2020 (5) TMI 212 - AT - Income Tax

Deduction u/s 80P - assessee has not given segment wise details of income earned by it from the core activity of the assessee cooperative society as well as from the non-core activity - HELD THAT - Some of the income during the year under consideration has been earned by the assessee from the activity of selling the commodities like Sugar, Kerosene, Wheat etc. under the Public Distribution Scheme of Rajasthan Govt. These activities are not the core activity of the assessee society and the income from these activities would not be eligible for deduction u/s 80P. Core activity of the assessee society which includes credit facilities to its Members and supply of fertilizers and other materials used in the agricultural activity to the members, the same is eligible for deduction u/s 80P - interest earned by the assessee from the deposits with another cooperative banks is also eligible for deduction u/s 80P but the interest earned from the saving bank account kept with schedule bank or non-cooperative bank is again a matter of dispute, so far as the eligibility of deduction u/s 80P of the Act is concerned. In the absence of these segmentwise details and income from different activities bifurcating into the category of core activity and ancillary activity to the core activity as well as non-core activity, it is not possible to consider the claim of deduction u/s 80P - set aside this issue to the record of the AO to verify the segmentwise details of income from core activities of the assessee as well as non-core activity to be filed by the assessee and then allow the claim of the assessee u/s 80P of the Act in respect of income from the core activity of the assessee. Appeal of the assessee is allowed for Statistical purposes.

Summary

Issues involved:
Disallowance of deduction claimed u/s 80P of the I.T. Act, 1961.

Analysis:

Issue 1: Disallowance of deduction u/s 80P of the I.T. Act, 1961

2.1 The sole issue in this appeal pertains to the disallowance of the deduction claimed under section 80P of the Income Tax Act, 1961.

2.2 The assessee, a cooperative society registered under the Cooperative Society Act, 1953, engaged in various activities including banking, providing credit facilities to members, and trading control price items under the Public Distribution Scheme of the Rajasthan Govt. The assessee filed its return of income claiming a deduction of ?27,45,889 under section 80P. The Assessing Officer (AO) disallowed the claim citing lack of details. The assessee contended before the CIT(A) that it is eligible for the deduction, but the CIT(A) upheld the disallowance due to insufficient details provided.

2.3 The assessee's representative argued that all necessary details were provided to the AO through the profit & loss account and balance sheet, including a breakdown of income and expenditure. The representative emphasized that since all details were available to the AO, the deduction should have been allowed.

2.4 The Departmental Representative (DR) argued that despite specific requests for details, the assessee failed to furnish the necessary evidence both before the AO and the CIT(A). The DR relied on the lower authorities' orders.

2.5 The Tribunal noted that the assessee had claimed the deduction for its entire income under section 80P. The AO disallowed the claim due to lack of evidence despite requests. The CIT(A) also confirmed the disallowance, stating that the assessee failed to provide supporting evidence for the deduction claimed.

2.6 The Tribunal observed that the profit & loss and trading accounts provided by the assessee did not offer segment-wise income details necessary for verifying the deduction claim under section 80P. While income from core activities like credit facilities to members and supply of agricultural materials is eligible for deduction, income from non-core activities like selling commodities under the PDS may not qualify. The Tribunal directed the AO to verify segment-wise income details to determine the eligibility of the deduction under section 80P, allowing the appeal for statistical purposes.

3.0 Consequently, the Tribunal allowed the appeal for statistical purposes, emphasizing the importance of providing detailed segment-wise income information for claiming deductions under section 80P.

This detailed analysis of the judgment provides a comprehensive overview of the issues involved and the Tribunal's decision regarding the disallowance of the deduction claimed under section 80P of the Income Tax Act, 1961.