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Showing 61 to 80 of 1466 Records
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2024 (6) TMI 1406
Surcharge applicable to the case of the assessee in terms of 2(29C) r/w section 164/167B - Liability to pay tax at maximum marginal rate as per provisions of Section 167B - as argued even if the tax rate is chargeable at a maximum rate, the applicable surcharge rate should be applied as specified in the Finance Act depending upon the net taxable income and it is incorrect to hold that the rate of surcharge should also be levied at maximum rate, when the tax is leviable at maximum marginal rate - HELD THAT:- Proviso to section 2 of the Finance Act, says that in respect of any income chargeable to tax under section 115A, 115AB, 115AC, 115ACA, 115AD, 115BA, 115BB, 115BBA, 115BBC, 115BBF, 115BBG, 115BBH, 115BBI, 115E, 115JB or 115JC of the Income Tax Act, the amount of income tax computed under this sub-section shall be increased by a surcharge, for the purpose of the Union, calculated, in the case of association of persons, having a total income exceeding Rs. 50 lakh, but not exceeding Rs. 1 crore @10% of such income tax etc. It does not contemplate surcharge at any rate on the income less than Rs. 50 lakhs.
In the case of ITO vs. Tayal Sales Corporation [2001 (2) TMI 877 - ITAT HYDERABAD] Tribunal took the view that under section 2(29C) of the Act, maximum marginal rate means, the rate of income tax including surcharge on income tax, if any applicable in relation to the highest slab of in the case of an individual and it does not say that the maximum marginal rate shall include surcharge on income tax irrespective of the highest slab of income, but it has a relationship with the highest slab of income.
Thus we direct that no surcharge could be levied on the income tax, if the income of the assessee is less than Rs. 50 lakhs.
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2024 (6) TMI 1405
Validity of assessment order passed u/s 143(3) in regard to issue of “freight income" - violation of natural justice - respondent had mentioned that the assessee had not submitted any bills and vouchers with respect to the freight outward - impugned order indicates that the respondent had assessed that the petitioner had earned freight income as freight receipts from its own trucks - respondent contends that the Writ petition is not maintainable and that the petitioner has a remedy of appeal to the CIT(A) u/s 246
HELD THAT:- It is settled law that if there is a violation of principle of natural justice, existence of alternative remedy is not a bar to entertain the writ petition.
Prima facie, we are satisfied that there has been violation of principle of natural justice and that the petitioner had not been informed about the respondent’s proposed action of estimating the freight income, either during the course of hearing or in the show cause notice, particularly when the respondent appears to have ignored the material submitted by the petitioner along with its reply through Annexure-V. Therefore, there shall be interim stay of recovery of only from the petitioner, until further orders.
List on 13th August, 2024.
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2024 (6) TMI 1404
Deduction u/s 80P - Interest income from banking business - CIT(A) upheld the order of AO holding that interest income is not eligible for deduction - HELD THAT:- We find that the issue involved is covered in favour of the assessee by a catena of decisions from ITAT as well as a decision of jurisdictional High Court. In this regard we may gainfully refer to decision in the case of CIT vs. Solapur Nagri Audyogik Sahakari Bank Ltd [2009 (6) TMI 15 - BOMBAY HIGH COURT] held there being no dispute that the funds in the voluntary reserves which were utilized for investment in KVP/IVP by the co-operative banks were the funds generated from the banking business, we hold that in all these cases the Tribunal was justified in holding that the interest income received by the co-operative banks from the investments in KVP/IVP made out of the funds in the voluntary reserves were eligible for deduction under section 80P(2)(a)(i).
The above case law fully supports the assessee’s case. Here also surplus funds not immediately required for day to day banking were kept in Bank deposits. The income earned there from thus would be income from banking business eligible for deduction u/s 80P(2)(a)(i).
Thus, we find that CIT (A) has erred in upholding the assessment order. The Appellant Cooperative society is entitled for deduction u/s 80P as claimed in the return. Decided in favour of assessee.
