9911796707
TMI Blog2021 (12) TMI 554X X X X Extracts X X X X X X X X Extracts X X X X ..... under section 263 of the Act in so far as it is against the appellant is opposed to law, weight of evidence, natural justice, probabilities, facts and circumstances of the appellant's case. 2. The notice issued for intimation of proceedings under section 263 of the Act, was bad in law. 3. The learned CIT is not justified in law in invoking the jurisdiction under section 263 of the Act and setting aside the order of the AO, as being "erroneous and prejudicial to the interest of the revenue", which is contrary to fact, on the facts and circumstances of the case. 4. The learned CIT is not justified in law in holding that the order passed by the Assessing Officer is bad in law, without appreciating that there was no error in the order pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... facts of the case are as follows: The assessee is a co-operative society registered under the Karnataka Co-operative Societies Act, 1959. It is engaged in providing credit facilities to its members and accepting deposits from its members. For the assessment year 2015- 2016, return of income was filed on 09.03.2016 declaring `NIL' income after claiming deduction u/s 80P(2) of the Act amounting to Rs. 15,17,065. The assessment was selected for scrutiny and assessment u/s 143(3) of the Act was completed on 18.12.2017. The A.O. had accepted the claim of deduction u/s 80P(2)(a)(i) of the Act amounting to Rs. 14,08,711 and 80P(2)(c) of the Act amounting to Rs. 50,000 (for 80P(2)(c), the assessee claimed deduction of Rs. 1,08,550). Accordingly, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome from institutions (who are not its members) is not eligible for deduction u/s 80P(2)(a)(i) of the Act and also u/s 80P(2)(d) of the IT Act, 1961. Therefore, the AO is directed to disallow the claim of deduction u/s 80P(2)(d) amount into Rs. 7,59,337/-. 5. Further, the assessee claimed deduction u/s 80P(2)(c) amounting to Rs. 50,000/- on the interest received from Cooperative Societies. It is noted that the assessee is not eligible for deduction u/s 80P(2)(c) of the IT Act, 1961 as the assessee has already claimed deduction u/s 80P(2)(a)(i) of the IT Act, 1961. 6. Therefore, the assessment order passed by the ITO, W- 1(3), Mysuru for AY 2015-16 u/s 143(3) of the IT Act, 1961 on 18.12.2017 is held to be erroneous and prejudicial to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s with Cooperative banks is entitled to deduction u/s 80P(2)(a)(i) of the Act. Alternatively it is contended that if interest income is to be assessed as income from other sources, necessarily, the cost incurred for earning such interest income ought to be allowed as deduction u/s 57 of the Act. As regards the main contention of the assessee, we find the Hon'ble jurisdictional High Court in the case of Totagars Co-operative Sale Society v.ITO reported in 395 ITR 611 (Kar.) had categorically held that interest income received on investment of surplus funds with Co-operative banks is to be assessed as income from other sources and not income from business (Thereby denying the claim of deduction u/s 80P(2)(a)(i) of the Act). It was further hel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the proportionate expenditure incurred by the appellant requires deduction. It is logical that when the Revenue is permitted to assess and recover taxes from assessee under Section 56 by treating the income earned by interest as income from "other sources", the appellant shall be entitled for proportionate expenditure cost incurred in mobilizing the deposit placed in the Bank/s. What can be taxed is only the net income which the appellant earns after deducting cost and expenditure incurred and administrative expenses incurred by the assessee. 13. Accordingly, we answer the question of law and hold that the Tribunal was not right in coming to the conclusion that the interest earned by the appellant is an income from other sources without ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
