2023 (6) TMI 257 - AT - Income Tax

Tribunal Partially Allows Appeal: Deletes Unexplained Money Addition, Grants Deduction for Cooperative Society Income.

The Tribunal addressed two main issues. First, it confirmed the deletion of the addition made under section 69A for unexplained money during ... Treatment of miscellaneous grants as income of cooperative society - classification of receipts as income from other sources - deduction under section 80P - deletion of additions under section 69A and invocation of section 115BBEDeletion of additions under section 69A and invocation of section 115BBE - Effect of earlier deletion by CIT(A) of addition under section 69A and consequent status of Grounds No. 1 & 5 - HELD THAT: - The Tribunal noted that the addition of Rs.17,60,000 made under section 69A had already been deleted by the Commissioner (Appeals) (see para 5.7.6 of the impugned order). The Assessing Officer had wrongly invoked the provisions of section 115BB/115BBE in relation to that addition. Because the deletion by the CIT(A) disposes of the disputed addition, Grounds No. 1 and 5 were rendered infructuous and required no further adjudication. [Paras 3]Grounds No. 1 and 5 are infructuous as the addition of Rs.17,60,000 under section 69A has already been deleted by the CIT(A).Treatment of miscellaneous grants as income of cooperative society - classification of receipts as income from other sources - deduction under section 80P - Whether miscellaneous income of Rs.9,92,664 constituted income from other sources or was income of the Society eligible for deduction under section 80P - HELD THAT: - The Tribunal examined the audited financial statements and the detailed breakup of the miscellaneous income. The sum comprised various grants and receipts from the West Bengal State Government and related bodies for activities carried out by the Society in furtherance of its registered objects (mini banking, sale of fertiliser and welfare/training activities for Tribal members). The West Bengal Tribal Development Cooperative Corporation Limited was noted as an Apex Body for such societies. Given that the receipts arose from activities which fall within the Society's objects and were government grants for those activities, there was no basis to treat these elements as income from other sources. Consequently, the receipts formed part of the Society's income for its objects and were eligible for deduction under section 80P. [Paras 8]The Tribunal reversed the CIT(A)'s finding and held that the miscellaneous income of Rs.9,92,664 is income of the Society arising from its objects and should not be treated as income from other sources; it is eligible for deduction under section 80P. Grounds No. 2, 3 and 4 are allowed.Final Conclusion: The assessee's appeal is partly allowed: Grounds No. 1 and 5 are rendered infructuous by the CIT(A)'s deletion of the addition under section 69A; the miscellaneous receipts of Rs.9,92,664 are held to be income of the Society eligible for deduction under section 80P and shall not be treated as income from other sources, and Grounds No. 2, 3 and 4 are allowed. Issues involved: The issues involved in the judgment are the addition made under section 69A of the Act for unexplained money during demonetization period and the treatment of miscellaneous income as income from other sources.Addition under section 69A of the Act:The appeal was against the order of the Commissioner of Income Tax (Appeals) regarding the addition made for unexplained money under section 69A of the Act. The Tribunal noted that the addition had already been deleted by the Commissioner of Income Tax (Appeals) as there was no merit in the addition. The Tribunal found that the Assessing Officer had wrongly invoked the provisions of section 115BB of the Act. Therefore, the grounds related to this issue were deemed infructuous as they had already been decided in favor of the assessee.Treatment of miscellaneous income:The remaining ground before the Tribunal concerned the addition of Rs.9,92,664 in the Profit & Loss Account of a Cooperative Society. The Assessing Officer treated this amount as income from other sources as the nature of the income was not satisfactorily explained. The Tribunal considered the break-up of the miscellaneous income provided by the assessee, which included grants received for various activities. The Tribunal observed that the miscellaneous income mainly constituted grants received from the West Bengal Government for activities as per the society's bye-laws. It was noted that the society operated for the benefit of Tribal members and received grants from the government. The Tribunal found that the miscellaneous income was earned for the purpose of the society's objects and thus eligible for deduction under section 80P of the Act. Consequently, the Tribunal reversed the decision of the Commissioner of Income Tax (Appeals) and allowed the grounds related to this issue, directing the Assessing Officer not to treat the amount as income from other sources.General Ground:The final ground of the appeal was of a general nature and did not require any specific reasoning. The Tribunal partly allowed the appeal of the assessee.Separate Judgment:The judgment was delivered by Dr. Manish Borad, Accountant Member, and Vice-President Shri Rajpal Yadav.