TaxTMI 
TaxTMI 
2025 (1) TMI 767
X X X X Extracts X X X X
X X X X Extracts X X X X
.... u/s. 263 and holding that decision of Assessing Officer cannot be treated as erroneous and prejudicial to the interest of revenue even if the AO has not made enquiry what ought to have been made and the same resulted in loss to the revenue? (ii) Whether on facts and circumstances of the case and in law, the Hon'ble Tribunal had erred in holding that the order passed by the AO is not erroneous by ignoring the decision of Hon'ble Supreme Court in the case of Totgars Cooperative Sale Society Ltd. reported in 322 ITR 283, wherein it was held that interest earned from investments made in any bank not being cooperative society, is not deductible under section 80P of the Act. iii) Whether on facts and circumstances of the case and in law, the Hon'ble Tribunal has erred in quashing the revision proceedings u/s 263 of the Income Tax Act by overlooking the fact that the Hon'ble High Court of Karnataka in the case of Totgars Cooperative Sale Society (2017) 395 ITR, 611 has held that the intention of legislature is clear that cooperative banks are not specie of genus cooperative society, which would entitle to exemption or deduction under the special provisions of chapter ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....asonable and possible view? (viii) Whether on the facts and Circumstances of the case and in law, the Hon'ble ITAT is justified in quashing the order of the Pr. CIT passed u/s 263 of the Act holding that the decisions of assessing officer cannot be treated as erroneous and prejudicial to interest of revenue even though the Assessing Officer has not made inquiry which should have been made as envisage by the decision of the Apex Court in the case of CIT-1, Mumbai Vs Amitabh Bachchan in Civil Appeal No 5009 of 2016? (ix) Whether on the facts and circumstances of the case and in law, in view of decision of the Hon'ble Supreme Court in the case of CIT VS Paville Projects (P.) Ltd reported in (2023) 149 Taxmann.com 115, the order of the Hon'ble ITAT is justified?" 3. Brief facts of the case are that the assessee is a cooperative society duly registered under the Gujarat Cooperative Society Act and is engaged in manufacturing of white crystal sugar from the sugarcane supplied by the cane grower members and selling the sugar and its bye-products. 4. The assessee filed its return of income on 16.10.2018 for the Assessment Year 2018-2019 at Rs. Nil and case of the assessee....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ilable to the cooperative societies on the income earned as interest on the investment made with the cooperative bank which in turn, is a cooperative society itself. 29. Reliance placed by the learned advocate for the revenue on decisions of the Hon'ble Karnataka High Court and Hon'ble Supreme Court in case of Totgars' Cooperative Sale Society Ltd, the Hon'ble Karnataka High Court appears to have taken into consideration the amendment in section 194A (3) (v) of the Act wherein the cooperative bank is excluded from the applicability of tax to be deducted at source. However, it appears that the interpretation made by the Hon'ble Karnataka High Court to the effect that the cooperative banks have been excluded from the definition of the cooperative societies by Finance Act,2015 by amending section 194A (3) (v) of the Act is concerned, on perusal of section 194A (3) of the Act, it appears that it provides for exemption from deducting Tax Deducted at Source ['TDS' for short] from the income on interest other than interest on securities as the cooperative societies other than cooperative banks meaning thereby that the cooperative banks are liable to deduct TDS from the interest other th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....In Apex Co-operative Bank of Urban Bank of Maharashtra and Goa Ltd., it was categorically held that under Section 56 of the BR Act, 1949 only three co-operative banks have been defined, namely, state co-operative bank, central co-operative bank and primary co-operative bank which are covered under Section 56 (cci) read with (ccvii) read with the provisions of the NABARD Act, 1981. Thus, it is only these three banks which are co-operative banks which require a licence under the BR Act, 1949 to engage in banking business. If any bank does not fall within the nomenclature of the aforesaid three banks as defined under the NABARD Act, 1981, it would not be a co-operative bank within the meaning of Section 56 of BR Act, 1949 irrespective of whatever nomenclature it may have or structure it may possess or incorporated under any Act. It was further stated that if a bank has to be a state co-operative bank, there has to be a declaration made by the State Government in terms of Section 2(u) of NABARD Act, 1981. Hence, it is necessary to go into the question as to, whether, the appellant herein has been so declared as a state co-operative bank. This question would need not detain us for long ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e society". iii) Thirdly, the gross total income must include income that is referred to in sub-section (2). iv) Fourthly, sub-clause (2)(a)(i) speaks of a co-operative society being "engaged in", inter alia, carrying on the business of banking or providing credit facilities to its members. v) Fifthly, the burden is on the assessee to show, by adducing facts, that it is entitled to claim the deduction under Section 80P. vi) Sixthly, the expression "providing credit facilities to its members" does not necessarily mean agricultural credit alone. It was highlighted that the distinction between eligibility for deduction and attributability of amount of profits and gains to an activity is a real one. Since profits and gains from credit facilities given to non-members cannot be said to be attributable to the activity of providing credit facilities to its members, such amount cannot be deducted. vii) Seventhly, under Section 80P(1) (c), the co-operative societies must be registered either under Co-operative Societies Act, 1912, or a State Act and may be engaged in activities which may be termed as residuary activities i.e. activities not covered by sub-clauses (a) and (b), eithe....