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TMI Blog2022 (8) TMI 28X X X X Extracts X X X X X X X X Extracts X X X X ..... ently supported the PCIT's revision directions under challenge reading as under: "6. I have examined the submission made by the assessee and issues involved. I have also gone through various case laws filed and relied upon by the assessee in support of claim u/s 8oP(2)(a)(i) or 80P(2)(d) of the Act. It is the submission of the assessee that, "Thus the Assessing Officer has already made requisite enquiries in detail, applied his mind on the submissions made by the Assessee, followed the binding decisions of Hon. Pune Bench of ITAT relied by the Assessee and then allowed the deduction claimed U/s 80P(2) of the Income Tax Act. Hence, it is the case of complete enquiry by the AO and decision of the AO cannot be termed as erroneous as he has followed the binding decision of Jurisdictional Bench of ITAT. Hence, we submit that assessment order passed after appreciation of all above facts is neither erroneous nor warrants any action u/s 263 of IT Act" It is found that Assessing officer has arrived at decision without properly examining the eligibility of assessee to claim deduction u/s 80P of the Act. As per provisions of section 80P(2)(a)(i), the Society is required to substantiate th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Karnataka High Court decision in the case of Tumkur Merchants Souharda Credit Co-op Society Ltd V CIT (2017) 396 ITR is relevant to be considered. In that it is mentioned that, "the amount which was invested in banks to earn interest was not an amount due to any members. It was not the liability, it was not shown as liability in their account. "Now, in the case of the present assessee, it is found that the deposits are made out of Deposits made by members. These deposits are liable to be returned back to the Members and hence are to be shown as liability in the Balance sheet. These deposits from members are Invested in the fixed deposits and interest income is earned from them. It implies that the deposits' accepted from the members were not used by the Society in its business of providing Credit facilities to its members. Instead they are put in to Deposits to earn interest. This act of making deposits out of the Deposits received from Members cannot be considered to attributable to the business of carrying on of the Business of providing Credit facilities to its Members and not in accordance with the principles of mutuality. 9. In the light of these facts, the Assessme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vide the Finance Act 2006, with effect from 01.04.2007. On a perusal of the order passed by the Pr. CIT under Sec. 263 of the Act, we find, that he was of the view that pursuant to insertion of sub-section (4) of Sec. 80P, the assessee would no more be entitled for claim of deduction under Sec. 80P(2)(d) in respect of the interest income that was earned on the amounts which were parked as investments/deposits with the co-operative bank, other than a Primary Agricultural Credit Society or a Primary Co-operative Agricultural and Rural Development Bank. Observing, that the co-operative banks from where the assessee was in receipt of interest income were not cooperative societies, the Pr. CIT was of the view that the interest income earned on such investments/deposits would not be eligible for deduction under Sec. 80P(2)(d) of the Act. 8. After necessary deliberations, we are unable to persuade ourselves to concur with the view taken by the Pr. CIT. Before proceeding any further, we may herein cull out the relevant extract of the aforesaid statutory provision, viz. Sec. 80P(2)(d), as the same would have a strong bearing on the adjudication of the issue before us. "80P(2)(d) (1). Wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... "(19) "Co-operative society" means a cooperative society registered under the Co-operative Societies Act, 1912 (2 of 1912), or under any other law for the time being in force in any state for the registration of co-operative societies;" We are of the considered view, that though the co-operative banks pursuant to the insertion of sub-section (4) to Sec. 80P would no more be entitled for claim of deduction under Sec. 80P of the Act, but as a cooperative bank continues to be a co-operative society registered under the Co-operative Societies Act, 1912 (2 of 1912), or under any other law for the time being in force in any State for the registration of co-operative societies, therefore, the interest income derived by a co-operative society from its investments held with a co-operative bank would be entitled for claim of deduction under Sec.80P(2)(d) of the Act. 9. In so far the judicial pronouncements that have been relied upon by the ld. A.R are concerned, we find that the issue that a co-operative society would be entitled for claim of deduction under Sec. 80P(2)(d) on the interest income derived from its investments held with a co-operative bank is covered in favour of the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X
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