Total Income 100% Tax-Exempt if S.80P Deduction Allowed: ITAT dismisses appeal noting No Effect on Disallowances [Read Order]
ITAT Dismisses Appeal of Co-operative Society, Holding That Disallowance of Prize and Bad Debt Provisions Has No Tax Effect Since Entire Income is Eligible for 100% Deduction under Section 80P
![Total Income 100% Tax-Exempt if S.80P Deduction Allowed: ITAT dismisses appeal noting No Effect on Disallowances [Read Order]](https://images.taxscan.in/h-upload/2025/07/18/2065030-total-income-tax-exempt-if-s80p-deduction-allowed-tax-exempt-deduction-itat-itat-dismisses-appeal-taxscan.webp "Total Income 100% Tax-Exempt if S.80P Deduction Allowed: ITAT dismisses appeal noting No Effect on Disallowances [Read Order]")
The Ahmedabad Bench of the Income Tax Appellate Tribunal (ITAT) has dismissed the appeal, noting that disallowances made by the Assessing Officer (AO) had no tax effect as the assessee was already entitled to full deduction under Section 80P of the Income Tax Act, 1961. Also Read:Section 80 P under Income Tax Act,1961: Case Digest on Recent Decisions The assessee...
The Ahmedabad Bench of the Income Tax Appellate Tribunal (ITAT) has dismissed the appeal, noting that disallowances made by the Assessing Officer (AO) had no tax effect as the assessee was already entitled to full deduction under Section 80P of the Income Tax Act, 1961.
The assessee Baria Taluka Prathmik Sixak Dhiran Sahakari Mandali, a co-operative society, challenged the order of the National Faceless Appeal Centre (NFAC) arising from an assessment order passed under Section 147 for the Assessment Year( AY) 2018–19.
The AO had disallowed two claims, such as a provision of ₹10,32,000 on account of prize expense, and ₹1,06,900 on account of bad debts. The AO had also denied deduction under Section 80P of the Income Tax Act.
The Commissioner of Income Tax (Appeals) ( CIT (A) ) in appeal held that the assessee was entitled to a deduction under section 80P of the Act and upheld the action of the AO in making a disallowance for provision for prize money and bad debts. The CIT(A) noted that once the assessee is held to be entitled to deduction under Section 80P of the Income Tax Act, the income of the assessee will be exempt from taxation @ 100%.
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The tribunal Bench comprising Sanjay Garg (Judicial Member) and Annapurna Gupta (Accountant Member) noted that once the assessee was held entitled to deduction under Section 80P, its entire income became 100% exempt from tax.
The Tribunal observed that even if the CIT(A) has upheld the order of the A.O. relating to the disallowance of provision of prize money and bad debts, the result would be that it will increase the income of the assessee, which otherwise is eligible for deduction u/s. 80P of the Act.
Accordingly, the appeal was dismissed, as when the entire income is deductible under Section 80P of the Act, technical disallowances do not impact the final tax outcome.
The assessee was represented by Vidhi V. Pandya, while Rignesh Das represented the revenue.
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