9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2022 (1) TMI 230 - AT - Income TaxRevision u/s 263 by CIT - deduction u/s 80P - amount as received from the Mysore and Chamarajanagar District Co-operative Bank Ltd which is a co-operative bank and not a co-operative society - CIT held that the assessment order passed by the AO is erroneous and prejudicial to the interest of the revenue and accordingly, directed the A.O. to revise the assessment order - HELD THAT - An identical issue was considered in the case of M/s.Prathamika Krushi Pattina Sahakari Niyamita 2022 (1) TMI 153 - ITAT BANGALORE wherein the Tribunal directed the A.O. to consider the issue afresh in the light of the dictum laid down by the Hon ble Apex Court in the case of Mavilayi Service Co-operative Bank Ltd. Ors. V. CIT Anr. 2021 (1) TMI 488 - SUPREME COURT . Since the facts considered by the Tribunal in the case of Prathamika Krushi Pattina Sahakari Niyamata v. Pr.CIT (supra) are identical to the facts of the case under consideration, respectfully following the same, we direct the A.O. to consider the issue afresh, based on the above order of the Tribunal. Appeals filed by the assessee are allowed for statistical purposes.
Issues Involved:
1. Validity of the CIT's invocation of Section 263 of the I.T. Act. 2. Eligibility for deduction under Section 80P(2)(a)(i) and 80P(2)(d) of the I.T. Act. 3. Treatment of interest income from investments with co-operative banks and societies. 4. Compliance with statutory requirements under the Karnataka Co-operative Societies Act and Rules. Issue-wise Detailed Analysis: 1. Validity of the CIT's Invocation of Section 263 of the I.T. Act: The CIT invoked Section 263 of the I.T. Act, determining that the assessment order was erroneous and prejudicial to the interest of the revenue. The CIT observed that the assessee claimed a deduction under Section 80P, which included interest received from a co-operative bank, not a co-operative society. The Tribunal upheld the CIT's invocation of Section 263, citing that the assessment order lacked necessary inquiry, rendering it erroneous and prejudicial to the revenue. The Tribunal referenced the case of M/s. Prathamika Krushi Pattina Sahakari Niyamita v. Pr.CIT, where similar issues were considered. 2. Eligibility for Deduction under Section 80P(2)(a)(i) and 80P(2)(d) of the I.T. Act: The Tribunal examined whether the assessee was entitled to deductions under Sections 80P(2)(a)(i) and 80P(2)(d). It referred to judicial precedents, including the Hon'ble Supreme Court's judgment in Mavilayi Service Co-operative Bank Ltd. & Ors. v. CIT & Anr., which clarified that co-operative societies extending credit facilities are entitled to deductions under Section 80P(2)(a)(i). The Tribunal noted that only profits attributable to transactions with non-members should be excluded from the deduction. For Section 80P(2)(d), it was held that interest income from investments with co-operative societies is deductible, but not from co-operative banks. 3. Treatment of Interest Income from Investments with Co-operative Banks and Societies: The Tribunal discussed various judicial pronouncements, including the Hon'ble Karnataka High Court's decision in Totgars Co-operative Sale Society, which held that interest income from investments in banks is taxable under the head 'income from other sources' and not eligible for deduction under Section 80P(2)(a)(i). However, interest income from investments with co-operative societies is deductible under Section 80P(2)(d). The Tribunal directed the AO to re-examine the interest income's nature, especially if invested as per statutory requirements. 4. Compliance with Statutory Requirements under the Karnataka Co-operative Societies Act and Rules: The assessee argued that the interest income was earned from investments made in compliance with the Karnataka Co-operative Societies Act and Rules. The Tribunal acknowledged the necessity to examine if the investments were statutory requirements, which could qualify the interest income as business income eligible for deduction under Section 80P(2)(a)(i). The Tribunal remanded the issue to the AO for fresh examination, considering statutory compliance. Conclusion: The Tribunal allowed the appeals for statistical purposes, directing the AO to re-examine the issues afresh in light of the judicial precedents and statutory requirements. The AO was instructed to follow the dictum laid down by the Hon'ble Apex Court in Mavilayi Service Co-operative Bank Ltd. & Ors. v. CIT & Anr. while framing the fresh assessment. The Tribunal's order emphasized a detailed and thorough re-evaluation of the assessee's claims for deductions under Section 80P.
|
