9911796707
TMI Blog2025 (4) TMI 95X X X X Extracts X X X X X X X X Extracts X X X X ..... proceedings scheme, 2019 on the issues viz., (i) investments / advances / loans and (ii) deduction from total income under Chapter-VI-A. On this issue, after considering the material available before him and also on perusal of the submissions made by the assessee, the Ld. AO completed the assessment U/s. 143(3) r.w.s 143(3A) and 143(3B) of the Act on 08/04/2021 accepting the income returned by the assessee. Thereafter, by virtue of the power vested with the Ld. Pr. CIT as per the provisions of section 263 of the Act, the Ld. Pr. CIT called for the assessment record for the AY 2018-19 and same were examined by the Ld. Pr. CIT. On perusal of the assessment record, the Ld. Pr. CIT observed that the interest of Rs. 65,29,869/-earned from the District Central Cooperative Bank allowed by the Ld. AO in the assessment is not an allowable deduction U/s. 80P of the Act. Thus, the Ld. Pr. CIT was of the view that the assessment order passed for the AY 2018-19 U/s. 143(3) r.w.s 144B of the Act is erroneous and prejudicial to the interest of the Revenue and accordingly proposed to revise the assessment U/s. 263 of the Act. Accordingly, the Ld. Pr. CIT issued a show cause notice dated 08/11/2023 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ces of the case the order passed U/s. 263 of the act is contrary to the facts of the case and provisions of law. 2. The Ld. Pr. CIT ought to have known that the orders passed by the Assessing Officer NFAC U/s. 143(3) r.w.s 143(3A) & 143(3B) of the Act is neither erroneous or prejudicial to the interest of the revenue hence the impugned order is liable to be set aside. 3. The Ld. Pr. CIT ought to have known that the AO has rightly allowed deduction U/s. 80P(2) of the Act, pertaining to interest earned from DCC Bank of Rs. 65,29,869/ - and it is a settled law that such interest is eligible for deduction, therefore any adverse view on this cannot stand the test of judicial scrutiny. 4. The Ld. Pr. CIT ought to have known that when the AO after considering the relevant facts and provisions of law has allowed deduction U/s. 80P(2) of the Act, hence it was not within the purview of section 263 of the Act to reopen the issue under the guise of alleged prejudice caused to the interest of the Revenue. 5. The Ld. Pr. CIT while negating the claim U/s. 80P(2) of the Act as above, drawn support of the Hon'ble Supreme Court in the case of "Totgars Cooperative Society Limited, 322 ITR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the facts and circumstances of the case, the Ld. Pr. CIT has rightly held that the assessee is not eligible for deduction U/s. 80P of the Act. The Ld. DR therefore pleaded to uphold the order of the Ld. Pr. CIT. 6. I have heard both the sides and perused the material placed on record as well as the orders of the Ld. Revenue Authorities. Now the question before me is to decide whether the assessee is eligible for deduction u/s 80P with respect to the interest income earned on deposits parked with District Cooperative Central Bank, or not? It is an admitted fact that the assessee has claimed deduction u/s 80P of the Act. The contention of the Ld. Pr. CIT and the Ld. DR is that any income by way of interest or dividends derived the Co-operative Society from its investments with any other cooperative society is eligible for deduction.The Ld. Revenue Authorities have also placed relied on the decision of Hon'ble Supreme Court of India in Civil Appeal No. 1622 of 2010 in the case of M/s Totgars Cooperative Sale Society Ltd., wherein it was held that "investment of surplus on hand not immediately required in Short Term deposits and securities by a co-operative society providing credi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed. Section 80P(1) of the Act entitles the Cooperative Societies to deduct the sums specified in sub-section (2) from its gross total income while computing the total income. Sub-section (2) of section 80P, in the sub-clause (a) allows deduction to cooperative society which is engaged in the following activities: "(a) in the case of a co-operative society engaged in- (i) carrying on the business of banking or providing credit facilities to its members, or (ii) a cottage industry, or [(iii) the marketing of agricultural produce grown by its members, or] (iv) the purchase of agricultural implements, seeds, livestock or other articles intended for agriculture for the purpose of supplying them to its members, or (v) the processing, without the aid of power, of the agricultural produce of its members, [or] the collective disposal of the labour of its members, or [(vi) (vii) fishing or allied activities, that is to say, the catching, curing, processing, preserving, storing or marketing of fish or the purchase of materials and equipment in connection therewith for the purpose of supplying them to its members,] the whole of the amount of profits and gains of business attrib ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nother [2017] 396 ITR 0371 (AP) in para 34 has discussed about the decision of the Hon'ble Supreme Court in the case of Totgar's Cooperative Sale Society Ltd (supra) and distinguished the facts while deciding the case. For the sake of brevity, we extract the relevant para 34 of the judgment of the Hon'ble Andhra Pradesh and Telangana High Court herein below: "34. The case before the Supreme Court in Totgar's Co-operative Sale Society Ltd.'s case (supra) was in respect of a co operative credit society, which was also marketing the agricultural produce of its members. As seen from the facts disclosed in the decision of the Karnataka High Court in Totgars, from out of which the decision of the Supreme Court arose, the assessee was carrying on the business of marketing agricultural produce of the members of the society. It is also found from paragraph-3 of the decision of the Karnataka High Court in Totgar's Co-operative Sale Society Ltd.'s case (supra) that the business activity other than marketing of the agricultural produce actually resulted in net loss to the society. Therefore, it appears that the assessee in Totgars was carrying on some of the activ ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
