9911796707
TMI Blog2022 (5) TMI 1055X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome for the Assessment Year 2016-17 declaring "Nil‟ taxable income after claiming deduction under Section 80P of the Act in respect of interest income earned from surplus amount kept as temporary deposits with banks (including cooperative banks). 3. During the relevant previous year, the Assessee earned interest income of INR 53,78,345/- from normal banking business, interest income of INR 41,85,230/- from co-operative banks (i.e. Sarswat Bank & RDCC Bank), and interest income of INR 5,42,724/- from commercial banks (i.e., Dena Bank & Bank of India). 4. The case of the Appellant was selected for scrutiny and during the assessment proceedings the Assessing Officer (AO) called for the details and breakup of all the receipts and asked the Appellant to justify its claim for deduction under Section 80P of the Act. After examining the reply filed by the Appellant, the AO concluded that the Appellant was not entitled to claim deduction under Section 80P(2)(a)/(d) of the Act in respect of interest income of INR 5,42,724/- from commercial banks and accordingly made disallowance of INR 2,62,244/- (after allowing deduction for expenses). The Assessing Officer accepted the contention ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elied upon the decision of the Tribunal in the case of Kaliandas Udyog Bhavan Premises vs. ITO: ITA No. 6547/Mum/2017, dated 24.04.2018. 9. In response the Learned Departmental Representative relied on order passed by PCIT to justify the exercise of power of revision under Section 263 of the Act the relevant extract of which read as under: "04. As mentioned above that the assessee has shown interest income of Rs. 57,78,345/-...... xx xx Thus, the plain reading of the above section describes that the assessee has to invest the surplus fund with cooperative society and not co-operative Banks. .........................It is seen that the assessee has invested the surplus fund with the Co-operative Banks and received interest on the said investments. Interest income would come in the category of "Income from Other Sources and not income from business". Hence, such interest income would be taxable under section 56 of the Act as decided by the Hon‟ble Supreme Court in the case of Totgars Cooperative Society Vs. ITO. 05. xx xx 06. Also, vide Finance Act 2006, deduction from income of Co-operative Banks as per the provisions of Section 80P of the Act, has been withdraw ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ociety to serve its members by offering the credit facilities is the purpose for which the deduction is available. It is for this reason section 80P(2)(d) has been inserted in the act to ensure that any surplus of one society may be utilized by other society to serve their members. The deposits made with the bank has not been extended this deductions which makes the legislative intention very clear that if the funds are utilized by the members of the society then earnings on those funds have been extended the benefit of deductions. Thus if the deposits are utilized for the members then the taxability benefits reaches to the society. ......................This legislative spirit has not been considered in any of the decisions cited by the AR of the assessee. The overemphasis on liability or surplus funds used by the society to. make distinction with Totogar‟s is actually misplaced, The AR of the assessee argued that alternatively the deduction may be allowed u/s 80P(2)(d) which is acceptable. considering the provision of law made as discussed above. The interest on deposits with State Bank of India cannot be held as business income u/s 80P(2)(a)(i) of the Income Tax Act, and a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the assessee cooperative society with any other cooperative society. We though are in agreement with the observations of the lower authorities that with the insertion of Subsection (4) of Sec. 80P, vide the Finance Act, 2006, with effect from 01.04.2007, the provisions of Sec. 80P would no more be applicable in relation to any cooperative bank, other than a primary agricultural credit society or a primary co-operative agricultural and rural development bank, but however, are unable to subscribe to their view that the same shall also jeopardise the claim of deduction of a co-operative society under Sec. 80P(2)(d) in respect of the interest income on their investments parked with a co-operative bank. We have given a thoughtful consideration to the issue before us and are of the considered view that as long as it is proved that the interest income is being derived by a co-operative society from its investments made with any other co-operative society, the claim of deduction under the aforesaid statutory provision, viz. Sec. 80P(2)(d) would be duly available. We may herein observe that the term "co-operative society‟ had been defined under Sec. 2(19) of the Act, as under: " ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at par with other banks would no more be entitled for claim of deduction under Sec. 80P(4) of the Act. We are of the considered view that the reliance placed by the CIT(A) on the judgment of the Hon‟ble Supreme Court in the case of Totgars Cooperative Sale Society Ltd. vs. ITO (2010) 322 ITR 283(S.C.) being distinguishable on facts, thus, had wrongly been relied upon by him. The adjudication by the Hon‟ble Apex Court in the aforesaid case was in context of Sec. 80P(2)(a)(i), and not on the entitlement of a co-operative society towards deduction under Sec. 80P(2)(d) on the interest income on the investments parked with a cooperative bank. We further find that the reliance place by the ld. D.R on the order of the ITAT "F" bench, Mumbai in the case of M/s Vaibhav Cooperative Credit Society Vs. ITO- 15(3)(4) (ITA No. 5819/Mum/2014, dated 17.03.2017 is also distinguishable on facts. We find that the said order was passed by the Tribunal in context of adjudication of the entitlement of the assessee co-operative bank towards claim of deduction under Sec.80P(2)(a)(i) of the Act. We find that it was in the backdrop of the aforesaid facts that the Tribunal after carrying out a c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Rs.27 48, 553/- earned by the assessee on the investments held with the co-operative bank would be entitled for claim of deduction under Sec. 80P(2)(d)." (Emphasis supplied) 12. In view of the above, it is clear that the assessment order passed by the AO was neither erroneous nor prejudicial to the interest of revenue. Assuming arguendo even if the contention of PCIT is accepted, the view taken by the AO regarding allowability of deduction under Section 80P(2)(d) of the Act in respect of interest received by the Appellant from a cooperative bank would still qualify as a plausible view and thereby taking away the jurisdiction of PCIT to invoke powers of revision under Section 263 of the Act. It is settled legal position that in case the view taken by the AO is a plausible view, PCIT cannot be permitted to substitute his opinion in place of the AO to arrive to a contrary finding. Thus, we allow Ground No.1 and hold that in the facts and circumstances of the present case the PCIT lacked the jurisdiction to exercise powers under Section 263 of the Act. Accordingly, the order, dated 26.03.2021, passed by the PCIT under Section 263 of the Act is set aside and the assessment order ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
