AI Drafter 
TaxTMI 
TaxTMI 
2019 (11) TMI 407
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....d in the circumstances of the case in exceeding his power under section 251(l) by bifurcating total income of Rs. 55,38,329 into Business Income under section 28 and Investment income under section 56 and accordingly calculated deduction under section 801?(2)(a)(i) and section 80(P)(2)(d) respectively, whereas the assessing officer has assessed whole income as business income of the Appellant and accordingly whole business income of Rs. 55,138,329 claimed under section 80P(2)(a)(i), has been disallowed by AO, without giving any notice and without giving any opportunity to heard. Without prejudice to the above: 2. The CIT (Appeal) erred in law and in the circumstances of the case in bifurcating total income and deduction of Rs. 55,38,329 claimed under section 80P(2)(a)(i) into two parts viz. section 80P(2)(a)(i) of Rs. 52,24,593 and section 80P(2)(d) of Rs. 3,13,796, without giving any notice or opportunity to the Appellant of being heard and to represent its case in this regard. 3. The CIT (Appeal) erred in law and in the circumstances of the case in treating interest earned on investment as investment income and not business income without taking into co....
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....lowing 90.66% of deduction u/s.80P(2)(d) of the Income-tax Act,1961 by way of interest from Fixed Deposit of Rs. 27,93,154/- and Dividend of Rs. 5,65,900/- from Co-operative Banks. 3. On the facts and circumstances of the case and in law, the Ld.CIT(A) has erred in allowing 90.66% of Guest House Rent of Rs. 62,350/- and Rs. 70,405/by way of sale of pass-book. 4. On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in not appreciating the fact that the assessee fulfills the conditions laid down u/s.56(c)(ccv) of Part V of Banking Regulation Act, 1949 and required to be considered as a co-operative bank and therefore, under the purview of a cooperative bank, assessee is not eligible for deduction u/s.80P(2)(a)(i) of the Act. 5. On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in ignoring the fact that the facts are different in this case than the judgment of Hon'ble Bombay High Court in the case of Quepem Urban Cooperative Credit Society Ltd. Vs. ACIT, dt.17.04.2015 (2015) 58 Taxmann.com 113(Bombay) and erred in not appreciating the fact that the assessee fulfills the conditions laid down u/s.56(....
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....onary 1. Gross receipts 5,93,07,839/- 33,59,054/- 1,32,755/- 2. Expenditure as claimed in the P & L A/c 5,37,69,510/- 30,45,318/- 1,20,356 3. Total Income 55,38,329/- 3,13,736/- 12,400 The expenditure for interest and other income is considered on pro-rata basis On the basis of the aforesaid facts, the CIT(A) observed that the claim for deduction under Sec. 80P that was raised by the assessee was to be compartmentalised into the following two parts: (i) Deduction u/s 80P(2)(a)(i) (including other income) Rs. 52,24,593/- (ii) Deduction u/s 80P (2)(d) (on account of interest on FD) Rs. 3,13,736/- Total Rs. 55,38,329/- In the backdrop of his aforesaid observations the CIT(A) separately examined the entitlement of the assessee towards claim for deduction under the provisions of Sec.80P(2)(a)(i) and Sec.80P(2)(d). 5. Insofar, the entitlement of the assessee towards claim of deduction under Sec. 80P(2)(a)(i) was concerned, the CIT(A) was of the view that a co-operative society which was carrying on the business of banking or providing credit facilities to its....
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....rt in the case of Totgars Cooperative Sale Society Ltd. Vs. ITO (2010) 322 ITR 283 (SC) observed, that the income earned by a co-operative credit society which was in the business of providing credit facilities to its members by investing its deposits during the time period the funds were not immediately required for its business purpose would be liable to be brought to tax under the head "Income from other sources" and accordingly, taxed under Sec.56 of the Act. On the basis of his aforesaid observations, the CIT(A) was of the view that the interest income earned by the assessee society from its investments with scheduled banks or co-operative banks would not be eligible for deduction under Sec 80P(2)(d) of the Act. Accordingly, the CIT(A) in the backdrop of his aforesaid deliberations concluded that the assessee would not stand entitled for deduction under Sec.80P of Rs. 3,13,736/-. To sum up, the CIT(A) concluded that the assesse‟s entitlement towards claim for deduction under Sec. 80P was to be confined to Rs. 52,12,193, to which it was entitled under Sec.80P(2)(a)(i) of the Act. 7. Both the assessee and the revenue being aggrieved with the order of the CIT(A) have car....
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....rders of the lower authorities and the material available on record, as well as the judicial pronouncements relied upon by them. As observed by us hereinabove, the A.O held a conviction that as the assessee was hit by provisions of Sec. 80P(4), therefore, it was not eligible to claim deduction under Sec. 80P(2)(a)(i). The claim of the assessee that it was a cooperative credit society providing banking/credit facilities only to its members and was not a cooperative bank providing banking/credit facility to the public at large did not find favour with the A.O. As is discernible from the records, the A.O was of the view that deduction under Sec.80P (2)(a)(i) in the case of cooperative credit society engaged in carrying on the business of banking (co-operative banks) was withdrawn by the legislature, vide the Finance Act, 2006 w.e.f 01.04.2007, except for in the case of a "primary agricultural credit society" or "a primary co-operative agricultural and rural development bank". Further, It was observed by the A.O, that the Explanation to Sec. 80P(4) clearly defined the expressions "co-operative bank", "primary agricultural credit society" and "primary cooperative agricultural and rural ....
