K6705 BOMMANAICKENPALAYAM PRIMARY AGRICULTURAL COOP CREDIT SOCIETY LIMITED,GOBICHETTIPALAYAM TALUK V. THE INCOME TAX OFFICER WARD 2(1), ERODE

ITA 2800/CHNY/2024

AI Insights

The case involves the Bommanaickenpalayam Primary Agricultural Co-operative Credit Society Ltd., which appealed against the order of the Learned Addl. / Joint Commissioner of Income Tax (Appeals)-1, Lucknow. The primary issues in the appeal were the disallowance of a deduction claimed under section 80P(2)(a)(i) amounting to Rs.16,587 and the disallowance of expenditure under section 37(1) amounting to Rs.4.65 Lacs. The Assessing Officer (AO) had disallowed these claims based on the interpretation of the membership and operational structure of the society, referencing a Supreme Court decision. The CIT(A) upheld the AO's decision due to lack of sufficient factual evidence from the assessee regarding its income structure. The tribunal found that the assessee had not adequately substantiated its claims and thus restored the appeal for a fresh examination by the CIT(A).

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 29389 (ITAT-CHENNAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-02-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2017-2018
• Other Referred Cases: M/s Citizen Co-operative Society Ltd. (84 Taxmann.com 114), Mavilayi Service Co-operative Bank Ltd. (123 Taxmann.com 161)
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ASHWIN D. GOWDA LD.
• Assessee Lawyers: R. RESHMA LD
• Keywords: Depreciation
• Section: 143(3); 37(1)

Judgement Text

" आयकर अपीलीय अिधकरण “ए” \rा यपीठ चे\u0012ई म\u0015। IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH, CHENNAI मा ननीय \u0018ी एबी टी. वक\u001c, \rा ियक सद\u001f एवं मा ननीय \u0018ी मनोज क ुमा र अ$वा ल ,लेखा सद\u001f क े सम&। BEFORE HON’BLE SHRI ABY T. VARKEY, JM AND HON’BLE SHRI MANOJ KUMAR AGGARWAL, AM आयकरअपील सं ./ ITA No.2800/Chny/2024 (िनधा 'रणवष' / Assessment Year: 2017-18) K6705 Bommanaickenpalayam Primary Agricultural Co-operative Credit Society Ltd. #R2-Nallapa Street, Periyar Nagar, Erode, Chennai-638 001. बनाम/ Vs. ITO Ward-2(1), Erode. \u0002थायीलेखासं./जीआइआरसं./PAN/GIR No. AABAK-3912-B (अपीलाथ\u001c/Appellant) : (\u001f थ\u001c / Respondent) अपीलाथ\u001cकीओरसे/ Appellant by : Ms. R. Reshma (Advocate) - Ld.AR \u001f थ\u001cकीओरसे/Respondent by : Shri Ashwin D. Gowda (Addl.CIT) - Ld. Sr. DR सुनवाईकीतारीख/Date of Hearing : 27-01-2025 घोषणाकीतारीख /Date of Pronouncement : 03-02-2025 आदेश / O R D E R Manoj Kumar Aggarwal (Accountant Member) 1. Aforesaid appeal by assessee for Assessment Year (AY) 2017-18 arises out of the order of learned Addl. / Joint Commissioner of Income Tax (Appeals)-1, Lucknow [CIT(A)] dated 03-10-2024 in the matter of an assessment framed by the Ld. AO u/s 143(3) of the Act on 19-11-2019. The grievance of the assessee is two-fold i.e., (i) Disallowance of deduction claimed u/s. 80P(2)(a)(i) for Rs.16,587/-; (ii) Disallowance of expenditure u/s 37(1) for Rs.4.65 Lacs. 2 2. The deduction for Rs.16587/- has been disallowed on the ground that the assessee provided credit facility to B-Class Members who were admitted to society mainly for the purpose of availing loans against specified security on payment of non-refundable admission fees and their membership existed only for limited period (maximum 3 years). Such members were not allotted shares and they do not have right to vote and participate in meetings. The Ld. AO, considering the decision of Hon’ble Supreme Court in the case of M/s Citizen Co-operative Society Ltd. (84 Taxmann.com 114), denied impugned deduction u/s 80P(2)(a)(i). The Ld. AO also disallowed expenses u/s 37(1) for Rs.4.65 Lacs since the same were in the nature of provision for overdraft interest, gratuity and depreciation. 3. During appellate proceedings, the assessee relied on the decision of Hon’ble Supreme Court in the case of Mavilayi Service Co-operative Bank Ltd. (123 Taxmann.com 161) and various other decisions. However, Ld. CIT(A) rejected the same on the ground that the assessee did not provide factual evidence regarding its income structure. The assessee failed to file the requisite documents and accordingly, the action of Ld. AO was upheld. No finding was rendered on disallowance u/s 37(1). 4. Considering the aforesaid facts, we deem to restore the appeal back to the file of Ld. CIT(A) since the assessee has failed to file the requisite documents to substantiate its claim. The assessee failed to demonstrate that the aforesaid case law was applicable to it. Further, no adjudication has been done on disallowance u/s 37(1). For all these reasons, the appeal is restored back to the file of Ld. CIT(A) for de novo adjudication with a direction to the assessee to substantiate its case. 3 5. The appeal stand allowed for statistical purposes. Order pronounced on 3rd February, 2025 Sd/- Sd/- (ABY T. VARKEY) (MANOJ KUMAR AGGARWAL) \rा ियक सद\u001f /JUDICIAL MEMBER लेखा सद\u001f / ACCOUNTANT MEMBER चे4ई Chennai; िदनांक Dated :03-02-2025 DS आदेश की Fितिलिप अ$ेिषत / Copy of the Order forwarded to : 1. अपीलाथ\u001c/Appellant 2. \u001f थ\u001c/Respondent 3. आयकरआयु=/CIT Coimbatore/Madurai/Chennai. 4. िवभागीय\u001fितिनिध/DR 5. गाडBफाईल/GF "