2022 (7) TMI 1261 - AT - Income Tax

Deduction u/s 80P - interest on bank deposits - HELD THAT - As stated by the ld. AR, and rightly so, the Tribunal in the case of Gramin Sewa Sahakari Samiti Maryadit Ors 2022 (3) TMI 75 - ITAT RAIPUR had after drawing support from the judgment in the case of Tumkur Merchants Souharda Cooperative Ltd. 2015 (2) TMI 995 - KARNATAKA HIGH COURT had after exhaustive deliberations concluded, that interest income earned on the surplus funds which were parked as deposits by the co-operative society in the normal course of the business of providing credit facilities to its members, i.e., at a point of time when there were no takers for the said funds was duly entitled for deduction under Sec. 80P(2)(a)(i). We, thus, in terms of our aforesaid observations direct the AO to allow the assessee s claim for deduction under Sec. 80P(2)(a)(i). Deduction of the income from paddy procurement business u/s 80P(2)(a)(iii) - HELD THAT - As decided in GRAMIN SEWA SAHAKARI SAMITI MARYADIT, SEWA SAHAKARI SAMITI MARYADIT RAJNANDGAON 2022 (3) TMI 75 - ITAT RAIPUR we are of the considered view that as the compilation of the paddy procurement by the assessee-society has been filed before us as additional documentary evidence, and the same was not there before the lower authorities, therefore, the matter in all fairness requires to be revisited by the AO. We, thus, in terms of the aforesaid observation set-aside the matter to the file of the Assessing Officer, with a direction to re-adjudicate the same after considering the additional documentary evidence that had been filed by the asssessee before us. A.O shall after determining as to what extent the assessee society had facilitated the marketing of the agricultural produce grown by non-members, therein, restrict the assessee s claim for deduction u/s. 80P(2)(a)(iii) of the Act only to the extent of the profit relatable thereto.

Summary

Issues Involved:
1. Deduction under Section 80P(2)(a)(i) for banking business.
2. Deduction under Section 80P(2)(a)(iii) for paddy procurement business.
3. Deduction under Section 80P(2)(c)(i) for PDS business.
4. Deduction under Section 80P(2)(d) for dividend income.

Issue-Wise Detailed Analysis:

1. Deduction under Section 80P(2)(a)(i) for Banking Business:
The assessee challenged the disallowance of the deduction claimed for interest income earned on bank deposits amounting to Rs. 4,36,196/-. The Tribunal referenced its earlier decision in ITA No.114/RPR/2016 & Ors., dated 23.02.2022, where it was determined that interest income earned on surplus funds parked as deposits by a co-operative society in the normal course of providing credit facilities to its members is eligible for deduction under Section 80P(2)(a)(i). The Tribunal directed the AO to allow the assessee's claim for deduction of Rs. 4,36,196/- under Section 80P(2)(a)(i).

2. Deduction under Section 80P(2)(a)(iii) for Paddy Procurement Business:
The assessee contested the disallowance of Rs. 4,17,910/- from its paddy procurement business. The Tribunal admitted additional evidence regarding paddy purchases and noted that the issue had been previously addressed in ITA No.114/RPR/2016 & Ors., where the matter was remanded to the AO for fresh adjudication. The Tribunal directed the AO to re-adjudicate the claim after considering the additional evidence and determining the proportion of procurement from non-members. The AO was instructed to restrict the deduction under Section 80P(2)(a)(iii) to the profit attributable to members' produce.

3. Deduction under Section 80P(2)(c)(i) for PDS Business:
The assessee disputed the disallowance of Rs. 1,47,499/- related to its PDS business. The Tribunal referred to its previous decision in ITA No.114/RPR/2016 & Ors., where it was held that the deduction should be restricted to the net profit after considering proportionate expenses. The Tribunal remanded the issue to the AO with instructions to re-adjudicate the claim for deduction under Section 80P(2)(c)(i) based on the net profit from PDS activities.

4. Deduction under Section 80P(2)(d) for Dividend Income:
The assessee challenged the disallowance of Rs. 86,800/- for dividend income received from Jila Sahakari Kendriya Bank Ltd. The Tribunal cited its earlier decision in ITA No.114/RPR/2016 & Ors., where it was determined that dividend income from a co-operative bank is eligible for deduction under Section 80P(2)(d). The Tribunal vacated the disallowance and allowed the assessee's claim for deduction of the dividend income under Section 80P(2)(d).

Conclusion:
The Tribunal allowed the appeals for statistical purposes, directing the AO to re-adjudicate the claims based on the Tribunal's observations and additional evidence. The decisions in ITA No.85/RPR/2018 were applied mutatis mutandis to the other appeals (ITA No.(s) 86 to 91/RPR/2018) for the assessment years 2012-13 and 2013-14.