2008 (8) TMI 983 - AT - Income Tax

Summary

Issues Involved:
1. Deduction u/s 80P(2)(c)
2. Deduction u/s 80P(2)(d)
3. Application of Rule 8D read with section 14A
4. Deduction u/s 80IB for Cattle Feed Plant
5. Deduction u/s 80IB for Banas-II Dairy Unit

Summary:

1. Deduction u/s 80P(2)(c):
The Department contended that the assessee's claim of Rs. 50,000/- deduction u/s 80P(2)(c) was incorrect as the assessee falls under section 80P(2)(b). The assessee argued that it is not a primary cooperative society as defined in section 80P(2)(b) and thus eligible for the deduction u/s 80P(2)(c). The Tribunal upheld the assessee's claim, stating that the assessee is engaged in activities other than those specified in clauses (a) or (b) of section 80P(2), and thus, the deduction of Rs. 50,000/- is allowable. The Department's appeal on this ground was rejected.

2. Deduction u/s 80P(2)(d):
The Department challenged the allowance of deduction of interest and dividend income u/s 80P(2)(d). The assessee argued that similar issues were decided in its favor in previous years by the ITAT. The Tribunal noted that the CIT(A) followed the Tribunal's earlier decisions and found no evidence that the investments were made from borrowed funds. Thus, the Tribunal upheld the CIT(A)'s decision to allow the deduction, rejecting the Department's appeal on this ground.

3. Application of Rule 8D read with section 14A:
The assessee contested the application of Rule 8D read with section 14A for calculating expenditure related to earning exempt income. The Tribunal did not provide a detailed discussion on this issue in the provided text.

4. Deduction u/s 80IB for Cattle Feed Plant:
The assessee argued that the deduction u/s 80IB for the Cattle Feed Plant was previously allowed by the Tribunal for the assessment year 2004-05. The Department requested similar directions as given in the earlier year. The Tribunal restored the issue to the Assessing Officer (A.O.) to examine the claim afresh, following the directions given in the earlier year, and directed the assessee to furnish necessary information, including an auditor's certificate if required.

5. Deduction u/s 80IB for Banas-II Dairy Unit:
The assessee claimed deduction u/s 80IB for Banas-II Dairy Unit, which was not claimed in the original return but was later supported by a fresh audit report. The CIT(A) dismissed the claim due to the late submission and discrepancies in the audit reports. The Tribunal noted that the issue was covered by its decision for the assessment year 2004-05, where the deduction was allowed. The Tribunal restored the matter to the A.O. to examine the audit report and the eligibility for deduction, considering the Tribunal's earlier decision.

Conclusion:
The appeal of the Department was dismissed, and the appeal of the assessee was allowed in part. The Tribunal directed the A.O. to re-examine certain issues following the Tribunal's earlier decisions and after giving the assessee an opportunity to be heard. The order was pronounced on 26.02.2010.