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2024 (6) TMI 1403
Denial of section 11 - delay in filing the audit report within the due date prescribed - Form 10 was not filed electronically - As regards the delay in filing the audit report, AR submitted that the same is directory in nature and not a mandatory requirement and thus denying the exemption u/s 11 is bad in law - HELD THAT:- Statement of the CIT(A) that return of income was not filed on time is incorrect. So non-filing of return within the due date prescribed cannot be a ground for denying the claim of exemption under section 11 of the Act. Further, we notice in CIT(A)’s Order, it has been stated that Form 10 is not filed before filing the return of income. This conclusion of the CIT(A) is contrary to the facts on record. The assessee had filed Form 10 electronically on 27.09.2018. So, this reasoning of the CIT(A) for denying the benefit of exemption under section 11 of the Act is also not correct.
Only surviving reason for denying claim of exemption under section 11 of the Act, is that audit report has not been filed along with the return of income - It is the contention of the assessee that the above requirement is only directory in nature and not mandatory requirement. It was contended that denying exemption under section 11 of the Act is bad in law. Admittedly, in this case, audit report was available before the AO when the return of income was processed vide intimation under section 143(1) of the Act.
Hon’ble Supreme Court in the case of Sambhaji and Others Vs. Gangabai and Others [2008 (11) TMI 393 - SUPREME COURT] held that procedure cannot be a tyrant but only a servant. It is not an obstruction in the implementation of the provisions of the Act, but an aid. The Hon’ble court further held that the procedures are handmaid and not the mistress. It is a lubricant and not a resistance. A procedural law should not ordinarily be construed as mandatory; the procedural law is always subservient to and is in aid to justice.
Thus, we hold that filing of audit report along with return of income is directory in nature and not mandatory and exemption u/s 11 of the Act, cannot be denied when the audit report is available before the AO while passing the intimation under section 143(1)(a) of the Act.
Filing of audit report though not filed within the due date, but has been filed prior to passing of the intimation under section 143(1) is not fatal to the claim of exemption u/s 11, matter is remanded to the AO to examine whether other conditions for claiming exemption under section 11 of the Act are satisfied in this case (since at the very threshold the claim of exemption was denied by the AO for the reason that there was belated filing of the audit report). Appeal filed by the assessee is allowed for statistical purposes.
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2024 (6) TMI 1402
Deduction u/s 80(P)(2) - interest earned on fixed deposits with State Bank of India - importance of word 'attributable' used - assessee is a co-operative society registered under the Maharashtra State cooperative societies act, 1961 collecting deposits from members under various scheme and major source of income is on account of interest on loan to its members and interest from fixed deposits - reasons for disallowance of deduction is that the interest income is received from the bank, therefore assessee is not eligible for deduction of interest income
HELD THAT:- On plain reading of the provisions of section 80P(2) (a) (i) the assessee is eligible for deduction of the whole of the sum attributable to carrying on business of credit to its members. Therefore only such income which has been attributable to business from its member is eligible for deduction under this section.
Identical issue has been decided in case of Tumkur Merchants Souharda Credit Cooperative Ltd. [2015 (2) TMI 995 - KARNATAKA HIGH COURT] wherein the interest accrued in a sum is from the deposits made by the assessee in a nationalized bank out of the amounts which was used by the assessee for providing credit facilities to its members considering the decision in case of Toatagarh [2010 (2) TMI 3 - SUPREME COURT] as held 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. In fact this amount which is in the nature of profits and gains, was not immediately required by the assessee for lending money to the members, as there were no takers. Therefore they had deposited the money in a bank so as to earn interest. The said interest income is attributable to carrying on the business of banking and therefore it is liable to be deducted in terms of Section 80P(1)
We hold that assessee is entitled to deduction u/s 80P(2)(a)(i) of the act on interest income received by the assessee from state bank of India of funds which are not immediately required for its utilisation in case of assessee being a members credit cooperative society. Assessee appeal allowed.
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2024 (6) TMI 1401
Disallowance of Employee's Contribution to ESI and PF u/s 36(1)(va) - payment of contribution of employee’s share should be made within 15 days from the end of the month during which disbursement of Salary is made - HELD THAT:- In the light of aforesaid discussion & relying on this Tribunal’s decision in the case of Manikandan Vazhukkapara Kumaran [2023 (11) TMI 1294 - ITAT BANGALORE] we are of the Opinion that plea of the assessee that the payment of contribution of employee’s share should be made within 15 days from the end of the month during which disbursement of Salary cannot be accepted - Appeal filed by the assessee is dismissed.
