Baria Taluka Prathmik Sixak Dhiran Sahakari Mandali Vs ITO (ITAT Ahmedabad)
Income Tax Appellate Tribunal (ITAT) Ahmedabad bench has dismissed an appeal filed by Baria Taluka Prathmik Sixak Dhiran Sahakari Mandali, a cooperative society, clarifying that once a deduction under Section 80P of the Income Tax Act, 1961, is allowed, the assessee’s total income becomes 100% exempt from taxation. This ruling effectively renders any disallowances of expenses inconsequential to the final tax liability.
The appeal, stemming from an assessment order passed under Section 147 for the Assessment Year 2018-19, challenged the order of the National Faceless Appeal Centre (NFAC), Delhi, dated July 9, 2024.
The cooperative society had raised several grounds of appeal. Primarily, it contested the disallowance of a provision of Rs. 10,32,000/- made for prize expenses and a further disallowance of Rs. 1,06,900/- for provision of bad debts, both confirmed by the CIT(A) under Section 28 of the Act. Additionally, the assessee challenged the initiation of penalty proceedings under Section 270A.
During the initial assessment, the Assessing Officer (AO) had not only made these disallowances but also denied the deduction claimed by the cooperative society under Section 80P of the Income Tax Act. Section 80P provides for deductions in respect of income of cooperative societies.
