TMI Blog2023 (6) TMI 1206X X X X Extracts X X X X X X X X Extracts X X X X ..... ills collection services to its members under section 80P(2)(a)(i) of the Act and, the ld.CIT(A) hold has rightly disallowed the same. Set off expenses incurred for earning of incomes to which the assessee was denied deduction under section 80P(2) at the rate of 5% thereof - contention of assessee was that the estimation ought to have been done on reasonable basis and for such purpose, he requested the matter to be restored back - HELD THAT:-As find merit in the contentions of assessee that there has to be a reasonable basis for arriving at any estimation, and in the absence of any such basis being provided by the ld.CIT(A),restore this issue back to the ld.CIT(A) to estimate the expenses to be allowed against the income from other sources liable to tax on a reasonable basis. Ground of appeal is allowed for statistical purposes. - ITA No.1787/Ahd/2019 - - - Dated:- 29-3-2023 - SMT.ANNAPURNA GUPTA, ACCOUNTANT MEMBER Assessee by : Shri Dhrunal Bhatt, AR Revenue by : Shri B.P. Makwana, Sr.DR ORDER The present appeal has been filed by the assessee against order passed by the Commissioner of Income Tax(Appeals), Gandhinagar, Ahmedabad (in short referred t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income. 3. As transpires from order of the authorities below, the assessee is a cooperative credit society engaged in providing credit facilities to its Members. During the impugned year, it had claimed deduction under section 80P(2)(a)(i) of the Act totaling to Rs.32,20,178/- out of which the AO found that an amount of Rs.1,66,327/- was not eligible for deduction for the reason that same was not derived from the business of the assessee being either in the nature of interest earned from banks/ UGVCL or in the nature of commission income. The AO followed the decision of Hon ble jurisdictional High Court in the case of State Bank of India Employees Co-op Credit Supply Society Ltd. Vs. CIT, 389 ITR 578 (Gujarat) for concluding that the assessee had wrongly claimed deduction under section 80P(2)(a)(i) of the Act. Further, the AO also noted that interest income earned from banks had been reflected short by an amount of Rs.55,008/-, and accordingly added the same to the income of the assessee, holding at the same time that the assessee was not entitled to deduction under section 80P on the same also. 4. Aggrieved assesseecarried the matter in appeal before the ld.CIT(A) who up ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The ld.DR however supported order of the authorities below. 8. I have heard the rival contentions. The fact that the present case was limited scrutiny assessment, scope of which did not include examining whether any income remained to be disclosed by the assessee, is evident from the notice under section 143(2) of the Act issued to the assessee during the assessment proceedings, revealing the purpose of limited scrutiny undertaken in the case of the assessee, which was placed before me. The ld.DR was unable to controvert the said fact. Further, I have noted that the ITAT in several decisions has held that the AO cannot travel beyond the scope of the purpose for which limited scrutiny assessment was initiated as stated before us by the ld.counsel for the assessee and reproduced above. The ld.DR was unable to draw my attention to any contrary view on the issue nor was able to point out any distinguishing facts. 9. In view of the same, and the facts of the present case, the addition made on account of interest earned from bank by the assessee is set aside amounting to Rs.55,008/- as the same is beyond the scope of limited scrutiny assessment. The said action could not have b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd UGVCL for Rs.2,32,000/- is concerned, it is observed that Appellant Society has been providing services of bill collection of telephone and electricity and depositing such collected amount to such organizations and during such process, it has to keep fixed deposit with such organizations which entitled them to receive interest income. It is also observed that for providing such facilities Appellant has been earning commission income from such organizations and this activity of Appellant is one of the businesses carried out by Society, commission income as well as interest income form part of income from business and profession eligible for deduction under Section 80P(2)(a). He also contended that ITAT Ahmedabad Bench had allowed deduction to identical commission income earned by cooperative from providing bill collection facilities to members in the case of The Kabilpore Peoples Cooperative Credit Society Ltd. Vs ITO (ITA No. 160/A/2012 A.Y 2017-18, which was referred to before the Ld.CIT(A) also and reproduced at page 47 of the order. 13. The ld.DR, on the other hand relied on the order of the ld.CIT(A) that since the said incomes did not qualify as income from providi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as been unable to demonstrate before us as to how this income qualifies for deduction under clause (a) of section 80 P(2) of the Act. Therefore, I agree with the ld.CIT(A) that the assessee is not entitled to deduction of income earned from the activities of providing bills collection services to its members under section 80P(2)(a)(i) of the Act and, the ld.CIT(A) I hold has rightly disallowed the same. The decision relied upon by the Ld.Counsel for the assessee in the case of Kabilpore Peoples Society(supra) , I find allowed the assesses claim to deduction on the commission income earned not u/s 80-P(2)(a) of the Act but under the residuary clause 80P(2)(c) of the Act. The assessee in the present case before me , claiming deduction of the commission income u/s 80P(2)(a) of the Act, the said decision, I hold is of no assistance to the assessee. In view of the above, I uphold the order of the ld.CIT(A) confirming the disallowance of deduction under section 80P(2)(a)(i) of the Act on interest income earned from banks and others and commission income totalling in all Rs.1,66,327/-.Ground no.1 to 3 are dismissed. 15. The ground no.4.1 raised by the assessee is against the order o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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