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....an Credit Society Ltd. Vs. ACIT, (2015) 58 taxmann.com 113 (Bom). It was observed by the Hon‟ble High Court in its aforesaid judgment, that an assessee cannot be considered to be a co-operative bank for the purposes of Sec.80P(4) unless the following three conditions are satisfied: (i) the principal business or primary objective should be business of banking. (ii) its paid up share capital and reserves should not be less than rupee one lac. (iii) its bye laws do not permit admission of any other co-operative society as its member. In our considered view, the word "banking‟ means accepting for the purpose of lending or investment of deposits of money from the public, repayable on demand or otherwise and withdrawal by cheque, draft, order or otherwise. As in the case of a co-operative credit society the acceptance and lending of money is only from the members and not from the public, therefore, it can safely be concluded that the principal business or primary objective of the said co-operative credit society is not the business of banking. As such, the first condition mentioned hereinabove can safely be held to have not been satisfied by the ....
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....not be hit by the provisions of Sec.80P(4) of the Act. Apart there from, we find that the Tribunal in the assesses own case for A.Y 2014-15 viz. ITO-21(20(2) vs. M/s Mahapalika Kshetra Madhyamik Shikshak Sahakari Patsanstha (ITA No. 928/Mum/2018, dated 25.06.2019) had concluded that the assessee society was duly entitled for claim of deduction u/s 80P(2)(a)(i) of the Act. We thus not finding any infirmity in the order of the CIT(A), who had rightly concluded that the assesses claim for deduction under Sec. 80P(2)(a)(i) was in order, uphold his order in context of the issue under consideration. 12. The appeal of the revenue is dismissed. 13. We shall now advert to the appeal of the assessee. As observed by us hereinabove, it is the claim of the ld. A.R, that as the CIT(A) had absolutely at the back of the assessee bifurcated its entitlement towards claim of deduction under Sec.80P into two parts viz.(i) deduction under Sec.80P(2)(a)(i): Rs. 52,24,593/-; and (ii) deduction under Sec.80P(2)(d) Act: Rs. 3,13,736/-, therefore, the assessee was divested of any opportunity of meeting out the aforesaid view of the CIT(A), and also the consequential adverse inferences emerging therefr....
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.... the case in treating interest earned on investment as investment income and not business income. 3. The CIT (Appeal) erred in law and in the circumstances of the case in applying section 80(P)(2)(d) on interest income earned on investment and consequently disallowing deduction on the ground that interest income is from cooperative bank and not from cooperative society. 4. The CIT (Appeal) erred in law and in the circumstances of the case by not treating the whole income of Rs. 60,07,707 earned by the appellant society from engaging in the business of providing credit facilities to its members as per section 80P(2)(a)(i) but instead bifurcated the income of Rs. 60,07, 707 into business and investment income as stated in ground 1 above. 5. The CIT (Appeal) erred in law and in the circumstances of the case in exceeding his power under section 25 1(1) by. bifurcating total income of Rs. 60,07,707 into section 80P(2)(a)(i) and section 80(P)(2)(d) whereas the assessee has made a claim under section 80P(2)(a)(i) which the Assessing officer has disallowed as per the assessing order passed. 6. The Appellant craves to leave, add, alter, amend and / or del....
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....ction under Sec. 80P of Rs. 60,07,707/-. It was observed by the A.O, that pursuant to insertion of sub-section (4) of Sec.80P, vide the finance Act, 2006 w.e.f 07.04.2007, the provisions of Sec.80P were no more applicable to any co-operative Bank other than a Primary Agricultural Credit Society or Primary Co-operative Agricultural Rural Development Bank. On the basis of a conjoint reading of Sec.80P(2)(a)(i) r.w.s 80P(4) the A.O declined to allow the assessee claim for deductoin under Sec.80P of Rs. 60,07,707/-. In the backdrop of the aforesaid facts, the A.O after inter alia withdrawing the assesses entitlement towards deduction under Sec.80P assessed its income at Rs. 62,36,132/-. 19. Aggrieved, the assessee carried the matter in appeal before the CIT(A). The CIT(A) observed, that the A.O while framing the assessment had also made two additions/disallowances viz.(i) disallowance of personal expenditure:Rs. 68,425/-; and (ii) disllowance of gratuity : Rs. 1,00,000/-. As regards the assesses entitlement towards claim of deduction under Sec.80P was concerned, the CIT(A) followed the view that was taken by him while disposing off the appeal of the assessee for the immediately prec....
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....restored to the file of the CIT(A) with a direction to readjudicate the same after providing an opportunity of being heard to the assessee. 21. Per contra, the ld. D.R adverting to the appeal of the revenue submitted, that as the A.O on the basis of a conjoint reading of Sec.80P(2)(a)(i) r.w.s Sec.80P(4) had rightly declined the assesses claim for deduction under Sec. 80P of Rs. 60,07,707/-, therefore, the CIT(A) was in error in concluding to the contrary and dislodging the well reasoned order of the A.O. Insofar, the appeal of the assessee was concerned, the ld. D.R relied on the order of the CIT(A) to the extent he had concluded that the assessee was not to be allowed deduction under Sec.80P (2)(d) in respect of its interest income receipts during the year from FDs or other investments kept in the financial institutions or Banks. Also, the ld. D.R supported the declining of the assesses claim for deduction by the CIT(A) as regards its rental income or receipts from printing and stationery or income of such other natuare under Sec.80P(2)(a)(i) of the Act. 22. We have heard the authorised representatives for both the parties, perused the orders of the lower authorities, as we....