ITAT Ahmedabad Judgments — April 2024

The Tribunal held that the addition on account of agricultural income was not sustainable due to lack of proper inquiry and violation of natural justice. It also held that land development expenses, even if claimed in the profit and loss account, could not be disallowed as they related to exempt agricultural income.

The Tribunal addressed two main issues. Firstly, regarding the deduction under Section 80P(2)(a)(i) on interest from nationalized banks, the Tribunal noted the AO's disallowance based on the Gujarat High Court's decision in State Bank of India v. CIT and the applicability of Section 56. The assessee argued that the funds were for statutory liquidity and the SBI case was distinguishable. The Tribunal's decision on this specific point is not fully detailed in the provided excerpt, but the overall result indicates a partial allowance. Secondly, concerning the deduction under Section 80P(2)(d) on interest from co-operative banks, the Tribunal, following its own decision for the immediately preceding assessment year (AY 2016-17) and the jurisdictional Gujarat High Court's rulings in State Bank of India v. CIT and Surat Vankar Sahakari Sangh Limited v. ACIT, allowed the deduction. The Tribunal emphasized maintaining consistency. However, to ensure the entities were indeed co-operative banks registered under the relevant Act, the Tribunal directed the AO to verify this fact before granting relief. The Tribunal also noted that while res judicata does not apply, consistency is to be maintained, referencing the Supreme Court decision in Radhasoami Satsang v. CIT.

On the first issue, the Tribunal noted that the assessee's claim that the statement was made without basis and not supported by evidence was not sufficiently substantiated. However, the Tribunal also observed that the assessment order did not mention any specific document, transaction details, or investment amounts related to the land transactions, with the Rs. 21.5 lakh admission being the sole basis for the addition. The Tribunal found that the AO had not exercised the jurisdiction conferred under Section 50C(2)(a) by referring the matter to the DVO for valuation. The Tribunal held that the CIT(A) ought to have accepted the fair market value disclosed by the assessee as the sale consideration. Consequently, the addition made by the AO under Section 50C was set aside, and the ground of appeal was allowed. The Tribunal also noted that the assessee had accepted the addition on the ground of appeal, leading to the dismissal of that specific ground. The Tribunal's reasoning for the Section 50C issue was that the AO was mandated to refer the valuation to the DVO when the assessee claimed the stamp duty value exceeded the fair market value. Therefore, the CIT(A)'s order confirming this addition was set aside.