TaxTMI 
TaxTMI 
TaxTMI 
2021 (9) TMI 232
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....aim deduction u/s 80P(2)(d) of the Act in respect of interest on fixed deposits earned from Co-operative bank. 3. The learned PCIT ought to have appreciated that the Assessing Officer has allowed deduction u/s 80P(2)(d) of the Act after considering the detailed replies filed by the appellant society during the course of assessment proceedings. 4. The learned PCIT ought to have appreciated that the view adopted by Assessing Officer cannot be said to be unsustainable or impossible view. Disallowance u/s 40(a)(ia) of the Act 5. The learned PCIT ought to have appreciated that the provisions of S. 40(a)(ia) of the Act are not applicable to the appellant society as it does not have any business income nor it has claimed any deduction on account of business expenditure. In any case, the issue of disallowance u/s 40(a)(ia) was not within the limited scrutiny jurisdiction and hence could not have been made base of revision u/s 263 of the Act. The appellant crave leave to add, to alter and/or amend the afore stated grounds of appeal." 2. Briefly stated, the assessee society had filed its return of income for A.Y. 2015-16 on 28.09.2015, declaring an income of Rs. 12,25,020/-. The re....
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....the ld. A.R that now when the jurisdiction of the A.O qua the assessment in question was limited to scrutinizing/examining the assessee's claim for deduction under Chapter VI-A of the Act, therefore, the assessment order passed by him u/s 143(3), dated 31.08.2017 could not have been held to be erroneous, for the reason, that he had failed to make a disallowance u/s 40(a)(ia) of the Act. In this regard, we may herein clarify that on a specific query by the bench it was stated by the ld. A.R that the case of the assessee at no stage was converted into full scrutiny with the approval of the CIT/Pr.CIT. Backed by the aforesaid facts, we are of a strong conviction that now when the jurisdiction of the A.O while framing assessment was in itself circumscribed and limited qua examination of the assessee's claim for deduction under Chapter VI-A of the Act, therefore, by no means the Pr. CIT could have held the order passed by the A.O u/s 143(3), dated 31.08.2017 as erroneous, for the reason, that he had not carried out an addition/disallowance which fell beyond the realm of the reasons on the basis of which the assessee's case was selected for limited scrutiny. In sum and substance, what th....
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.....O had aptly confined himself to the issue for which the case of the assessee was selected for limited scrutiny, therefore, no infirmity can be attributed to his order, for the reason, that he had failed to dwell upon certain other issues which were clearly beyond the realm of the reason for which the case of the assessee was selected for limited scrutiny as per the AIR information. We thus not being able to concur with the view taken by the Pr. CIT that the order passed by the A.O under Sec. 143(3), dated 10.10.2016 is erroneous, therefore, set aside his order and restore the order passed by the A.O. As we have quashed the order passed by the Pr. CIT under Sec. 263 on the ground of invalid assumption of jurisdiction by him, therefore, we refrain from adverting to and therein adjudicating the contentions advanced by the ld. A.R on the merits of the case, which thus are left open." Accordingly, in the backdrop of our aforesaid deliberations, we are unable to persuade ourselves to accept the view taken by the Pr. CIT that the order passed by the A.O u/s 143(3), dated 31.08.2017 was erroneous, for the reason, that he had failed to carry out disallowance of certain expenses u/s 40(a)(....
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....nsideration to the contentions advanced by the ld. Authorized representatives for both the parties in context of the aforesaid issue under consideration. As stated by the ld. A.R, and rightly so, the issue that interest received by a co-operative society on its deposits with co-operative banks would be eligible for deduction u/s 80P(2)(d) of the Act is covered in assessee's favour by orders of the various coordinate benches of the Tribunal in the following cases : (i). M/s Solitaire CHS Ltd. Vs. Pr.CIT-26, Mumbai, ITA No. 3155/Mum/2019, dated 29.11.2019 (ii). Land and Cooperative Housing Society Ltd. Vs. ITO (2017) 46 CCH 52 (Mum.) (iii). M/s C. Green Cooperative Housing and Society Ltd. Vs. ITO-21(3)(2), Mumbai (ITA No. 1343/Mum/2017, dated 31.03.2017. (iv). Marvwanjee Cama Park Cooperative Housing Society Ltd. Vs. ITO-Range 20(2)(2), Mumbai (ITA NO. 6139/Mum/2014, dated 27.09.2017. (v). Kaliandas Udyog Bhavan Pemises Co-op. Society Ltd. Vs. ITO, 21(2)(1), Mumbai. In the aforesaid orders, it has been held by the Tribunal that though the co-operative banks pursuant to the insertion of sub-section (4) to Sec. 80P of the Act would no more be entitled for claim of deduction....
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....relevant extract of the aforesaid statutory provision, viz. Sec. 80P(2)(d), as the same would have a strong bearing on the adjudication of the issue before us. "80P(2)(d) (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)............................................................................................ (b)............................................................................................ (c)............................................................................................ (d) in respect of any income by way of interest or dividends derived by the co-operative society from its investments with any other co-operative society, the whole of such income;" On a perusal of Sec. 80P(2)(d), it can safely be gathered that interest income derived by an assessee co-operative society from its investmen....
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....uld be entitled for claim of deduction under Sec. 80P(2)(d) on the interest income derived from its investments held with a co-operative bank is covered in favour of the assessee in the following cases: (i) Land and Cooperative Housing Society Ltd. Vs. ITO (2017) 46 CCH 52 (Mum) (ii) M/s C. Green Cooperative Housing and Society Ltd. Vs. ITO-21(3)(2), Mumbai (ITA No. 1343/Mum/2017, dated 31.03.2017 (iii) Marvwanjee Cama Park Cooperative Housing Society Ltd. Vs. ITO-Range-20(2)(2), Mumbai (ITA No. 6139/Mum/2014, dated 27.09.2017. (iv). Kaliandas Udyog Bhavan Pemises Co-op. Society Ltd. Vs. ITO, 21(2)(1), Mumbai. We further find that the Hon'ble High Court of Karnataka in the case of Pr. Commissioner of Income Tax and Anr. Vs. Totagars Cooperative Sale Society (2017) 392 ITR 74 (Karn) and Hon'ble High Court of Gujarat in the case of State Bank Of India Vs. CIT (2016) 389 ITR 578 (Guj), had held, that the interest income earned by the assessee on its investments with a co-operative bank would be eligible for claim of deduction under Sec. 80P(2)(d) of the Act. Still further, we find that the CBDT Circular No. 14, dated 28.12.2006, also makes it clear beyond any scope of do....
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....cooperative society on its investments held with a co-operative bank would be eligible for claim of deduction under Sec.80P(2)(d) of the Act. 9. Be that as it may, in our considered view, as the A.O while framing the assessment had taken a possible view, and therein concluded that the assessee would be entitled for claim of deduction under Sec. 80P(2)(d) on the interest income earned on its investments/deposits with co-operative banks, therefore, the Pr. CIT was in error in exercising his revisional jurisdiction u/s 263 for dislodging the same. In fact, as observed by us hereinabove, the aforesaid view taken by the A.O at the time of framing of the assessment was clearly supported by the order of the jurisdictional Tribunal in the case of Land and Cooperative Housing Society Ltd. Vs. ITO (2017) 46 CCH 52 (Mum). Accordingly, finding no justification on the part of the Pr. CIT, who in exercise of his powers under Sec. 263, had dislodged the view that was taken by the A.O as regards the eligibility of the assessee towards claim of deduction under Sec. 80P(2)(d), we 'set aside' his order and restore the order passed by the A.O under Sec. 143(3), date 14.09.2016. As the facts and the....