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TMI Blog2019 (12) TMI 1235X X X X Extracts X X X X X X X X Extracts X X X X ..... made in respect of bad debts and commission payment claimed by the assessee would qualify for deduction u/s 80P of the Act or not? In respect of the bad debt, the assessee is required to demonstrate that the debt which is claimed is in the nature of profit gains and business attributable to such activity. In the present case, the assessee had made provision for bad debt. If the assessee had not done this provision, this amount would have not been deducted from the profit loss account. Therefore, in my considered view, this amount is certainly attributable to the profit gains of the assessee society. Further, disallowance of payment of commission. The commission is claimed as business expenditure, deducted from the profit gains account. Therefore, this would also be in the nature of profit gains of the assessee society. Therefore, in the light of the decision of the coordinate bench rendered in the case of ACIT Circle-4 Vs. Buldana Urban Co-operative Credit Society Ltd. [ 2013 (12) TMI 237 - ITAT NAGPUR ] the assessee is entitled for benefit of deduction u/s 80P of the Act. I therefore, direct the A.O. to grant deduction u/s 80P of the Act to the assessee. - Shri Kul Bharat, Judic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ; 3,00,000/-, ₹ 50,000/- and ₹ 95,002/- were confirmed. Now the assessee is in appeal against this order. 3. Ground No.1 is against allowing the deduction u/s 80P of the Act. Ld.Counsel for the assessee reiterated the submissions as made before the authorities below. Ld. Counsel placed reliance on the decision of the coordinate bench rendered in the case of ACIT Circle-4 Vs. Buldana Urban Co-operative Credit Society Ltd. in support of the contention that the assessee society is eligible for deduction u/s 80P of the Act. 4. Ld. D.R. opposed these submissions and supported the orders of the authorities below. 5. I have heard the rival submissions, perused the materials available on record and gone through the orders of the authorities below. The assessee has relied upon the decision of the coordinate bench rendered in the case of ACIT Vs. Buldana Urban Co-operative Credit Society Ltd. (supra), wherein the coordinate bench has decided the issue as under: The deposit received from parties whose identity itself are not established, who are not established to be members who are not of the nature of eligible income as given under section 80P(2)(a)(i). In this regard the Commis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re, in our opinion the restriction put in respect of the deduction available under section 80P(2)(a)(i) will not apply to the assessee. In his statement recorded even though chairman of the society surrendered the amount he never agreed that these deposits belong to the assessee or were made by the assessee by surrendering the amount he clearly stated that since our society is in swift of mode of development phase and is in the mode of development phase at various places. There are certain basic requirement which have not been complied with like identification of the deposits, i.e., name, address, photograph, etc., even he accepted manpower of the society engaged for this business is also not fully equipped and properly trained and due to these reasons, the society could not strictly follow the KYC norms. He also stated since these deposits stand withdrawn and society does not have any control over this fund at this stage therefore he surrendered the amount. It is not denied that the deposits have been received during the course of business of the assessee and the assessee is engaged in the business of providing credit facilities to its members. The credit facilities cannot be prov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... business providing the credit facilities to its members. This is not denied that the assessee is engaged in the business of providing credit facilities to its members. The credit facilities cannot be provided until and unless the assessee receives the deposits. It cannot always be provided out of its own capital. Receiving of the deposit is necessary and essential for advancing the money on credit and earning the interest income. The deposits may not have been derived from the income for providing the credit facilities to the members. Receiving of the deposit thus in our view in case it is treated to be the income of the assessee has a casual connection with the business of providing credit facilities to its members as this receipt in our opinion has been received by the assessee during the course of carrying on the business. Thus, the judgment of the Supreme Court as referred to by the Commissioner of Incometax (Appeals), in our opinion, supports the case of the assessee rather than that of the Revenue. There is no evidence being brought on record or placed before us during the course of the hearing which may prove that these deposits belong to the assessee and he made the same. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... early applicable on the facts and circumstances of the case. The decision of the co-ordinate Bench is binding on us. Respectfully following the aforesaid decision and the discussion held in the preceding paragraph, we set aside the order of the Commissioner of Income-tax (Appeals) on this issue and direct the Assessing Officer to allow the deduction to the assessee under section 80P(2)(a)(i) in respect of the addition sustained by us under section 68 of the Income-tax Act. Thus, this ground is partly allowed. 34. In the result, the appeals filed by the Revenue stands dismissed, while the appeals filed by the assessee are partly allowed. 6. However, we find that before Ld. CIT(A) also, the assessee had made the claim of deduction u/s 80P of the Act in the ground No.5 before the Ld. CIT(A). However, the Ld. CIT(A) rejected the claim of the assessee in para 4.5, which is reproduced as under: Ground No.5:- Through this ground of appeal the appellant has challenged for not allowing the deduction u/s 80P of the I.T. Act on the addition made. The A.O. made the addition on the expenses which are not allowable. The A.O. is justified in not allowing the exemption u/s 80P of the I.T. Act on t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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