2023 (9) TMI 777 - AT - Income Tax

Partial success in tax appeals for assessment years, remand for profit deduction, and re-adjudication of other income eligibility.

The Tribunal partly allowed the appeals for the assessment years in question, condoning the delay in filing due to valid reasons. The deduction of profit ... Deduction under Sec. 80P - a primary agricultural cooperative society engaged in the business of banking, paddy procurement, sale of fertilizer, seeds, manures and pesticides as well as sale of controlled items under the Public Distribution System (PDS) - HELD THAT:- Tribunal in the case of Gramin Sewa Sahakari Samiti Maryadit & Ors [2022 (3) TMI 75 - ITAT RAIPUR] had after necessary deliberations on the issue in hand remanded the matter to the file of the A.O, with a specific direction i.e, to restrict its claim for deduction as regards its profit from PDS only to the extent of its net profit i.e., after considering the proportionate expenses. Thus restore the matter to the file of the AO, with a direction to restrict the assessee’s claim for deduction as regards its profit from PDS only to the extent of its net profit i.e., after considering the proportionate expenses. Declining claim for deduction of the dividend income received on the shares of Jila Sahakari Bank, for the reason that as the latter was not a co-operative society, hence, the dividend income received therefrom would not be eligible for deduction u/s 80P(2)(d) - Admittedly, in the case of Gramin Sewa Sahakari Samiti Maryadit & Ors. [2022 (3) TMI 75 - ITAT RAIPUR] had observed, that the dividend income received by a co-operative society on the shares of a co-operative bank held by it would be eligible for deduction under Sec. 80P(2)(d) of the Act. Thus vacate the disallowance of the assessee’s claim for deduction. “Other income” which comprises of recovery from NPA accounts and receipts against paddy procurement as ineligible for deduction u/s. 80P(2) - Tribunal while disposing off the appeal in the case of Gramin Sewa Sahakari Samiti Maryadit & Ors. [2022 (3) TMI 75 - ITAT RAIPUR] while dealing with the assessee’s claim for deduction of its income from paddy procurement business u/s. 80P(2)(a)(iii) of the Act had remanded the issue to the file of the A.O. Though concur with the claim of the assessee that the assessee society is entitled for deduction of its income from paddy procurement business u/s. 80P(2)(a)(iii), but restore the matter to the file of the A.O for the limited purpose of restricting the said claim of deduction to the extent of the profit relatable to the marketing of the agricultural produce of the members of the assessee society. In the course of the set-aside proceedings the AO shall re-adjudicate the assessee’s claim for deduction u/s 80P(2)(a)(iii) i.e. after determining as to what extent the assessee society had facilitated the marketing of the agricultural produce grown by its members, and thus, restrict it’s claim for deduction u/s. 80P(2)(a)(iii) only to the extent of the profit relatable thereto. Recovery from accounts classified as “Non-Performing Assets” (NPA) - claim of deduction was declined by them for the reason that as the assessee had failed to give specific details as regards the income classified as “other income”, therefore, the same was not open for verification - We find that the assessee except for harping on its entitlement for deduction u/s. 80P qua the recovery from the loan accounts classified as NPA in preceding years, had failed to place on record the requisite details. No justifiable reason to dislodge the view taken by the lower authorities who in absence of requisite details had declined the assessee’s claim for deduction u/s. 80P w.r.t. such part of its “other income”. Accordingly, the view taken by the CIT(Appeals) to the said extent is upheld. Issues Involved:1. Condonation of Delay.2. Deduction of Profit from PDS under Sec. 80P(2)(c).3. Deduction of Dividend Income under Sec. 80P(2)(d).4. Deduction of Other Income under Sec. 80P(2).Condonation of Delay:The appeals were time-barred by 10, 35, 37, and 38 days respectively. The delay was due to the appellant's remote location and their engagement in paddy procurement activities. The Tribunal found the reasons satisfactory and condoned the delay.Deduction of Profit from PDS under Sec. 80P(2)(c):The assessee's claim for deduction of Rs. 38,88,571/- from PDS activities was remanded to the AO to restrict the deduction to the net profit after considering proportionate expenses, following the precedent set in Gramin Sewa Sahakari Samiti Maryadit & Ors Vs. ITO.Deduction of Dividend Income under Sec. 80P(2)(d):The Tribunal vacated the disallowance of Rs. 1,30,800/- on dividend income received from Jila Sahakari Bank, following the decision in Gramin Sewa Sahakari Samiti Maryadit & Ors Vs. ITO, which held that dividend income from a co-operative bank is eligible for deduction under Sec. 80P(2)(d).Deduction of Other Income under Sec. 80P(2):The Tribunal remanded the issue of Rs. 9,05,369/- other income, which includes recovery from NPA accounts and receipts against paddy procurement, to the AO for re-adjudication. The AO is to determine the extent of the income eligible for deduction under Sec. 80P(2)(a)(iii) and Sec. 80P(2).Conclusion:The appeals for the assessment years 2012-13, 2013-14, 2015-16, 2016-17, and 2017-18 were partly allowed for statistical purposes, with directions for the AO to re-assess the deductions based on the Tribunal's observations.