9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2019 (11) TMI 407 - AT - Income TaxDeduction u/s 80(P)(2)(a)( i) - HELD THAT - As is discernible from a perusal of Sec. 80P(2)(a)(i), the same envisages a deduction in respect of the whole of the amount of profits and gains of business attributable to the specified activities of the co-operative society. In our considered view, the term attributable to which is much wider in impact than the expression derived from , would thus also cover receipts from other activities related to the business of banking. As the assessee before us is co-operative credit society and not a co-operative bank, therefore, it would not be hit by the provisions of Sec.80P(4) as had been made available on the statute by the Finance Act, 2006, w.e.f 01.04.2007. - Apart there from, we find that the Tribunal in the assesses own case for A.Y 2014-15 2019 (6) TMI 1293 - ITAT MUMBAI had concluded that the assessee society was duly entitled for claim of deduction u/s 80P(2)(a)(i) of the Act. - the assessee society was duly entitled for claim of deduction u/s 80P(2)(a)(i) of the Act. We thus not finding any infirmity in the order of the CIT(A), who had rightly concluded that the assesses claim for deduction under Sec. 80P(2)(a)(i) was in order, uphold his order in context of the issue under consideration. Deduction under Sec. 80P(2)(d) - Power of CIT(A) u/s 251 to bifurcate the income into Business income u/s 218 and investment income u/s 56 - HELD THAT - the assesses claim for deduction under Sec. 80P was declined by the A.O on the standalone basis of a conjoint reading of Sec.80P(2)(a)(i) r.w.s 80P(4). In our considered view, the CIT(A) before resorting to the aforesaid fresh basis for restricting the assesses claim for deduction under Sec.80P to an amount of ₹ 52,12,193/-, in all fairness, should have afforded an opportunity of being heard to the assessee and called for his objections, if any, as regards the same. Appeal of the revenue is dismissed and the appeal the assessee is allowed for statistical purposes.
Issues Involved:
1. Entitlement to deduction under Section 80P(2)(a)(i) and Section 80P(2)(d) of the Income Tax Act, 1961. 2. Classification of income as business income or investment income. 3. Application of Section 80P(4) and its implications on co-operative credit societies. 4. Procedural fairness in bifurcation of income and deductions by the CIT(A). Detailed Analysis: 1. Entitlement to Deduction under Section 80P(2)(a)(i) and Section 80P(2)(d): The primary issue revolves around the eligibility of the assessee, a co-operative credit society, for deductions under Section 80P(2)(a)(i) and Section 80P(2)(d). The CIT(A) had bifurcated the total income of ?55,38,329 into business income under Section 28 and investment income under Section 56, allowing deductions accordingly. The assessee claimed that the entire income should be treated as business income and thus eligible for deduction under Section 80P(2)(a)(i). The CIT(A), however, treated interest earned on investments as investment income and not business income, allowing only a partial deduction under Section 80P(2)(d). 2. Classification of Income as Business Income or Investment Income: The CIT(A) classified the interest income earned from investments as investment income, which was contested by the assessee. The assessee argued that such income should be considered business income, as it was earned in the course of providing credit facilities to its members. The CIT(A) differentiated between income from the core activities of the society and income from investments, allowing deductions accordingly. 3. Application of Section 80P(4) and Its Implications: The AO denied the deduction under Section 80P(2)(a)(i) based on the application of Section 80P(4), which excludes co-operative banks from such deductions. The CIT(A) and the Tribunal, however, concluded that the assessee, being a co-operative credit society and not a co-operative bank, was not hit by the provisions of Section 80P(4). This conclusion was supported by precedents, including the judgment of the Hon’ble High Court of Bombay in Quepem Urban Credit Society Ltd. Vs. ACIT, which clarified that a co-operative credit society cannot be considered a co-operative bank unless specific conditions are met. 4. Procedural Fairness in Bifurcation of Income and Deductions: The assessee contended that the CIT(A) bifurcated the income and deductions without providing an opportunity to be heard, thus violating principles of natural justice. The Tribunal found merit in this argument and noted that the CIT(A) should have afforded the assessee an opportunity to present its case before making such bifurcations. Consequently, the Tribunal directed the CIT(A) to reconsider the assessee’s entitlement to deductions under Section 80P, ensuring procedural fairness. Conclusion: The Tribunal upheld the CIT(A)’s decision to allow the assessee’s claim for deduction under Section 80P(2)(a)(i) but remanded the issue of bifurcation of income and deductions back to the CIT(A) for reconsideration, ensuring the assessee is given a fair opportunity to present its case. The Tribunal dismissed the revenue’s appeals, affirming that the assessee, being a co-operative credit society, is eligible for deductions under Section 80P(2)(a)(i) and not hit by Section 80P(4). The appeals of the assessee were allowed for statistical purposes, emphasizing the need for procedural fairness in the adjudication process.
|
