Loading judgment…

COOPERATIVE CANE DEVE. UNION, LTD.,HARIDWAR vs ITO, W- 1(3)(1), HARIDWAR, HARIDWAR | BharatTax

COOPERATIVE CANE DEVE. UNION, LTD.,HARIDWAR vs. ITO, W- 1(3)(1), HARIDWAR, HARIDWAR

ITA 158/DDN/2024Status: DisposedITAT Dehradun16 January 2026AY 2019-20Bench: SHRI YOGESH KUMAR U.S (Judicial Member), SHRI MANISH AGARWAL (Accountant Member)13 pages

AI SummaryAllowed

Facts

The assessee, a cooperative society, filed its return of income for AY 2019-20, claiming a deduction of INR 1,04,54,668/- under Section 80P. The Centralized Processing Centre (CPC) processed the return under Section 143(1) and disallowed the Section 80P deduction, assessing the total income at the claimed deduction amount. The Ld. CIT(A) upheld this disallowance.

Held

The tribunal held that the disallowance of Section 80P deduction by the CPC under Section 143(1)(a) was incorrect and beyond its purview, especially since similar deductions were allowed in preceding and subsequent assessment years, including under scrutiny assessments. The tribunal noted that the issue was debatable and no proper show cause notice was issued.

Key Issues

The key legal issue is whether the CPC can disallow a deduction claimed under Section 80P through an intimation under Section 143(1)(a) as an 'incorrect claim' when the issue is debatable and similar claims were allowed in other assessment years.

Sections Cited

Section 80P, Section 143(1), Section 143(1)(a), Section 143(2), Section 143(3), Section 250

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DEHRADUN “DB” BENCH: DEHRADUN

Before: SHRI YOGESH KUMAR U.S & SHRI MANISH AGARWAL

For Respondent: Shri Amar Pal Singh, JCIT DR

Hearing: 13.11.2025Pronounced: 16.01.2026

Year: 2019-20] Co-operative Cane Development vs ITO Union Limited, Jawalapur, Ward-1(3)(1) Vill. & P.O. Jawalapur, Distt.- Haridwar Haridwar, Uttarakhand-249407 Uttarakhand PAN-AAAIC0152B APPELLANT RESPONDENT Assessee by None Revenue by Shri Amar Pal Singh, JCIT DR Date of Hearing 13.11.2025 Date of Pronouncement 16.01.2026 ORDER

PER MANISH AGARWAL, AM :

1.

The captioned appeal is filed by the assessee against the order dated 26.07.2024 by Ld. Commissioner of Income Tax (A), National Faceless Appeal Centre (“NFAC”), Delhi [“Ld. CIT(A)”] in Appeal No. NFAC/2018-19/10076885 passed u/s 250 of the Income Tax Act, 1961 [“the Act”] arising from the intimation order dated 02.12.2020 passed u/s 143(1) of the Act pertaining to Assessment Year 2019-20.

2.

At the time of hearing, assessee filed the letter and stated that the written submission made be considered. Therefore, ld. Sr. DR was heard and proceeded to decide the appeal filed by the assessee on the basis of material available on record.

3.

Brief facts of the case are that assessee is a Co-operative society constituted by the State Government, engaged in the business of providing credit facilities to its members who are agriculturists and cane growers also, marketing of agricultural products and purchase of agricultural implements and other products like fertilizers, insecticides etc. Assessee filed its return of income on 29.08.2019, declaring total income at NIL and claimed deduction u/s 80P of INR 1,04,54,668/-. Thereafter, the return of income was processed u/s 143(1), assessed total income at INR 1,04,54,668/- where deduction u/s 80P was not provided to the assessee society.

