Case Law Details
Indur Intideepam Producers MA Cooperative Societies Federation Limited Vs ITO (ITAT Hyderabad)
Conclusion: Deduction claimed by assessee in return of income which was directly relatable to the insurance activities, as it did not fall under section 80P(2) i.e., Insurance activities. Accordingly, the matter was remanded back to the file of AO for the limited purposes of verifying the deduction claimed in return of income and to pass a fresh order after affording due opportunity of hearing to the assessee in accordance with law.
Held: Assessee-cooperative society was providing credit facilities to its members. It filed return of income along with claiming deduction under section 80P. AO noted that assessee was mainly in the business of lending services for guarantee payments. Since the income earned by assessee was from business which was not covered under section 80P, AO opined that assessee was not eligible for deduction. Hence, he disallowed the deduction claimed by the assessee and added it to the returned income of the assessee and thus, completed the assessment u/s 143(3) of the Act and passed assessment order. It was held that assessee could claim the deduction in respect of the gross total income earned by assessee from the activities mentioned in sub-section (2) of Section 80P. Undoubtedly, the activities of the insurance did not form a part and parcel of carrying on the business of banking and providing credit facilities to its members. The activities of the insurance did not fall within the realm of the banking activities as banking activities were separate and distinct from the insurance activities. There was no reason to state that assessee was entitled to any deduction under section 80P. AO was only entitled to disallow the deduction claimed by assessee in the return of income with respect to insurance business. It was proper to remand back the matter to the file of AO for the limited purpose with a direction to disallow the deduction claimed by the assessee in return of income which was directly relatable to the insurance activities, as it did not fall under section 80P(2) i.e., Insurance activities. Accordingly, the matter was remanded to the file of AO for the limited purposes of verifying the deduction claimed in return of income and to pass a fresh order after affording due opportunity of hearing to the assessee in accordance with law. In case, assessee failed to file any documents in support of its case, AO should decide the matter in accordance with the law.
FULL TEXT OF THE ORDER OF ITAT HYDERABAD
This appeal is filed by the assessee feeling aggrieved by the order of Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi dt.24.09.202 1 invoking proceedings under section 143(3) of the Income Tax Act, 1961 (in short, “the Act”).
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