AI Drafter 
TaxTMI 
TaxTMI 
2021 (12) TMI 554
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....rincipal Commissioner of Income Tax, Mysore, passed under section 263 of the Act in so far as it is against the appellant is opposed to law, weight of evidence, natural justice, probabilities, facts and circumstances of the appellant's case. 2. The notice issued for intimation of proceedings under section 263 of the Act, was bad in law. 3. The learned CIT is not justified in law in invoking the jurisdiction under section 263 of the Act and setting aside the order of the AO, as being "erroneous and prejudicial to the interest of the revenue", which is contrary to fact, on the facts and circumstances of the case. 4. The learned CIT is not justified in law in holding that the order passed by the Assessing Officer is ....
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....t prays that appeal may be allowed for the advancement of substantial cause of justice and equity." 3. The brief facts of the case are as follows: The assessee is a co-operative society registered under the Karnataka Co-operative Societies Act, 1959. It is engaged in providing credit facilities to its members and accepting deposits from its members. For the assessment year 2015- 2016, return of income was filed on 09.03.2016 declaring `NIL' income after claiming deduction u/s 80P(2) of the Act amounting to Rs. 15,17,065. The assessment was selected for scrutiny and assessment u/s 143(3) of the Act was completed on 18.12.2017. The A.O. had accepted the claim of deduction u/s 80P(2)(a)(i) of the Act amounting to Rs. 14,08,711 and 80P(2)....
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....arry on the business of banking. Therefore, it is held that the income of Rs. 7,59,337/- earned by the assessee by way of income from institutions (who are not its members) is not eligible for deduction u/s 80P(2)(a)(i) of the Act and also u/s 80P(2)(d) of the IT Act, 1961. Therefore, the AO is directed to disallow the claim of deduction u/s 80P(2)(d) amount into Rs. 7,59,337/-. 5. Further, the assessee claimed deduction u/s 80P(2)(c) amounting to Rs. 50,000/- on the interest received from Cooperative Societies. It is noted that the assessee is not eligible for deduction u/s 80P(2)(c) of the IT Act, 1961 as the assessee has already claimed deduction u/s 80P(2)(a)(i) of the IT Act, 1961. 6. Therefore, the assessment order p....
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.... heard rival submissions and perused the material on record. The main contention of the assessee is that interest income received from investments with Cooperative banks is entitled to deduction u/s 80P(2)(a)(i) of the Act. Alternatively it is contended that if interest income is to be assessed as income from other sources, necessarily, the cost incurred for earning such interest income ought to be allowed as deduction u/s 57 of the Act. As regards the main contention of the assessee, we find the Hon'ble jurisdictional High Court in the case of Totagars Co-operative Sale Society v.ITO reported in 395 ITR 611 (Kar.) had categorically held that interest income received on investment of surplus funds with Co-operative banks is to be assessed a....
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....r Section 56 of the Income Tax Act. Then the next immediate question that follows is as to whether the entire fund i.e., in deposit with the Bank is taxable or the proportionate expenditure incurred by the appellant requires deduction. It is logical that when the Revenue is permitted to assess and recover taxes from assessee under Section 56 by treating the income earned by interest as income from "other sources", the appellant shall be entitled for proportionate expenditure cost incurred in mobilizing the deposit placed in the Bank/s. What can be taxed is only the net income which the appellant earns after deducting cost and expenditure incurred and administrative expenses incurred by the assessee. 13. Accordingly, we answer the q....