9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2020 (10) TMI 878 - AT - Income TaxRevision u/s 263 - Deduction u/s. 80P(2)(a)(i) - HELD THAT - Though there is justification for invoking powers u/s. 263 of the Act to make verification as to whether the principle of mutuality is satisfied in the case of assessee in Citizen Co-operative Society Ltd. 2017 (8) TMI 536 - SUPREME COURT the other directions contained in our view, is uncalled for. When the assessment is set aside for examination of the claim of assessee u/s. 80P(2)(a)(i) of the Act in the light of the decision of Hon ble Supreme Court in Citizen Co-operative Society Ltd. (supra) , the exercise to be done would be restricted to verification of nature of membership of the society as per the bye laws and as to whether the income derived by the assessee on which deduction u/s. 80P(2)(a)(i) has been claimed, is attributable to the business of providing credit facilities to its members. Assessment vis- -vis section 80P(2)(a)(i) would be a de novo assessment and the AO would be free to adopt his line of enquiry while deciding the issue in the set aside proceedings, limited to the ratio laid down by the Hon ble Supreme Court in Citizen Co-operative Society Ltd. (supra) uninfluenced by the directions of the Pr.CIT as contained in the impugned order in paragraph 3.3 . Accordingly, we modify the directions of the Pr. CIT in the impugned order as indicated above. Appeal of the assessee is partly allowed.
Issues:
1. Whether the assessment order allowing deduction u/s. 80P(2)(a)(i) to the assessee was erroneous and prejudicial to the revenue's interests. 2. Whether the assessee provided credit facilities only to regular members and not to nominal members. 3. Whether interest income from BDC Corporation Bank is eligible for deduction u/s. 80P(2)(a)(i) of the Act. 4. Whether the Pr. CIT's directions for conducting a roving and fishing enquiry were justified. Issue 1: The Principal CIT invoked powers u/s. 263 of the Income-tax Act, 1961, deeming the assessment order erroneous and prejudicial to revenue interests. The AO allowed deduction u/s. 80P(2)(a)(i) based on a Karnataka High Court decision, but the Principal CIT referred to a Supreme Court judgment specifying that income from providing credit facilities to primary members is eligible for deduction. The AO's failure to inquire about the nature of members led to setting aside the assessment order for a fresh assessment. Issue 2: The assessee contended that it only had regular members, not nominal or associate members, as per the society's bylaws. It argued that the Supreme Court's decision on Citizen Co-operative Society Ltd. did not apply to its case. The Principal CIT directed verification of the nature of membership, but the Tribunal found the directions for a roving enquiry unnecessary. Issue 3: The Principal CIT held that interest income from BDC Corporation Bank did not qualify as a transaction with society members, thus not eligible for deduction u/s. 80P(2)(a)(i). The Tribunal emphasized the need for verifying if income derived for deduction was from providing credit facilities to members, as per the Supreme Court's ruling. Issue 4: The Tribunal upheld the Principal CIT's decision under section 263 based on the Supreme Court's judgment. However, it deemed the directions for a roving enquiry excessive. The Tribunal modified the directions, emphasizing a de novo assessment focusing on the nature of membership and income attribution, free from the Principal CIT's directions. In conclusion, the Tribunal partially allowed the assessee's appeal, emphasizing adherence to the Supreme Court's ruling on eligibility for deduction u/s. 80P(2)(a)(i) while limiting the scope of enquiry to relevant factors without unnecessary directions from the Principal CIT.
|
