2022 (6) TMI 78 - AT - Income Tax

Deduction u/s 80P involving nominal members - HELD THAT - As the issue is found to be no more res integra in light of Mavilayi Service Cooperative Bank Ltd . 2021 (1) TMI 488 - SUPREME COURT deciding the same against the department. So far as the assessee s very deduction claim pertaining to interest income derived from deposits in cooperative banks is concerned case law State Bank of India Vs. CIT 2016 (7) TMI 516 - GUJARAT HIGH COURT and CIT Vs. Totagars Cooperative Sale Society 2017 (1) TMI 1100 - KARNATAKA HIGH COURT holds that such an income also is eligible for the impugned claim. This second issue also goes against the department. Next comes the assessee s reliance on CBDT Circular No.37/2016 that TDS and NPA provisions respectively deserves to be considered as eligible for deduction since enhancing the business profits only. This issue, in my considered opinion, deserves to be restored back to the AO for his fresh adjudication in light of the aforementioned CBDT Circular.

Issues:
1. Initiation of 147 proceedings without tangible material.
2. Confirmation of additions made by the ITO.
3. Appeal decision without considering submissions.
4. Disallowance of deduction claimed under section 80P(2)(a)(i).
5. Disallowance of deduction for dealing with nominal members.
6. Non-granting of enhanced deduction as per CBDT Circular.
7. Non-allowance of proportionate deduction for transactions with ordinary members.
8. Non-allowance of deduction under section 80P(2)(c)(ii).
9. Eligibility for deduction under section 80P(2)(d) for interest received from cooperative banks.

Analysis:

1. The appellant challenged the initiation of 147 proceedings for AY 2011-12, arguing the absence of tangible material to substantiate the "reason to believe" escaped income. The Tribunal considered this issue, emphasizing the requirement for concrete evidence before initiating such proceedings under the Income Tax Act, 1961.

2. The appellant contested the additions made by the ITO, Ward 2, Jalna, which were confirmed by the CIT(A), NFAC. The Tribunal reviewed the reasoning behind the additions and found discrepancies in the analogy used by the authorities. The Tribunal noted the appellant's argument regarding transactions with nominal members and their voting rights.

3. The appeal decision was criticized for not considering submissions filed before the case was transferred to NFAC. The Tribunal acknowledged the importance of reviewing all relevant submissions before making a decision, highlighting specific dates when submissions were made.

4. The disallowance of deduction claimed under section 80P(2)(a)(i) was challenged by the appellant, citing the absence of a banking license from the Reserve Bank of India. The Tribunal analyzed the legal provisions and precedents to determine the eligibility of the appellant for the claimed deduction.

5. The appellant's contention regarding the disallowance of deduction for dealing with nominal members was examined in light of relevant legal precedents. The Tribunal referred to specific court cases where similar issues were decided in favor of the appellant, emphasizing the definition of nominal members under the Maharashtra Cooperative Societies Act, 1960.

6. The Tribunal addressed the non-granting of enhanced deduction as per CBDT Circular, directing the issue to be reconsidered by the Assessing Officer in accordance with the Circular. The Tribunal highlighted the importance of following relevant circulars for determining deductions accurately.

7. The non-allowance of proportionate deduction for transactions with ordinary members was raised by the appellant. The Tribunal reviewed the provisions under section 80P(2)(a)(i) and assessed the appellant's eligibility for the claimed deduction based on the nature of transactions with ordinary members.

8. The appellant's claim for deduction under section 80P(2)(c)(ii) was not allowed by the authorities. The Tribunal examined the provisions of the ITA, 1961 to determine the eligibility of the appellant for the claimed deduction under the specified section.

9. The appellant sought deduction under section 80P(2)(d) for interest received from cooperative banks. The Tribunal analyzed the appellant's eligibility for this deduction based on the specific provisions of the ITA, 1961 and the nature of the interest income derived from cooperative banks.

In conclusion, the Tribunal partly allowed the appellant's appeal, addressing various substantive grounds raised by the appellant and providing detailed analyses for each issue presented before the Tribunal.

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