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TMI Blog2022 (8) TMI 1020X X X X Extracts X X X X X X X X Extracts X X X X ..... arises against the Pr.CIT, Pune-4, Pune s order dated 23-03-2022 passed in case No. ITBA/REV/F/REV5/2021-22/1041379374(1) in proceedings under Section 263 of the Income Tax Act, 1961, in short the Act . Heard both the parties. Case file perused. 2. The assessee s sole substantive ground raised in the instant appeal challenges correctness of learned PCIT s revision directions holding the corresponding regular assessment dated 15.11.2019 as an erroneous one causing prejudice to the interest of Revenue for the reason that the Assessing Officer had wrongly accepted its section 80P(2)(a) deduction claim regarding interest income of Rs.3,22,84,734/- derived from deposits made in the co-operative banks. 3. Learned CIT-DR vehemently supported the PCIT s revision directions under challenge reading as under: 7. I have examined the submission made by the assessee and issues involved therein. I have also gone through various case laws filed and relied upon by the assessee in support of claim of Rs.1,78,32,346/- u/s 80P. It is the submission of the assessee that the allowability of deductions has been examined by the Assessing Officer and he has taken a view. Therefore, invoking ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the aforesaid decisions of the Hon'ble Supreme Court Karnantaka High Court, Interest earned on such deposits kept with Scheduled Bank/Cooperative Bank cannot be allowed as deduction under section 80P of the Act and such interest should be brought to tax. a. In this regard, the Assessment record has been verified in detail. The submissions made before the Assessing Officer regarding the deposits made with different bank/institution are seen to have been given without details as to when they were made and whether they were made out of the Deposits of the members or otherwise from out of the surplus generated. b. Also, the assessee has claimed that it accept deposits from its members only. However, no requisite details were furnished by the assessee either before the Assessing Officer or during the present proceedings. The Assessing Officer also has not verified this aspect. 9. It is seen from the Profit and Loss account that the assessee has received interest dividend income of Rs. 3.22 Cr. on fixed deposits investments with various co-operative banks. It is not clear whether these co-operative banks are registered with the RBI or not. If it is registered wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 11,39,89,067 This act of making deposits out of the deposits received from members cannot be considered to be attributable to the business of providing credit facilities to its members. Thus, making deposits to the bank out of the deposits received from Members is not in accordance to the principles of mutuality. 11. In the light of these facts, the Assessment Order dt 15.11.2019 is hereby set aside to the Assessing Officer for proper verification of facts and to re-examine the assessee's claim of deduction of Rs.1,78,32,346/- under section 80P of the Income-tax Act, 1961. However, before arriving at any conclusion, the Assessing Officer shall give reasonable opportunity to the assessee to adduce the evidence and information with regard to: a. the Source of deposits made with all institutions from which interest income is earned with specific details and nexus as to whether those deposits are made from the deposits received from the members which are returnable to the members or from out of the surplus funds arising from profits and gains. b. Whether the deposits are made with institutions which are registered with RBI for c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ould 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). Where in the case of an assessee being a co-operative society, the gross total income includes any income referred to in sub-section (2), there shall be deducted, in accordance with and subject to the provisions of this section, the sums specified in sub-section (2), in computing the total income of the assessee. (2). The sums referred to in sub-section (1) shall be the following, namely :- (a)............................................................................................ (b)............................................................................................ (c)............................................................................................ (d) in respect of any income by way of interest or dividends deri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty 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 assessee in the following cases: (i) M/s Solitaire CHS Ltd. vs. Pr. CIT, ITA No. 3155/Mum/2019; dated 29.11.2019 ( ITAT G Bench, Mumbai); (ii) Majalgaon Sahakari SAkhar Karkhana Ltd. Vs. ACIT, Circle-3, Aurangabad, ITA No, 308/Pun/2018 (ITAT Pune) (iii) Kaliandas Udyog Bhavan Pemises Co-op. Society Ltd. Vs. ITO, 21(2)(1), Mumbai We further find that the Hon'ble High Court of Karnataka in the case of Pr. Commissioner of Income Tax and Anr. Vs. Totagars Cooperative Sale Society (2017) 392 ITR 74 (Karn) and Hon ble High Court of Gujarat in the case of State Bank Of India Vs. CIT (2016) 389 ITR 578 (Guj), had held, that the interest income earned by the assessee on its investments with a co-operative bank would be e ..... X X X X Extracts X X X X X X X X Extracts X X X X
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