IN INCOME TAX APPELLATE TRIBUNAL BENCH, CHENNAI, [BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI D.S. SUNDER SINGH, ACCOUNTANT MEMBER] . I.T.A.No.1084 Mds 2016 Assessment year : 2008-09 Dy. Commissioner of Vs. M s Tamilnadu Co-operative Income Tax Marketing Federation Ltd Non-Corporate Circle 3 No.713, Mount Road Chennai Chennai 600 006 [PAN AABAT 4288 M] ( Appellant) ( Respondent) Appellant by : Shri Shiva Sriivas, JCIT Respondent by : None Date of Hearing : 21-09-2016 Date of Pronouncement : 30-09-2016 ORDER PER D.S. SUNDER SINGH, ACCOUNTANT MEMBER This appeal of Revenue is directed against order of Commissioner of Income-tax (Appeals)-4, Chennai, dated 11.1.2016 for assessment year 2011-12. 2. At outset, it was noted that none attended on behalf of assessee despite service of notice through Department. Therefore, we proceed to decide appeal after hearing ld. DR and considering material available on record. :-2-: ITA No.1084 16 3. Condonation of delay: There was delay of seven days in filing appeal. appellant (DCIT, Non corporate circle-3,Chennai) has filed condonation petition requesting for condoning delay. We have gone through petition and condone delay. 4. Revenue s grounds of appeal are related to deduction u s 80P(2)(d) of Income-tax Act, 1961 (in short Act ) in respect of income from other sources and deduction u s.80P(2)(e) in respect of income from house property. 5. assessee is Co-operative Society formed by Government of Tamilnadu. return of income admitting NIL income was filed on 29.9.2011. case was selected for scrutiny and assessment was completed on total income of `1,54,78,657 -. assessee admitted sum of Rs.1,19.86,609 - under Income from other sources, and Income property amounting to Rs.35,52,888 - aggregating to `1,54,78,657 - and claimed set off of entire income against business losses. During assessment proceedings assessing officer raised objection regarding incorrect claim of set off of losses (i.e. Set off of business losses against income from other sources and income from property) u s 72. During course of assessment proceedings, assessee made alternate claim of deduction u s :-3-: ITA No.1084 16 80P(2)(a)(iv) in respect of business income and 80P(2)(e) in respect of property income. In assessment order Assessing Officer has rejected claim made by assessee and assessed total income at Rs.1,54,78,657 - 6. During assessment proceedings Assessing Officer observed that assessee whenever incurred business losses during particular year, set off business losses against income from other heads and carry forwarded business loss to subsequent assessment years. Similarly, whenever assessee earned income from business sets off income with brought forward business losses which was not permitted as per Income-tax Act, 1961. claim of deduction u s 80P was rejected by Assessing Officer because assessee has not made claim in return of income and claim was made subsequently during course of assessment proceedings. Assessing Officer was of opinion that claim made during course of assessment proceedings cannot be entertained and relied on judgment of Hon'ble Supreme Court in case of Goetze (India) Ltd vs CIT, 284 ITR 323. 7. Aggrieved by order of Assessing Officer, assessee went in appeal before CIT(A). Ld. CIT(A) deleted :-4-: ITA No.1084 16 addition holding that assessee is permitted to make claim during course of assessment proceedings or before first appellate authority. CIT(A) relied on judgment of Hon'ble Bombay High Court in case of CIT vs Pruthvi Brokers & Shareholders Pvt. Ltd. wherein it was held that taxpayer is entitled to claim deduction before appellate authorities which was not claimed in original or revised income tax return but was claimed in assessment and appellate proceedings. CIT(A) also relied on decision of Hon'ble Supreme Court in case of Jute Corporation of India Ltd vs CIT, 187 ITR 688. CIT(A) allowed claim of assessee u s 80P(2)(d) and 80P(2)(e) as per Para 10 o f his order which is extracted as under: 1 0. I find force in above submissions of appellant. interest income earned on investments with other co-operative societies and cooperative banks is eligible for deduction u s 80 P(2)(d) of Act and similarly income derived from letting out of properties of societies covered under section 80P(2)( e ) of Act. AO has not controverted nature of these income during assessment proceeding. Simply because assessee has not claimed deduction under section 80P in return of income, assessee cannot be deprived of genuine and bonafide claim of deduction u s 80P of Act. Therefore, in view of above observations and also respectfully following judgements of Hon'ble Courts, I am of :-5-: ITA No.1084 16 considered view that assessee's claim of deductions u s 80P(2)(d) & (e) are legitimate and bonafide which must be allowed by AO. Hence, AO is directed to allow claim of assessee for deduction u s 80 P of Act. Accordingly, findings given by AO are rejected. 8. ld. DR argued that assessee has not made any claim in return of income and accordingly not allowable and supported assessment order. None appeared for respondent. 9. We heard rival submissions and perused material placed on record. assessee is earning income and making investments with other co-operative banks which are eligible for deduction u s 80P(2)(d) of Act. Similarly, income derived from letting out of properties of society is covered u s 80P(2)(e) of Act. assessee did not make any claim in return of income u s 80P since there was no taxable income as per return submitted by assessee. Therefore, when Assessing Officer has raised objection for taxing income disallowing set off of losses, assessee has naturally claimed deduction u s 80P since disallowance would be resulting in taxable income. As decided by Bombay High Court in case of Pruthvi Brokers & Shareholders Pvt. Ltd.(supra) and Hon'ble Supreme Court in :-6-: ITA No.1084 16 case of Jute Corporation of India Ltd (supra), there is no bar on appellate authorities to entertain additional claim during appeal proceedings. Therefore, we do not find any infirmity in order of CIT(A) and CIT(A) has rightly allowed claim of assessee. However in grounds of appeal assessing officer has raised issue of non verification of income in respect of income from other sources and income from property whether it was earned from investments in other cooperative societies or not and letting out of godowns and warehouses. Since assessing officer has disallowed entire claim made by assessee, there was no occasion to verify correctness of claim for deduction u s 80P. assessee also has not placed any material before us. Therefore we remit matter back to assessing officer for limited purpose to verify income from other sources whether it was earned out of investments in other cooperative societies or not and in case of property income whether it was earned from letting out of godowns as claimed by assessee and decide issue as per law. assessee is directed furnish information to AO to complete proceedings. grounds raised by Revenue are allowed for statistical purposes.. :-7-: ITA No.1084 16 10. next ground raised by Revenue is related to Rule 46A. This ground is raised by Revenue because alternative ground raised was not subject matter of assessment proceedings. Since we remitted matter back to assessing officer this ground is infructuous Therefore, this ground is dismissed. 11. In result, appeal of Revenue is partly allowed for statistical purposes. Order pronounced in open court on 30th September, 2016, at Chennai. Sd - Sd - ( . ) ( . . ) (N.R.S. GANESAN) (D.S. SUNDER SINGH) JUDICIAL MEMBER ACCOUNTANT MEMBER Chennai Dated: 30th September, 2016 RD Copy to: 1. Appellant 4. CIT 2. Respondent 5. DR 3. ( ) CIT(A) 6. GF Dy. Commissioner of Income-tax, Non-Corporate Circle 3, Chennai v. M/s Tamilnadu Co-operative Marketing Federation Ltd