Tribunal remands deduction & disallowance issues for fresh assessment under

The tribunal set aside the CIT(A)'s decision on the deduction issue under section 80P(2)(a)(vi) and directed a fresh consideration by the assessing officer. The issue of disallowance under section 40(a)(ia) was also remanded for further examination. The appeal by the revenue and the Cross Objection by the assessee were treated as allowed for statistical purposes, pending reassessment by the assessing officer.

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Issues:
- Appeal by revenue and Cross Objection by assessee against order relating to assessment year 2008-09.
- Revenue assailing CIT(A) decision on deduction u/s. 80P(2)(a)(vi) and partial relief u/s. 40(a)(ia).
- Assessee assailing CIT(A) decision on partial confirmation of disallowance u/s. 40(a)(ia).

Analysis:
1. The appeal and Cross Objection were filed against the order of the Ld. CIT(A) for the assessment year 2008-09. The revenue's appeal was delayed by 60 days, and the assessee's Cross Objection was delayed by 10 days, both of which were condoned by the tribunal for hearing.

2. The revenue challenged the CIT(A)'s decision on the assessee's entitlement to deduction u/s. 80P(2)(a)(vi) and partial relief u/s. 40(a)(ia). The assessee, in its Cross Objection, contested the partial confirmation of disallowance u/s. 40(a)(ia) by the CIT(A).

3. The assessee, a cooperative society mainly engaged in running restaurants, declared a loss in its income tax return. The Assessing Officer disallowed certain amounts, including rent payments and interest received from members. The total income was computed after allowing a deduction under section 80P of the Act.

4. The CIT(A) upheld the assessee's claim for deduction u/s. 80P(2)(a)(vi) and granted partial relief on the disallowance u/s. 40(a)(ia) following a Supreme Court decision. The revenue and the assessee appealed against this order.

5. The revenue argued that the society did not qualify for the deduction under sec. 80P(2)(a)(vi) as it was not formed for the collective disposal of labor of its members. The revenue emphasized the voting rights restriction as per the proviso to sec. 80P(2). The revenue cited case law to support its position.

6. The assessee contended that its society was formed to provide employment to workers, and membership was extended to permanent employees engaged in the society's activities. The assessee relied on case law supporting its eligibility for the deduction under sec. 80P(2)(a)(vi).

7. The tribunal noted the differing views presented and the need for a detailed examination of the bye-laws and relevant materials to determine the society's eligibility for the deduction. The issue required further verification and examination by the assessing officer.

8. The tribunal set aside the CIT(A)'s order on the deduction issue and directed a fresh consideration by the assessing officer. The issue of disallowance u/s. 40(a)(ia) was also remanded for fresh examination as per the revenue's contentions.

9. Consequently, the appeal of the revenue and the Cross Objection of the assessee were treated as allowed for statistical purposes, pending further examination and consideration by the assessing officer.

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