Swa Ashokrao Bankar Nagari Sahakari Patsanstha Maryadit Vs ITO (ITAT Pune)
Separate Books Maintained – AO’s Estimation Unsustainable- 80P Deduction Allowed in Full: ITAT Deletes Proportionate Profit Addition of ₹50.10 Lakh
Assessee is a Co-operative Society engaged in providing credit facilities to its Members & had also taken a sugar factory on lease, carrying on sugar-manufacturing operations during AY 2022-23. It filed return declaring nil income after claiming deduction u/s 80P on gross total income of ₹65,25,467. AO held that the assessee had not maintained separate books for the two activities &, based on proportionate credits in the consolidated P&L account, estimated income attributable to credit-facility business & sugar business. AO concluded that deduction u/s 80P was incorrectly claimed & made an addition of ₹50,10,957. CIT(A) confirmed the addition, reiterating that separate books were not maintained.
Before Tribunal, assessee produced audited financial statements of both divisions, including separate profit & loss accounts for credit-facility business & sugar business. Records showed profit of ₹4,17,52,214 from credit-facility operations & loss of ₹3,64,48,176 from sugar manufacturing, with full details of direct & indirect expenses. Tribunal noted that Revenue had not rebutted the genuineness of these audited statements. It held that AO’s proportionate allocation method was uncalled for once separate books were produced & no defects were found. Tribunal rejected the findings of AO & CIT(A), holding that net profit after set-off of sugar-factory loss was eligible for deduction u/s 80P(2)(a)(i). The addition of ₹50,10,957 was deleted & the appeal was allowed.
