TaxTMI 
TaxTMI 
2020 (12) TMI 222
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....de intention on the part of assessee not to file the appeal on time before this Tribunal. Since we find that there was no reason for the assessee not to file an appeal on time, we are of the opinion that the assessee should not be penalized for the lackadaisical attitude shown by the accountant, so in the interest of justice, after hearing the Ld. D.R, we condone the delay and proceed to hear the appeal on merits. 3. By preferring Ground nos. 1 and 2, the assessee bank has assailed the action of Ld PCIT to have invoked the revisional jurisdiction u/s 263 of the Act without satisfying the condition precedent as prescribed in the Statute. According to assessee, on a perusal of the impugned order it could reveal that the twin condition required for invoking revisional jurisdiction is absent. According to assessee, the only issue that has been found fault by the PCIT is that before passing the assessment orders, the Assessing Officer did not make adequate enquiry in respect of interest earned amounting to Rs. 4,55,000/- from Bond of NABARD which according to Ld PCIT cannot be claimed as deduction u/s 80P of the Act. So he issued show cause notice (SCN) to the assessee conveying his in....
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.... of the Act and discussed in detail about this in a similar case of an assessee like Bank which are re-produced (only relevant portion) as under: "............................. 80P. Deduction in respect of income of co-operative societies. - (1) Where, in the case of an assessee being a co-operative society, the gross total income includes any income referred to in sub-section (2), there shall be deducted, in accordance with and subject to the provisions of this section, the sums specified in sub-section (2), in computing the total income of the assessee. (2) The sums referred to in sub-section (1) shall be the following, namely :- (a) in the case of a co-operative society engaged in- (i) carrying on the business of banking or providing credit facilities to its members, or (ii) a cottage industry, or (iii) the marketing of agricultural produce grown by its members, or (iv) the purchase of agricultural implements, seeds, livestock or other articles intended for agriculture for the purpose of supplying them to its members, or (v) the processing, without the aid of power, of the agricultural produce of its members, or (vi) the collective disposal of the labour of....
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.... provisions of chapter VI-A is in terms of the provisions of the Act with special reference to section 80B(5) read with Section 80AB of the Act and is the net figure. 49. Section 80P(2)(a)(i) of the Act permits a co-operative society engaged in carrying on the business of banking or providing credit facilities to its members to claim deduction of the whole of the amount of profits and gains of business attributable to such activity, viz, business of banking or providing credit facilities to its members. On a plain reading, it becomes apparent that the two activities are distinct and separate activities. The first activity viz. carrying on the business of banking connotes a larger activity than the activity of providing credit facilities to its members. The latter is restricted qua the members of the society while the former is wide enough to take within its sweep as its potential customers both members and non-members. The interpretation canvassed by the Revenue that the latter phrase has a restrictive effect on the former expression "business of banking" ignores the word "or" which occurs between the two phrases. There is no warrant for reading the word "or" as "and". Once t....
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.... at periodical intervals as stipulated by the BR Act. Similarly, the accounts of the society, including the balance-sheet, are required to be prepared in the manner specified and are subject to inspection, audit and regulation by the Reserve Bank of India. These provisions indicate an entity carrying on business of banking is not absolutely or wholly free; is amenable to supervision / regulation. In other words, its investments are subjection to scrutiny; and any impermissible investment will not be permitted to continue, if made, by the regulator, i.e. the Reserve Bank of India. 66. In the case of Punjab Co-operative Bank Ltd. vs. CIT [1940] 8 ITR 635 the Privy Council stated (headnote): "In the ordinary case of a bank the business consists in its essence of dealing with money and credit. The banker has always to keep enough cash or easily realisable securities to meet any probable demand by depositors, and if some of the securities are realised in order to meet withdrawals by depositors, this is clearly a normal step in carrying on the banking business, in other words, it is an act done in what is truly the carrying on of the banking business." 67. This view was reiterated wi....
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....zable securities. The twin objectives as laid down by this Court is not to lose interest by keeping the funds idle and invested in securities so as to encash them readily in the case of need. This is in consonance with the definition of the term "banking". The deposits are accepted as payable on demand or otherwise, and also permitting withdrawal by cheques and other prescribed modes. 70. However, the business of banking is primarily a business in trust, a business of putting trust in a banker. How does a bank ensure that the customer places trust. It has to offer not only good returns but also safety and liquidity. In other words, the depositor must be ensured that the depositor will get good returns on its deposit, the deposits would be safe and deposits would be available for withdrawal as and when required, subject to the terms of the contract between the parties. It is in this context that the requirement of investment being in easily realisable securities or money being readily available for meeting the demand made by the depositor is taken as the touchstone of the business of banking. 71. The depositor is not aware of the definition of the term "banking" as provided unde....
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....ion under Chapter VI-A; (vi) In the case of an assessee, like the present assessee, all interest income, actually received or accrued, has to be computed in the manner provided in the Act so as to form the total income which is subjected to charge under Section 4 of the Act; (vii) The order of the Apex Court cannot and should not be construed in a manner so as to be inconsistent with the provisions of the statute as the apex court could not have contemplated passing an order contrary to the provisions of the Act; (viii) Thus the direction by the Supreme Court can only mean ascertainment of utilization of net income of earlier years, which forms part of the funds which are invested, and given the nomenclature of voluntary reserves; (ix) Under Section 80P(2)(a)(i) of the Act the two activities viz., business of banking or providing credit facilities to its members, are distinct and separate activities; the former connotes a larger activity than the activity of providing credit facilities to its members; (x) The provision of section 80P has been introduced on the statute book to encourage and promote growth of the co-operative sector in the economic life of the country; (x....