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2024 (6) TMI 1400
Rejection of application for registration the trust in form no.10AB u/s 12A(1)(ac)(ii) - assessee ought to have application u/s 12A(1)ac(iii) of the Act instead of 12A(1)(ac) (ii) of the Act - HELD THAT:- From the perusal of the record it is evident that the appellant has made an application form 10AB for registration of trust u/s 12A(1)(ac)(ii) - appellant has filed the duly rectified application on the prescribed form 10AB. CIT(E) without considering the revised application of the appellant rejected it on the technical ground. Appellant also stated that Ld. ITAT has considered the similar issue in which the Ld. CIT (E) order was set aside by the ITAT Chennai Bench.
As contended the appellant has committed a technical mistake in making the application u/s 12A(1)(ac)(ii) instead of clause (iii) of clause (ac) of sub-section (1) of section 12A of the Act. As pointed out the appellant has filed revised form 10AB for seeking registration under the correct provision i.e. Section 12A(1)(ac)(iii) which can also be considered.
In consonance with the decision rendered by the co-ordinate Bench, the typographical error deserves to be corrected. Accordingly, the appeal deserves to be allowed and impugned order dated 15.03.2024 of CIT (E) is liable to be set aside. Hence, the appeal is allowed and we set aside the order of Ld. CIT(E) dated 15-03-2024 and remand the matter back to the file of the CIT(E) for fresh adjudication by considering amended application of the appellant u/s 12A(1)(ac)(iii) of the Act, or he can call for amended application from the appellant. Appeal filed by the assessee is allowed for statistical purpose.
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2024 (6) TMI 1399
Order passed u/s 73 of the OGST Act, 2017 read with Rule 142 (5) of the OGST Rules - time limitation - petitioner contended that the reasons for passing the order impugned cannot be sustained in the eye of law - tax period July, 2017 to March, 2018 - HELD THAT:- This Court finds that since the matter is covered by the judgment of this Court in the case of M/S. LAXMI CONSTRUCTION VERSUS STATE TAX OFFICER, CT & GST CIRCLE, BARBIL. [2024 (5) TMI 1214 - ORISSA HIGH COURT], without expressing any opinion on the merits of the case, this writ petition stands disposed of in terms of the judgment passed by this Court in the case of M/s Laxmi Construction.
The writ petition is disposed off.
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2024 (6) TMI 1398
Liability of appellant to pay Central Excise Duty - appellant is the principal manufacturer and who has sent their raw materials to their job workers for conversion in terms of N/N. 214/86 -CE dated 25.03.1986 - HELD THAT:- The said issue stands decided by the Tribunal in the appellant’s own case in M/S. GREAVES COTTON LTD. VERSUS COMMISSIONER OF GST & CENTRAL EXCISE CHENNAI [2024 (5) TMI 1470 - CESTAT CHENNAI] has held that 'the appellant is not the manufacturer of the waste and scrap and therefore, there is no liability on the appellant to pay the duty on the waste and scrap manufactured at the job worker’s end. Further, the provision of Rule 4(5)(a) of the CENVAT Credit Rules, 2004 nowhere states that the waste and scrap generated at the job worker’s end makes the principal manufacturer liable to payment of duty on such waste and scrap.'
The demand do not sustain - impugned order set aside - appeal allowed.
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2024 (6) TMI 1397
Denial of relief claimed u/s 90 - delay in furnishing of Form 67 prescribed under Income Tax Rules, 1962 - HELD THAT:- We notice that Form 67 has been filed with a minor delay. Copies of Form 67 are filed in the paper book furnished for each of the Assessment Years. In the decisions referred by the ld. Counsel for the assessee, we note that this Tribunal has consistently taken a view that filing of Form 67 is directory and not mandatory in nature and that the claim of FTC cannot be denied merely for late filing of Form 67 as it is merely a procedural formality. See Krishna Kumar Chaudhary [2023 (7) TMI 5 - ITAT KOLKATA]
Thus we find that the assessee is entitled for the alleged Foreign Tax Credit claimed in the return of income for the impugned Assessment Years. Decided in favour of assessee.
