2015 (7) TMI 327 - AT - Income Tax

Reopening of assessment - disallowances of deduction claimed u/s.80P(2) - CIT(A) directing re-computing the total income after deduction u/s.80P of ₹ 10,81,712/- as against ₹ 50,04,034/- determined by the A.O - Held that - The appellant had wrongly reduced the items of Municipal Taxes pertaining to house properties as against adding it back. This would increase the income from business activity further by ₹ 56,400/-. Therefore the income determined from its business and profession would be ₹ 77,598/- (Loss) as against loss of ₹ 2,88,873/- shown by the appellant - ₹ 2,88,873/- Rs.l,54,875/- ₹ 56,400/- . The gross total income of the appellant would be higher by an amount of ₹ 211275/- than what has been shown by the appellant in its computation of income submitted in response to the show cause. The gross total income of the appellant is therefore taken at ₹ 1555407/- as against ₹ 1344132/- determined by him. Coming to the deductions claimed by the appellant in its revised computation before me, the deductions of ₹ 28,224/- u/s. 80P(2)(a)(iv), ₹ 50,000/- u/s. 80P(2)(c) and ₹ 395471/- u/s. 80P(2)(d) are held as admissible to the appellant. Its claim of deduction of ₹ 539379/- u/s. 80P(2)(iii) of the act in respect of vegetable commission is inadmissible as there was no profit from this activity. This activity has resulted in a loss which has wiped out the profits generated by the CNG and Petrol business. The appellant is therefore not eligible for any deduction u/s. 80P(2)(a)(iii) of the act. Its claim that no expenditure relating to commission income received from members is debited in the P. & L. account is untenable. All expenses pertaining to all other activities have been accounted for separately, i.e. in the accounts maintained individually for each activity. The expenses in the P. & L. account pertained only to the vegetable commission activity. The total deduction u/s. 80P of the act is admissible to the appellant is only ₹ 473695/- ₹ 28,224/- ₹ 3,95,471/- ₹ 50,000/- . The total taxable income of the appellant which is gross total income less deduction u/s. 80P(2) of the act works out to ₹ 10,81,712/- ₹ 15,55,407/- - ₹ 4,73,695/-). The total taxable income is determined at ₹ 1081710/-. The A.O. is directed to consider this as taxable income of the appellant The aforesaid findings of the ld.CIT(A) is not controverted by the Revenue by placing any material contrary to the finding on record, therefore we do not see any reason to interfere with the order of the ld.CIT(A), same is hereby confirmed. - Decided against revenue.

Summary

Issues:
Appeal against order of Ld. Commissioner of Income Tax (Appeals) regarding re-computation of total income after deduction u/s.80P for AY 2007-08.

Analysis:

1. The appeal was filed by the Revenue against the order of the Ld. Commissioner of Income Tax (Appeals) for AY 2007-08. The Revenue challenged the re-computation of total income after deduction u/s.80P, specifically disputing disallowances made by the Assessing Officer (AO) on various items. The AO disallowed a total amount of &8377; 50,04,034, which the Ld. CIT(A) reduced to &8377; 4,73,695 as eligible deduction under u/s.80P(2) of the Income Tax Act, 1961. The Revenue contended that the disallowances should have been upheld, while the assessee supported the Ld. CIT(A)'s order.

2. The main issue in this appeal revolved around the disallowances of deductions claimed under u/s.80P(2) of the Act. The Senior DR argued that the Ld. CIT(A) erred in deleting the disallowances, emphasizing the lack of justification provided by the assessee for claiming the deductions. On the other hand, the assessee's counsel supported the Ld. CIT(A)'s decision.

3. After considering the submissions, the Tribunal reviewed the orders of the lower authorities and the facts of the case. The Ld. CIT(A) had meticulously analyzed the case and provided detailed findings on the correct determination of the appellant's income. The Tribunal noted that the AO's approach of considering profits from ineligible activities as taxable income was incorrect. The Ld. CIT(A) identified various inadmissible expenses and reserves in the appellant's accounts, leading to a revised computation of income. The Tribunal concurred with the Ld. CIT(A)'s findings and confirmed the admissibility of certain deductions while disallowing others.

4. The Tribunal observed that the Revenue did not present any material to challenge the Ld. CIT(A)'s findings on record. Consequently, the Tribunal upheld the Ld. CIT(A)'s order, rejecting the Revenue's appeal. The Tribunal dismissed the Revenue's appeal, affirming the Ld. CIT(A)'s decision regarding the computation of taxable income for the appellant for AY 2007-08.

5. The Tribunal concluded that the Revenue's grounds of appeal were not sustainable, and the appeal was dismissed. The order was pronounced in court on a specified date in Ahmedabad, finalizing the decision in favor of the appellant based on the Ld. CIT(A)'s computation of income and allowable deductions under u/s.80P of the Income Tax Act, 1961.