The Id. ADDL/JCIT (A) is not justified and correct in dismissing appeal of the appellant which was directed against an Intimation order dt. 02.12.2020 passed by the CPC u/s 143(1) on basis of the return e-filed by the appellant on 29.08.2019 claiming deduction of Rs. 10454659/- u/s 80P in Part- C of Chapter- VI-A of the Income Tax Act, 1961, against the following gross receipts aggregating Rs. 10454659/- shown under the head Income from other sources in the return for the year under consideration:- i. Others (so called commission received from the sugar factory/s against the activity of marketing of the sugar cane, an agricultural produce, grown by the members of the appellant:- Rs. 9747340/- ii. Interest from various saving bank accounts:- Rs. 574976/- iii. Interest from deposits with banks:- Rs. 127856/- iv. Interest from income tax refund:- Rs. 4487/- Total net income under the head income from other sources:- Rs. 10454659/- (in support of above, copy of the relevant pages of the return filed is enclosed as annex. 52 to 68 herewith) In this connection, it is submitted that while dismissing the said appeal, the Id. ADDL / JCIT (A) has failed to consider the fact that the provision u/s 143(1)(a) was wrongly and illegally applied by the CPC in making an 'adjustment of Rs. 10454659/- on account of disallowance of claim of deduction of Rs. 10454659/- u/s 80P, in the said Intimation order dt. 02.12.2020 passed u/s 143(1) in the case. Here it is mentioned that before passing this Intimation order u/s 143(1), the CPC has, on 30.10.2020, issued a communication of proposed adjustment u/s 143(1)(a), a copy of which is enclosed as annex. 69 to 70 herewith. From Part-A of this communication letter, it is clear that in it, the CPC proposed to make 'adjustment of Rs. 10454659/- on account of disallowance of claim of deduction of Rs. 10454659/- u/s 80P, on the ground that this claim of deduction is an 'incorrect claim u/s 143(1)(a)(ii)', and as stated under the head 'Error Description' of the communication letter, this ground of alleged incorrect claim u/s 143(1)(a)(ii) has been taken on the basis that 'In Schedule 80P, deduction u/s 80P(2)(a)(i) to (vii) cannot be more non speculative and non specified business income'. In other words, as per the CPC, the amount of deduction claimed u/s 80P in the return cannot be more than the amount of net profit/ income shown under the head business or profession other than the speculative and specified business, and since in the return filed in the case, the income shown under the head income from business or profession other than the speculative and specified business was shown at Rs. Nil and the deduction claimed u/s 80P was at Rs. 10454659/- i.e more than the income shown under the head income from business or profession, hence the CPC made an 'adjustment' of Rs. 10454659/- on account of alleged incorrect claim of deduction of Rs. 10454659/- u/s 80P, in the Intimation order u/s 143(1) but the Id. ADDL/JCIT (A) has failed to consider that this action of the CPC In invoking provision under Sec.143(1)(a)(ii) in the case has been highly illegal, unjustified and beyond the purview of Sec. 143(1)(a)(ii) and discriminatory also as:- a. Firstly, as already stated in brief facts of the case in above para no. A, before passing the Intimation order u/s 143(1), which has been under consideration before the ADDL / JCIT (A), a communication letter dt. 30.10.2020 under first proviso to Sec. 143(1)(a) proposing adjustment of Rs. 10454659/- on account of disallowance of claim of deduction u/s 80P In the return filed has been issued to the appellant. A copy of it is enclosed as annex. 69 to 70 herewith. As clear from bare reading of this communication letter, it was just a suggestive one which was not like a show cause notice against proposed disallowance of claim of deduction of Rs. 10454659/- u/s 80P and on the other hand, the similar deduction in relation to the similar nature receipts under similar facts and circumstances was allowed to the appellant not only an Intimation order passed u/s 143(1) for AY 2017-18 but also in an assessment order passed u/s 143(3) for earlier AY 2011-12, hence, without giving a proper and reasonable opportunity of being heard by issuing a show cause notice, an adjustment of Rs. 10454659/- on account of disallowance of claim of deduction u/s 80P in the return filed was wrongly and illegally made by the CPC in the Intimation order dt. 02.12.2020 u/s 143(1)(a), hence, in view of decision in (a) a judgment dt. 11.10.2021 of Hon'ble Bombay H.C. in a Writ Petition no. 1625 of 2021 in case of Mantra Industries Ltd. Vs. NFAC and ors., (a copy of which is enclosed as annex. 71 to 75 herewith), and (b) an order dt. 13.08.2024 of Hon'ble jurisdictional ITAT, Bench SMC, Dehradun in in case of Liberheri Coop. Cane Dev. Union Vs. NFAC, (a copy of which is enclosed as annex. 76 to 79 herewith). the action of the CPC has been illegal, unjustified, bad in the eye of law, hence the Id. ADDL / JCIT (A) has erred in dismissing appeal of the appellant without averting to the real issue involved in the case that the adjustment made u/s 143(1)(a)(ii) has been beyond purview of Sec. 143(1)(a)(ii). He has wrongly dismissed the appeal only on the ground that the deduction u/s 80P is not applicable in the case without considering the whole facts, circumstances of the case, material placed before him and particularly the past history of the appellant. b. Now, the status of the appellant, which is a cooperative society within the meaning of Sec. 2(19) of the IT Act 1961, is not disputed in the present case. c. The provision u/s 143(1)(a) (ii) applies in a case where there is an incorrect claim, if such incorrect claim is apparent from any information in the return. In the present case, the claim which has been found to be incorrect apparent from information in the return filed is the claim of deduction of Rs. 10454659/- made u/s 80P in the return filed but this claim of deduction u/s 80P in the return is not an incorrect claim because as already stated in above para no. A mentioning brief facts of the case, the appellant filed the return for earlier AY 2017-18 showing the similar nature receipts of so called commission from the sugar factory/s against the similar nature activity of the marketing of the sugar cane produced by the members, under the same head of income i.e Income from other sources, and showing income under the head business or profession at Rs. Nil and in the Intimation order passed u/s 143(1) on 17.05.2018 on basis of such return for AY 2017-18, this deduction u/s 80P has been allowed by the CPC itself. It is most Important to mention here that subsequently, the said return for AY 2017-18 was taken up for scrutiny u/s 143(2) and on considering the facts, circumstances of the case and evidences etc. filed, the claim of deduction u/s 80P, as already accepted in the Intimation order u/s 143(1) passed for the AY 2017-18, and the disclosed total income at Rs. NII have been fully accepted in the scrutiny assessment order dt. 02.05.2019 u/s 143(-1, a copy of which is enclosed as annex. 3 to 4 herewith. It is also important to mention here that even for subsequent AY 2020-21, in which the appellant earned the similar so called commission receipts from the sugar factory/s against the similar nature activity of marketing of sugar cane produced by the members of the appellant, which activity falls u/s 80P(2)(a)(iii), besides the incidental bank interest etc., the appellant e-filed the return claiming deduction u/s 80P against the receipts falling u 80P(2)(a)(iii) showing the same under the same head of income i.e. Income from other sources, and showing income from business and profession other than speculative / specified business at Rs. Nil likewise AY 2017-18 and also the year under consideration, and the CPC allowed the claim of deduction u/s 80P in the Intimation order dt. 01.04.2021 u/s 143(1) for AY 2020-21. A copy of this Intimation order for AY 2020-21 is enclosed as annex. 39 to 43 herewith. It is also important to mention here that the return for this AY 2020-21 has also been scrutinized u/s 143(2) and in the scrutiny assessment order passed on 01.09.2022 u/s 143(3), a copy of which is enclosed as annex. 5 to 17 herewith, the deduction u/s 80P, which was accepted in the Intimation order dt. 01.04.2021 u/s 143(1), has been accepted as it is, hence, under these facts and circumstances of the case, the claim of the deduction made u/s 80P with regard to the similar nature receipts shown under the same head of the income i.e income from other sources, when the income shown under the head business or profession has also been Rs. nil, cannot be said to be an incorrect claim so as to apply the provision of Sec. 143(1)(a)(ii), particularly when in the appellant's scrutiny assessment order dt. 26.09.2013 passed u/s 143(3) for earlier AY 2011-12, a copy of which is enclosed as annex. 2 herewith, the deduction u/s 80P in respect of the similar nature receipts was allowed to the appellant. It is mentioned here that in the following identical cases, where the returns showing similar nature receipts under the similar head of income i.e Income from other sources and claiming deduction u/s 80P against the same as in the present case have been filed, the CPC has allowed the deduction u/s 80P in the Intimation orders passed u/s 143(1):- - Intimation order dt. 03.04.2021 u/s 143(1) in case of Khatima Sahkari Ganna Vikas Samti Limited for AY 2020

