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2021 (8) TMI 152

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....ome of Rs. Nil. The return was processed u/s 143(1) of the Income Tax Act, 1961 (in short 'Act'). Subsequently, the case was selected for scrutiny under CASS selection. Accordingly, statutory notices u/s 143(2) and 142(1) were issued and served on the assessee. In response, the AR of the assessee attended and filed the relevant information as called for. Subsequently, the assessment u/s 143(3) of the Act was completed on 19.12.2016, in the return of income assessee had claimed deduction u/s 80P of the Act to the extent of Rs. 15,02,44,211/- and the Assessing Officer allowed the above deduction claimed by the assessee u/s 80P and the total income was assessed at Rs. 20,76,874/- 3. The Ld. Pr. CIT-29, Mumbai on verification of the order pas....

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.... dated 19.12.2016 appear to be prima facie erroneous and prejudicial to the interest of revenue. Accordingly, he issued notice u/s 263 of the Act to the assessee with the above facts on the record and assessee was asked why the assessment order passed u/s 143(3) should not be revised u/s 263 of the Act. In response to the above show cause notice, assessee filed the following submissions before Ld. Pr. CIT, for the sake of clarity is reproduced below : "Explanation : 1- Regarding taxability of interest income received from co-operative banks. Shivkripa Sahakan Patpedhi Ltd is a registered co-operative society, registered by the Registrar of co-operative societies, Mumbai. The main object of the society is providing credit facilities to i....

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....then has obtain banking licence from RBI. As per MSC Act 1960 we have to kept 30% of deposit accepted from our members as liquidity for repaying deposits on demand or on maturity. We have invested his 30% amount in these banks. Hence investment is for our business purpose. Totgar Co-operative Sale Society case given in the letter is totally different in respect of our society's case. It is engaged in business ofmarketing of agricultural produce of its members. 4. After considering the submissions of the assessee, Ld. Pr. CIT rejected the submissions of the assessee and observed that the assessee had received interest income on bank deposits and other income during the relevant assessment year and this income was not offered by the ....

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....tion u/s 263 of the ITA, 1961 on the analogy that the order passed u/s 143(3) of the ITA, 1961 dated 19/12/2016 was erroneous and prejudicial to the interest of the revenue. 2. The learned PCIT-29, Mumbai erred in law and on facts in not appreciating that all the details / information relating to interest income and commission earned from Insurance, MSEB Bill and DD; were submitted during the scrutiny proceeding u/s 143(3) of the ITA, 1961 on 18/11/2016, and were duly verified by the learned AO, As such order u/s 143(3) of the IT Act, 1961 is neither erroneous nor prejudicial to the interest of the revenue, 3. The learned PCIT-29, Mumbai erred in law and on facts in holding that following income ought to have been offered under "Income ....

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....CIT in 263 order, he submitted that this issue is already covered by the decisions of Hon'ble Karnataka High Court in Guttigedarara Credit Co-operative Society Ltd. v. Income Tax Officer, Ward 2(2), [2015] 60 taxmann.com215 (Karnataka) that the income earned by assessee by providing credit facilities to its members was deposited in banks for a short duration which earned interest. The Hon'ble High Court has allowed the interest income earned by the assessee on such deposits with the banks. Similarly, he brought to our notice 89 of the Paper Book to submit the Hon'ble Karnataka High Court in the case of TumkurMerchants Souharda Credit Co-operative Ltd. v. Income Tax Officer Ward-V [2015] 55 taxmann.com 447 (Karnataka) submit that Cooperative....