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TMI Blog2016 (4) TMI 473X X X X Extracts X X X X X X X X Extracts X X X X ..... total agreement with the alternate plea of the assessee that the expenses attributable for the purpose operating such activity ought to have to be allowed on actual/proportionate basis. We are of the view that the action of the CIT(A) in restricting the expenses artificially @ 10% of the gross income from such activities is not sustainable in law being devoid of objectivity. The Assessing Officer is accordingly directed to allow the expenses which are attributable to the running of Ambulance and determine the income from the aforesaid activity. The surplus if any, from this activity would be entitled to relief made residuary clause of section 80P(2)(c)(ii). We also notice that the Income from MSEB commission is held to be business activity as per decision cited by the assessee in the case of Ahmednagar District Co-operative Bank Ltd. (1990 (4) TMI 119 - ITAT PUNE ) and other decisions noted above. Accordingly, we hold that the assessee is entitled to relief under section 80P as per law. We also simultaneously find merit in the alternate plea of the assessee that proportionate expenses attributable to earning of such income ought to have been allowed by the authorities below. In vi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ambulance Rent, Commission on collection of MSEB bills and Health Club Fees under the head 'Income from Other Sources'. 2. On the basis of facts and in the circumstances of the case, the Commissioner of Income Tax, (Appeals)-I, Nashik is not justified in confirming the disallowance of deduction claimed u/s. 80P in respect of Locker Rent, Ambulance Rent, Commission on collection of MSEB bills, Health Club Fees and Rent from property. 3. Without prejudice to Ground of Appeal No. 1 & 2 and on the basis of facts and in the circumstances of the case, the Commissioner of Income Tax, (Appeals)-I, Nashik is not justified in restricting the deductions of expenses attributable to Ambulance Rent received at 10% of gross ambulance rent received instead of actual expenses incurred at ₹ 1,70,001/-. 4. Without prejudice to Ground of Appeal No. 1 & 2 and on the basis of facts and in the circumstances of the case, the Commissioner of Income Tax, (Appeals)-I, Nashik is not justified in restricting the deductions of expenses attributable to MSEB Commission at 10% of gross MSEB Commission instead of calculating the same on the basis of proportionate of taxable net profit of gross ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gross amount of receipt in various heads as noted above instead of net income under the respective heads after appropriation of expenses, the assessee preferred appeal before the first appellate authority i.e. the CIT(A). 6. The CIT(A) confirmed the action of the Assessing Officer in rejecting the claim of deduction under section 80P(2) of the Act in respect of income under the head Locker Rent, Ambulance Rent, MSEB Bill collection commission, Shop Rent, Health Club Fees, etc.. noted above on the ground that such activities are not part of the business activities of the assessee and therefore income out of the same cannot be assessed under the head 'income from business'. However, the CIT(A) agreed with the contention of the assessee that expenses attributable to these various streams of income should be allowed as deduction which was estimated at 10% of the gross income. As regards property rent income of ₹ 40,900/-, the CIT(A) directed the Assessing Officer to tax the rent income under the head 'income from house property' and grant statutory deduction of 30% under section 24 as per law. The claim of deduction under section 80P(2) of the assessee was denied by the CIT(A) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assets directly attributable to such income. The A.O. is also further directed to allow an ad hoc deduction on account of other expenses @ 10% of the gross income out of locker rent, ambulance rent, M.S.E.B. commission and health club income for appellant's expenses on earning of such income. This ground, therefore is partly allowed. 9. Ground No. 6 is in respect of disallowance of deduction claimed u/s. 80P(2) in respect of property rent income of ₹ 40,900/-. Brief facts of the issue are that the appellant, during the year under consideration leased out certain portion of its constructed property and received total rent of ₹ 40,900/ - during the year under consideration. The A.O. disallowed the claim of the appellant u/s. 80P(2) in respect thereof for the reason that renting out of property is not the business of the society and therefore the appellant is not eligible for deduction u/s. 80P(2) in respect of the same. The Ld. A.R. argued that the said income is also eligible for deduction u/s. 80P(2). Alternatively he also requested to allow the expenses attributable to said source of income as deduction there from because the A.O. has disallowed the gross incom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order, the A.O. is also directed to not allow the deduction of ₹ 50,000/- as granted by him u/s. 80P(2)(c)(ii) because the appellant is not eligible for the same as this deduction is available to the societies which are not covered by clause (a) or clause (b) of sub-section (2) of section 80P. The appellant is undisputedly covered by clause (a) of sub-section (2) of section 80P. Therefore, the appellant is not eligible for the deduction u/s 80P(2)(c)(ii). The A.O. is directed to withdraw the said deduction of ₹ 50,000/- granted to appellant." 7. Aggrieved by the impugned order of the CIT(A), the assessee is in appeal before us. 8. None appeared on behalf of the assessee. However, written submissions on behalf of the assessee was received by fax on 31st January, 2016 which is placed on record and considered for adjudicating the issue. 8.1 As per the written submissions, the assessee contended that first issue involved in the present appeal is that the Assessing Officer has not granted deduction under section 80P of the Act in respect of following class of activities : (i) Locker Rent (ii) Ambulance Rent (iii) Commission on Collection of MSEB bills (iv) Health Clu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 29.05.2014 wherein it held to be akin banking activity is eligible for deduction under section 80P(2)(a)(i) of the Act. Without prejudice to the aforesaid plea, the assessee contended that the CIT(A) was not justified in restricting the expenses to earn said income artificially 10% of the gross receipt and therefore the Assessing Officer should be directed to allow proportionate expenses on account of salary, depreciation, stationary, etc.. 8.6 The findings of the CIT(A) in respect of shop rent income, however, was accepted by the assessee and not pressed. 8.7 With regard to the Health Club Fees Income, the assessee by way of his written submissions pleaded that deduction of expenses attributable to running of Health Club as per audited account of the assessee namely; salary of the caretaker, maintenance, etc. should be allowed and action of the CIT(A) in this regard to estimate the expenses and estimated at 10% of the gross fees is not justified. 8.8 With regard to the direction of the CIT(A) for withdrawal of deduction of ₹ 50,000/- under section 80P(2)(c) of the Act, the assessee alleged that the CIT(A) has withdrawn the deduction allowed by the Assessing Officer withou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y carrying on banking business. The alternate ground agitated by the assessee is towards ad-hoc estimation of expenses in relation to such income @ 10% of the gross receipt as against actual and proportionate expenses attributable for the purpose of carrying on such allied activities. This has resulted in higher incidence of taxation owing to denial of deduction under section 80P on such income. We find that eligibility of the assessee for deduction under section 80P of the Act in respect of locker rent income is covered by the decision of the Hon'ble Supreme Court in the case of Mehsana District Central Co-op. Bank Ltd. (supra). Therefore, we set-aside the direction of the CIT(A) in this regard and hold that the assessee is eligible for deduction under section 80P of the Act in respect of this income. With respect to the income from running of Ambulance, while holding that the assessee is not eligible for deduction under section 80P(2)(a) or (b), we are in total agreement with the alternate plea of the assessee that the expenses attributable for the purpose operating such activity ought to have to be allowed on actual/proportionate basis. We are of the view that the action of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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