TaxTMI 
TaxTMI 
2022 (12) TMI 1117
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....d in holding that the assessment made by the ld. Assessing Officer vide order dated 11.12.2019 for the assessment year 2017-18 is found to be erroneous in so far as it is prejudicial to the interest of the revenue. 2. That on the facts and in the circumstances of the case, the Id. Principal Commissioner of Income-tax-I, Jaipur grossly erred in holding that "the id. AO passed the assessment order in a routine and perfunctory manner without examining the issue of deduction u/s 80P(2)(d) of the Act" is wholly unjustified, bad in law and deserve to be quashed. 2.1 That the learned Assessing Officer passed the assessment order after appreciating all supporting documents and evidences which was just and proper therefore the assessment order passed by the learned assessing officer is neither erroneous nor is prejudicial to the interest of the revenue. 2.2 That the learned Pr.CIT has gone on assumptions, presumptions, conjecture and surmises which is bad in law. 2.3 That on the facts and in the circunstances of the case, the Id. Principal Commissioner of Income-tax-II, Jaipur grossly erred in denying the claim of the assessee appellant amounting of Rs. 1....
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....CIT/CIT can use these powers if it notices that any order passed by the AO is not in following conformity with the law. In reaching such conclusion, I am aided by the following rulings:- The Hon'ble Supreme Court in the case of Malabar Industrial Limited V/S CIT2431TR has held that "An incorrect assumption of facts or an incorrect application of law will satisfy the requirement of the order being erroneous. In the same category fall orders passed without applying the principles of natural justice or without application of mind. 11. From the above facts and circumstances of the case and having regard to the material available on record, the Assessing Officer failed to consider/apply his mind to the information available on record with regard to the deduction allowed to the cooperative society u/s 80P(2)(d) of the Act. This in turn has resulted in passing of an erroneous order by the Assessing Officer in the case due to non-application of mind to relevant material, reflecting non appreciation of facts and an incorrect application of mind to law which is prejudicial to the interest of the revenue. Thus, the order passed u/s 143(3) on 11.12.2019 is erroneous and p....
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....r on the interest earned by the assessee appellant from M/s. Jhunjhunu Kendriya Sahkari Bank Ltd. 5 Detailed reply dated 28.02.2022 thereto was filed by the assessee appellant objecting to issuance of notice u/s. 263 of the Act. 6 Ignoring the submissions of the assessee appellant, the ld. PCIT passed an order dated 29.03.2022. 7 For ready reference, extracts of relevant provisions of Section 80P is reproduced hereunder: 80P Deduction in respect of income of Co-operative Societies (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 sum 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) In the case of a co-operative society engaged in - (i) ............. (ii) ............. (iii) the marketing of agricultural produce grown by its members, or] (iv) the purchase of agricultural implements, seeds, live....
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....rimary cooperative agricultural and rural development bank' have also been defined to lend clarity to them. 10 The Co-operative Bank pursuant to the insertion of Sub-section (4) of Sec. 80P would no more be entitled for claim of deduction under Sec. 80P of the Act, however, the interest income derived by a co-operative society from its investments held with a co-operative bank, would continue to be entitled for claim of deduction under Sec.80P(2)(d) of the Act since a Cooperative bank continues to be a co-operative society registered under the Co-operative Societies Act, 1912 or under any other law for the time being enforced in any state for the registration of co-operative societies. 10. The assessee society fulfills all the conditions stated u/s. 80P of the Act, i.e.: • The assessee is a cooperative society duly registered with the Registrar Cooperative Societies under the Rajasthan Cooperative Societies Act. It is undisputed position. • Gross total income of the assessee society includes the income referred to in section 80P(2)(a)(iii), 80P(2)(a)(iv) & 80P(2)(d) of the Act. • The assessee society is engaged in carryin....
