TaxTMI 
TaxTMI 
2022 (12) TMI 24
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....rder had been erroneous and prejudicial to the interest of revenue. 2. The learned Principal Commissioner misdirected himself that the valid order passed by the Assisstant Commissioner was erroneous and prejudicial to the interest of revenue simply for the reason that the order was cryptic and parsimonious in description of the reliefs claimed by the assessee and allowed by the Assessing Officer with the Assisstant Commissioner's views on each and every claim of the assessee under chapter VIA and more especially with respect to the relief under section 80(P)(2)(d). 3. The learned Principal Commissioner is believed to have set aside the valid order mainly on account of the objections raised by Revenue Audit party or the Internal Audit party and such action on the part of the Principal Commissioner is erroneous as the Audit parties are not the persons vested with powers to express opinions on legal aspects of an assessment. 4. The learned Principal Commissioner ought to have appreciated the fact that the assessee's file was never called for by the Principal Commissioner for review and inspection at any point of time and it is a mystery as to how the....
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....eived from such investments has been claimed as deduction u/s 80P(2)(d) of the IT Act, 1961 under Chapter VIA. The assessee in the reply filed before me stated that they derived interest income on fixed deposit with Central Co-operative Bank or Rs.79,17,751/-, interest on SB account with Central Co-op Bank of Rs.72,990/- and interest on SB account with other commercial Bank of Rs.5,88,226/- totaling to Rs.85,78,967/- and claimed deduction of Rs.79,90,741/- u/s 80(p)(2)(d) and restricted the same to gross total income of Rs.79,37,939/-. I have perused the written submission made by the assessee quoting various judgments. Whereas the Income Tax Act is very clear that the deduction u/s 80P(2)(d) is applicable "in respect of any income by way of interest or dividends derived by the cooperative society from its investments with any other co-operative society, the whole of such income". In the case on hand, the assessee has derived interest and dividend income on the investments made in the Cooperative Banks. Section 80P(2)(d) of the Act reads as under; (d) in respect of any income by way of interest or dividends derived by the co-operative society from its investments with any ....
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....ds relating to any proceeding under this Act available at the time of examination by the Principal Commissioner or Commissioner; (c)............ Explanation 2.-For the purposes of this section, it is hereby declared that an order passed by the Assessing Officer shall be deemed to be erroneous in so far as it is prejudicial to the interests of the revenue, if, in the opinion of the Principal Commissioner or Commissioner,- (a) the order is passed without making inquiries or verification which should have been made; (b) the order is passed allowing any relief without inquiring into the claim; (c) the order has not been made in accordance with any order, direction or instruction issued by the Board under section 119; or (d) the order has not been passed in accordance with any decision which is prejudicial to the assessee, rendered by the jurisdictional High Court or Supreme Court in the case of the assessee or any other person." 4.1 The Pr.CIT was of the opinion that the Assessment Order has been passed without making inquiries or verification and relief allowed without inquiring. 4.2 However, on perusal of the assessment orde....
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....de and also there was business income to the assessee from the same. Therefore, interest expense debited by the assessee has not been considered for the calculation of disallowance under section 14A because the same has been incurred for the purpose of business." The PCIT therefore agrees that the Assessing Officer has recorded from the details submitted by respondent and the explanation given by respondent that the assessee had regular business connection with the company in which investment has been made and also there was a business income to the assessee from the same. He notes that the Assessing Officer, therefore did not consider the calculation of disallowance under section 14A the interest expense debited by the assessee because the same has been incurred for the purpose of business. The PCIT though was unhappy with the view of the Assessing Officer, the PCIT himself does not say why it should have been considered for the calculation of disallowance under section 14A. Even if one assumes that he has, after reading of the order expressed his views, but still the position is two views therefore were possible. Therefore, if one of the two possible views was taken by the Assess....
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....tion, which would be applicable under Section 80P(2)(a)(i) of the I.T. Act. For, in the present case the interpretation that is required is of Section 80P(2)(d) of the I.T. Act and not Section 80P(2)(a)(i) of the I.T. Act. Therefore, the said judgment is inapplicable to the present case. Thus, neither of the two substantial questions of law canvassed by the learned counsel for the Revenue even arise in the present case." Unquote. 5.7 The ITAT Chennai in the case of ITO Vs. Irula Snake Catchers Industrial Co-operative Society Ltd [2022] 140 taxmann.com 494 (Chennai - Trib.) has held on identical facts as under : Quote, "We heard the rival submissions and considered the documents available on records. Here, we are adjudicating two issues; one relating to deduction u/s.80P(2) of the Act and the applicability of the video / still photography- charges within the ambit of the income of the co-operative society. The Assessee received the interest from the co-operative bank "TAICO". The co-operative banks are first cooperative society and thereafter they are converted into banks. The Hon'ble jurisdictional High Court is also in favour of the Assessee. Hon'ble Supreme Co....
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....h cannot be held as erroneous. 15. The Hon'ble Karnataka High Court in Totagars Cooperative Sales Society (supra) held that for the purpose of section 80P(2)(d) a Co-operative Bank should be considered by a Co-operative Society and interest earned by Co-operative Society from Cooperative Bank would necessarily be deductible under section 80P(1) of the Act. Further, the Hon'ble Jurisdictional High Court in Surat VankarSahakari Sangh Ltd. (supra) held that assessee cooperative society is eligible for deduction under section 80P(2)(d) in respect of gross interest received from co-operative bank without adjusting interest paid to said bank. 16. The Co-ordinate Bench of Rajkot Tribunal in Surendarnagar District Co-operative Milk Producer Union Ltd. v. Dy. CIT [2019] 111 taxmann.com 69/179 ITD 690 (Rajkot Tribunal) also held the assessee co-operative society could not claim benefit under section 80P(2)(d) in respect of interest earned by it from deposits made with nationalized/private banks, however, the said benefit was available in respect of interest earned and on deposits made with co-operative bank. Thus, in view of the aforesaid legal discussion we are of ....