agriculture for the purpose of supplying them to its members and will allow deduction on such income u/s 80P(2)(iv)
Assessment Year: 2017-18 Enayetpur S K U S Ltd of the Act. Needless to say that the assessee-society will promptly supply the necessary details and information as and when called for by the Assessing Officer and the Assessing Officer will also give reasonable time and opportunity to the assessee to furnish the necessary details, thereafter, the Assessing Officer will pass a speaking order on this issue. This Ground of the appeal of the assessee is partly allowed.
Ground No.2– Vide Ground No.2, the assessee-society has 7. agitated against the action of the ld. CIT(A) in confirming the disallowance in respect of cash deposits in demonetized currency accepted during the demonetization period. In the alternative, the assessee has pleaded that the ld. CIT(A) ought to have allowed the benefit of deduction of interest payable to its members attributable to the deposits with the bank and out of the income earned on cash deposits during the demonetization period. The relevant part of the findings of the Assessing Officer on this issue is reproduced as under: “Deposits during Demonetization Period 3.13 Assessee had made cash deposits in SBN to the amount of Rs.1,46,74,500/- during the demonetization period. Rs.8,84,500/- in UCO Bankand Rs.1,37,90,000/- in Malda District Cooperative Central Bank, Malda. The assessee has submitted that the cash in SBNs (Specified Bank Notes) was received from various members towards their various accounts held in the cooperative society, during the demonetization period. The details of such deposits containing the names of the members from whom the amounts in SBNs were received, their a/c nos., their PAN/Aadhar/Voter Id Nos., etc., were filed. In the show cause letter issued in this regard, it was asked why the acceptance and deposit of such SBNs, when the assessee society was not authorized to accept SBNs, should not be treated as unexplained. In the reply, the assessee has made reference to sec.69A of the Act and gave his submission why the same cannot be added u/s 69A of the Act.”.
Assessment Year: 2017-18 Enayetpur S K U S Ltd 3.14 As the cash deposits in SBNs received during the demonetization period were credited in the books of accounts of the assessee, Sec.68 of the Income Tax Act, is attracted. Sec.68 of the Income Tax Act, 1961, reads as under.
Cash credits.
Where any sum is found credited in the books of an assessee maintained for any previous year, and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the sum so credited may be charged to income tax as the income of the assessee of that previous year:
3.15 The act of deposit of money or loan repayment in the deposit account or loan account of a customer held in the cooperative society and the acceptance of the same by the cooperative society is an "Act of Contract", wherein the cooperative society is expected to give back the deposit amount, on demand, with or without interest and the deposit in the loan account is part of a contract of granting a loan and its repayment. The allied Acts which come in to picture in this context are the Indian Contracts Act 1872, and the Reserve Bank of India Act 1934.
As per Section 23 of Indian Contracts Act 1872, which defines what considerations and objects are lawful, and what not — The consideration or object of an agreement is lawful, unless— it is forbidden by law; or is of such a nature that, if permitted, it would defeat the provisions of any law; or is fraudulent; or involves or implies, injury to the person or property of another; or the Court regards it as immoral, or opposed to public policy. In each of these cases, the consideration or object of an agreement is said to be unlawful. Every agreement of which the object or consideration is unlawful is void.
As per Section 26 of the Reserve Bank of India Act 1934, which defines Legal tender — character of notes — (1) Subject to the provisions of sub- section (2), every bank note shall be legal tender at any place in India in payment, or on account for the amount expressed therein, and shall be guaranteed by the Central Government. (2) On recommendation of the Central Board, the Central Government may, by notification in the Gazette of India, declare that, with effect from such date as may be specified in the notification, any series of bank notes of any Assessment Year: 2017-18 Enayetpur S K U S Ltd denomination shall cease to be legal tender save at such office or agency of the Bank and to such extent as may be specified in the notification.
Every contract involves consideration. Thus, in the above type of contracts, consideration is money. The word ‘money’ has not been defined under the said Act, but the most common definition of ‘money’ as found from dictionaries is that, money means an authorized medium of exchange especially coins or paper currency issued as legal tender by a Government. Hence, in a concluded and valid contract, the consideration has to be understood as money in legal tender only. In India, such ‘legal tender’ status to the paper currency is given by the Central Government in terms of the provisions of Sec.26 of the RBI Act. Under the same section, the Central Government is also empowered to withdraw the legal tender’ status of the currency notes. Thus, the currency notes are a mere piece of racer unless the same are recognized by the Government of India as ‘legal tender’ in terms of Section 26 of the RBI Act.