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....t, viz. (i) the order is erroneous; and (ii) the same is also prejudicial to the interest of the revenue is not satisfied. Each and every erroneous order cannot be the subject matter of revision because the second requirement also must be fulfilled. There must be some prima facie material on record to show that tax which was lawfully exigible has not been imposed or that by the application of the relevant statute on an incorrect or incomplete interpretation, a lesser tax than what was just, has been imposed. 12.2 The phrase "prejudicial to the interest of the revenue" has to be read in conjunction with an erroneous order passed by the Assessing Officer. Every loss of revenue has to be read in conjunction with an erroneous order passed by the Assessing Officer. Every loss of revenue has a consequence of an order of Assessing Officer cannot be treated as prejudicial to the interest of the revenue. For example, when an Assessing Officer adopted one of the courses permissible in law and it has resulted in loss of revenue or where two views are possible and the Assessing Officer has taken one view with which the CIT did not agree with, it cannot be treated as an erroneous order....
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....sp; 4 Jaipur Bench Ajmer Zila Dugdh Utpadak Sahkari Sangh Ltd. v. PCIT {2019 (11) TMI 690 dated 28.08.2019} Index-I, PB 74-83, Relevant PB 74-83 5 Ahmedabad Bench Laxmi Bachat Sharafi Sahkari Mandali Ltd. v. ITO {2022 (9) TMI 153 dated 31.08.2022} Index-II, PB 62-75, Relevant PB 70 Amendment made by Finance Act, 2006 referred 6 Rajkot Bench Galaxy Credit Cooperative Society Ltd. v. PCIT {2022 (7) TMI 494 dated 08.07.2022} Index-II, PB 76-79, Relevant PB 77 7 Pune Bench Dr. Jagadale Mama Hospital Employees Coop Credit Society Ltd. v. PCIT {2022 (9) TMI 30 dated 29.08.2022} Index-II, PB 95-100, Relevant PB 99 Amendment made by Finance Act, 2006 referred 8 Pune Bench Shri Sharad Gramin Bigar Sheti Sahakari Pathasanstha Ltd. v. PCIT {2022 (8) TMI 1020 dated 22.08.2022} Index-I, PB 84-88, Relevant PB 86-88 Amendment made by Finance Act, 2006 referred 9 Surat Bench Shri Madhi Surali Vibhag Nagrikshakari Dhiran Mandali Ltd. v. ACIT {2021 (10) TMI 861 dated 15.09.2021} Index-I, PB 116-120, Relevant PB 116-120 10 Vishakhapatnam Bench Krishna District Milk Producer Mutually....
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....ndment made by Finance Act, 2006 also referred 12 Panaji Bench Belgaum Coal & Coke Consumer Cooperative Association Ltd. v. ITO {2022 (4) TMI 395 dated 06.04.2022} Index-II, PB 101-106, Relevant PB 104 Amendment made by Finance Act, 2006 also referred 13.2 We wish to refer and rely upon following authorities which have under identical factual backdrop have held that benefit of deduction u/s. 80P(2)(d) ought to be given to the assessee societies wherein interest is earned from cooperative banks: SNo. Court Particulars Paper Book Remarks Section 80P(2)(d) & 80P(4) of the Act read with section 143(3) of the Act 1 Rajasthan High Court CIT v. Rajasthan Rajya Sahakari Kray Vikray Sangh Ltd {2016 (9) TMI 1385 dated 01.09.2016} Index-II, PB 107-115 2 Rajasthan High Court PCIT v. Kekri Sahakari Bhumi Vikas Bank Ltd {2016 (12) TMI 1649 dated 08.12.2016} Index-II, PB 116-125 3 Rajasthan High Court PCIT v. Kekri Sahakari Bhumi Vikas Bank Ltd {2018 (11) TMI 571 dated 08.08.2017} Index-II, PB 126-134 4 Kerala High Court PCIT v. Peroorkada Service Co-operative Bank Ltd {2021 (2) TM....
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....50-156 8. Section 80P(2)(d) of the Act allows whole deduction of an income by way of interest or dividends derived by the cooperative society from its investment with any other co-operative society. This provision does not make any distinction in regard to source of the investment because this Section envisages deduction in respect of any income derived by the co-operative society from any investment with a cooperative society. It is immaterial whether any interest paid to the cooperative society exceeds the interest received from the bank on investments. The Revenue is not required to look to the nature of the investment whether it was from its surplus funds or otherwise. The Act does not speak of any adjustment as sought to be made out by learned counsel for the Revenue. The provision does not indicate any such adjustment in regard to interest derived from the co-operative society from its investment in any other co-operative society. Therefore, we do not agree with the argument advanced by learned counsel for the Revenue. In our opinion, the learned Tribunal was right in law in allowing deduction under Section 80P(2)(d) of the Incometax Act, 1961. in respect of interest of RS....
