AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2024 (1) TMI 693
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....Ld. Principal Commissioner of Income Tax has failed to appreciate that the issue in respect of deduction claimed under section 80P, on interest income had been discussed threadbare by the Assessing Officer at the time of assessment proceedings and as such assumption of jurisdiction under section 263 of the Act is uncalled for. 3. That the Ld. Principal Commissioner of Income Tax has only substituted her opinion over the plausible opinion taken by the Assessing Officer and as such assumption of jurisdiction is arbitrary and unjustified. 4. That the Ld. Commissioner of Income Tax has erred in failing to consider the various replies and submissions placed on record in proceedings before her in the correct perspective which is arbitrary and unjustified. 5. That the appellant craves leave to add or amend the grounds of appeal before the appeal is finally heard or disposed off. 6. That the order of Principal Commissioner of Income tax is erroneous, arbitrary, opposed to the facts of the case and is unsustainable in law." 3. Briefly the facts of the case are that the assessee is a cooperative society and during the year under consideration, it derive....
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....PCIT but not found acceptable and the assessment order was set aside to the file of the AO with a direction to pass a fresh assessment order for applying the correct provision of law and after giving due opportunity to the assessee. 7. Against the said findings and the directions of the Ld. Pr. CIT, the assessee is in appeal before us. 8. During the course of hearing, the Ld. AR submitted that the matter regarding claim of deduction under Section 80P has been thoroughly examined by the AO during the course of assessment proceedings. In this regard, our reference was drawn to the notice dt. 22/09/2019 issued under section 143(2) and the response filed by the assessee dt. 04/10/2019, subsequent notice dt. 07/12/2020 issued under section 142(1) and the response filed by the assessee dt. 20/12/2020, thereafter another notice dt. 28/01/2021 and response submitted by the assessee dt. 12/02/2021 and thereafter the showcause dt. 09/03/2021 and reply to the show cause dt. 11/03/2021. It was submitted that after thorough examination of the factual position and considering the decisions of the Hon'ble Supreme Court in case of Totgars Co-operative Sale Society Ltd.(Supra) and Mavilayi Se....
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....order. It was submitted that the said decision has since been followed by the Hon'ble Gujarat High Court in case of Surat Vankar Sahakari Sangh Limited reported in 421 ITR 134. 13. Further reliance was placed on various Coordinate Benches decisions where consistent view has been taken on the interest income earned by the cooperative society from its investment with any other cooperative banks as eligible for deduction under section 80P(2)(d) of the Act. In this regard, our reference was drawn to the findings of the ITAT Pune Benches in case of Rena Sahakari Sakhar Karkhana Ltd. Vs. PCIT reported in 138 Taxmann.com 532 and decision of ITAT Raipur Benches in case of Gramin Sewa Shakari Samiti Maryadit Vs. ITO reported in 138 Taxmann.com 476. 14. Per contra, the Ld. CIT/DR has relied on the findings of the Ld. Pr. CIT and we deem it appropriate to reproduce the said findings which read as under: "(ii) I have considered the facts of the case. It is true that as per Section 80P(2)(d), interest income derived by a co-operative society from its investments held with any other co-operative society shall be deducted in computing its total income. Further that with the inserti....
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....xxxxxxxxxxx The cooperative society had large idle surplus funds which were neither used for the purpose for which it has been set up nor distributed to its members. It was not the purpose of the cooperative society to accumulate funds and earn interest thereupon. For instance, it had Reserve funds & others : Rs. 28198816.27 Undistributed profit : Rs. 17819222.77 In view of above position too, interest income was not eligible for deduction u/s 80P(2)(d) of the Act as it was not earned from any specified co-operative activity but from investment of surplus and idle funds with Commercial and Cooperative Banks. However, while passing the above assessment order, the AO erred in not following the ratio of the decisions of Hon'ble Supreme Court in Pr.CIT Vs. the Totgars Co-operative Sales Society Ltd. 322 ITR 283 (SC) 2010, and of the jurisdictional Hon'ble P&H High Court in Commissioner of Income tax II Chandigarh Vs. Punjab State Co-operative Federation of Housing Building Society Ltd., correctly and completely. (iv) The assessment order passed in the case of the assessee is considered to be erroneous in so far as it is prej....
