VAPI MARCHANT SAVING AND CREDIT CO-OP SOCIETY LIMITED ,VAPI V. INCOME TAX OFFICER, WARD-9, VAPI, VAPI

ITA 838/SRT/2023

AI Insights

The case involves Vapi Merchant Saving and Credit Co-op Society Ltd, which appealed against the order of the Commissioner of Income-tax (Appeals) - National Faceless Appeal Centre, Delhi, for the assessment year 2010-11. The primary contention was the rejection of a deduction claimed under section 80P(2)(a)(i) of the Income Tax Act, 1961, related to interest income from members. The assessee did not file its regular return of income within the prescribed due date but filed a return declaring nil income after a notice under section 148 was issued, claiming deductions which were denied by the Assessing Officer and upheld by the CIT(A). The Tribunal dismissed the appeal, referencing the Supreme Court's decision in Sun Engineering Works P Ltd, which emphasized that reassessment proceedings are for the benefit of the revenue and not the assessee, and deductions claimed must be related to escaped income.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 782887 (ITAT-SURAT)
• Duration Of Justice: 1 year(s) 10 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-10-2025
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 04-12-2023
• Other Referred Cases: Sun Engineering Works P Ltd vs. CIT, State Bank of India vs. CIT, Jai Steel India vs. CIT
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: J.K. CHANDNANI
• Assessee Lawyers: HEM CHHAJED
• Keywords: Business income; Reassessment proceedings
• Section: 147; 148; 153A; 139

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL SURAT BENCH “SMC” SURAT BEFORE SHRI SANDEEP GOSAIN (JUDICIAL MEMBER) AND SHRI OM PRAKASH KANT (ACCOUNTANT MEMBER) ITA No. 838/SRT/2023 Assessment Year: 2010-2011 Vapi Merchant Saving and Credit Co-op Society Ltd., Office No. 130, First Floor, Varun Complex, Opp. Reliance Super Market GIDC, Vapi-396195. Vs. ITO Ward-9, Income Tax Office, Nr. Vaishali Char Rasta, NH-8, GIDC, Vapi-396191. PAN NO. AAAAV 3925 E Appellant Respondent Assessee by : Mr. Hem Chhajed, AR Revenue by : Mr. J.K. Chandnani, Sr. DR Date of Hearing : 09/10/2025 Date of pronouncement : 30/10/2025 ORDER PER OM PRAKASH KANT, AM This appeal by the assessee is directed against order dated 30/09/2023, passed by the learned commissioner of Income- tax(appeals)-National Faceless Appeal Centre, Delhi [in short the Ld. CIT(A)] for assessment year 2010-11, raising following grounds: 1. The order passed by the Ld. CIT (A) is against law, equity & justice. Printed from counselvise.com 2. The Ld. CIT(A) has erred in law and on facts in upholding rejection of decution claimed by appellant U/S 8OP of the Act. 3. The Ld. CIT(A) has erred in law and on facts by not allowing deduction 80P(2)(a)(i) 2. Briefly stated facts of the case that the assessee a cooperative society, did not file its regular return of income for the year under consideration before the Income-tax Act, 1961 ( not file the return of income within the extended period available within the provision of section 139 of the act. 2.1 Subsequently, the believe that income escaped assessment and issued notice under section 148 of the act, on 31/03/2017. In response filed return of income for the first time declaring Nil income after claiming deduction of Act. The bifurcations of interest income reported by the assessee in the return of income is reproduced as under: Sr. No. 1. Interest income from bank F.Ds 2. Inter accounts 3. Interest received from members 2.2 During reassessment proceeding, the Assessing Officer brought to the knowledge of the assessee that in view of prov section 80A(5) of the A deduction otherwise than by return of income filed under the due Vapi Merchant Saving and Credit Co The Ld. CIT(A) has erred in law and on facts in upholding rejection of decution claimed by appellant U/S 8OP of the The Ld. CIT(A) has erred in law and on facts by not allowing of Rs. 14,61,780/- claimed U/S 80P(2)(a)(i) of the Act. stated facts of the case that the assessee a cooperative society, did not file its regular return of income for the year under the due date prescribed under section 139(1 tax Act, 1961 (in short ‘the Act’). The assessee also did not file the return of income within the extended period available within the provision of section 139 of the act. Subsequently, the Assessing Officer recorded reasons to believe that income escaped assessment and issued notice under section 148 of the act, on 31/03/2017. In response return of income for the first time declaring Nil income after claiming deduction of ₹14,61,780/- under section 80P(2)(a)(i) The bifurcations of interest income reported by the assessee in the return of income is reproduced as under: Particulars Interest Income Interest income from bank F.Ds Rs.3,25,542/ Interest income from bank saving accounts Rs.29,443/ Interest received from members Rs.25,25,308/ During reassessment proceeding, the Assessing Officer brought to the knowledge of the assessee that in view of prov section 80A(5) of the Act, the assessee was not eligible for the deduction otherwise than by return of income filed under the due Vapi Merchant Saving and Credit Co-op Society Ltd 2 ITA No. 838/SRT/2023 The Ld. CIT(A) has erred in law and on facts in upholding rejection of decution claimed by appellant U/S 8OP of the