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....343-7350 of 2019 decided on 12th January 2021} held that Section 80P of the IT Act, being a benevolent provision enacted by Parliament to encourage and promote the credit of the co-operative sector in general must be read liberally and reasonably, and if there is ambiguity, in favour of the Assessee. * Hon'ble Karnataka High Court rendered in the case of PCIT Vs. Totagars Co-operative Sale Society (2017) 392 ITR 74 has clearly held that the issue whether a Co-operative Bank is considered to be a Co-operative Society is no longer res integra. The Co- operative Bank which is a species of the genus would necessarily be covered by the word "Cooperative Society". * Various judgment passed by the Tribunals which have been relied upon by the assessee appellant have considered the same and have distinguished / held it to be non-jurisdictional High Court, hence, inapplicable. * The Co-operative Bank pursuant to the insertion of Sub-section (4) of Sec. 80P would no more be entitled for claim of deduction under Sec. 80P of the Act, however, as a co-operative bank continues to be a co-operative society registered under the Co-operative Societies Act, 1912 (2 of 1912), or under any oth....
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....itiated within a period of 4 years. * The assessee had failed to disclose 'fully and truly' all material facts necessary for assessment. * On merits various authorities in favour of the assessee including Gujarat High Court itself not considered nor cited. In light of above, the impugned proceedings-initiated u/s. 263 of the Act are illegal, bad-inlaw and it thus deserves to be set-aside and quashed." Relying on the above paper book the ld. AR of the assessee submitted that the case of the assessee was selected for limited scrutiny. The ld. AO on the very issue as raised by the ld. PCIT has already taken a plausible view and the same is clearly portrayed in the assessment order. The relevant finding of the ld. AO is reiterated here in below: "2. The assessee is a Co-operative society registered under the Rajasthan Cooperative Societies Act, 1965 and engaged in the marketing of the agriculture produce grown by its member and purchase of agricultural implements, seeds or other articles intended for agriculture for the purpose of supplying them to its members. During the year under consideration the assessee co-operative society has claimed deduction u/s 80P....
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.... officer in a routine and perfunctory manner without examining the issue of deduction u/s. 80(P)(2)(d) of the Act." Thus, the main question centers on whether action of the assessing officer in allowing the claim of the assessee us/s. 80(P)(2)(d) is found faulted with, whether the assessee ought to have produced the appropriate evidence and whether non-recording of the reasons for accepting explanation will render the order erroneous and prejudicial to the interest of the revenue. In fact, there is a specific finding and reference of the deduction claimed by the assessee founded place in the assessment order. Thus, we are of the considered view that he ld. AO has taken a plausible view which is based on decision relied upon by the ld. AR of the assessee is one of the plausible views and we see that there is no lack of enquiry on the part of Ld. AO and we find that he has applied his mind and allowed the claim of the assessee. 9. Thus, ld.AO has examined that issue as it is evident form the finding recorded in the assessment order. As the case was for this limited purpose the same has been examined and verified by the ld. AO as it emerges from the findings of the AO. The ld. Pr. ....
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....is unsustainable under law (vi) If while making the assessment, the Assessing Officer examines the accounts, makes enquiries, applies his mind to the facts and circumstances of the case and determine the income, the Commissioner of Income-tax, while exercising his power under section 263 of the Act is not permitted to substitute his estimate of income in place of the income estimated by the Assessing Officer. (vii) The Assessing Officer exercises quasi-judicial power vested in his and if he exercises such power in accordance with law and arrive at a conclusion, such conclusion cannot be termed to be erroneous simply because the Commissioner of Income-tax does not fee stratified with the conclusion. (viii) The Commissioner of Income-tax, before exercising his jurisdiction under section 263 of the Act must have material on record to arrive at a satisfaction and (ix) If the Assessing Officer has made enquiries during the course of assessment proceedings on the relevant issues and the assessee has given detailed explanation by a letter in writing and the Assessing Officer allows the claim on being satisfied with the explanation of the assessee, the d....