2025 (10) TMI 1308

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.... Assessing Officer, National e-Assessment Centre, Delhi under Section 143(3) r.w.s. 143(3A) & 143(3B) of the Income Tax Act, 1961 (hereinafter referred to as 'the Act') for Assessment Year 2018-19. Grounds of appeal taken by the Revenue read as under: "1. That the CIT(A), NFAC has erred in law and in facts by not appreciating the disallowance of deduction u/s 80P(2)(a)(iii) of the IT Act, 1961 claimed on commission income from sugar factory and was unjustified and unsustainable in the eyes of law. 2. That the CIT(A), NFAC has erred in law and in facts by not appreciating the facts that the assessee itself claimed commission income under the head 'Income from Other Sources' in place of 'Profits and gains....

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....lia, by allowing deduction under Section 80P(2)(a)(iii) of the Act on addition made towards commission receipts of Rs. 3,62,87,047/- treating the same as 'business income' earned in the form of commission income as against 'other income' assessed by the Learned AO. Aggrieved against the aforesaid order of Ld. CIT(A) allowing deduction under Section 80P(2)(a)(iii) of the Act, now the Revenue is in appeal before us. 3. We have heard rival submissions and perused the material available on record. The Ld. CIT(A) has allowed the assessee's claim of deduction under Section 80P(2)(a)(iii), treating commission receipts of Rs. 3,82,87,047/- as 'business income' by observing as under: "Ground Nos.6 & 7: Addition made towards commission re....

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....i.e., marketing of agricultural produce grown by its members. Except relying upon the decision of the Hon'ble Supreme Court in the case of Totgars' Co-operative Sale Society Ltd. (supra), the AO did not state any other reason such as income shown is not derived from the marketing of members agricultural produce. In this backdrop, I am in complete agreement with the reply of the assessee submitted during the course of assessment proceedings, which is extracted by the AO in the assessment order. For the completeness of the order, the reply of the assessee against the proposal of denial of disallowance of commission earned from the sugar factories on supply of sugarcane by its members is reproduced below. "it is most important....