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Income Tax Appellate Tribunal, PUNE BENCH “SMC”, PUNE
Before: SHRI INTURI RAMA RAO & Ms. ASTHA CHANDRA
This is an appeal filed by the assessee directed against the order of National Faceless Appeal Centre (NFAC), Delhi dated 11.03.2024 for the assessment year 2017-18.
Briefly, the facts of the case are that the appellant is a Cooperative Society formed under the Maharashtra Cooperative Societies Act, 1961.
It is engaged in the business of providing credit facilities to its members and accepting deposits from them. The Return of Income for the A.Y. 2017-18 was filed by the assessee declaring Nil income after claiming exemption u/s.80P(2)(a)(i) of the Income-tax Act, 1961 (hereinafter referred to as ‘The Act’). Against the said return of income, the assessment was completed by the AO vide order dated 15.12.2019 passed u/s.143(3) of the Act at a total income of Rs.30,00,000/-. While doing so, the AO made disallowance of provision of NPA on Standards Assets amounting to Rs.30,00,000/- debited to the profit and loss account rejecting the contention of the appellant society that the said provision was made in terms of the Circular issued by the Commissioner of Cooperative Societies mandating the provision for NPAs on the standard assets.
Being aggrieved, an appeal was filed before the CIT(A), who vide impugned order confirmed the action of AO disallowing the provision for NPA on standard assets, however, proceeded to hold that the issue had become academic in view of the subsequent order passed by the AO u/s.154 of the Act.
Being aggrieved, the appellant is in appeal before the Tribunal in the present appeal.
We heard the rival submissions and carefully perused the relevant material on record. Admittedly, the addition of Rs.30,00,000/- made by the AO disallowing the provision of NPA on standard assets had become academic in view of the subsequent order passed by the AO in the proceedings u/s.154 of the Act. In any event, in view of the undisputed position that the appellant cooperative society is entitled for deduction u/s.80P(2)(a)(i) of the Act, the addition, if any, also partakes the character of business income, which qualifies for deduction u/s.80P(2)(a)(i) of the Act. Accordingly, the appeal filed by the appellant cooperative society stands allowed.
In the result, the appeal filed by the assessee is allowed.
Order pronounced on this 28th day of May, 2024.