2022 (9) TMI 715 - AT - Income Tax

A ssessment u/s 143(3) - disallowing an amount being the provisions towards additional interest on CTDs and disallowing being provision towards additional interest on RID of CTDs - assessee had filed revised return of income by offering the provisions made on additional interest on CTDs and provision towards additional interest on RID of CTDs - HELD THAT - We find the AO in the instant case completed the assessment u/s 143(3) on 16.3.2015 for the A.Y 2012-13. We find the Assessing Officer completed the assessment for the A.Y 2010-11 on 21.3.2016 and while deciding identical issues, the assessee had filed revised return of income by offering the provisions made on additional interest on CTDs and provision towards additional interest on RID of CTDs. Under these circumstances, we do not find any infirmity in the order of the CIT (A) in confirming the additions made by the AO. Deduction u/s 80P - Assessee has not taken this claim before the AO and has taken this ground for the first time and this amounts to a new claim in additional ground - HELD THAT - Hon'ble Bombay High Court in the case of CIT vs. Pruthvi Brokers Shareholders Pvt. Ltd 2012 (7) TMI 158 - BOMBAY HIGH COURT held that the assessee can always make a new claim not made in return of income before the appellate authorities. Since in the instant case, the assessee was all along been granted deduction of section 80P benefit and a ground was also taken before the learned CIT (A), therefore, considering the totality of the facts of the case and in the interest of justice, we deem it proper to restore the issue to the file of the Assessing Officer with a direction to consider the claim of deduction u/s 80P - AO shall decide the issue as per fact and law after giving due opportunity of being heard to the assessee. Appeal filed by the assessee is partly allowed for statistical purposes.

Summary

Issues Involved:
1. Non-consideration of additional evidences by CIT (A).
2. Non-consideration of revised return filed in response to section 148.
3. Disallowance of Rs.99,95,270/- towards additional interest provision on compulsory thrift deposits.
4. Disallowance of Rs.58,96,831/- towards additional interest provision on RID CTD.
5. Disallowance of reserve fund, education fund, and common fund debited to P&L A/c.
6. Non-allowance of deduction u/s 80P(2)(a)(i) of the I.T. Act, 1961.

Issue-wise Detailed Analysis:

1. Non-consideration of Additional Evidences by CIT (A):
The learned CIT (A) did not consider the additional evidences submitted by the assessee during the appeal proceedings, stating that the case does not fall within the exceptions provided. This ground was not pressed by the assessee during the hearing, and therefore, it was dismissed.

2. Non-consideration of Revised Return Filed in Response to Section 148:
Similarly, the ground regarding the non-consideration of the revised return filed in response to section 148 of the I.T. Act, 1961, was also not pressed by the assessee during the hearing and was dismissed.

3. Disallowance of Rs.99,95,270/- Towards Additional Interest Provision on Compulsory Thrift Deposits:
The Assessing Officer (AO) disallowed the provision of Rs.99,95,270/- towards additional interest on compulsory thrift deposits (CTDs), considering it as an appropriation of profits rather than an allowable expense. The CIT (A) upheld this disallowance. The Tribunal found no infirmity in the CIT (A)'s order, noting that the provision was not out of income derived from utilizing the thrift deposits but from income earned from all sources, including share capital and reserves.

4. Disallowance of Rs.58,96,831/- Towards Additional Interest Provision on RID CTD:
The AO also disallowed Rs.58,96,831/- towards additional interest provision on Reinvestment Deposit of CTDs (RID CTD), treating it similarly as an appropriation of profits. The CIT (A) upheld this disallowance, and the Tribunal found no reason to interfere with the CIT (A)'s decision.

5. Disallowance of Reserve Fund, Education Fund, and Common Fund Debited to P&L A/c:
The AO disallowed the amounts debited towards the reserve fund, education fund, and common fund, as these were considered appropriations of profits. The CIT (A) upheld these disallowances, and the Tribunal found no infirmity in the CIT (A)'s order.

6. Non-allowance of Deduction u/s 80P(2)(a)(i) of the I.T. Act, 1961:
The assessee challenged the CIT (A)'s decision to not allow the deduction u/s 80P(2)(a)(i). The Tribunal noted that the CIT (A) rejected this ground on the basis that it was a new claim not raised before the AO and that the additional evidences were not admitted. However, the Tribunal found merit in the assessee's argument that they had been allowed this deduction in previous years. Citing the Hon'ble Bombay High Court's decision in CIT vs. Pruthvi Brokers & Shareholders Pvt. Ltd, the Tribunal held that the assessee can make a new claim before the appellate authorities. Consequently, the Tribunal restored the issue to the AO to consider the claim of deduction u/s 80P, directing the AO to decide the issue as per fact and law after giving due opportunity to the assessee.

Conclusion:
The Tribunal partly allowed the appeal for statistical purposes, dismissing certain grounds as not pressed and upholding the disallowances made by the AO and CIT (A) on the provisions towards additional interest and funds. The issue regarding the deduction u/s 80P was remanded to the AO for reconsideration.