Is Cane Development Council A 'Local Authority' Or An 'AOP'? Delhi ITAT Remands Nanauta Parishad's Case For Fresh Examination

The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) has remanded to the Assessing Officer the case of Ganna Vikas Parishad, Nanauta, holding that the authorities below had not examined the constitution and activities of the taxpayer while sustaining an addition of Rs 32,91,119 and denying its claim of exemption.

Judicial Member C.N. Prasad observed that although he “could not find fault with the reasoning of the Ld. CIT(A) in sustaining the addition,” the authorities had failed to examine the nature of the assessee.

“However, in my considered view the authorities below have not examined the Constitution of the assessee, whether it is registered under societies registration Act or registered a trust etc, and none of the authorities have examined the activities of the assessee so as to ascertained whether the assessee is entitle to any deduction under any provisions of the Act,” the tribunal held.

The appeal was filed by Ganna Vikas Parishad for Assessment Year 2021–22 against the order of the CIT(A)/NFAC dated October 30, 2025.

The taxpayer, a Cane Development Council constituted under Section 5 of the U.P. Sugarcane (Regulation of Supply and Purchase) Act, 1953, filed its return declaring nil income. The case was selected for scrutiny. The Assessing Officer noticed that the Council had claimed a deduction under Section 80P(2)(b) of the Income Tax Act applicable for Association of Persons.

However, during assessment proceedings, the council submitted, by letter dated November 16, 2022 that due to a clerical mistake it had claimed deduction under Section 80P(2)(b), whereas it was actually entitled to an exemption under Section 10(20) of the Act.

The assessing officer rejected the claim under Section 10(20), holding that the provision applies to specified local authorities and that the assessee did not fall under the expression “local authority” to which Section 10(20) applies. The deduction under Section 80P was also denied, resulting in an addition of Rs 32,91,119.

The CIT(A) upheld the addition, noting that in earlier years the assessee had claimed exemption or deduction under different provisions and that for the year under consideration it had shown its status as “AOP/BOI” in the return.

Holding that the constitution and activities of the assessee had not been examined to ascertain whether it was entitled to any deduction under the Act, the Tribunal restored the matter to the file of the assessing officer “for making the assessment afresh after gathering all the details from the assessee and providing an opportunity to the assessee.”

The tribunal directed the assessee to cooperate in the proceedings before the Assessing Officer by filing all relevant and necessary documents to justify its claim. The appeal was allowed for statistical purposes.