2020 (9) TMI 1013 - AT - Income Tax

Revision u/s 263 - treating the original assessment made u/s. 143(3) as erroneous and prejudicial to the interest of revenue - assessee not eligible for deduction u/s. 80P2(d) - assessee has made certain investment in various banks and earned interest income on fixed deposit and dividend income and has not offered the said amount for taxation under the head Income from other sources and he held interest and dividend income earned is other income not eligible for deduction u/s. 80P2(d) - As per assessee every detail regarding the claim under Chapter VI has been provided to the AO and after examination of which the AO allowed the claim of assessee - HELD THAT - Record furnished before us regarding the assessment proceedings clearly shows the assessee made no specific claim u/s. 80P2(d) of the Act before the AO nor in the return of income as rightly pointed by the ld. DR. Whether the interest and dividend earned by the assessee from Co-operative Bank is eligible for claim u/s. 80P2(d) ? - In the present case, the assessee is a Co-operative Society engaged in the business of manufacturing of sugar and by-products. As rightly argued by Shri Deepak Garg that the assessee is not under the activities of specified under Clause (d) or (b) of section 80P, but under Clause (c), as discussed above the assessee earned interest and dividend income from Latur District Central Co-operative Bank and Vikas Sahakari Bank Ltd. clearly shows the interest and dividend earned by the assessee are not from Co-operative Society. Therefore, in our opinion the AO on incorrect assumptions of facts without applying correct application of law allowed deduction u/s. 80P2(d) of the Act which clearly reflects non application of mind. Coming to the assessment order passed 143(3) of the Act, we note that there was no discussion nor reference made by the AO to the claim of assessee made u/s. 80P2(d) - AO has not made proper enquiry of the claim made by the assessee in terms of provisions contemplated u/s. 80P - Pr. CIT directed the AO to decide this issue afresh after bringing entire facts on record after affording opportunities to the assessee, in our opinion, the order of Pr. CIT-2 is valid in treating the assessment order completed u/s. 143(3) of the Act dated 08-03-2016 as erroneous and prejudicial to the interest of revenue. - Decided against assessee.

Summary

Issues:
Delay in filing appeal, Treatment of interest and dividend income for deduction u/s. 80P2(d) of the Act, Enquiry by Assessing Officer, Eligibility of Co-operative Bank income for deduction u/s. 80P2(d) of the Act.

Analysis:
The appeal was filed with a delay of 196 days, which was condoned by the Appellate Tribunal after finding the reasons for delay to be genuine. The main issue raised by the assessee was the treatment of interest and dividend income for deduction u/s. 80P2(d) of the Act by the Principal Commissioner of Income Tax-2, Aurangabad. The Principal Commissioner contended that the income earned was not eligible for deduction as it was from a Co-operative Bank, not falling under the purview of a Co-operative Society as per the Act. The Principal Commissioner directed the Assessing Officer to re-examine the issue, considering all facts.

During the proceedings, the assessee argued that all necessary details were provided to the Assessing Officer for deduction u/s. 80P2(d) of the Act. The assessee maintained that the income was added to the total income and offered for taxation, disputing the Principal Commissioner's decision. The Assessing Officer's lack of proper enquiry into the claim was highlighted, leading to the dispute.

The Tribunal analyzed the eligibility of interest and dividend income from a Co-operative Bank for deduction u/s. 80P2(d) of the Act. Referring to legal precedents, the Tribunal concluded that a Co-operative Bank's income is not eligible for the deduction, as its business is distinct from that of a Co-operative Society. The Tribunal found that the Assessing Officer's failure to properly examine the claim and the lack of discussion on the deduction in the assessment order supported the Principal Commissioner's decision. Therefore, the Tribunal upheld the Principal Commissioner's order, dismissing the appeal.

In summary, the Tribunal addressed the delay in filing the appeal, the treatment of interest and dividend income for deduction u/s. 80P2(d) of the Act, the Assessing Officer's enquiry, and the eligibility of income from a Co-operative Bank for deduction. The decision highlighted the distinction between Co-operative Banks and Co-operative Societies regarding tax deductions, emphasizing the need for proper assessment procedures and application of relevant laws. The Tribunal's ruling upheld the Principal Commissioner's decision, ultimately dismissing the appeal.