Exemption Ward 1(1), Nashik for AY 2018-19. (Copy of order is enclosed as annex. 110 to 117 herewith), In the following decisions of higher forum, the claim of deduction u/s 80P against the similar nature receipts as disclosed In the present case has been allowed under similar facts and circumstances and when the similar nature receipts were shown in the returns in the similar manner l.e under the head Income from other sources as in the present case and when Income under the head business / profession was shown at Nil:- - Order dt. 12.12.2024 by the Hon'ble ITAT Bench- E, Delhi in in case of Mallyana Co-operative Cane Development Union Vs. ITO, Meerut for AY 2017-18. (Copy of order is enclosed as annex. 118 to 121 herewith). In case of Mint Panchseel Colony vs CIT, reported in (2005) 278 ITR 640 (All), where "the petitioner has offered seeking extension of time for non-payment of nine consignments when in similar and identical situation extension has been allowed to another manufacturer.", the Hon'ble All. H.C. has held that "We consider it discriminatory if others have been allowed the opportunity why the case of the petitioner has not been considered.". In view of this principle laid down by the Hon'ble All. H.C., the claim of deduction u/s 80P in respect of the similar nature receipts, which were shown under the same head of income i.e Income from other sources and the income under the head business or profession was shown at Rs. Nil in appellant's own case for earlier AY 2017-18 has been accepted and allowed in the Intimation order u/s 143(1) by the CPC itself, the similar claim of deduction u/s 80P in respect of the similar nature receipts shown in the appellant's return in the similar manner for the year under consideration cannot be said to be an incorrect claim so as to attract provision u/s 143(1)(a)(ii). Further, as already submitted earlier, the claim of deduction u/s 80P in respect of the similar nature receipts shown in the similar manner in the appellant's returns filed for earlier AY 2017-18 and also for immediate succeeding AY 2020-21 has been allowed u/s 80P, In the Intimation orders passed u/s 143(1) by the CPC itself and no adjustment u/s 143(1)(a)(il) on account of disallowance of deduction claimed u/s 80P for these years, hence even as per rule of consistency, the similar claim of deduction u/s 80P under similar facts and circumstances for the intervening assessment year 2019-20 is allowable, therefore, from this point of view also, the claim of deduction u/s 80P in the return for the year cannot be said to be an incorrect claim so as to attract provision u/s 143(1)(a)(ii).

