TaxTMI 
TaxTMI 
2023 (6) TMI 1278
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....ssessment order passed by AO under section 14313) r.w.s. 143(3A) & 143(38) of the Act was made without proper application of the provisions of the Act. The order passed by PCIT-17 u/s. 263 of the Act is without jurisdiction. 2. The Ld. PCIT-17 erred in law as well as on facts of the case in setting aside the assessment order dated 6 January 2021 passed by assessing officer under section 143(3) r.w.s. 143(3A) & 143(38) of the Act by denying deduction of INR 27,20,624/- under section 80P(2)(d) of the Act. 3. The Ld. PCIT-17 erred in stating in her 263 order that deduction under section 80P is available only against the income earned under the head profits and gains of business and not against income under the head Income from other sources. The PCIT ought to have appreciated that the appellant has claimed deduction under section 80P(2)(d) and that there is no requirement under section 80P(2)(d) for interest income to be in the nature of business income. 4. The Ld. PCIT-17 ought to have appreciated that section 80P(4) denies benefit of section 80P to co-operative banks and that the Insertion of section 80P(4) can in no way jeopardize the claim of deduction of a co-operative soci....
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....n 263 of the Act by the learned PCIT. 4. The brief facts of the case pertaining to this issue, as emanating from the record, are: The assessee is a co-operative housing society, registered under the Maharashtra Co-operative Societies Act, 1960. For the year under consideration, the assessee filed its return of income on 24/08/2018 declaring a total income of Rs. 1910. The return filed by the assessee was selected for scrutiny and statutory notices under section 143(2) as well as section 142(1) of the Act were issued and served on the assessee. During the assessment proceedings, the assessee was asked to explain and justify the deduction claimed under section 80P of the Act with supporting evidence. In response thereto, the assessee filed a detailed reply along with supporting documentary evidence in respect of its claim of deduction under section 80P of the Act on account of interest income of Rs. 27,20,624 earned from the co-operative banks. The Assessing Officer ("AO") vide order dated 06/01/2021 passed under section 143(3) read with sections 143(3A) and 143(3B) of the Act, after considering the replies filed by the assessee, accepted the income returned by the assessee and gran....
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....of the principle of mutuality are not satisfied in case of interest earned from co-operative banks by the assessee. Thus, the learned PCIT held that the AO had to complete the assessment in light of the provisions of section 80P(2)(d) and section 80P(4) of the Act, which the AO has failed to do. Vide impugned order, the learned PCIT held the assessment order to be erroneous and prejudicial to the interest of Revenue and accordingly, set aside the same, with a direction to the AO to frame the assessment de novo after proper application of the provisions of the Act regarding the applicability of section 80P(2)(d) in the case of the assessee. Being aggrieved, the assessee is in appeal before us. 8. We have considered the submissions of both sides and perused the material available on record. The assessee is a co-operative housing society registered under the Maharashtra Co-operative Societies Act 1960, whose only source of revenue is from contributions from members and interest on deposits held with co-operative banks and non-cooperative banks. The interest income earned from co-operative banks of Rs. 27,20,624 was claimed as a deduction under section 80P(2)(d) of the Act, and the in....
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....t to note the provisions of section 80P of the Act under which the assessee has claimed the deduction in the present case. As per the provisions of section 80P(1) of the Act, the income referred to in sub-section (2) to section 80P shall be allowed as a deduction to an assessee being a co-operative society. Further, section 80P(2)(d) of the Act, reads as under: "80P. Deduction in respect of income of co-operative societies. (1) ...... (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;" 10. Thus, for the purpose of provisions of section 80P(2)(d) of the Act, two conditions are required to be cumulatively satisfied- (i) income by way of interest or dividend is earned by the co-operative society from the investments, and (ii) such investments should be with any other co-operative society. Further, the term „co-operative society‟ is defined under section 2(19) of the Act as under: "(19) "co-operative society" means a co-oper....