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2023 (12) TMI 762 - AT - Income TaxDisallowance of deduction u/s 80P(2)(d) - assessee is a cooperative bank - AO disallowed the deduction and treated interest and dividend income from other sources and added back with the total income of the assessee - HELD THAT - The status of the cooperative bank where the investment was parked, and the income was generated was never ascertained by the revenue authorities. Here, to determine the taxability of the income of assessee from investment first to ascertain the status of the bank and assessee. DR was unable to bring any specific observation during the hearing. In our considered view, the appeal of the assessee is remanded back to the file of the ld. CIT(A) to determine the income in the light of discussion indicated above. Needless to say, the assessee should get reasonable opportunity in set aside proceeding. Appeals of the assessee allowed for statistical purpose.
Issues involved:
The judgment involves the disallowance of deduction u/s 80P(2)(d) in a batch of four appeals filed by the assessee society against the order of the ld. Commissioner of Income Tax (Appeals) NFAC, Delhi, for A.Ys. 2013-14 to 2016-17, emanating from the order of the ld. Income Tax Officer, Ward-1, Hanumangarh, passed u/s 143(3) of the Income Tax Act 1961. Issue 1: Disallowance of deduction u/s 80P(2)(d): The assessee, a cooperative bank, had invested in cooperative societies and banks, generating dividend and interest income claimed for deduction u/s 80P(2)(d) of the Act. However, the ld. AO disallowed the deduction, treating the income as from other sources and adding it back to the total income of the assessee for each assessment year from 2013-14 to 2016-17. Issue 2: Applicability of section 80P(4) to cooperative bank: The question arose whether the assessee cooperative bank, functioning under by-laws allowing loans only to members and not the public, falls under the provisions of section 80P(4) and if it is at par with commercial banks. Judgment Summary: The ITAT Jodhpur considered a batch of appeals related to the disallowance of deduction u/s 80P(2)(d) by the ld. AO for A.Ys. 2013-14 to 2016-17. The appeals were heard together, with ITA No. 68/Jodh/2022 as the lead case. The assessee, a cooperative bank, claimed deduction for dividend and interest income earned from investments in cooperative societies and banks. The ld. CIT(A) upheld the disallowance, leading to the assessee's appeal to the ITAT. The ITAT noted that the assessee's income was generated from surplus funds' investments, not in the course of normal business. The issue was previously adjudicated in the assessee's favor for A.Y. 2009-10 by the ITAT Jodhpur. Referring to the Kerala State Co-Operative Agricultural & Rural Development Bank Ltd. case, the ITAT emphasized the need to ascertain the bank's status where the income was generated. As the revenue authorities failed to determine this, the appeal was remanded to the ld. CIT(A) for proper assessment, ensuring the assessee's reasonable opportunity in the proceedings. In conclusion, the ITAT allowed the appeals for statistical purposes, remanding the matter back to the ld. CIT(A) for a detailed determination of the income taxability in light of the cooperative bank's status. The judgment was pronounced on 12.10.2023.
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