Reliance placed on:- - (1992) 193 ITR 321 (S.C): Radhasoami Satsang, Saomi Bagh, Agra Vs. Commissioner of Income Tax. - Order dt. 18.04.2022 by the Hon'ble ITAT Bench B, Kolkata in /Kol/2021 in case of ACIT Vs. Steel Authority of India Employees Cooperative Credit Society Ltd. for AY 2012-13. (Copy of order is enclosed as annex. 99 to 109 herewith). Besides all above, it is also submitted that decision of ld.ADDL/JCIT (A) dismissing appeal against the aforesaid Intimation order u/s 143(1) in the case is also not justified and correct in as much as he has failed to consider that the adjustment on account of disallowance of claim of deduction u/s 80P in the Intimation order in the case was made just on a technical ground that the receipts, against which the deduction u/s 80P was claimed, was shown under the head income from other sources instead of the head business or profession, which according to the CPC was proper head in the case, but as there had been no finding by the CPC in the Intimation order u/s 143(3) that the deduction u/s 80P was not applicable at all on merits of the case. So, had the appellant shown the receipts, which have been shown under the head income from other source, under the head business or profession, the deduction claimed u/s 80P against these receipts would have been allowed by the CPC. Here it is submitted that in a decision of Hon'ble ITAT, Bombay in its order dt. 14.09.2023 In case of Kavita Jasjit Singh Vs. CIT: (2023) 69 CCH 0020 Mum Trib, a copy of which is enclosed as annex. 122 to 129 herewith, the Hon'ble ITAT, Bombay has held that when substantial justice and technical considerations are pitted against each other, the cause of substantial justice deserves to be preferred, hence, in view of it, when actually the deduction claimed u/s 80P in the present case has been disallowed and an adjustment on account of it made in the Intimation order passed u/s 143(1)(a) has been merely on technical issue, hence the adjustment made is illegal and incorrect but the Id. ADDL / JCIT (A) has failed to consider this material aspect of the case. d. Alternatively, if for a moment it is presumed that the said claim of deduction u/s 80P in the case has been an incorrect claim (though not admitted), even then under the above facts and circumstances of the case and also in view of the fact that in many similar cases referred to below, the deduction u/s 80P claimed against the similar nature receipts shown under the similar head of income from other sources in the returns filed has been allowed by the different CIT(A)'s and also by different A.O.'s in scrutiny cases even when these receipts were not shown under the head business / profession as in the present case:- - Order dt. 06.03.2025 of CIT(A) in case of Sahkari Ganna Vikas Samiti Ltd., Faizabad for AY 2017-18 (Copy enclosed as annex.130 to 135 herewith).

