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2016 (4) TMI 473 - AT - Income TaxEligibility for deduction under section 80P(2)(a) or 80P(2)(b) - determine eligibility of deduction under section 80P of the Act in respect of income earned from certain allied activities viz. (i) Locker Rent; (ii) Ambulance Rent; (iii) Commission on Collection of MSEB bills; and (iv) Health Club by cooperative credit society carrying on banking business - Held that:- We find that eligibility of the assessee for deduction under section 80P of the Act in respect of locker rent income is covered by the decision of the Hon’ble Supreme Court in the case of Mehsana District Central Co-op. Bank Ltd. (2001 (8) TMI 15 - SUPREME Court ). Therefore, we set-aside the direction of the CIT(A) in this regard and hold that the assessee is eligible for deduction under section 80P of the Act in respect of this income. With respect to the income from running of Ambulance, while holding that the assessee is not eligible for deduction under section 80P(2)(a) or (b), we are in total agreement with the alternate plea of the assessee that the expenses attributable for the purpose operating such activity ought to have to be allowed on actual/proportionate basis. We are of the view that the action of the CIT(A) in restricting the expenses artificially @ 10% of the gross income from such activities is not sustainable in law being devoid of objectivity. The Assessing Officer is accordingly directed to allow the expenses which are attributable to the running of Ambulance and determine the income from the aforesaid activity. The surplus if any, from this activity would be entitled to relief made residuary clause of section 80P(2)(c)(ii). We also notice that the Income from MSEB commission is held to be business activity as per decision cited by the assessee in the case of Ahmednagar District Co-operative Bank Ltd. (1990 (4) TMI 119 - ITAT PUNE ) and other decisions noted above. Accordingly, we hold that the assessee is entitled to relief under section 80P as per law. We also simultaneously find merit in the alternate plea of the assessee that proportionate expenses attributable to earning of such income ought to have been allowed by the authorities below. In view of the fair admission on the part of the assessee, the finding of the CIT(A) in respect of Shop Rent Income is sustained. With regard to other income, namely, Health Club Fees, we once again hold that expenses attributable to the running of the Health Club should be allowed to the assessee while determining the income from such activity on reasonable/proportionate basis. However, we do not find any merit in claim of the assessee for deduction under section 80P(2)(a)/80P(2)(b) of the Act in respect of this activity. As regards withdrawal of deduction of ₹ 50,000/- as allowed by the Assessing Officer under section 80P(2)(c), we find merit in the plea of the assessee that a co-operative society engaged in any business activity which is not otherwise eligible for deduction under section 80P(2)(a) or (b), in such a scenario, it is eligible for deduction to the extent of ₹ 50,000/- as per plain provisions of the Act. We also find that the action of the CIT(A) in withdrawing the aforesaid deduction without affording the opportunity to the assessee in this regard also offends the provisions of the Act as well as principles of natural justice. In the light of the aforesaid, we hold that the assessee is entitled to deduction under section 80P(2)(c)(ii) of the Act in respect of business activities such as running of Ambulance, Health Club fee etc. which are not eligible for deduction under section 80P(2)(a) or 80P(2)(b) of the Act. - Decided partly in favour of assessee
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