AI Drafter 
TaxTMI 
TaxTMI 
2022 (2) TMI 1274
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.... sec.263 of the Income-tax Act, 1961 even though order passed by Ld. AO is neither erroneous nor prejudicial to the interest of the revenue and order u/s 143(3) was passed after detailed consideration and application of mind. 2. That having regard to the facts and circumstances of the case, the Hon'ble CIT, is erred in law and on facts in making disallowing deduction of Rs.5,45,649/- u/s 80P(2)(a)(i) of the Act on account of interest earned from banks without considering the submissions of the assessee and without considering the fact that assessee society is in the business of banking. 3. That the appellant craves the leave to add, modify, amend or delete any of the grounds of appeal at the time of hearing and all the above grounds are without prejudice to each other." 2. Brief facts of the case are that the assessee is a Co-operative Society engaged in the business of providing credit facility to its members. The Ld. Pr. CIT has noted that for the assessment year 2013-14, the assessment order had been framed on 18.01.2016, under section 143(3) of the Income Tax Act, 1961 (hereinafter refer to as The Act'), assessing the total income at NIL by the Assessing Of....
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....ng credit facilities to its members" nor the same was "interest from any other co-operative society''. iv. The provisions of section 80P(2)(d) of the Income Tax Act, 1961, clearly provide deduction on interest from investment with any other Co-operative Society only whereas the above referred interest income has not been earned from any Co-operative Society. In this connection, reliance is placed on the judgment of the Hon 'ble Punjab and Haryana High Court, in the case of Commissioner of Income Tax Vs M/s Punjab State Co-operative Federation of Housing Building Societies Ltd., in ITA No. 643 of 2010, wherein the Hon'ble High Court, following the judgment of Hon'ble Supreme Court, in the case of The Totgars Co-operative Sale Society Ltd. Vs ITO 2010(35) DTR 25, have held that interest received by the assessee from Commercial banks was not covered by Section 80P(2)(a)(i) of the Act and was taxable under section 56, being income from other sources. Accordingly, your income, being interest from its Savings Bank account with Punjab National Bank, at Rs. 5,45,649/- is required to be assessed as "Income from Other Sources" and the same is not eligible for deduction u/s ....
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.... 5. The ld. AR submitted that the Hon'ble CIT had erred in law and facts in passing order u/s 263 of the I.T. Act, without complying with the mandatory conditions u/s 263 as envisaged under the Income Tax Act, 1961; that having regards to the facts and circumstances of the case Hon'ble CIT has erred in law and facts in invoking provisions of sec.263 of the Income-tax Act, 1961 even though order passed by Ld. AO is neither erroneous nor prejudicial to the interest of the revenue as the order u/s 143(3) was passed after detailed consideration and application of mind and therefore the Hon'ble CIT, was not justified on facts in making disallowing deduction of Rs.5,45,649/- u/s 80P(2)(a)(i) of the Act on account of interest earned from banks without considering the submissions of the assessee and without considering the fact that assessee society is in the business of banking. In support, he placed reliance on the following decisions: 1. CIT Vs. Bangalore District Cooperative Central Bank Ltd, 233 ITR 282 2. CBDT Circular No. 18/2015 dated 2015 3. CIT Vs. Nawanshahar Central Cooperative Bank Ltd [2007] 6. Per contra, the Ld. CIT(DR) supported the impugne....
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....- has not been earned on investment with a co-operative society, deduction u/s 80P(2)(d) is not available to the assessee society in the light of the provisions of section 80P(2)(d) of the Income tax Act, 1961 and therefore, tax has to be charged by the AO on the interest income of Rs. 5,45,649/- after disallowing deduction u/s 80P of the I.T. Act, 1961 to this extent. The case law relied upon by the Ld. AR are distinguished on the facts and covered by the Judgement of Hon'ble Supreme Court, in the case of The Totgars Co-operative Sale Society Ltd. (Supra). 11. It is seen that during the course of assessment proceedings, the Assessing Officer did not examine this issue and accordingly, the Assessing Officer had not made any disallowance w.r.t. deduction claimed u/s 80P of the Income Tax Act, 1961 which was required to be added to its income as rightly observed by the Ld. Pr. CIT. As per provisions of section 80P(2)(d) of the Income Tax Act, 1961, the Co¬ operative Society is provided deduction under said section in respect of income of the Co-operative Society by way of interest from its investments with any other Co-operative Society. Hence, the referred income, being inter....
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....fficer. In this connection, we may analyze Section 80P of the Act. This section comes in Chapter VI-A, which, in turn, deals with "Deductions in respect of certain Incomes". The Headnote to Section 80P indicates that the said section deals with deductions in respect of income of cooperative Societies. Section 80P(1), inter alia, states that where the gross total income of a cooperative Society includes any income from one or more specified activities, then such income shall be deducted from the gross total income in computing the total taxable income of the assessee-Society. An income, which is attributable to any of the specified activities in Section 80P(2) of the Act, would be eligible for deduction. The word "income" has been defined under Section 2(24)(i) of the Act to include profits and gains. This sub-section is an inclusive provision. The Parliament has included specifically "business profits" into the definition of the word "income". Therefore, we are required to give a precise meaning to the words "profits and gains of business" mentioned in Section 80P(2) of the Act. In the present case, as stated above, ...10/- http://www.itatonline.org - 10 - assessee-Society regularl....