2016 (3) TMI 1434 - AT - Income Tax

Tribunal grants deductions for Locker Rent and MSEB Commission under section 80P

The Tribunal allowed the assessee's appeal partially, granting deductions under section 80P for Locker Rent and Commission on MSEB Bill Collection. ... Deduction u/s. 80P(2)(c)(ii) - Disallowing deduction in respect of incomes earned by the assessee from Locker Rent, Ambulance Rent, Commission on Collection of MSEB bills and Health Club - HELD THAT:- We observe that on similar grounds the assessee has filed appeals before the Tribunal against the order of Commissioner of Income Tax (Appeals) for assessment years 2010-11 and 2011-12 [2016 (4) TMI 473 - ITAT PUNE] decided in favour of the assessee. No material has been placed on record by the Revenue to controvert the findings of Coordinate Bench. In such circumstances, we do not find any reason to take any contrary view. Issues Involved:1. Deduction under section 80P for Locker Rent, Ambulance Rent, Commission on Collection of MSEB bills, and Health Club Fees.2. Deduction of expenses attributable to Ambulance Rent, MSEB Commission, and Health Club income.3. Taxation of Rent from Property under 'Income from House Property'.4. Withdrawal of deduction of Rs. 50,000 under section 80P(2)(c)(ii).5. Deduction u/s 80P(2)(a)(i) for interest earned on fixed deposits with Nationalized Banks.6. Treatment of income from Locker Rent, Ambulance Rent, MSEB Commission, and Health Club income as 'Income from Other Sources'.Detailed Analysis:1. Deduction under section 80P for Locker Rent, Ambulance Rent, Commission on Collection of MSEB bills, and Health Club Fees:The assessee, a Co-operative Society engaged in banking, was denied deduction under section 80P for income from Locker Rent, Ambulance Rent, Commission on Collection of MSEB bills, and Health Club Fees by the Assessing Officer. The Commissioner of Income Tax (Appeals) upheld this decision. However, the Tribunal referred to its previous decisions in the assessee’s own case for assessment years 2010-11 and 2011-12, where it was held that the assessee is eligible for deduction under section 80P for Locker Rent based on the Supreme Court's decision in Mehsana District Central Co-op. Bank Ltd. For Ambulance Rent and Health Club Fees, the Tribunal held that while these activities are not eligible for deduction under section 80P(2)(a) or (b), the expenses attributable to these activities should be allowed, and any surplus would be entitled to relief under section 80P(2)(c)(ii). For Commission on MSEB Bill Collection, the Tribunal allowed the deduction under section 80P based on the decision in Ahmednagar District Cooperative Bank Ltd.2. Deduction of expenses attributable to Ambulance Rent, MSEB Commission, and Health Club income:The Commissioner of Income Tax (Appeals) restricted the deduction of expenses attributable to Ambulance Rent, MSEB Commission, and Health Club income to 10% of the gross receipts. The Tribunal found this restriction unsustainable and directed that actual/proportionate expenses attributable to these activities should be allowed.3. Taxation of Rent from Property under 'Income from House Property':The assessee's ground regarding the taxation of Rent from Property under 'Income from House Property' was not pressed in the written submissions, and hence, this ground was dismissed.4. Withdrawal of deduction of Rs. 50,000 under section 80P(2)(c)(ii):The Commissioner of Income Tax (Appeals) directed the withdrawal of the Rs. 50,000 deduction granted by the Assessing Officer under section 80P(2)(c)(ii). The Tribunal found merit in the assessee's plea that a co-operative society engaged in any business activity not eligible for deduction under section 80P(2)(a) or (b) is eligible for deduction up to Rs. 50,000 under section 80P(2)(c)(ii). The Tribunal restored the deduction.5. Deduction u/s 80P(2)(a)(i) for interest earned on fixed deposits with Nationalized Banks:The Revenue's appeal challenged the deduction allowed by the Commissioner of Income Tax (Appeals) under section 80P(2)(a)(i) for interest earned on fixed deposits with Nationalized Banks. The Tribunal noted that the tax effect of the issues raised by the Revenue was below the monetary limit prescribed by the CBDT circular No. 21/2015 and dismissed the appeal on account of low tax effect.6. Treatment of income from Locker Rent, Ambulance Rent, MSEB Commission, and Health Club income as 'Income from Other Sources':The Tribunal reiterated its stance from previous decisions, holding that the income from Locker Rent is eligible for deduction under section 80P. For Ambulance Rent and Health Club Fees, the expenses attributable to these activities should be allowed, and any surplus would be entitled to relief under section 80P(2)(c)(ii). The Commission on MSEB Bill Collection was held to be a business activity eligible for deduction under section 80P.Conclusion:The Tribunal allowed the assessee's appeal in part, granting deductions under section 80P for Locker Rent and Commission on MSEB Bill Collection, and allowing actual/proportionate expenses for Ambulance Rent and Health Club Fees. The Tribunal dismissed the Revenue's appeal due to low tax effect. The assessee's ground regarding Rent from Property was dismissed as not pressed.