Commission Income of Cooperative Society u/s 80P: ITAT Allows Withdrawal of Revenue Appeal as Tax Effect Below Prescribed Limit [Read Order]
The Department filed an appeal but, noting that the tax effect was only Rs. 53.31 lakh,below the Rs. 60 lakh limit prescribed in CBDT Circular No. 09/2024 sought withdrawal
The Jabalpur Bench of Income Tax Appellate Tribunal (ITAT) allowed withdrawal of Revenue’s appeal in the case concerning commission income of a cooperative society under section 80P of Income Tax Act,1961 as the tax effect was below the prescribed limit.
The Revenue-appellant, appealed against the Commissioner of Income Tax (Appeals)[CIT(A)] order dated 22.05.2024. In this case, Shakti Mahila Sangh Bahu-Uddeshiya, respondent-assessee,was a registered Cooperative Society engaged in providing micro-finance to members and self-help groups in rural areas.
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For AY 2017-18, it filed its income tax return declaring a total income of Rs. 1,34,10,566 and claimed the entire amount as a deduction under section 80P.
The original assessment under section 143(3) accepted the returned income. Later, the PCIT-1, Jabalpur, held the assessment to be erroneous under section 263 on 14.02.2022 and directed a fresh assessment. Following this, the Assessing Officer (AO) passed a revised order under sections 143(3) r.w.s. 263 and 144B on 28.03.2023, determining total income at Rs. 1,72,53,990.
The revised income was treated as commission earned for services rendered as a business correspondent and assessed under “Income from Other Sources.”
The assessee challenged the revised assessment before the CIT(A). After reviewing the case, the ld. CIT(A) held that the commission income of Rs. 1,72,53,988 received from IDBI constituted business income and was eligible for deduction under section 80P(2)(a)(i). The ld. AO’s disallowance of the deduction was found unjustified, and the addition was deleted.
The Department was dissatisfied with the CIT(A)’s order and filed an appeal.
During the hearing, the Departmental counsel referred to Central Board of Direct Taxes (CBDT) Circular No. 9/2024 dated 17.09.2024, which revised the monetary limit for filing appeals before the ITAT to Rs. 60 lakhs.
He noted that the tax effect in this case was only Rs. 53,31,481 and that it did not fall under any exceptions mentioned in CBDT Circular No. 05/2024 dated 15.03.2024. The AO had recommended withdrawal of the appeal, and it was therefore requested that the Department be permitted to withdraw the appeal.
The two member bench comprising Kul Bharat (Vice President) and Nikhil Choudhary (Accountant Member) considered the matter and noted that the Department had requested withdrawal of the appeal in view of CBDT Circular No. 09/2024 dated 17.09.2024. Since the tax effect was below the prescribed limit, the tribunal allowed the withdrawal of the appeal and dismissed it.
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