TaxTMI 
TaxTMI 
2020 (10) TMI 416
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.... 2. The solitary issue argued was whether Principal Commissioner of Income Tax (PCIT) was justified in holding that the assessee was not entitled to deduction u/s 80P(2)(a)(i) of the Act, in respect of interest income earned from bank, by placing reliance on judgement of the Hon'ble Karnataka High Court in the case of PCIT Vs. Totagars Co-operative Sale Society reported in 395 ITR 611. 3. Brief facts of the case are as follows: Assessee is a primary Agricultural Credit Society. For the assessment year 2015-16, the return of income was filed on 18.9.2015 declaring total income of Rs. 2,12,090/- after claiming deduction of Rs. 29,88,544/- u/s 80P of the Act. The assessee's case was selected for scrutiny and an order of assessment u/s 1....
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....primary agricultural credit society as per the certificate of registration and thus, it was entitled to claim deduction u/s 80P(2)(a)(i) of the Act. On the issue regarding interest income earned from banks, the assessee contended that surplus funds for which there was no immediate need were deposited with the banks and interest income earned on such investments was to be considered as "income from business" since these funds were relating to business of providing credit facilities to the members. Therefore, the assessee was eligible for deduction u/s 80P(2)(a)(i) of the Act in respect of the interest income received from banks. 4. The PCIT accepted the assessee's contentions that it is a primary agricultural credit society and it was ....
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....red were deposited with the bank and interest income was earned. It was contended that the interest income so earned has to be necessarily considered as "income from business" and not "income from other sources". Further, the Ld. A.R. submitted that the assessing officer had followed the principle laid down by the judgement of the Hon'ble jurisdictional High Court in the case of Tumkur Merchant Southara Crdit Co-operative Society Ltd. (supra), hence the assessment order cannot be said to be erroneous and prejudicial to the interest of the revenue. Therefore, it was prayed that the revisionary order passed u/s 263 of the Act is to be quashed. 6. The Ld. D.R. on the other hand by referring to the assessment order submitted that there has b....
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....r all the assessment years were identical. The bone of contention of the assessee in AYs 2007-08 to 2011-12 was that deduction u/s. 80P(2)(a)(i) of the I.T. Act is claimed by the respondent-assessee u/s. 80P(2)(d) of the I.T. Act and not u/s. 80P(2)(a)(i) of the I.T. Act which was claimed in AYs 1991-92 to 1999-2000. The reason given by the assessee was that in AYs 2007-08 to 2011-12 investments in deposits, after the Supreme Court judgment went against the assessee, were shifted from scheduled banks to co-operative banks. As per section 80P(2)(d) of the I.T. Act, income by way of interest or dividend derived by a co-operative society from his investments with any other co-operative society is entitled to deduction of the whole of such i....