2024 (5) TMI 553 - AT - Income Tax

ITAT Cochin supports agricultural co-op, orders removal of tax exemption denial; emphasizes fair treatment of taxpayer claims.

The ITAT Cochin ruled in favor of the appellant, a Primary Rural Agricultural Co-operative Credit Society, by directing the deletion of the disallowance ... Deduction u/s 80P - there was a mismatch of said exempt income claimed in Schedule BP vis-à-vis Schedule E1 of the return and the appellant had not claimed any deduction u/s 80P - HELD THAT:- The mismatch in it’s return inasmuch as the same finds mention in the schedule of ‘Exemption’, rather than ‘Deduction’, can thus only be regarded as mistaken, to which, in context, the doctrine of ‘De Minimis’ is applicable. Rather than the said mistake being therefore capitalized by the Revenue by denying the assessee it’s claim u/s. 80P, it ought to have considered it holistically, consistent with the assessee’s claim u/s. 80P. What, in any case, we wonder, leads it to the inference of the assessee having not claimed deduction u/s. 80P, which is the basis of the disallowance? Besides, if the Revenue regards it as, and only rightly so, not a case of exemption, what prevents it to be regard it, as it considers it to be, and as it actually is, a claim of deduction. The Board per its Circular No. 14 (XL-35), dated 11.04.1955 which, being beneficial, as is trite law, binding on the Revenue [refer, inter alia, CIT v. Hero Cycles [1997 (8) TMI 6 - SUPREME COURT] clarifies that the Department must not take the advantage of the ignorance of an assessee to collect more tax than what is legitimately due. This also reflects the uniform view as in Parekh Brothers [1983 (8) TMI 17 - KERALA HIGH COURT] exhorting the Revenue to assist the tax payer in every way, particularly in the matter of claiming and securing relief. While in the instant case, the assessee is being denied, on account of wrong presentation, it’s right to claim deduction u/s. 80P. We find no merit in the impugned disallowance and, accordingly, direct its deletion. Appeal of the assessee is allowed. Issues: Disallowance of claim of exemption/deduction under section 80P of the Income Tax Act, 1961.Summary:The judgment by the Appellate Tribunal ITAT Cochin pertains to an appeal against the Commissioner of Income-tax (Appeals) order concerning the disallowance of a claim of exemption/deduction under section 80P of the Income Tax Act, 1961 for the assessment year 2019-2020.The appellant, a Primary Rural Agricultural Co-operative Credit Society, had declared income as exempted under section 80P(2) but left relevant columns in the return. The Tribunal observed that the inclusion of the claim for deduction in the computation of income implies that the income is taxable, and the mismatch in the return is a mistake eligible for the doctrine of 'De Minimis'. The Revenue was advised to consider the claim holistically and not capitalize on the mistake. The Tribunal cited precedents emphasizing that the Department should not take advantage of an assessee's ignorance to collect more tax than due. The Tribunal found no merit in the disallowance and directed its deletion, allowing the appeal of the assessee.Therefore, the Tribunal ruled in favor of the appellant, highlighting the importance of considering claims in a holistic manner and assisting taxpayers in claiming legitimate relief.