TaxTMI 
TaxTMI 
2025 (6) TMI 2012
X X X X Extracts X X X X
X X X X Extracts X X X X
....fficer is prejudicial and erroneous to the interest of revenue?" [B] "Whether on the facts of the case as well as law, the Income Tax Appellate Tribunal was justified in quashing the order u/s 263 of the Income Tax Act of Ld. PCIT without appreciating that section 80P(2)(d) does not contain the work "Bank" and its scope is limited to only "Cooperative Societies"?" [C] "Whether on the facts of the case as well as law, the Income Tax Appellate Tribunal was justified in quashing the order u/s 263 of the Income Tax Act of Ld. PCIT when Hon'ble Jurisdictional High Court in the case of Katlary Kariyana Merchant Sahkari Sarafi Mandali Ltd. vs. Assistant Commissioner of Income-tax, [2022] 140 taxmann.com 602 (Gujarat) had held that the interest derived from surplus funds invested by assessee in nature of FDRs in Cooperative Banks and Nationalized Bank, other than Co-operative Societies will certainly not fall in category to be entitled to claim deductions under section 80P(2)(a)(i) and section 80P(2)(d) of the I.T. Act?" 3. The brief facts leading to the filing of the present Appeal are as under: 3.1 The respondent assessee is a registered Cooperative Society an....
X X X X Extracts X X X X
X X X X Extracts X X X X
....2) (d) of the Act, is no more res-integra pursuant to the decision rendered by this Court in the case of Principal Commissioner of Income-Tax v. Ashwinkumar Arban Cooperative Society Ltd., in Tax Appeal No. 221 of 2022. It was held as under: "28. Having heard learned advocates for the respective parties and considering the controversy arising in these tax appeals, we are of the opinion that the controversy sought to be canvassed with regard to deduction under section 80P(2)(d) of the Act is no more res integra in view of the decision of this Court in case of Katlary Kariyana Merchant Sahkari Sarafi Mandali Ltd. as well as in case of State Bank of India (supra) wherein it was held that the deduction of under section 80P(2)(d) of the Act is available 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 a....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... X X (b) "banking" means the accepting, for the purpose of lending or investment, of deposits of money from the public, repayable on demand or otherwise, and withdrawal by cheque, draft, order or otherwise; (c) "banking company" means any company which transacts the business of banking in India. Explanation.-Any company which is engaged in the manufacture of goods or carries on any trade and which accepts deposits of money from the public merely for the purpose of financing its business as such manufacturer or trader shall not be deemed to transact the business of banking within the meaning of this clause;" 32. After considering the above interpretation of various provisions and the Case laws, the Hon'ble Apex Court has analyzed the provisions as under: "14.1. 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 cooperative 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. Th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ed in sub- sections (1) and (2) of Section 80P. The proviso excludes co-operative banks, which are co-operative societies which must possess a licence from the Reserve Bank of India to do banking business. In other words, if an entity does not require a licence to do banking business within the definition of banking under Section5(b) of the BR Act, 1949, then it would not fall within the scope of sub-section (4) of Section 80P. 14.3. While analysing Section 80P of the Act in depth, the following points were noted by this Court: i) Firstly, the marginal note to Section 80P which reads "Deduction in respect of income of co-operative societies" is significant as it indicates the general "drift" of the provision. ii) Secondly, for purposes of eligibility for deduction, the assessee must be a "co-operative 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 t....