The Ahmedabad Bench of Income Tax Appellate Tribunal ( ITAT ) allowed the appeal of the assessee, holding that the Rs. 50,000 basic deduction under Section 80P(2)(c) of Income Tax Act,1961 should have been granted.
The State Transport Employees Co Operative Credit and Thrift Society, appellant-assessee,filed its return showing no income after claiming a deduction of Rs.34,32,392 under Section 80P. The case was selected for scrutiny, and notices were issued.
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During the assessment, the assessee claimed a deduction of Rs.34,33,392, including Rs.1,73,036 for interest on deposits with the State Bank of India, a nationalized bank. The Assessing Officer added this amount, citing the Supreme Court’s decision in the Totgar case.
The assessee also earned Rs.95,242 from savings bank interest and Rs.3,62,719 from fixed deposits with Mehsana District Central Co-operative Bank. The total deduction claimed was Rs.4,57,961, which the Assessing Officer disallowed.
The assessee aggrieved by the order of Assessing Officer(AO) appealed before the Commissioner of Income Tax(Appeals)[CIT(A)] who later dismissed the appeal.The assessee then appealed before the tribunal.
Comprehensive Guide of Law and Procedure for Filing of Income Tax Appeals, Click Here
The assessee’s counsel claimed that the CIT(A) made an error by not allowing the Rs.50,000/- deduction under Section 80P(2)(c) of the Act, as the assessee, a co-operative society, is entitled to it. This deduction is a legal entitlement for co-operative societies, and denying it goes against the law.
The two member bench comprising Suchitra Kamble(Judicial Member) and Makrand Vasnat Mahadeokar(Accountant Member)heard both parties and reviewed the available records. It noted that under Section 80P(2)(c) of the Act, co-operative societies are entitled to a basic deduction of Rs.50,000/-, and this deduction should have been allowed.
In short,the appeal filed by the assessee was allowed.
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