Appeal allowed for deduction u/s 80P(2)(a)(iii) - emphasize compliance & natural justice

The ITAT Bangalore allowed the appeal for statistical purposes, directing the AO to re-examine the claim for deduction u/s 80P(2)(a)(iii) of the Income Tax Act for the assessment year 2011-12. The ITAT set aside the CIT(A)'s decision due to insufficient evidence provided by the assessee, emphasizing the importance of complying with the law and submitting relevant details. The assessee was granted the opportunity to substantiate their eligibility for the deduction, highlighting the principle of natural justice.

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Issues:
- Allowance of deduction u/s 80P(2)(a)(ii) and 80P(2)(a)(iii) of the Income Tax Act

Analysis:
1. The appeal concerned the allowance of deduction u/s 80P(2)(a)(ii) and 80P(2)(a)(iii) of the Income Tax Act for the assessment year 2011-12. The assessee, a Co-operative Society engaged in marketing agricultural produce, claimed deduction under these sections in the revised return of income.

2. The Assessing Officer (A.O.) questioned the eligibility of the assessee for deduction u/s 80P(2)(a)(iii) as it required the produce sold to be grown by members. The A.O. disallowed the deduction claimed u/s 80P(2)(a)(i) and 80P(2)(a)(iii) to a certain extent, allowing only a partial deduction u/s 80P(2)(c) of the Act.

3. In the appellate proceedings, the Commissioner of Income Tax (Appeals) upheld the A.O.'s decision, leading the assessee to appeal to the ITAT Bangalore. The assessee argued that the entire income was attributable to marketing activities, thus eligible for deduction u/s 80P(2)(a)(iii) of the Act.

4. The ITAT observed that the assessee failed to provide necessary details to prove eligibility for deduction u/s 80P(2)(a)(iii). However, considering the past allowance of such deduction and in the interest of natural justice, the ITAT set aside the CIT(A)'s order and directed the AO to re-examine the claim with the provision of relevant details by the assessee.

5. Ultimately, the ITAT allowed the appeal for statistical purposes, emphasizing the need for the AO to reassess the claim in accordance with the law and the provision of relevant details by the assessee. The judgment was pronounced on 23rd August 2021 by the ITAT Bangalore.

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