2023 (7) TMI 369 - AT - Income Tax

Deduction u/s 80P(2)(d) - dividend income received from IFFCO claimed as exempt u/s 10(34) - assessee is a cooperative society engaged in the business of banking activities - AO observed that the exemption u/s 10(34) of the Act could be claimed by the assessee only when the amount has been subjected to dividend distribution tax in the hands of the payer in terms of section 115-O - HELD THAT - We find that the issue in dispute is squarely covered by the decisions of this Tribunal in assessee s own case in 2018 (9) TMI 1172 - ITAT DELHI and 2022 (5) TMI 1564 - ITAT DELHI dividend received from IFFCO and UP Cooperative Bank Ltd. are exempt u/s 80P(2)(1). Disallowance of depreciation on fixed assets as per section 32 of the Act and making the addition u/s 69 r.w.s. 115BBE - assessee has not filled the depreciation figure in the relevant column of ITR - HELD THAT - Mentioning of depreciation figure in column No. 39 under the head Other expenses was a mistake, still, the depreciation figure together with the computation thereon had been enclosed and claimed properly by the assessee in the return of income. This figure of depreciation duly tallies with the depreciation figure mentioned in the P L Account of the assessee also. Hence, we do not appreciate the action of the lower authorities in disallowing the genuine claim of depreciation on a very flimsy reason. We also condemn the action of the lower authorities in invoking the provisions of section 69 of the Act r.w.s. 115BBE for the purpose of disallowing the claim of depreciation of the assessee, without even understanding and appreciating the fact that the provisions of section 69 of the Act, by no stretch of imagination, could be applied in the instant case. We direct the ld. AO to allow depreciation. Appeal of the assessee is allowed.

Summary

Issues:
1. Delay in filing the appeal by the assessee.
2. Eligibility for deduction u/s 80P(2)(d) of the Act in respect of dividend income.
3. Disallowance of depreciation on fixed assets and addition u/s 69 r.w.s. 115BBE of the Act.

Delay in filing the appeal:
The appeal in ITA No. 914/Del/2021 for AY 2015-16 was delayed by 639 days due to the transfer of the previous Secretary handling income-tax matters. An affidavit was filed by the present Secretary explaining the delay, which was accepted by the Tribunal, leading to the appeal being admitted for adjudication.

Eligibility for deduction u/s 80P(2)(d) of the Act:
The assessee, a cooperative society, received dividend income and claimed it as exempt u/s 10 of the Act. The Assessing Officer disallowed the exemption, stating that it could only be claimed if dividend distribution tax was paid by the payer. However, the Tribunal found that the issue was already decided in favor of the assessee in previous cases and held that the dividend income from cooperative societies IFFCO and U.P. Cooperative Bank Ltd. was exempt u/s 80P(2)(d) of the Act. The appeal of the assessee on this ground was allowed.

Disallowance of depreciation on fixed assets:
The assessee's claim for depreciation on fixed assets was disallowed by the lower authorities based on a technicality related to the ITR form. Despite a minor error in mentioning the depreciation figure, the Tribunal found that the claim was genuine and properly presented in the return of income. The Tribunal criticized the authorities for disallowing the claim and invoking unrelated provisions, directing the AO to allow the depreciation claim. Consequently, the appeal of the assessee on this ground was allowed.

Final Decision:
The Tribunal allowed the appeal of the assessee, overturning the disallowances made by the lower authorities and directing the AO to allow the depreciation claim. The order was pronounced in the open court on 22.05.2023.