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2022 (8) TMI 287 - AT - Income TaxRevision u/s 263 - As per CIT amount was invested to the nominal member and in the Schedule Bank not in the Cooperative Bank and disallowed the deduction of 80P(2) and return back the order to AO for reassessment - HELD THAT:- As respectful observation of the case Mavilayi Service Coop Bank Ltd. [2021 (1) TMI 488 - SUPREME COURT] limited object of section 80P(4) is to exclude co-operative banks that function at par with other commercial banks i.e. which lend money to members of the public. Thus, if the Banking Regulation Act, 1949 is now to be seen, what is clear from section 3 read with section 56 is that a primary cooperative bank cannot be a primary agricultural credit society, as such co-operative bank must be engaged in the business of banking as defined by section 5(b) of the Banking Regulation Act, 1949, which means the accepting, for the purpose of lending or investment, of deposits of money from the public. A number of judgments have held that a proviso cannot be used to cut down the language of the main enactment where such language is clear, or to exclude by implication what the main enactment clearly states - the ratio decidendi of Citizen Cooperative Society Ltd. [2017 (8) TMI 536 - SUPREME COURT] must be given effect to. Section 80P of the IT Act, being a benevolent provision enacted by Parliament to encourage and promote the credit of the co-operative sector in general must be read liberally and reasonably, and if there is ambiguity, in favour of the assessee. The observation of the order of the assessing authority, it is clear that the particular issue related investment in cooperative bank nationalised bank was not discussed in the order shift even the Ld. assessing officer did not apply his mind to differentiate the nature of investment of the assessee. The earning of interest from this investment will be in question for attraction of tax or allowable deduction under section 80(P) of the Act for treating this income as business. Incorrect assumption of fact & incorrect application of law will separately the requirement of order being erroneous. In the case of Malabar Industrial Company Ltd. [2000 (2) TMI 10 - SUPREME COURT] The assessment order is itself erroneous & prejudicial to the interest of revenue. PCIT was justified in revising the order of assessment. Accordingly, the impugned order pass by PCIT is upheld. Appeal of assessee dismissed.
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