The Ld. CIT(A) has erred in law and on facts by not allowing claimed U/S stated facts of the case that the assessee a cooperative society, did not file its regular return of income for the year under the due date prescribed under section 139(1) of ). The assessee also did not file the return of income within the extended period available Assessing Officer recorded reasons to believe that income escaped assessment and issued notice under section 148 of the act, on 31/03/2017. In response, the assessee return of income for the first time declaring Nil income after under section 80P(2)(a)(i) of the The bifurcations of interest income reported by the assessee in Interest Income Rs.3,25,542/- Rs.29,443/- Rs.25,25,308/- During reassessment proceeding, the Assessing Officer brought to the knowledge of the assessee that in view of provision of ct, the assessee was not eligible for the deduction otherwise than by return of income filed under the due Printed from counselvise.com date prescribed under section 139(1) of the A counsel for the assessee submitted that under section 80P(2)(a)(i) filing return under section 139 (1) of the A conditions are fulfilled, established for credit members are shareholders of the society rejected the contention of the assessee and refer the Hon’ble Supreme Court in the case of Sun Engineering Works P Ltd (1992) 198 ITR 297 ,320(SC) under section 147 are for the benefit of the R assessee. The Assessing Officer rejected claim of the assessee on the merit relying on the decision of Hon’ble dated 25/04/2016 in t 2015 and 47 of 2015, wherein it is held that in case of a society engaged in providing credit facility to its members, it is the interest income derived from credit provided to its members, which is deductible under section 80P(2)(a)(i) of the A by depositing surplus funds business income and cannot be claimed deduction under section 80P(2)(a)(i) of the act. 3. On further appeal, the Ld. CIT(A) also upheld learned Assessing Officer. Aggrieved, the assessee is before the Tribunal by way of raising grounds Vapi Merchant Saving and Credit Co ed under section 139(1) of the Act. But the learned counsel for the assessee submitted that while claiming deduction under section 80P(2)(a)(i) of the Act, there was no requirement of n under section 139 (1) of the Act once the two conditions are fulfilled, firstly, credit cooperative society is credit facility to its members and secondly all the shareholders of the society. The Assessing Officer rejected the contention of the assessee and refered to the decision of the Hon’ble Supreme Court in the case of Sun Engineering Works P Ltd (1992) 198 ITR 297 ,320(SC) wherein it is held that proceeding 147 are for the benefit of the Revenue and not for the assessee. The Assessing Officer rejected claim of the assessee on the merit relying on the decision of Hon’ble Gujarat dated 25/04/2016 in the case of state bank of India in ITA 486 of 2015 and 47 of 2015, wherein it is held that in case of a society engaged in providing credit facility to its members, it is the interest income derived from credit provided to its members, which is er section 80P(2)(a)(i) of the Act and interest derived by depositing surplus funds to a bank is not attributable to business income and cannot be claimed deduction under section 80P(2)(a)(i) of the act. On further appeal, the Ld. CIT(A) also upheld the finding of the learned Assessing Officer. Aggrieved, the assessee is ribunal by way of raising grounds as reproduced above. Vapi Merchant Saving and Credit Co-op Society Ltd 3 ITA No. 838/SRT/2023 ct. But the learned claiming deduction no requirement of ct once the two , credit cooperative society is bers and secondly all the . The Assessing Officer to the decision of the Hon’ble Supreme Court in the case of Sun Engineering Works P wherein it is held that proceeding evenue and not for the assessee. The Assessing Officer rejected claim of the assessee on Gujarat High Court bank of India in ITA 486 of 2015 and 47 of 2015, wherein it is held that in case of a society engaged in providing credit facility to its members, it is the interest income derived from credit provided to its members, which is ct and interest derived bank is not attributable to business income and cannot be claimed deduction under section the finding of the learned Assessing Officer. Aggrieved, the assessee is in appeal s reproduced above. Printed from counselvise.com 4. Before us learned counsel for the assessee referred to delay in filing the appeal. The learned counsel on behalf of the society and submitted that delay of five days due to non service of the order and the assessee came to know from the Income-tax portal filed. 4.1 In view of the explanation filed by the assessee for the delay supported by way of an affidavit, we are of the opinion that assessee was prevented by sufficient cause for delayed filing of the appeal, accordingly we condone the delay and admit the appeal for adjudication. 5. We have heard rival submission of the parties and perused the relevant material record. The sole issue in dispute assessee is eligible for deduction of the claim made for the first time in the return of income filed in response to n of the Act. The Assessing Officer has denied the claim in section 80A(5) of the A in the case of Sun engineering Private Limited(supra). 