DASPUR BLOCK-I CO-OPERATIVE AGRICULTURAL MARKETING SOCIETY LIMITED,PASCHIM MEDINIPUR V. A.C.I.T., WARD-38(1), , MIDNAPUR

ITA 2066/KOL/2024

AI Insights

The case involves Daspur Block-I Cooperative Agricultural Marketing Society Limited, which appealed against the order of the National Faceless Appeal Centre, Delhi, concerning the Assessment Year 2014-15. The primary contention was the denial of full deduction under section 80P(2) of the Income Tax Act for the provision made for the Gratuity Fund. The Tribunal had to decide whether the addition of the provision for gratuity to the gross total income, which was not paid out but earmarked, qualifies for deduction under section 80P(2). The Tribunal referenced several precedents where similar provisions were allowed deductions, thus supporting the assessee's claim.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 474478 (ITAT-KOLKATA)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-01-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2014-2015
• Other Referred Cases: Collector Land Acquisition Vs. MST Katiji (1987) 167 ITR 471 SC, Sagar Gramin Bank vs. DCIT in ITA Nos. 304 & 319/Kol/2012, dated 31.03.2014, Gour Gramin Bank Vs. DCIT in ITA Nos. 305 & 320/Kol/2012, dated 31.03.2014, Sharavathi Pathina Sahakara Sangha Niyamitha Vs. ITO in ITA Nos.150 to 152/Bang/2022, dated 01.08.2022
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MADHUMITA DAS
• Assessee Lawyers: SOUMITRA CHOUDHARY
• Keywords: Business income; Reasonable cause; Bad and doubtful debts
• Section: 143(3); 139(1); 234B; 80P

