Appeal allowed for 2014-15 & 2015-16 assessment years, directing re-computation of deductions & condoning appeal delay

The appeal was partly allowed for the assessment year 2014-15, directing the AO to re-compute the deduction under Section 80P(2)(b) and verify the disallowance under Section 40(a)(ia). For the assessment year 2015-16, the appeal was allowed, with the same findings as the previous year. The delay in filing the appeal for the assessment year 2015-16 was condoned due to bona fide reasons.

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Issues Involved:
1. Denial of deduction under Section 80P(2)(b) of the Income Tax Act.
2. Disallowance under Section 40(a)(ia) for non-deduction of TDS.
3. Charging of interest under Section 234B.

Detailed Analysis of the Judgment:

1. Denial of Deduction under Section 80P(2)(b):
The assessee, a Co-operative Society engaged in collecting and supplying milk, claimed a deduction under Section 80P(2)(b) of the Income Tax Act for the assessment years 2014-15 and 2015-16. The Assessing Officer (AO) denied the deduction, noting that the majority of the milk (94.89%) was sold to private parties rather than federal societies, thus restricting the deduction to 5.11% of the net profit. The Commissioner of Income Tax (Appeals) [CIT(A)] upheld this decision. The Tribunal, however, referred to a similar case (Fattesinghrao Naik (Appa) Sahakari Dudh Utpadak Sangh Limited Vs. ITO) where the deduction was allowed due to the perishable nature of milk and the limited capacity of the federal society to purchase all the milk. The Tribunal directed the AO to re-compute the deduction, considering the price at which milk was sold to federal societies or the open market, whichever was lower, and to exclude sales made solely to outsiders during months when no milk was sold to federal societies.

2. Disallowance under Section 40(a)(ia):
The AO disallowed Rs. 6,00,000 under Section 40(a)(ia) for non-deduction of TDS, without specifying the recipient of the payment. The Tribunal found merit in the assessee's argument that such disallowance would increase business profits, which should qualify for deduction under Section 80P. The Tribunal directed the AO to verify this and decide the issue in accordance with the law, referencing the Gujarat High Court's decision in ITO Vs. Keval Construction.

3. Charging of Interest under Section 234B:
The assessee contested the charging of interest under Section 234B, arguing it was disputable and unforeseen. The Tribunal dismissed this ground, stating that charging interest under Section 234B is consequential and mandatory.

Summary of Judgments:
For the assessment year 2014-15, the appeal was partly allowed for statistical purposes, directing the AO to re-compute the deduction under Section 80P(2)(b) and verify the disallowance under Section 40(a)(ia). For the assessment year 2015-16, the appeal was allowed for statistical purposes, applying the same findings as the previous year. The delay in filing the appeal for the assessment year 2015-16 was condoned due to bona fide reasons.

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