CHANGANACHERRY CO-OP AGRL & RURAL DEVELOPMENT BANK LIMITED,KOTTAYAM vs. ITO WARD -1 &TPS, KOTTAYAM

This appeal at the instance of the assessee is directed against the Commissioner of Income-tax (Appeals)’s [“CIT(A)]” for short] order dated 25.08.2022 passed u/s 250 of the Income-tax Act, 1961 (“the Act” for short). The relevant assessment year is 2019-2020.

The sole issue in the instant appeal is the disallowance of the claim of exemption / deduction for Rs.1,13,29,839/-under section 80P of the Income Tax Act, 1961, by the authorities below on the grounds that there was a mismatch of said exempt income claimed in Schedule BP vis-à-vis Schedule E1 of the return and the appellant had not claimed any deduction u/s 80P of the IT Act.

The brief facts of the case are that the assessee is a Primary Rural Agricultural Co-operative Credit Society duly registered u/s 7(1) of the Kerala Cooperative Society Act, 1961 (Act 21 of 1969) having registration no.K1119 dated 10-02-2012, as appears from the certificate dated 31-08- 2021 issued by the Assistant Registrar of Co-operative Societies (General), Changanacherry, which is annexed as page 13 of the PB.

We find from the revised return in ITR 5 (vide page 30 onwards of the paper book) pertaining to the period under dispute that the assessee had declared income of Rs.1,13,29,839/- as exempted under section 80P(2) of the Income Tax Act, 1961, in sub-column 5 of Column A of Schedule BP of the said return but left the relevant columns of Schedule E1 of the said return. It is pertinent to mention here that Schedule BP provides for the Computation of Income from Business or Profession whereas Schedule E1 provides for the declaration of “Details of Exempted Income (Income not to be included in Total Income or not chargeable to tax).

Our first observation in the matter is that the very fact that the assessee includes the claim for deduction u/s.80P in the Schedule ‘BP’ relating to computation of income, implies that it regards it’s relevant income as taxable, i.e., forming part of gross total income, and claims deduction u/s.80P there-against. The Changanacherry Co-op. A & RD Bank Ltd. mismatch in it’s return inasmuch as the same finds mention in the schedule of ‘Exemption’, rather than ‘Deduction’, can thus only be regarded as mistaken, to which, in context, the doctrine of ‘De Minimis’ is applicable. Rather than the said mistake being therefore capitalized by the Revenue by denying the assessee it’s claim u/s.80P, it ought to have considered it holistically, consistent with the assessee’s claim u/s.80P.What, in any case, we wonder, leads it to the inference of the assessee having not claimed deduction u/s.80P, which is the basis of the disallowance? Besides, if the Revenue regards it as, and only rightly so, not a case of exemption, what prevents it to be regard it, as it considers it to be, and as it actually is, a claim of deduction. The Board per its Circular No.14 (XL-35), dated 11.04.1955 which, being beneficial, as is trite law, binding on the Revenue [refer, inter alia, CIT v. Hero Cycles [1997] 228 ITR 463 (SC)], clarifies that the Department must not take the advantage of the ignorance of an assessee to collect more tax than what is legitimately due. This also reflects the uniform view of the Hon’ble Courts, as in Parekh Brothers v. CIT [1984] 150 ITR 105 (Ker), exhorting the Revenue to assist the tax payer in every way, particularly in the matter of claiming and securing relief. While in the instant case, the assessee is being denied, on account of wrong presentation, it’s right to claim deduction u/s.80P. This further is also the sum and substance of the Tribunal in the assessee’s case for A.Y 2016-17 (supra), relied upon by the assessee. There is though in the instant case no plea as to non- receipt of notice for adjustment, to though no consequence.

In view of the foregoing, we find no merit in the impugned disallowance and, accordingly, direct its deletion. We decide accordingly.

Date of dispatch of Order.

Draft dictation sheets are attached Sr.PS