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2019 (12) TMI 1235 - AT - Income TaxDeduction u/s 80P - Deduction u/s 80P of the Act is not allowed on the ground that the expenses claimed by the assessee are not allowable - HELD THAT - The coordinate bench of this Tribunal has decided the issue related to allowance of deduction u/s 80P of the Act and the expenditure disallowed by the A.O. whether this would qualify for deduction u/s 80P of the Act. A bare reading of provision of section 80P(2) of the Act makes it clear that the deduction would be available in respect of the profit gains of business attributable to any one or more of search activities, which is prescribed u/s 80P(2) of the Act. As per the assessee, the assessee is providing credit facilities to its members. Therefore, it would qualify for claim of deduction u/s 80P of the Act. The coordinate bench under the identical facts has allowed deduction u/s 80P of the Act in respect of the activity similar or same, which is being undertaken by the assessee society. Now the issue would be whether the disallowances made in respect of bad debts and commission payment claimed by the assessee would qualify for deduction u/s 80P of the Act or not? In respect of the bad debt, the assessee is required to demonstrate that the debt which is claimed is in the nature of profit gains and business attributable to such activity. In the present case, the assessee had made provision for bad debt. If the assessee had not done this provision, this amount would have not been deducted from the profit loss account. Therefore, in my considered view, this amount is certainly attributable to the profit gains of the assessee society. Further, disallowance of payment of commission. The commission is claimed as business expenditure, deducted from the profit gains account. Therefore, this would also be in the nature of profit gains of the assessee society. Therefore, in the light of the decision of the coordinate bench rendered in the case of ACIT Circle-4 Vs. Buldana Urban Co-operative Credit Society Ltd. 2013 (12) TMI 237 - ITAT NAGPUR the assessee is entitled for benefit of deduction u/s 80P of the Act. I therefore, direct the A.O. to grant deduction u/s 80P of the Act to the assessee.
Issues Involved:
1. Deduction under Section 80P of the Income Tax Act. 2. Addition of ?3,95,032/- by the Assessing Officer. 3. Disallowance of Daily Deposit Agents’ Commission expenses of ?95,032/-. Detailed Analysis: 1. Deduction under Section 80P of the Income Tax Act: The assessee contended that the CIT(A) erred in not allowing the deduction under Section 80P despite it being claimed in the return of income. The Tribunal considered the decision of the coordinate bench in the case of ACIT Circle-4 Vs. Buldana Urban Co-operative Credit Society Ltd., which established that a co-operative society engaged in providing credit facilities to its members is eligible for deduction under Section 80P(2)(a)(i). The Tribunal noted that the CIT(A) had denied the deduction on the grounds that the expenses claimed were not allowable. However, the Tribunal emphasized that Section 80P(2) allows deductions for profits and gains attributable to the activities prescribed in the section, including providing credit facilities to members. The Tribunal concluded that the disallowances made for bad debts and commission payments should qualify for deduction under Section 80P, as they are attributable to the profits and gains of the assessee society. Therefore, the Tribunal directed the Assessing Officer to grant the deduction under Section 80P. 2. Addition of ?3,95,032/- by the Assessing Officer: The assessee challenged the addition of ?3,95,032/- made by the Assessing Officer, arguing that the income initially believed to have escaped assessment was not found to have escaped assessment, and thus, a fresh notice under Section 148 was necessary for assessing other income. The Tribunal noted that the case was reopened based on AIR information regarding cash deposits and that the Assessing Officer had made various additions, including ?50,000 under Section 43B, ?95,032 as commission paid, and ?3 lakhs for disallowance of provision for bad debt. Since the Tribunal allowed the deduction under Section 80P, the issue of sustaining the addition became academic and did not require separate adjudication. 3. Disallowance of Daily Deposit Agents’ Commission expenses of ?95,032/-: The assessee contended that the CIT(A) erred in confirming the disallowance of ?95,032/- as Daily Deposit Agents’ Commission expenses. The Tribunal considered this issue in light of the decision to allow the deduction under Section 80P. The Tribunal noted that the commission expenses, being business expenditures deducted from the profit and loss account, are attributable to the profits and gains of the assessee society. Therefore, these expenses should also qualify for the deduction under Section 80P. Consequently, the Tribunal directed the Assessing Officer to allow the deduction for these expenses as well. Conclusion: The Tribunal partly allowed the appeal, directing the Assessing Officer to grant the deduction under Section 80P for the disallowed expenses and additions, thereby rendering the other grounds of the appeal academic. The order was pronounced in the open court on 26.12.2019.
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