2013 (3) TMI 673 - AT - Income Tax

Deduction for income of Co-operative Society u/s 80P - The taxpayer an agriculture Co-operative society has not filed the return of income within the due date provided u/s 139(1) or 139(4) of the Act. Though it has filed all the particulars with regard to depreciation. However the assessing officer without any discussion disallowed part of the depreciation - HELD THAT - As income tax return was not filed by the taxpayer within due date he is not eligible for deduction u/s 80P of the Act. Though he submitted the depreciation particulars nothing prevents the A.O. from considering the issue and record reasons for disallowing the depreciation claim of the taxpayer. Disallowance u/s 40(a)(ia) - Non-deduction of TDS on interest u/s 194A(3)(viia) - Taxpayer an agriculture Co-operative society was accepting deposits and maintaining savings bank account and current bank account. The taxpayer was also providing cheque facilities to its customers. - HELD THAT - Taxpayer is engaged in banking activities hence bound to deduct tax u/s 194A(3)(viia) of the Act.

Summary

Issues:
1. Deduction u/s 80P of the Act
2. Depreciation
3. Disallowance u/s 40a(ia) of the Act

Deduction u/s 80P of the Act:
The taxpayer's appeal was against the order of CIT(A)-II, Kozhikode for the assessment year 2009-10 concerning deduction u/s 80P of the Act. The Tribunal referred to a previous case where it was established that if the return was not filed within the due date or the time limit prescribed, the taxpayer is not eligible for the deduction u/s 80P. The Tribunal held that the taxpayer in this case was not eligible for the deduction based on the specific provisions of section 80A(5) of the Act.

Depreciation:
The next ground of appeal was related to depreciation. The taxpayer claimed a certain amount as depreciation, but the assessing officer unreasonably restricted it without providing any explanation. The Tribunal noted that the assessing officer failed to record reasons for disallowing part of the depreciation and did not consider the details submitted by the taxpayer. Consequently, the Tribunal set aside the lower authorities' orders and directed the assessing officer to re-examine the issue based on the materials provided by the taxpayer and to decide in accordance with the law.

Disallowance u/s 40a(ia) of the Act:
The issue of disallowance u/s 40a(ia) of the Act was also raised. The taxpayer argued that, being an agricultural co-operative society, they were not required to deduct tax under section 194A(3)(viia). However, the Department contended that the taxpayer was engaged in banking activities and thus obligated to deduct tax. The Tribunal analyzed the activities of the taxpayer, which included banking operations like maintaining accounts and providing cheque facilities. It concluded that the taxpayer, despite being a cooperative society, was engaged in banking activities, making them liable to deduct tax. Therefore, the Tribunal confirmed the lower authorities' orders on this issue.

In conclusion, the Tribunal partly allowed the taxpayer's appeal for statistical purposes, emphasizing the importance of complying with the provisions of the Income-tax Act in determining eligibility for deductions and tax obligations.