2021 (7) TMI 631

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....se, whether the Pr.CIT was right in law in reopening the concluded assessment of the Appellant and annulling the same holding it to be erroneous and prejudicial to the interest of the Revenue and directing the Assessing Officer for making fresh assessment of income of the Appellant. 2. Whether the Pr.CIT was correct in holding that the interest on investments of Rs. 4,69,497/- earned by the Appellant does not qualify for deduction u/s 80P(2)(a)(i) of the Ac and it is taxable under the head `Income from other sources' u/s 56 of the Act in the light of the decision in - Totgars Sale Co-operative Society Ltd. v. ITO. 3. It is submitted that, the Pr.CIT grossly erred in law in passing the impugned order u/s 263 of the Act as t....

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....s of the appellant society which happens to be its business income (Interest from Loans) but wrongly taken while finalising the financial accounts under the head 'Interest on investments' and this income is also exempt u/s. 80P of the Act, it is submitted. 5. The appellant craves leave to add, to amend, modify and / or to alter any of the foregoing grounds and also urge such other grounds at the time of hearing." 3. Brief facts of the case are as follow:- The assessee is a primary agricultural credit society. For the assessment year 2015-2016, the return of income was filed on 30.10.2015 declaring `NIL' income after claiming deduction u/s 80P(2)(a)(i) of the I.T.Act. The assessment u/s 143(3) of the I.T.Act was comple....

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....6. The learned Departmental Representative also did not raise any objection for giving a similar direction in the instant case. 7. We have heard rival submissions and perused the material on record. The Hon'ble Apex Court in the case of Mavilayi Service Co-operative Bank Ltd. v. CIT (supra) had held that when the assessee is registered as a Co-operative Society under the respective State Acts, the interest income received for providing credit facilities to its members is entitled to deduction u/s 80P(2)(a)(i) of the I.T.Act. The relevant finding of the Hon'ble Apex Court reads as follow:- "45. To sum up, therefore, the ratio decidendi of Citizen Cooperative Society Ltd. (supra), must be given effect to. Section 80P of the IT Act....

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....l members' are 'members' as defined under the Kerala Act. This Court in U.P. Cooperative Cane Unions' Federation Ltd., Lucknow v. Commissioner of Income Tax, Lucknow-I (1997) 11 SCC 287 referred to section 80P of the IT Act and then held: "8. The expression "members" is not defined in the Act. Since a cooperative society has to be established under the provisions of the law made by the State Legislature in that regard, the expression "members" in Section 80-P(2)(a)(i) must, therefore, be construed in the context of the provisions of the law enacted by the State Legislature under which the cooperative society claiming exemption has been formed. It is, therefore, necessary to construe the expression "members" in Secti....