Home Income tax Corporate Income tax Tax Deduction U/S 80P Cannot Declare If Earnings Made Through Business Exercise

Tax Deduction U/S 80P Cannot Declare If Earnings Made Through Business Exercise

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Tax Deduction U/S 80P Cannot Declare If Earnings Made Through Business Exercise
Ahmedabad ITAT's Order for Jetalpur Seva Sahkari Mandali Ltd

The Earnings Tax Appellate Tribunal (ITAT), the Ahmedabad bench has dominated that revenue generated from industrial exercise can’t be deducted underneath Part 80P of the Earnings Tax Act, 1961.

The assessee, Jetalpur Seva Sahkari Mandali Ltd., filed an revenue tax return for the evaluation yr 2017-18, declaring an mixture revenue of Rs. 21,52,910/-. The return was carried out underneath Part 143(1) of the Earnings Tax Act, and the case was chosen for scrutiny attributable to a major deduction declare underneath Chapter VI.

It was famous by the Assessing Officer that the assessee had claimed a deduction of Rs. 33,21,232/- underneath Part 80P, together with curiosity revenue of Rs. 9,43,000/- from its Petrol Pump department enterprise. The officer requested an evidence from the assessee relating to the eligibility of the curiosity revenue for deduction underneath Part 80P of the Earnings Tax.

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In response, the assessee said that the first perform of the pinnacle workplace division was to offer financing, and thus, the curiosity revenue of Rs. 9,43,000 from the Pump Division certified for deduction underneath Part 80P(2)(a) of the Earnings Tax Act.

In line with the authorised consultant (AR), the attraction was delayed by 103 days, nevertheless it was thought of authentic and accepted.

Moreover, it was said that the pinnacle workplace division engaged in numerous actions for its members, comparable to promoting fertilisers, seeds, and agricultural gear, in addition to offering unique entry to credit score financing. Part 80P of the Earnings Tax Act permits for deductions in numerous sorts of such actions.

The Departmental Consultant argued that the curiosity revenue was clearly related to the industrial operation of the Pump Division and shouldn’t be exempt from taxation underneath Part 80P.

Moreover, it was argued that the taxpayer didn’t qualify as a Client Cooperative Society since its members didn’t use the merchandise it offered, comparable to petrol and diesel. The Commissioner of Earnings Tax (Enchantment) upheld the order of the Assessing Officer of denying the deduction underneath Part 80P(2)(a)(i) of the Earnings Tax Act.

The bench, consisting of a single member, Suchitra Kamble (Judicial Member), concluded that the actions carried out by the Pump Division have been totally taxable and didn’t fall underneath Part 80P of the Earnings Tax Act.

Subsequently, the assessee’s declare for deduction underneath Part 80P in relation to the Pump Division was rightfully denied by each the Assessing Officer and the Commissioner of Earnings Tax (Enchantment). Because of this, the assessee’s attraction was dismissed.

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