Thursday, 13 December 2018

ITAT : ‘Net’ commission receipts, not ‘gross’ qualifies for Sec. 80P deduction

Pune ITAT denies deduction u/s. 80P(2)(a)(i) to assessee (a Co-operative society engaged in banking business) in respect of ‘gross’ commission receipts (arising on account of collecting electricity charges for & on behalf of MSEB) for AY 2012-13; ITAT holds that since the amount of gross receipt from MSEB commission is less than the amount of expenses incurred for earning such commission, there can be no distinct deduction u/s. 80P because of the negative income earned by assessee from this activity; Referring to Sec. 80AB, ITAT rules that where deduction is required to be made u/s. 80P (which is covered under Chapter-VI-A), it is ‘the amount of income of that nature as computed in accordance with the provisions of the Act’, which shall be considered as eligible for deduction; Thus, ITAT holds that the eligible amount for deduction can be the `income’ and not the `gross receipts’ from the specified source; Relies on SC ruling in Motilal Pesticides (I) (P) Ltd and Bombay HC ruling in Asian Cable Corporation Ltd. rendered in context of Sec. 80HH / Sec. 80-O deductions.:

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