5.1 In this regard, we may like to refer to the decision of the Hon’ble Supreme court in Sun Engineering p Ltd (supra), where Hon’ble Supreme Court held purpose of the proceedings under section 147 which are for the benefit of the revenue and not an assessee, an assessee cannot be Vapi Merchant Saving and Credit Co Before us learned counsel for the assessee referred to delay in filing the appeal. The learned counsel referred to the affidavit filed on behalf of the society and submitted that delay of five days due to non service of the order and the assessee came to know from portal, only in thereafter immediately appeal was e explanation filed by the assessee for the delay supported by way of an affidavit, we are of the opinion that assessee was prevented by sufficient cause for delayed filing of the appeal, accordingly we condone the delay and admit the appeal for We have heard rival submission of the parties and perused the relevant material record. The sole issue in dispute for deduction of the claim made for the first time in the return of income filed in response to notice under section 148 ct. The Assessing Officer has denied the claim in section 80A(5) of the Act and decision of the Hon’ble Supreme Court un engineering Private Limited(supra). In this regard, we may like to refer to the decision of the Supreme court in Sun Engineering p Ltd (supra), where Hon’ble Supreme Court held that Keeping in view the object and purpose of the proceedings under section 147 which are for the it of the revenue and not an assessee, an assessee cannot be Vapi Merchant Saving and Credit Co-op Society Ltd 4 ITA No. 838/SRT/2023 Before us learned counsel for the assessee referred to delay in referred to the affidavit filed on behalf of the society and submitted that delay of five days was due to non service of the order and the assessee came to know from only in thereafter immediately appeal was e explanation filed by the assessee for the delay supported by way of an affidavit, we are of the opinion that assessee was prevented by sufficient cause for delayed filing of the appeal, accordingly we condone the delay and admit the appeal for We have heard rival submission of the parties and perused the relevant material record. The sole issue in dispute is whether the for deduction of the claim made for the first time ice under section 148 ct. The Assessing Officer has denied the claim in view of e Supreme Court un engineering Private Limited(supra). In this regard, we may like to refer to the decision of the Supreme court in Sun Engineering p Ltd (supra), where Keeping in view the object and purpose of the proceedings under section 147 which are for the it of the revenue and not an assessee, an assessee cannot be Printed from counselvise.com permitted to convert the reassessment proceedings as his appeal or revision, in disguise, and seek relief in respect of items earlier rejected or claim relief in respect of items not claimed in t assessment proceedings, unless relatable to ‘escaped income’, and reagitate the concluded matters. Even in cases where the claims of the assessee during the course of reassessment proceedings related to the escaped assessment are accepted, stil claims has to be limited to the extent to which they reduce the income to that originally assessed. The income for purposes of ‘reassessment’ cannot be reduced beyond the income originally assessed. 5.2 In the instant case before u regular return of income for the year under consideration either in the due date prescrib belatedly. The deduction under the provisions of t allowed subject to fulfilling the conditions prescribed in provisions of the Act and the assessee income was not filed because in view of income would be below threshold income the assessee is more than the prescribed minimum income limit for tax without deduction claimed deduction only return of income leading to escapement situation, it may be presumed that Vapi Merchant Saving and Credit Co permitted to convert the reassessment proceedings as his appeal or revision, in disguise, and seek relief in respect of items earlier rejected or claim relief in respect of items not claimed in t assessment proceedings, unless relatable to ‘escaped income’, and reagitate the concluded matters. Even in cases where the claims of the assessee during the course of reassessment proceedings related to the escaped assessment are accepted, still the allowance of such claims has to be limited to the extent to which they reduce the income to that originally assessed. The income for purposes of ‘reassessment’ cannot be reduced beyond the income originally In the instant case before us, the assessee even did not file its regular return of income for the year under consideration either in the due date prescribed under section 139(1) of the A The deduction under the provisions of t ulfilling the conditions prescribed in ct and the assessee cannot assume that was not filed because in view of deduction available would be below threshold income, although total income of the assessee is more than the prescribed minimum income limit for without deduction. The assessee filed return of in claimed deduction only, when the revenue noticed non return of income leading to escapement of income. In such a , it may be presumed that the assessee was totally Vapi Merchant Saving and Credit Co-op