Gramin Sewa Sahakari Samiti Maryadit Vs ITO (ITAT Raipur)
ITAT Raipur held that cooperative society is entitled for claiming deduction u/s. 80P(2)(d) of the Income Tax Act in respect of dividend received on shares of cooperative banks.
Facts- The assessee is a Primary Agricultural Co-operative Society engaged in carrying out business of banking, paddy procurement, sale of fertilizers, seeds, manures, and pesticides and of control items under Public Distribution System. During the course of assessment proceedings, it was noticed that the assessee has failed to get its accounts audited within the specified due date i.e. 30.09.2012. Audit was done in the case on 23.02.2013. Thus, the AO observed that the assessee had committed default within the meaning of sec.44AB of the Act. Accordingly, penalty proceedings were initiated. Notice u/s.271B of the Act, was issued to show cause ‘as to why’ penalty should not be imposed. After considering the submissions, AO confirmed penalty of Rs. 1,50,000/- u/s. 271B. CIT(A) confirmed the same. Being aggrieved, the present appeal is filed.
The assessee society has claimed 100% deduction of income from all the activities claiming that it is covered by the provisions of sec.80P of the Act. The Ld.AO was not found satisfied with the explanations submitted by the assessee with respect to its entitlement to qualify for deduction u/s.80P of the Act, has made certain additions u/s.80P of the Act. CIT(A) granted partial relief. Being aggrieved, the present appeal is filed.
Conclusion- Held that order of penalty levied by the Ld.AO u/s.271B of the Act and confirmed by the Ld. CIT(A) is liable to be set aside with a direction to verify that the appointment of the statutory/tax auditor was done after the due date of completion of audit u/s 44AB of the Act, and if same is the case and audit was completed within a reasonable time of such appointment, then the penalty u/s 271B cannot be held as justified.
Held that the assessee’s society is entitled for deduction of its income from paddy procurement business u/s.80P(2)(a)(iii) of the Act, but restore the matter to the file of the AO for limited purpose of restricting the said claim of deduction to the extent of the profit relatable to the marketing of agricultural produce of the members of the agricultural society.
Held that the entitlement of cooperative society for claiming deduction u/s.80P(2)(d) of the Act, qua the dividend received on shares of cooperative banks is eligible for deduction u/s 80P(2)(d), which is squarely covered by the aforesaid decision, therefore, principally concurring with the claim of assessee i.e. disallowance made by the AO sustained by the Ld.CIT(A) stands vacated.
FULL TEXT OF THE ORDER OF ITAT RAIPUR
The above captioned appeals are directed against the order of the Commissioner of Income Tax (Appeals), Income Tax Department, National Faceless Appeal Centre, Delhi, emerged from the orders of the Ld. Assessing Officer, u/s.271B & 143(3) of the Income Tax Act, 1961 (in short “the Act”). The details of these appeals are as under:
