2017 (9) TMI 472 - AT - Income Tax

Deduction u/s 80P on the enhanced profit - gross total income - Held that - The income which has been computed by the AO after making certain additions/disallowances has to be taken as eligible for deduction under section 80P(2)(a)(i) if it complies the conditions stipulated therein. Somewhat similar issue has been decided in the case of M/s. S.B. Builders but he allowed deduction under section 80IB(10) only with reference to the profit shown in the return of income. The Tribunal after considering the Supreme Court s judgement in Cambay Electric Supply Industrial Co. Ltd. vs. CIT (1978 (4) TMI 1 - SUPREME Court) has held that profit derived for the purposes of section 80- IB(10) would mean profit as computed in the manner laid down in the Act i.e. as per the provisions of Section 30 to 43D. - Decided against revenue

Summary

Issues:
- Appeal against order of CIT(A) directing to allow deduction u/s 80P on enhanced profit
- Interpretation of provisions of Section 80P for deduction from gross total income
- Comparison with previous Tribunal decisions on similar issues

Analysis:
1. The appeal was filed by the Revenue against the order of the CIT(A) directing to allow deduction under section 80P on the enhanced profit. The Revenue argued that the assessee was not entitled to the deduction as per the questions of law raised in the Department's appeal filed in the High Court. The brief facts revealed that the assessee, a cooperative credit society, had filed a return of income declaring Nil income. The AO determined the total income, disallowing deductions under section 80P, and making other disallowances. The CIT(A) allowed the deduction under section 80P(2), which was further contested by the Revenue. The Tribunal considered the provisions of Section 80P, emphasizing that the deduction is to be allowed from the gross total income as per the Act's provisions.

2. The Tribunal highlighted that the income for deduction under section 80P should be the finally assessed business income, not just the income declared in the return. It referenced a previous Tribunal decision in a similar context, emphasizing the importance of computing profits as per the Act's provisions. The Tribunal compared this issue with a case related to section 80IB(10) and highlighted the significance of considering profits derived as per the Act's computation rules. The Tribunal found no illegality or infirmity in the CIT(A)'s order, dismissing the Revenue's appeal.

3. The learned D.R. relied on the AO's order but failed to provide any decision supporting a different interpretation. The Tribunal upheld the CIT(A)'s order, emphasizing the necessity of considering the finally assessed business income for deduction under section 80P. The appeal filed by the Revenue was ultimately dismissed, affirming the CIT(A)'s decision to allow the deduction under section 80P on the enhanced profit.