On the night of 08-11-2016, the Hon’ble Prime Minister of India while addressing the Nation has announced the decision of the Central Government to withdraw the legal tender status to the existing series of bank notes of the value of Rs.500 and Rs.1000 w.e.f. 09-11-2016. which was said to be a measure to tackle black money in the economy, to lower the rash circulation which is directly related to corruption in our Country, and to eliminate fake currency. Accordingly, a Notification in S.O.No.3407(E) dt. 08-11-2016 was also issued withdrawing the legal tender status to the bank notes of the value of Rs.500 and Rs.1000 referred to as specified bank notes or SBNs). However, in the said Notification a facility was granted to the holders of SBNs for the deposit of such SBNs in their account maintained with any bank on or before 30- 12-2016 so that the equivalent value of SBNs will be credited to such accounts. The Government has further announced that the SBNs will continue to be legal tender during demonetization period for the limited purpose of making payments at places like petrol bunks, gas agencies, etc. Thus, except where the SBNs were deposited in a bank, or exchanged for goods / services at designated places like petrol bunks etc., in all other cases such SBNs are no longer legal tender w.e.f.09-11- 2016. Coming to the present issue on hand, it is not in dispute that the assessee has carried on his business operations, accepted cash deposits/loan repayments during the demonetization period. As already discussed above, in a concluded and valid Contract, consideration shall only be the receipt of money in legal tender. Once the assessee says that Assessment Year: 2017-18 Enayetpur S K U S Ltd he has carried out business operations, even during demonetization period, it has to be understood that he has received the money in legal tender only but not in SBNs, because from 09-11-2016 onwards, the SBNs are no longer money but a mere piece of paper as between the seller and the buyer, and do not constitute money in legal tender. The assessee cannot take a contradictory stand that he received price in SBNs. Thus, a valid contract during demonetization period and SBNs are mutually exclusive, and the assessee cannot be permitted to club both of them.
Hence, if any one says that he has received price in SBNs as a part of contract, such contract itself is void and non-est in the eyes of law, because the claim of receipt of such price in SBNs as a part of contract of sale, if accepted, would defeat the provisions of Sec.26(2) of RBI Act, 1934 and the Notification in S.O.No.3407(E) dt. 08-11-2016 issued thereunder, through which the Central Government has withdrawn the legal tender status of SBNs from 09-11-2016 onwards. As per the said Notification, the only way-out given to the persons holding SBNs as on 09-11-2016 to realize the equivalent value of such SBNs is to deposit the same in to his bank account (please see Para 2(iii) and 2(iv) of the Notification). If the SBNs are claimed to have been dealt by the persons who held the SBNs as on 09-11-2016, in a manner other than what was prescribed in the statutory Notification, like exchanging the same with unauthorized persons other than banks, and if such a claim is accepted, it would bring the said statutory Notification, which was issued as a measure to tackle black money, to ridicule and renders it nugatory. Also, since the ‘public policy’ behind the withdrawal of legal tender status to the SBNs from 09-11-2016 onwards was explained by the Central Government to be a measure to tackle the black money in the economy, to lower cash circulation which is directly linked to corruption, fake currency etc., any claim of acceptance of SBNs as a part of contract of sale or contract is opposed to the said ‘public policy’ as announced by the Central Government and vitiates the whole exercise of demonetization. Hence, for these reasons, the contract if it involves receipt of SBNs as ‘price’, is ab-initio void as per the provisions of Sec.23 of the Contracts Act, 1872 and thus non-est in the eyes of law. Hence, such SBNs cannot be treated as having arisen out of a contract. To conclude, as the assessee is not one of the entities authorized by the Central Government to accept SBNs during demonetization period in exchange for goods/services, and as the assessee has claimed that they have carried out valid business during the demonetization period by duly reporting Assessment Year: 2017-18 Enayetpur S K U S Ltd such transactions, such receipts pre-suppose the receipt of price in legal tender, and accordingly any other claim to the contrary is not acceptable. Further, as the assessee has deposited the SBNs held by him in to his bank account, and since the Notification in S.O.No.3407(E) dt. 08-11- 2016 issued by the Central Government has withdrawn the legal tender status of SBNs w.e.f 09-11- 2016 but permitted the deposit of such SBNs held by a person in to his bank account, the SBNs deposited in bank during demonetization period by the assessee represents the SBNs held by him as on 08-11-2016, and the onus is on the him to prove the sources for such SBNs, failing which it may have to be treated as unexplained cash credits u/s.68 and brought to tax accordingly.
