2020 (9) TMI 409 - AT - Income Tax

Order u/s. 143(3) as barred by limitation - Deduction u/s.80P(2)(a)(i) denied on the ground that the appellant is not a Co-operative Society - HELD THAT - Admittedly, in this case, the assessment order was passed on 29/12/2017. However, it was received by the assessee through Speed Post on 02/01/2018. Now the contention of the assessee is that it should have been posted on or before 31/12/2017. However, as find that 30/12/2017 and 31/12/2017 were Saturday and Sunday being Government holidays. Being so, the assessment order was rightly sent by Speed Post on 01/01/2018 and it cannot be said that the assessment order was barred by limitation. Accordingly, reject this additional ground taken by the assessee. Deduction u/s. 80P - AO should have considered the net income by setting off the loss incurred on account of business carried on with the regular members which resulted in loss - HELD THAT - The assessee has raised this additional ground first time before the Tribunal and the lower authorities had no to consider this ground. In view of this, remit this issue to the file of the CIT(A) for fresh consideration. Accordingly, this additional ground of the assessee is allowed for statistical purposes.

Issues Involved:
1. Deduction u/s. 80P(2)(a)(i) disallowed for not being a Co-operative Society
2. Addition made for income from nominal members not allowed as deduction u/s. 80P(2)(a)(i)
3. Interest income not allowed as deduction u/s. 80P(2)(a)(i) and u/s. 80P(2)(d)
4. Expenditure for earning interest income not allowed
5. Ground regarding Limitation for assessment order
6. Additional grounds regarding deduction u/s. 80P of Income-tax Act, 1961
7. Admission of additional grounds

Analysis:

1. Deduction u/s. 80P(2)(a)(i): The appellant contended that the Commissioner erred in disallowing the deduction claimed u/s. 80P(2)(a)(i) on the basis that the appellant was not a Co-operative Society. The appellant argued that the Karnataka Co-operative Societies Act, 1959 allows for the admission of nominal members, hence the deduction should be allowed. The Tribunal admitted the additional grounds for adjudication, citing relevant Supreme Court judgments. The appellant's contentions were considered, and the appeal was partly allowed for statistical purposes.

2. Income from Nominal Members: The Commissioner disallowed the addition of income from nominal members as a deduction u/s. 80P(2)(a)(i) due to lack of voting rights and management participation. The appellant argued that such members were allowed under the Co-operative Societies Act, hence the deduction should be permitted. The Tribunal remitted this issue to the CIT(A) for fresh consideration, allowing the additional ground raised by the appellant for statistical purposes.

3. Interest Income Deduction: The Commissioner disallowed the interest income as deduction u/s. 80P(2)(a)(i) and u/s. 80P(2)(d) despite investments being made from surplus funds. The appellant contended that the interest income from Co-operative Banks should be allowed as a deduction. The Tribunal considered the arguments and admitted the additional grounds for adjudication, ultimately partly allowing the appeal for statistical purposes.

4. Expenditure for Interest Income: The Commissioner did not allow the expenditure incurred for earning interest income from investments as a deduction. The Tribunal considered the appellant's contentions and admitted the additional grounds for adjudication, ultimately partly allowing the appeal for statistical purposes.

5. Limitation for Assessment Order: The appellant raised a ground regarding the limitation for the assessment order, arguing that it was issued beyond the due date. The Tribunal rejected this additional ground, determining that the assessment order was sent within the required timeframe, despite being received later by the appellant.

6. Additional Grounds for Deduction u/s. 80P: The appellant raised additional grounds related to the deduction u/s. 80P of the Income-tax Act, 1961. The Tribunal admitted these additional grounds for adjudication, considering the appellant's reasons for raising them and the relevant legal precedents cited.

7. Admission of Additional Grounds: The Tribunal admitted the additional grounds raised by the appellant, emphasizing that all relevant facts were on record, and no fresh investigation was necessary. The Tribunal considered the arguments presented by both parties and decided to admit the additional grounds for adjudication, ultimately partly allowing the appeal for statistical purposes.

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