The Indore bench of Income Tax Appellate Tribunal (ITAT) recently directed the assessing officer to re-adjudicate assessee’s eligibility under section 80P of income tax act 1961 in respect of building /godowns used by Co-Operative Society.
Section 80P of Income Tax Act 1961 provides deduction to cooperative societies for computing income.
Assessee M.P. State Cooperative Marketing Federation Ltd is an APEX body of marketing societies, registered under M.P. State Co-operative Societies Act, 1960 and part of the activities carried on by assessee were eligible for deduction under section 80 P Of Income-tax Act, 1961, which stand allowed to assess. While computing taxable income under section 28 from various activities (including the activities eligible for deduction under section 80P), the assessee claimed depreciation of Rs.1,60,23,529/- under section 32 Income-Tax Act, 1961.but the revenue reduced the depreciation .against this order assesee filed appeal.
Anil Khabya, counsel for the assessee submits that assessee is a marketing society and eligible for deduction under section 80P if Income Tax Act 1961 and disallowance of Rs. 1,18,52,613/- which is sought to reduce the deduction under section 80P Income Tax Act 1961, is on account of depreciation relatable to “Buildings and Godowns block” of assets. Therefore assessee is having several “Buildings and Godowns” consisting of not only the Building/Godowns used for the activities eligible for deduction u/s 80P but also for other activities such as keeping own goods of assessee which is not eligible for deduction u/s 80P, administrative buildings.
Further under the scheme of Income-tax Act, 1961, the block of “Buildings and Godowns” is a single block for depreciation purpose and there is no way to separate the depreciation relatable to the activities eligible for 80P deduction. Hence it is not at all justified on the part of revenue-authorities to reduce the deduction u/s 80P by the amount of full depreciation of Rs. 1,18,52,613/-relatable to “Buildings and Godown block” or by even a part of it.
P.K. Mishra, counsel for the revenue, relied upon the decision of the authorities and prayed to uphold the disallowance.
After considering the contentions of the both parties the division bench of ITAT comprising M. Biyani, (Accountant) and. Suchitra Kamble, (Judicial Member) allowed the appeal filed by the assessee and directed the assessing officer to proceed with the assessee,s issue in the light of legal provisions of Income-tax Act, 1961 and the judicial rulings.
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