2018 (6) TMI 267 - AT - Income Tax

Benefit of Section 80P(2)(d) on the dividend income - Held that - Since both the authorities have not seen the Memorandum of Association or any other evidence in respect of the institutions where the investments were made; therefore, we deem it appropriate to set aside this issue to the file of the Assessing Officer. The Assessing Officer shall decide the status of the institutions where the investments were made by the assessee. If they were found to be co-operative societies, then deduction as per Section 80P(2)(d) would be granted; otherwise, he will decide the issue in accordance with law. - Decided in favour of assessee for statistical purposes.

Summary

Issues:
Delay in filing appeals, Condonation of delay, Eligibility for deduction under Section 80P(2)(d) of the Income-tax Act.

Analysis:
The judgment by the Appellate Tribunal ITAT Ahmedabad pertains to two appeals filed by the assessee against orders of the CIT(A)-XX, Ahmedabad for Assessment Years 2008-09 & 2011-12, which were initially time-barred by 94 days. The delay was attributed to the Secretary-cum-Manager of the Society suffering from a major illness, resulting in the inability to file the appeals within the stipulated time. The Tribunal, after considering the medical certificate and circumstances, condoned the delay in the interest of justice to proceed with deciding the appeals on merits.

The primary issue raised by the assessee was the denial of benefit under Section 80P(2)(d) of the Income-tax Act on dividend income for the relevant assessment years. The assessee, a Co-operative Society, claimed that the dividend income from certain investments qualified for deduction under Section 80P(2)(d), but the Assessing Officer disallowed the claim. The CIT(A) upheld the disallowance, stating that the income derived from investments with institutions like Banas Bank, which were not co-operative societies but co-operative banks, did not qualify for the deduction under Section 80P(2)(d).

The Tribunal analyzed the provisions of Section 80P of the Act, emphasizing that a co-operative society is entitled to deduction under Section 80P(2)(d) for income by way of interest or dividends derived from investments with other co-operative societies. However, the Assessing Officer's disallowance was based on the classification of the institutions as co-operative banks rather than co-operative societies. The Tribunal directed the Assessing Officer to determine the status of the institutions where investments were made by the assessee to ascertain their eligibility for deduction under Section 80P(2)(d), highlighting the importance of examining the nature of these institutions before making a final decision.

In conclusion, the Tribunal allowed both appeals for statistical purposes, setting aside the disallowance and instructing a reevaluation by the Assessing Officer regarding the nature of the institutions where the investments were made to determine the eligibility for deduction under Section 80P(2)(d) of the Income-tax Act.