Society Ltd 5 ITA No. 838/SRT/2023 permitted to convert the reassessment proceedings as his appeal or revision, in disguise, and seek relief in respect of items earlier rejected or claim relief in respect of items not claimed in the original assessment proceedings, unless relatable to ‘escaped income’, and reagitate the concluded matters. Even in cases where the claims of the assessee during the course of reassessment proceedings related l the allowance of such claims has to be limited to the extent to which they reduce the income to that originally assessed. The income for purposes of ‘reassessment’ cannot be reduced beyond the income originally s, the assessee even did not file its regular return of income for the year under consideration either in ed under section 139(1) of the Act or even The deduction under the provisions of the Act is to be ulfilling the conditions prescribed in the relevant assume that return of deduction available total although total income of the assessee is more than the prescribed minimum income limit for return of income and , when the revenue noticed non-filing of of income. In such a the assessee was totally neither Printed from counselvise.com aware nor interested for claiming the deduction provided chapter VI of the A specifically restrict the eligibility of chapter VI of the A prescribed under section 139(1) of the A 5.3 The Hon’ble Rajasthan High court in the case of Jai Steel India) Income-tax Appeal No. 53/A2011 the assessee to seek deduction or claim expenditure which has not been claimed in the original assessment, which assessment already stands completed, only because a assessment under 153A of the Act in pursuance of search or requisition is required to be made. 5.4 As far as the issue raised in the merit is concerned, the assessee failed to substantiate that the interest income was earned from its business activity of extending credit fa which is one of the condition provided under section 80P(2)(a) of the Act. 5.5 Since the lower authorities have decided the issue keeping in view binding precedent on the issue in dispute, we do not find any error in the order of the assessee accordingly dismissed. Vapi Merchant Saving and Credit Co aware nor interested for claiming the deduction provided chapter VI of the Act. Further, the section 80A(5) of the A specifically restrict the eligibility of claim of ded chapter VI of the Act in the return filed within the time period ed under section 139(1) of the Act. The Hon’ble Rajasthan High court in the case of Jai Steel tax Appeal No. 53/A2011 held that it is not the assessee to seek deduction or claim expenditure which has not been claimed in the original assessment, which assessment already stands completed, only because a assessment under of the Act in pursuance of search or requisition is required to As far as the issue raised in the merit is concerned, the assessee failed to substantiate that the interest income was earned from its business activity of extending credit facility to its members which is one of the condition provided under section 80P(2)(a) of the Since the lower authorities have decided the issue keeping in view binding precedent on the issue in dispute, we do not find any error in the order of the Ld. CIT(A). The grounds of appeal of the assessee accordingly dismissed. Vapi Merchant Saving and Credit Co-op Society Ltd 6 ITA No. 838/SRT/2023 aware nor interested for claiming the deduction provided under her, the section 80A(5) of the Act claim of deduction under ct in the return filed within the time period The Hon’ble Rajasthan High court in the case of Jai Steel held that it is not open for the assessee to seek deduction or claim expenditure which has not been claimed in the original assessment, which assessment already stands completed, only because a assessment under Section of the Act in pursuance of search or requisition is required to As far as the issue raised in the merit is concerned, the assessee failed to substantiate that the interest income was earned cility to its members which is one of the condition provided under section 80P(2)(a) of the Since the lower authorities have decided the issue keeping in view binding precedent on the issue in dispute, we do not find any Ld. CIT(A). The grounds of appeal of the Printed from counselvise.com 6. In the result, the appeal filed by the assessee is dismissed. Order pronounced by way display o on 30/10/2025 under Rule 34(4) of ITAT Rules, 1963. Sd/- (SANDEEP GOSAIN JUDICIAL MEMBER Surat; Dated: 30/10/2025 Rahul Sharma, Sr. P.S. (on Tour) Copy of the Order forwarded to 1. The Appellant 2. The Respondent. 3. CIT 4. DR, ITAT, Surat 5. Guard file. //True Copy// Vapi Merchant Saving and Credit Co In the result, the appeal filed by the assessee is dismissed. Order pronounced by way display of result on notice board /10/2025 under Rule 34(4) of ITAT Rules, 1963. - Sd/ (SANDEEP GOSAIN) (OM PRAKASH KANT JUDICIAL MEMBER ACCOUNTANT MEMBER Copy of the Order forwarded to : BY ORDER, (Assistant Registrar) ITAT, Surat Vapi Merchant Saving and Credit Co-op Society Ltd 7 ITA No. 838/SRT/2023 In the result, the appeal filed by the assessee is dismissed. f result on notice board /10/2025 under Rule 34(4) of ITAT Rules, 1963. Sd/- OM PRAKASH KANT) ACCOUNTANT MEMBER BY ORDER, (Assistant Registrar) ITAT, Surat Printed from counselvise.com "