Tribunal allows appeals, holding business indivisible. Common expenses not to be apportioned.

The Tribunal allowed the appeals filed by the assessees, holding that the business of the assessee-society was one and indivisible, and common overhead expenses should not be apportioned to determine the net income from specified activities. The Tribunal followed the binding judgment of the Gujarat High Court, which supported the assessee's claim for deduction on the gross income without apportioning common expenses. The appeals were allowed, directing the AO to allow the deduction under Section 80P as claimed by the assessees.

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Issues Involved:
1. Rewriting of books of accounts without rejecting the same for recalculating the claim of deduction under Section 80P.
2. Artificial determination of profits eligible for each department and restriction of the claim of deduction under Section 80P.
3. Disallowance of deduction to the extent of Rs. 9,08,475 under Section 80P.
4. Non-appreciation of facts and breach of Principles of Natural Justice by the lower authorities.
5. Levying of interest under Sections 234A/B/C of the Income Tax Act.

Detailed Analysis:

1. Rewriting of Books of Accounts Without Rejecting the Same for Recalculating the Claim of Deduction Under Section 80P:
The assessing officer (AO) recalculated the claim of deduction under Section 80P without rejecting the books of accounts maintained by the assessee. The AO observed that the assessee, a multipurpose co-operative society, derived income from various sources and claimed deductions under multiple clauses of Section 80P. The AO noted that the assessee did not maintain separate books of accounts to differentiate profits from members' and non-members' activities. The AO, therefore, allocated overhead expenses proportionately to determine the net margin for different activities, restricting the deduction under Section 80P to Rs. 56,28,749 against the claimed Rs. 65,37,224.

2. Artificial Determination of Profits Eligible for Each Department and Restriction of the Claim of Deduction Under Section 80P:
The AO's approach involved determining the profits eligible for each department by allocating common overhead expenses proportionately. This method was contested by the assessee, who relied on the Gujarat High Court's decision in CIT v. Jamnagar Jilla Sahakari Kharid Vechan Sangh Ltd., which held that common expenditure with no direct nexus to specific activities should not be apportioned for deduction purposes. The Tribunal noted that the business of the assessee was indivisible, and the common overhead expenses should not be allocated on a proportionate basis to arrive at the net income from specified activities.

3. Disallowance of Deduction to the Extent of Rs. 9,08,475 Under Section 80P:
The AO disallowed the deduction to the extent of Rs. 9,08,475 by restricting the deduction under Section 80P to Rs. 56,28,749. The Tribunal, however, found that the business of the assessee was one and indivisible, and common overhead expenses should not be apportioned. The Tribunal followed the Gujarat High Court's decision, which supported the assessee's claim for deduction on the gross income without apportioning common expenses.

4. Non-Appreciation of Facts and Breach of Principles of Natural Justice by the Lower Authorities:
The assessee argued that the lower authorities failed to appreciate the facts and ignored various submissions, explanations, and information provided by the assessee. The Tribunal, after considering the rival contentions and the case file, found that the AO's method of apportioning common overhead expenses was not justified, as it resulted in a notional figure rather than the actual income from specified activities.

5. Levying of Interest Under Sections 234A/B/C of the Income Tax Act:
The Tribunal did not specifically address the issue of levying interest under Sections 234A/B/C, as the primary focus was on the allowability of the deduction under Section 80P. However, the Tribunal's decision to allow the assessee's appeal implicitly addresses this issue by overturning the AO's disallowance of the deduction.

Conclusion:
The Tribunal allowed the appeals filed by the assessees, holding that the business of the assessee-society was one and indivisible, and common overhead expenses should not be apportioned to determine the net income from specified activities. The Tribunal followed the binding judgment of the Gujarat High Court in the case of Jamnagar Jilla Shakari Kharid Vechan Sangh Ltd., which supported the assessee's claim for deduction on the gross income without apportioning common expenses. The appeals in ITA No.173/SRT/2017, ITA No.199/SRT/2018, ITA No.200/SRT/2018, and ITA No. 201/SRT/2018 were allowed, and the Tribunal directed the AO to allow the deduction under Section 80P as claimed by the assessees.

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