Buldana Zilla Parishad Employees Co-op. Society Ltd. Vs ITO (ITAT Nagpur)
The Income Tax Appellate Tribunal (ITAT), Nagpur Bench, allowed the appeal of a credit co-operative society after holding that deduction under Section 80P(2)(a)(i) of the Income Tax Act, 1961 could not be denied merely because the assessee selected an incorrect column while filing its return of income. The appeal arose from an order of the Commissioner of Income Tax (Appeals) affirming the Assessing Officer’s denial of deduction for Assessment Year 2018-19.
The assessee, a credit co-operative society registered under the Maharashtra Co-operative Societies Act, 1960, was engaged in providing credit facilities to its members. In its return of income, it claimed deduction under Section 80P and declared nil income. The Assessing Officer observed that the deduction had been claimed under Section 80P(2)(c) instead of Section 80P(2)(a)(i) and treated the subsequent explanation as an afterthought. On that basis alone, the deduction under Section 80P(2)(a)(i) was denied. The Commissioner (Appeals) upheld the assessment, following which the assessee approached the Tribunal.
Before the Tribunal, the assessee contended that it was eligible for deduction under Section 80P(2)(a)(i) as its business consisted of providing credit facilities to its members. It pointed out that the audited financial statements reflected income from such activities and that the Tax Audit Report certified the admissibility of deduction under Section 80P amounting to Rs.76,75,476. The assessee also highlighted that deduction under Section 80P(2)(a)(i) had been consistently allowed in preceding and subsequent assessment years on identical facts. It submitted that the denial resulted solely from a clerical error in selecting the relevant clause in the return of income. The assessee further argued that the appellate order discussed issues relating to Sections 14A and 36(1)(iii), which had no connection with the dispute before it, indicating lack of application of mind.
