ITAT Cochin Judgments — September 2017

The Tribunal held that the society was not entitled to deduction under Section 80P(2)(a)(vi) as its income was not generated from the collective disposal of its members' labor but from the sale of toddy purchased from both members and non-members.

For two appeals, the Tribunal dismissed them in limine as the tax effect was below the threshold specified by CBDT circulars. For the remaining appeal, the Tribunal partly allowed the Revenue's ground regarding the estimation of gross profit, setting aside the CIT(A)'s order and directing the Assessing Officer to estimate profit at 3.2%.

The Tribunal held that the expenditure incurred for renovation of leasehold premises for setting up showrooms is revenue expenditure. It followed the jurisdictional High Court's decision in the assessee's own case, stating that a pending SLP before the Supreme Court does not negate the High Court's operative order.

The Tribunal held that mere belated filing of the return of income does not disentitle the assessee from claiming the benefit of deduction under Section 80P, provided other conditions are satisfied. The High Court's decision in Chirakkal Service Cooperative Bank Ltd. was followed.

The Tribunal held that while failure to remit tax can attract penalty under Section 271C, the assessee's plea of financial difficulties as a reasonable cause for the delay needs to be considered. The matter was remanded to the Assessing Officer for fresh adjudication.

The Tribunal held that the transactions did not constitute diversion of funds for the benefit of persons specified under Section 13(3). It noted that the debit balances were either repayments of loans from trustees or advances for genuine business purposes, and that overall credit balances existed in favour of trustees.