TaxTMI 
TaxTMI 
2025 (7) TMI 1119
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....n favour of Revenue by the Hon'ble P&H High Court in its Order in ITA No. 157 of 2005 dated 08.09.2010 in the case of the assessee titled CIT vs. Haryana State Co-operative Supply and Marketing Federation Ltd. reported as [2012] 344 ITR 631 (P&H), wherein it was held by Hon`ble Court that the assessee is not eligible to claim deduction 80P(2)(e) of the Act? 2. Whether on the facts and in the circumstances of the case, Ld. CIT(A) was justified in deleting the disallowance made by AO of deduction u/s 80P(2)(e) of the Act on the ground that Tax had been deducted under section- 1941 of the Act on some of the transactions, ignoring that the section under which tax is deducted at source by the deductor or a party making payment to an assessee does not determine the nature of receipts in the hands of the assessee or the head under which such income will be assessed in the hands of the assessee? 3. Whether Ld. CIT(A) was justified in directing the AO to quantify the Rental income of the assessee on the basis of its 26AS and allow deduction u/s 80P(2)(e) of the Act on Rental income after calling for fresh submissions from the assessee, ignoring that as per Section-251(1)(a), the pow....
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....was submitted that such income is eligible for deduction under section 80P(2)(e). For the dividend income, it was submitted that it is not exempt under section 10(34) but taxable and deductible u/s 80P(2)(d), and the assessee had already disallowed proportionate expenses suo motu. 5.2 The CIT(A), after examining records, accepted the contention that rental income from letting of godowns to third parties qualifies under section 80P(2)(e). However, acknowledging that the godowns were used partly for trading and partly for letting, he remitted the matter to the AO for proper bifurcation and recomputation. On the dividend issue, he held that disallowance under section 14A was unwarranted as Rule 8D had not been applied and a suo motu disallowance had already been made. 6. Against the order of the CIT(A) the Revenue preferred an appeal before the Tribunal. 7. During the hearing before us, the Ld. CIT-DR supported the order of the AO and submitted that as per the binding judgment of the Hon'ble Punjab & Haryana High Court in the assessee's own case reported in [2012] 344 ITR 631 (P&H), deduction under section 80P(2)(e) is not allowable where the godowns are used for storage of goods o....
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....ional disallowance of Rs. 25,97,31,163/- by proportionately allocating total indivisible expenditure across all heads of income, and thereby concluded that the net income attributable to the exempt dividend and interest became negative, effectively nullifying the claim under section 80P(2)(d). 8.4 The assessee contended before the lower authorities that its investments in co-operative institutions were made out of accumulated surplus and reserve funds over the years and not out of borrowed funds. It was submitted that no expenditure, direct or indirect, was incurred for earning such income. Nonetheless, in order to avoid litigation and in line with past directions of the Hon'ble ITAT in earlier years, the assessee voluntarily disallowed a portion of the expenditure under Rule 8D and claimed deduction for the balance. The assessee also emphasised that no fresh investments were made during the year. 8.5 Before the CIT(A), the assessee argued that the AO had failed to record satisfaction as mandated under section 14A(2) regarding the correctness of the assessee's computation of disallowance before invoking Rule 8D. It was also pointed out that the method adopted by the AO was no....
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.... and extent of "letting out". 9.3 However, we also find that in subsequent years, the Coordinate Bench of this Tribunal has held in favour of the assessee on similar facts by examining documentary evidence of third-party leasing. In particular, in ITA Nos. 1611 to 1613/Chd/2018 and others, the Tribunal has noted that where godowns were given on rent to third parties, deduction under section 80P(2)(e) was allowable. The key distinction made was whether the rental income arises from the storage of goods belonging to third parties or the assessee's own goods stored by the assessee for third party. 9.4. We have carefully considered the rival contentions and perused the material available on record. In view of the binding precedent laid down by the Hon'ble Jurisdictional High Court and the consistent view taken by the Coordinate Bench of the Tribunal in the assessee's own case for earlier assessment years, we are of the considered opinion that the matter requires verification of the factual matrix and, accordingly, deserves to be restored to the file of the Learned Assessing Officer. 9.5 The Assessing Officer shall examine and bifurcate the income derived by the assessee under two di....
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..../- under section 14A r.w. Rule 8D and restricted the deduction to Rs. 7,11,15,902/-. 9.9 In our considered view, the invocation of the provisions of Section 14A read with Rule 8D of the Income Tax Rules, 1962, by the Assessing Officer, in principle, cannot be faulted. The Assessing Officer was justified in disallowing expenditure attributable to the earning of exempt income. However, once the provisions of Section 14A r.w. Rule 8D(2) are invoked, it is imperative that the disallowance be computed strictly in accordance with the formula prescribed under the Rule. At the same time, it is equally necessary to acknowledge that the assessee had suo motu disallowed a sum of Rs. 42,56,730/- in its computation of income, towards expenditure relatable to exempt income. This voluntary disallowance ought to have been duly considered and adjusted by the Assessing Officer while computing the final disallowance under Rule 8D. 9.10 As regards the assessee's claim for deduction under section 80P(2)(d) of the Income Tax Act, 1961, we observe that the dividend income received by the assessee from other co-operative institutions is, in principle, eligible for deduction under the said provision. The....