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCHES “SMC”, KOLKATA BEFORE DR.MANISH BORAD, ACCOUNTANT MEMBER आयकर अपील सं. / ITA No.2066/KOL/2024 Assessment Year : 2014-15 Daspur Block-I Cooperative Agricultural Marketing Society Limited, Chechua Gobinda Nagar, Sekendari, Ghatal, Dist. Paschim Medinipur, West Bengal – 721 146 PAN : AADFD6126D V/s ACIT, Circle-38(1), Midnapore Appellant Respondent आदेश / ORDER PER DR. MANISH BORAD, ACCOUNTANT MEMBER : The captioned appeal pertaining to Assessment Year 2014-15 at the instance of assessee is directed against the order dated 06.09.2023 passed by National Faceless Appeal Centre, Delhi u/s.250 of the Income-tax Act, 1961 (in short ‘the Act’) which in turn is arising out of Assessment Order dated 22.12.2016 passed u/s. 143(3) of the Act. 2. At the outset, I find that appeal is time barred by limitation by 337 days before the Tribunal. An affidavit has been filed by the Chairman of the society. He stated that due to his regular illness, neither his emails could be opened nor Assessee by : Shri Soumitra Choudhary, A.R. Revenue by : Smt. Madhumita Das, Addl. CIT Date of hearing : 28.11.2024 Date of pronouncement : 29.01.2025 ITA No.2066/Kol/2024 Daspur Block-I Cooperative Agricultural Marketing Society Limited the mails received from the I.T portal. The Authorised Representative who is looking after the Tax matters was also not conversant with the matters at Tribunal level. Immediately, he took the matter to the notice of Governing Body who took steps in filing the appeal with the help of Shri Soumitra Choudhury, Advocate. It is therefore prayed for condoning the delay of 337 days. 3. I have gone through the averments made in the affidavit and in the absence of anything contrary to disbelieve the said version I find that there was ‘reasonable cause’ which prevented the assessee in filing the appeal within the stipulated time. Therefore, the delay of 337 days in preferring the appeal before the Tribunal is condoned by virtue of decision of Hon’ble Supreme Court in the case of Collector Land Acquisition Vs. MST Katiji (1987) 167 ITR 471 SC. 4. Assessee has filed following grounds of appeal : “1. For that on the facts of the case, the Ld. CIT(A) has passed the Order on 06.09.2023 which is completely arbitrary, unjustified and illegal. 2. For that on the facts of the case the Ld. CIT(A) was not justified in confirming the addition made on account of Provision of Gratuity Fund of Rs.11,54,821/-to the gross total income although amount of provision for gratuity has already been transferred to the gratuity fund earmarked for the purpose of payment of gratuity of employees during the year, as such his finding is completely wrong arbitrary, unjustified and illegal. 3. For that on the facts of the case that the Ld. CIT(A), was not justified in denying the deduction u/s 80P(2) of the 1.T. Act because the addition made on account of Provisions for gratuity to the gross total income assessed under 'Income from Business & Profession' allowing partly to the tune of Rs. 8,21,387/- arbitrarily as well as illegally. 4. For that on the facts of the case that the Ld. CIT(A) was grossly misconstrued the fact that the appellant being a registered Co-Operative society is eligible to get full deduction u/s 80P(2) of ITA No.2066/Kol/2024 Daspur Block-I Cooperative Agricultural Marketing Society Limited the Act from the income attributable to its business or profession and thus the confirmation of the addition of provision for gratuity enhancing the business income denying eligibility of deduction u/s 80P(2) of the Act from the business income is arbitrary, unjustified and illegal. 5. For that the charging interest u/s. 234A & 234B amounting to Rs.13,763/-and Rs.4,54,179/- which are mechanically wrong and illegal. 6. For that the appellant reserves the right to adduce any further ground or grounds, if necessary, at or before the hearing of the appeal.” 5. Though the assessee has raised as many grounds referred above but the effective issue raised by the assessee is that the ld.CIT(A) erred in confirming the action of the AO of not granting the deduction u/s.80P(2) of the Act to the extent of Rs.11,54,821/- which was disallowed by the AO on account of purchase provision for Gratuity Fund. 6. At the outset, Ld. Counsel for the assessee referring to the decisions of the Coordinate benches of the Tribunal in the case of Sagar Gramin Bank vs. DCIT in ITA Nos. 304 & 319/Kol/2012, dated 31.03.2014, Gour Gramin Bank Vs. DCIT in ITA Nos. 305 & 320/Kol/2012, dated 31.03.2014 and Sharavathi Pathina Sahakara Sangha Niyamitha Vs.ITO in ITA Nos.150 to 152/Bang/2022, dated 01.08.2022 stated that it has been held consistently that if the gross total income is increased on account of adding up of Provision for Gratuity Fund then such increased gross total income is eligible for deduction u/s.80P(2) of the Act. 7. On the other hand, ld. Departmental Representative supported the orders of the lower authorities. ITA No.2066/Kol/2024 Daspur Block-I Cooperative Agricultural Marketing Society Limited 8. I have heard the rival submissions and perused the record placed before me. The assessee is aggrieved with lower amount of deduction allowed u/s.80P(2) of the Act to the extent of Rs.11,54,821/-. Admittedly, ld. AO made addition on the provision for Gratuity Fund at Rs.11,54,821/- on account of non payment of Gratuity and no supporting evidence having been uploaded by the appellant to prove that the provision for Gratuity Fund has already been transferred to the Gratuity Fund earmarked for the purpose of payment of Gratuity. Though the ld. Counsel for the assessee has stated that the amount of provision for Gratuity Fund has already been transferred to the Gratuity Fund earmarked for the purpose of payment of Gratuity of employees during the year and the evidence to this effect is available. The alternate contention made by the ld. Counsel for the assessee is that on account of adding up of provision for Gratuity, the gross total has increased and therefore the assessee which is eligible for deduction u/s.80P(2) of the Act should be allowed the benefit of increased amount of deduction u/s.80P(2) of the Act to the extent of adding up of provision for Gratuity Fund. Reliance has been placed on the decisions of Coordinate Bench of the Tribunal cited (supra). I observe that similar issue came up before the Tribunal in the case of ITA No.305/Kol/2012 wherein the Tribunal in Para No.3 of the order has held as under : “3. We have heard rival contentions and gone through facts and circumstances of the case. We find that the assessee is eligible for deduction u/s. 80P of the act and payment of gratuity, payment of leave encashment and provision for doubtful debts is also out of eligible income and that also gross total income of the Co-operative Society. As pointed out by Ld. Counsel for the assessee to the provisions of section 80P(1) of the Act that the gross total income includes any income referred to in sub-section (2) means the ITA No.2066/Kol/2024 Daspur Block-I Cooperative Agricultural Marketing Society Limited deduction will be allowed from gross total income. The relevant provision of section 80P(1) reads as under: “(1) Where in the case of an assessee being a co-operative society, the gross total income includes any income referred to in sub-section (2), there shall be deducted, in accordance with and subject to the provisions of this section, the sums specified in sub-section (2), in computing the total income of the assessee.” It means the addition made by AO on account of provision for gratuity, provision for leave encashment eventually which was paid before filing of return of income u/s. 139(1) of the Act and provision for bad and doubtful debts, is eligible for deduction u/s. 80P of the Act in view of the fact that deduction is to be allowed out of gross total income. Accordingly, this disallowance in any way will not affect on income for the reason that this will also be part of gross total income and will be eligible for deduction u/s. 80P of the Act. These three common issues of assessee’s appeal are allowed.” 9. I have gone through the above decisions and since the ld. DR has failed to bring any contrary decisions in its favour, therefore, respectfully following the decisions referred herein above I am inclined to hold that since the gross total income of the assessee has increased on account of adding up of provision for Gratuity Fund, the assessee’s income from the business for which it is eligible for additional deduction u/s.80P of the Act at Rs.11,54,821/-. I therefore allow the effective grounds of appeal raised by the assessee. 10. In the result, the appeal of the assessee is allowed. Order pronounced on this 29th day of January, 2025. - Sd/- (MANISH BORAD) ACCOUNTANT MEMBER पुणे/Pune; \u0001दनांक / Dated : 29th January, 2025 Satish ITA No.2066/Kol/2024 Daspur Block-I Cooperative Agricultural Marketing Society Limited आदेश क\u0002 \u0003ितिलिप अ\tेिषत / Copy of the Order forwarded to : 1. अपीलाथ\f / The Appellant. 2. \r\u000eयथ\f / The Respondent. 3. The Pr. CIT concerned. 4. िवभागीय \rितिनिध, आयकर अपीलीय अिधकरण, “(SMC)” ब\u0014च, Kolkata/ DR, ITAT, “(SMC)” Bench, Kolkata. 5. गाड\u0018 फ़ाइल / Guard File. आदेशानुसार / BY ORDER, // True Copy // Assistant Registrar, ITAT, Kolkata "