- Order dt. 14.06.2024 of CIT(A) in case of Sahkari Ganna Vikas Samiti Ltd., Malakpur for AY 2018-19 (Copy) enclosed as annex. 136 to 140 herewith.) - Order dt. 14.10.2022 of CIT(A) in case of Sahkari Ganna Vikas Samiti Ltd., Baitalpur for AY 2014-15 (Copy enclosed as annex. 141 to 155 herewith.) - Order dt. 09.09.2016 of CIT(A) in case of Sahkari Ganna Vikas Samiti Ltd., Tikonia, Haldwani for AY 2012-13 (Copy enclosed as annex 156 to 163 herewith.) - Order dt. 31.05.2024 of CIT(A) in case of Cooperative Cane Development Union Ltd., Siswa Bazar for AY 2018-19 (Copy enclosed as annex. 164 to 169 herewith.) - Assessment order dt. 19.09.2022 u/s 143(3) in case of Sahkari Ganna Vikas Samiti Ltd., Gaur for AY 2020-21 (Copy enclosed as annex. 170 to 172 herewith.) - Assessment order dt. 29.03.2025 u/s 143(3) in case of Laksar Co operative Cane Dev Union Limited for AY 2023-24 (Copy enclosed as annex. 173 to 188 herewith.) - Assessment order dt. 28.02.2025 u/s 143(3) in case of Sahkari Ganna Vikas Samiti Ltd., Kichha for AY 2023-24 (Copy enclosed as annex. 189 to 199 herewith.) In an order dt. 15.10.2024 by the Hon'ble ITAT Bench-Mumbai in in case of Charkop Lands End Co-operative Housing Society Ltd. Vs. ITO, Mumbai (Copy enclosed as annex. 200 to 209 herewith.), the Hon'ble ITAT has allowed the deduction u/s 80P(2)(d) in respect of the interest earned on FDR with cooperative bank. The Hon'ble jurisdictional Uttrakhand H.C. has also, in an Identical case of CIT Vs. Iqbalpur Co-operative Cane Development Union Ltd., reported in (2009) 315 ITR 441 (Uttrakhand), has held the similar nature receipts as disclosed in the present case as fully eligible for deduction u/s 80P, hence from these decisions of higher forum, it is clear that the issue of claim of deduction u/s 80P under the given facts and circumstances has been a very controversial and highly debatable issue. In many cases, a few of which are being referred below, it has been held by the Hon'ble High Courts and also different ITAT's that a debatable issue / claim is outside purview of Sec. 143(1)(a):- - CIT Vs. Haryana State Co-operative land....: (2002) 254 ITR 107 (Punj) - Judgment dt. 23.02.2018 of Hon'ble Bombay H.C. in an Income Tax Reference no. 25 of 2000 in case of Bajaj Auto Finance Ltd. Vs. CIT, Pune (Copy of order is enclosed as annex. 210 to 224 herewith) - Order dt. 20.02.2023 by the Hon'ble ITAT Bench- G, Mumbai in IТА по. 3169/Mum/2022 in case of Sai-Prerana Co-op. Credit Society Ltd. Vs ITO for AY 2017-18. (Copy of order is enclosed as annex. 225 to 231 herewith). - Order dt. 25.08.2022 by the Hon'ble ITAT Bench- G, Delhi in in case of Garg Heart Centre & Nursing Home Private Ltd. & Ors Vs ACIT for AY 2018-19. (Copy of order is enclosed as annex. 232 to 259 herewith). - Order dt. 13.07.2022 by the Hon'ble ITAT Bench- C, Chennai in ITA no. 505/Chny/2021 in case of Tangar Exports LLP VS ACIT for AY 2019-20. (Copy of order is enclosed as annex. 260 to 264 herewith). - Order dt. 20.02.2023 by the Hon'ble ITAT Bench- A, Jaipur in ITA no. 357/JPR/2022 in case of Paris Elysees India Pvt. Ltd. vs. DCIT for AY 2018-19. (Copy of order is enclosed as annex. 265 to 286 herewith).