3.16 In view of the above, the explanation of the assessee is not found to be satisfactory and hence, the amounts deposited in SBNs during the demonetization period are held to be unexplained. The total cash deposited in SBNs during the demonetization period was Rs.1,46,74,500/-. Hence, the total cash deposits in SBNs during the demonetization period of Rs.1,46,74,500/- are treated as unexplained and brought to tax u/s.68 of the Act.”
The ld. CIT(A) has confirmed the order of the Assessing Officer finding no infirmity in the same.
We have heard the rival contentions and gone through the record. Before us, the ld. Counsel for the assessee has submitted that the assessee-society has accepted the Specified Bank Notes during demonetization period from its members as the assessee-society was working in the rural area and the members were totally dependent upon it for banking needs. He, in this respect, has submitted that sources of the deposits were fully proved, therefore, the Assessing Officer was not justified in making the impugned additions u/s 68 of the Act. However, a perusal of the assessment order would reveal that the assessee-society has not provided the member-wise details of the deposits. Moreover, the assessee-society was not entitled to accept the demonetized currency/Specified Bank Notes during demonetization Assessment Year: 2017-18 Enayetpur S K U S Ltd period. The assessee-society admittedly has done this activity in violation of law and the said activity of the assessee-society was not a legal activity. No justification on the part of the assessee-society can justify the said activity and cannot qualify it as legal activity. No doubt, if the source of the deposits is explained, though the same is done in contravention of law, then the addition cannot be made u/s 68 of the Act. Though, action can be initiated by the competent authority for the violation of law under the respective law but such deposits will not qualify to be declared as unexplained income of the assessee-society. However, the fact on the file is that the assessee-society has not furnished necessary member-wise details to the Assessing Officer. Under the circumstances, the source of the deposits is not proved. Further, the assessee-society has deposited the said demonetized currency accepted from its members in cooperative/schedule bank and earned interest income on the same. The assessee-society has claimed that it is indulged in the banking business activity. Therefore, the income earned by the assessee-society in the form of interest on such deposits is liable to be assessed as business income, however, not eligible for section 80P deduction. The assessee-society since has earned the said interest income from an activity which was prohibited by law by collecting deposits in demonetized currency during demonetization period, therefore, the expenditure incurred by the assessee-society in the shape of interest paid to the members cannot be allowed as deduction u/s 37 of the Act. With the above observations, the issue is restored to the file of the Assessing Officer with a direction that the assessee-society will furnish the necessary details relating to the source of the deposits to the Assessing Officer. If the assessee- society proves the source, no addition shall be made u/s 68 of the Act. The assessee-society will not be eligible for deduction in the form of Assessment Year: 2017-18 Enayetpur S K U S Ltd interest paid on such deposits to the members. The Assessing Officer will also give proper opportunity to the assessee to furnish necessary details and thereafter to decide the issue afresh as directed above.
Ground No.3– Vide Ground No.3, the assessee-society has agitated against the action of the ld. CIT(A) in confirming the addition of Rs.1,01,718/- made by the Assessing Officer on account of contingent liability.
The ld. counsel for the assessee in this respect made the following submissions:
Normally, the method of accounting which is followed by the assessee- PACS is mercantile system of accounting. However, the assessee considers income by way of interest pertaining to doubtful loans as not real income in the year in which it accrues, but only when it is realized. A mixed method of accounting is thus followed by the assessee-Society. This method of accounting adopted by the assessee is in accordance with accounting practice. Here, Assessee created a provision in respect of as OD Int. this provision eventually related to the bad debt; rather we can say it would be the provision for bad debt. Here, under the section 36(viia) minimum eligible amount would be 10% of the Total Income i.e. Rs.3650389.00 as per return. Therefore, eligible rebate under sec 36(viia) would be Rs.365039.00. Here, being an assessee, we created a provision of Rs 101718.00 by debiting the Profit and loss Account which was eventually less than the eligible amount. As such, A.O's consideration appeared to be contradictory and addition as contingent liability should be deleted. Finally, all relevant incomes are eligible for deduction under section 80P in respect of PACS. So, addition by disallowing provision created by debiting Profit and loss account would be part of income, it should be eligible for deduction under 8OP.
After considering the aforesaid submissions of the ld. counsel and after going through the assessment order, we find that the aforesaid submissions of ld. counsel are misconceived. The amount of Rs.101718/- has not been debited by the assessee on account of any bad debt, rather, the same has been claimed as ‘interest overdue’, Assessment Year: 2017-18 Enayetpur S K U S Ltd which has not been explained by the assessee. As held above, even otherwise, the assessee is not eligible for deduction 80P of the Act. In view of this, this ground has no merit and the same is accordingly dismissed.
In the result, the appeal of the assessee-society is treated as partly allowed.