2021 (8) TMI 994 - AT - Income Tax

Deduction u/s 80P - AO has disallowed the claim for deduction for the reason that the assessee has failed to furnish the details called for - HELD THAT - Admittedly, the assessee did not furnish the details called for by the A.O., more particularly that the produce marketed by it was grown by its members. Before us, the Ld. A.R. submitted that the assessee is admitting farmers as members, only after satisfying itself that he/she owns agricultural lands - we notice that the assessee has failed to furnish any details before the A.O. to support the claim for deduction u/s 80P(2)(a)(iii) more particularly, the fact that the agricultural produce was grown by its members. Since the assessee had been allowed deduction u/s 80P(2)(iii) in the earlier years, we are of the view that, in the interest of natural justice, the assessee may be provided with an opportunity to furnish the relevant details before the A.O. to support the claim for deduction u/s 80P(2)(a)(iii) of the Act. We set aside the order passed by Ld CIT(A) and restore this issue to the file of the AO for examining the claim of the assessee afresh in accordance with law. The assessee is also directed to furnish relevant details before the AO - Appeal filed by the assessee is treated as allowed for statistical purposes.

Summary

Issues:
- Allowance of deduction u/s 80P(2)(a)(ii) and 80P(2)(a)(iii) of the Income Tax Act

Analysis:
1. The appeal concerned the allowance of deduction u/s 80P(2)(a)(ii) and 80P(2)(a)(iii) of the Income Tax Act for the assessment year 2011-12. The assessee, a Co-operative Society engaged in marketing agricultural produce, claimed deduction under these sections in the revised return of income.

2. The Assessing Officer (A.O.) questioned the eligibility of the assessee for deduction u/s 80P(2)(a)(iii) as it required the produce sold to be grown by members. The A.O. disallowed the deduction claimed u/s 80P(2)(a)(i) and 80P(2)(a)(iii) to a certain extent, allowing only a partial deduction u/s 80P(2)(c) of the Act.

3. In the appellate proceedings, the Commissioner of Income Tax (Appeals) upheld the A.O.'s decision, leading the assessee to appeal to the ITAT Bangalore. The assessee argued that the entire income was attributable to marketing activities, thus eligible for deduction u/s 80P(2)(a)(iii) of the Act.

4. The ITAT observed that the assessee failed to provide necessary details to prove eligibility for deduction u/s 80P(2)(a)(iii). However, considering the past allowance of such deduction and in the interest of natural justice, the ITAT set aside the CIT(A)'s order and directed the AO to re-examine the claim with the provision of relevant details by the assessee.

5. Ultimately, the ITAT allowed the appeal for statistical purposes, emphasizing the need for the AO to reassess the claim in accordance with the law and the provision of relevant details by the assessee. The judgment was pronounced on 23rd August 2021 by the ITAT Bangalore.