2024 (9) TMI 1696 - AT - Income Tax

Cooperative society wins deduction claim under section 80P despite wrong section cited by authorities

The Habrol Cooperative Agricultural Service Society Limited Versus The ITO, Dharamshala.

The Habrol Cooperative Agricultural Service Society Limited Versus The ITO, Dharamshala. - TMI The appeal in this case was filed by the Assessee against the order of the Addl./JCIT (A)-4, Bengaluru. The grounds of appeal included challenges to the assessing authority's decision to disallow a deduction under chapter VI-A in respect of section 80P of the Income Tax Act 1961. The Assessee argued that the deduction was wrongly disallowed due to a mistake made by their counsel while filing the tax return.The brief facts presented by the Assessee highlighted that they were a Co-operative Society in a remote village of Himachal Pradesh providing banking/credit facilities to its members. The Assessee had consistently claimed the deduction under section 80P(2)(a)(i) in previous years without dispute. However, during the assessment year in question, their counsel mistakenly claimed the deduction under a different section, leading to the disallowance by the assessing authority.The Assessee contended that despite the error in claiming the deduction under the wrong section, they were entitled to the deduction as per past practice and legal principles. They cited precedents and judgments emphasizing that legitimate deductions should be allowed even if inadvertently omitted or claimed under the wrong provision.The Addl./JCIT (A) based their decision on section 80A(5) of the Income Tax Act, which they believed precluded the Assessee from claiming the deduction. However, the Tribunal disagreed with this interpretation, noting that section 80A(5) was not applicable to the Assessee's situation as they were entitled to the deduction under section 80P(2)(a)(i). The Tribunal also considered the case laws presented by the Assessee, which supported the view that legitimate deductions should be allowed even if not claimed correctly.Ultimately, the Tribunal allowed the Assessee's appeal, concluding that the assessing authority's decision to disallow the deduction was unjustified. The Tribunal emphasized that the Assessee should not be over-assessed due to a mistake made by their counsel and upheld the Assessee's entitlement to the legitimate deduction under section 80P(2)(a)(i).In summary, the key issues considered in this judgment were the eligibility of the Assessee for a deduction under section 80P(2)(a)(i), the impact of section 80A(5) on the deduction claim, and the application of legal principles regarding legitimate deductions. The Tribunal's decision focused on rectifying the assessing authority's error and ensuring that the Assessee received the entitled deduction.