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....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 provides for deduction 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. Thus, for the purpose of Section 80P(2)(d) of the Act, there are only two conditions which are required to be cumulatively satisfied, i.e, the income should be by way of interest or dividend earned by a Co-operative Society from its investments, and secondly, such investments should be with any other Cooperative Society. Besides these two conditions, there are no other condition(s) which has been provided in the statue as apparent from the plain reading of the provisions of Section 80P(2)(d) of the Act. 17. The term "co-operative society" as defined under section 2(19) of the Act (19) means a co-operative society registered under the Co-operative Societies Act, 1912 (2 of 1912), or under any other law for the time being in force in any State for the registration of co-operative societies. 18. As per the ld PCIT own fi....
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....e with the provisions of Section 80P(2)(d) of the Act. Where the facts in the present case and legal position is not in dispute, we therefore don't understand how the ld PCIT in the same breath hold that the assessee shall not be eligible for claim of deduction under section 80P(2)(d) of the Act. 20. Now, coming to the decision of the Hon'ble Punjab and Haryana High Court in case of CIT Vs. Punjab State Cooperative Federation of Housing Building Societies Ltd (Supra), the question for consideration before the Hon'ble High Court was whether the Tribunal was right in holding that interest income from commercial banks, being attributable to business activity of the assessee qualifies for deduction u/s 80P(2)(a)(i) of the Act ignoring the fact that direct source of income is not the loans advanced to members of the society and it is only the interest income from commercial banks in form of fixed deposits and saving bank accounts. Referring to the decision of the Hon'ble Supreme Court in case of case of Totgars Co-operative Sale Society Ltd (Supra), it was held that since the judgment of the Tribunal was prior to the judgment of the Hon'ble Supreme Court, the Tribunal did not have th....
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....ference, it is reproduced as under: "(d)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;" So far as the principle of interpretation applicable to a taxing statute is concerned, we can do no better than to quote the by now classic words of Rowlatt, J., in Capce Brandy Syndicate v. IRC [1921] 1 KB 64 : "... In a taxing Act, one has to look merely at what is clearly said. There is no room for any intendment. There is no equity about a tax. There is no presumption as to a tax. Nothing is to be read in, nothing is to be implied. One can only look fairly at the language used." (p. 71) The principle laid down by Rowlatt, J., has also been time and again approved and applied by the Supreme Court in different cases including the one Hansraj Gordhandas v. H.H. Dave, Assistant Collector of Central Excise & Customs AIR 1970 SC 755 at p. 759. 6. Section 80P(2)(d) allows whole deduction of an income by way of interest or dividends derived by the co-operative society from its investment with any other co-operative society. This....
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....terest income is earned from deposits placed with a co-operative society. Where the AO has allowed the claim of the assessee under section 80P(2)(d) of the Act after due examination of the facts of the case, he has rightly followed the dicta laid down by the Hon'ble Jurisdictional High Court and therefore, the order so passed by the AO cannot be held as erroneous in so far as prejudicial to the interest of Revenue. 23. Now, coming to the decisions of the Hon'ble Karnataka High Court, we find that there are two decisions in case of Pr. CIT v. Totagars Co-operative Sale Society and in both of these decisions, the Hon'ble Karnataka High Court has referred to the decision of the Hon'ble Supreme Court in case of Totagars Co-operative Sale Society vs ITO (Supra). In case of first decision referred by the ld AR, it was held that according to section 80P(2)(d) of the Act, the amount of interest earned from a Co-operative Society Bank would be deductable from the gross income of the Co-operative Society in order to assess its total income. In the latter decision referred by the ld PCIT (he has not referred to the earlier decision), it was held that interest earned by the assessee, a Co-o....