2019 (3) TMI 801 - AT - Income Tax

Disallowance of deduction claimed u/s 80P(2)(d) - interest received from the investment made with other Co operative Bank qualification for deduction u/s 80P - non appearance of the assessee before the first appellate authority - HELD THAT - The cause of non appearance of the assessee before the first appellate authority, deem it appropriate to restore the issue relating to assessee s claim of deduction under section 80P(2)(d) to the file of the Commissioner (Appeals) for de novo adjudication. Commissioner (Appeals) must deal with all the submissions to be made by the assessee and the decisions to be cited and decide the issue through a speaking and well reasoned order after due opportunity of being heard to the assessee. Also direct the assessee to respond to the notice of hearing to be issued by the Commissioner (Appeals) and co operate in finalizing the proceeding by making proper submissions with supporting evidences and case laws. It is made clear, have not expressed any opinion on the merits of the disputed issue. With the aforesaid observations, grounds raised are allowed for statistical purposes.

Summary

Issues:
Challenge to disallowance of deduction under section 80P(2)(d) of the Income Tax Act, 1961.

Analysis:
The appeal was filed challenging the disallowance of deduction under section 80P(2)(d) of the Income Tax Act for the assessment year 2014-15. The Assessing Officer noted interest income earned by the assessee from investments in a Co-operative Bank, which the assessee claimed as a deduction under section 80P(2)(d) of the Act. However, the Assessing Officer disallowed the deduction, stating that a Co-operative Bank is a Commercial Bank and does not qualify for the deduction under section 80P. This decision was based on the Supreme Court's ruling in Totgars Co-operative Cell Society Ltd. v/s ITO. The first appellate authority upheld the disallowance.

The Authorized Representative argued that the assessee fulfills all conditions of section 80P(2)(d) and is eligible for the deduction. It was highlighted that the assessee is a Co-operative Society not engaged in business activities, making the Supreme Court's decision in Totgars Co-operative Cell Society Ltd. inapplicable. The appeal was decided ex-parte due to lack of communication, preventing the assessee from presenting arguments. The Authorized Representative requested an opportunity for the assessee to provide detailed submissions to convince the appellate authority.

Upon considering the submissions, the Tribunal found the decision in Totgars Co-operative Cell Society Ltd. not directly applicable to the present case due to differing facts. The Tribunal decided to restore the issue of deduction under section 80P(2)(d) to the first appellate authority for fresh adjudication. The appellate authority was directed to consider all submissions and evidence presented by the assessee and provide a well-reasoned order after giving the assessee a fair hearing. The Tribunal emphasized that it did not express any opinion on the merits of the disputed issue. The appeal was allowed for statistical purposes.

In conclusion, the Tribunal's decision emphasized the need for a fair hearing and detailed consideration of the assessee's claim for deduction under section 80P(2)(d) of the Income Tax Act. The case was remanded to the first appellate authority for a fresh decision after allowing the assessee an opportunity to present its case effectively.