Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2021 (11) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2021 (11) TMI 50 - AT - Income TaxAddition of gross profit instead of net profit from the sale of Ghee - apportion the expenses to different activities for determining the net profit - assessee is engaged in the trading activity of Ghee which is not possible without incurring the indirect/administrative expenses - HELD THAT:- As it is not possible for any organization to run its activities without incurring the basic expenditures. Likewise, the assessee among other activity, is also carrying out the activity of trading in Ghee which is not possible to run without incurring the administrative expenses. The assessee is engaged in multiple activity and some of the activity are eligible for deduction u/s 80P - some of the activity of the assessee are taxable. But the assessee is maintaining common books of accounts, common infrastructure, common facilities, manpower etc. Thus in such a situation, the only option available to the assessee is to apportion the expenses to different activities for determining the net profit of each activity. Accordingly, we are not convinced with the finding of the authorities below by treating the gross profit as taxable income of the assessee. It was the duty of the revenue to pinpoint the infirmity in the expenses apportion by the assessee towards the activity under consideration. To our understanding, all the expenses apportion by the assessee cannot be ignored without bringing any cogent reason on record. Hence, we set aside the finding of the CIT (A) and direct the AO to take the net profit declared by the assessee as taxable income and delete the amount over and above such taxable income of the assessee. Hence the ground of appeal of the assessee is allowed. Non granting the deduction provided u/s 80P (2)(c)(ii) - CIT (A) observed that the activity of the assessee falls under clause (b), therefore the assessee cannot claim the deduction u/s 80P(2)(c)(ii) - HELD THAT:- As coordinate bench of Hyderabad Tribunal in case of Film Nagar Co-operative Society Ltd . [2002 (7) TMI 233 - ITAT HYDERABAD-B] by following the judgment in case of CIT vs. Ratanabad Co-operative Housing Society Ltd. [1994 (12) TMI 31 - BOMBAY HIGH COURT] held that “The expression 'profits and gains' in clause (c) of sub-section (2) of section 80P is not confined to 'Profits and gains of business' under clause (a)”. Thus, in case of co-operative credit society, income to which benefit of section 80P(2)(a)(i) is not allowed, e.g., rental income, interest income from surplus funds kept in FDs' of banks, etc., basic exemption of ₹ 50,000/- as provided for in section 80P(2)(c)(ii) must be granted. It appears that, though the word 'activity' is not defined, yet the investment activity, activity of renting of immovable property, trading of Ghee etc., and the consequent income attributable to such activities would be covered u/s 80P(2)(c). Hence, we set aside the finding of the learned CIT (A) and direct the AO to allow the deduction to the assessee under the provisions of section under section 80P(2)(c)(ii) of the Act. Hence the ground of appeal of the assessee is allowed.
|