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2024 (6) TMI 1396
Validity of reopening of assessment against income generated in the NRE account - income generated in NRE account stated to be escapement from income in view of Section 147 or not? - HELD THAT:- The aforesaid question is no more res-integra. The Coordinate Bench of this Court in case of Nitin Mavji Vekariya [2023 (11) TMI 649 - GUJARAT HIGH COURT] held that funds came from NRE Accounts and the source therefore was beyond the reach of the authorities. Even on reading the provisions of section 10(4), it is apparent that such incomes are exempt from being included in the total income.
Considering the ratio laid down by the Coordinate Bench and keeping in mind the facts of the present case, we are unable to take any different view - WP allowed.
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2024 (6) TMI 1395
Deduction u/s. 80P(2)(d) - adjustment has been made by the CPC u/s. 143(1) treating the interest received from the Cooperative Bank as income from other sources - HELD THAT:- Admittedly assessee is a Co-operative Housing Society registered under Maharashtra Society act 1960 and as per the said act of the Co-operative Housing Societies have to get their accounts audited ones there is requirement to furnish and audit before from Charted Accountant, and therefore the due date was 31/10/2012 and 31/10/2014 for the A.Y 2012-23 and 2014-15 respectively and thus assessee had filed the return of income within the due date of under section 139(1).
Thus even under amended provision no prima facie adjustment have been made no prima facie adjustment on account of deduction u/s.80P could have been made.
In the early provision of adjustment u/s.143(1)(a) no such disallowance could have been made. Accordingly, we hold that disallowance made by the CPC u/s.143(1)(a) on the claim of deduction u/s. 80P is beyond the scope of adjustment u/s. 143(1) accordingly the adjustment is deleted.
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2024 (6) TMI 1394
Levy of personal penalty u/r 26 of the Central Excise Rules, 2002 - appeal settled under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - HELD THAT:- This Tribunal in the case of M/S JPFL FILMS PRIVATE LIMITED, JALAN JEE POLYTEX LTD., KAVITA INTERNATIONAL AGENCY, KULDEEP SINGH, DP SINGH, R KNITFAB, PERFECT DESIGNER, VK KALRA, RELIANCE INDUSTRIES LIMITED, KANPUR WOOL INDUSTRIES, SWASTIK TRADING CO., APEX CORPORATION AND MANSA TRADERS VERSUS COMMISSIONER OF CENTRAL EXCISE, LUDHIANA [023 (12) TMI 304 - CESTAT CHANDIGARH] held that once the main appeal is settled under SVLDRS, 2019, the appeals filed by the co-noticees challenging the personal penalty arising out of the same Orderin-Original cannot be sustained.
Consequently, the appeals filed by the appellants deserve to be allowed and the same are allowed.
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2024 (6) TMI 1393
Revision u/s 263 in the name of dead person/assessee - Addition on account of capital gains claimed as exempt u/s. 47(1) and rejection of assessee's claim of deduction u/s. 54/54F- HELD THAT:- It was in the knowledge of CIT that Shri Nirmal Kant Saini had expired, still the CIT passed order u/s. 263 of the Act in the name of ‘Nirmal Kant Saini’. It is not the case of revenue that the Department was not informed about the death of Shri Nirmal Kant Saini in proceedings u/s 263 of the Act.
The Hon'ble Apex Court in the case of PCIT vs Maruti Suzuki India Ltd 2019 (7) TMI 1449 - SUPREME COURT]] has held that assessment order passed in the name of non-existing entity would be without jurisdiction and was to be set aside.
In the instant case, the CIT after having knowledge of death of Nirmal Kant Saini was mandatorily required to pass an order in the name of legal heir of the deceased, whereas, the order was passed in the name of Nirmal Kant Saini i.e. in the name of a dead person. The order passed in the name of a dead person is illegal and bad in law. Hence, any subsequent proceedings arising there from are non-est. Appeal of the assessee is allowed.
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2024 (6) TMI 1392
Money laundering - proceeds of crime - Challenge to provisional order of attachment issued under section 5 of PMLA - HELD THAT:- The properties that can be proceeded against, exercising the powers of attachment must be those that have been acquired utilising the proceeds of crime. The contention of the learned counsel for the respondents that the term proceeds of crime will also include the value of the property which had been acquired even earlier is, according to me, too far-fetched and will not be justifiable in the light of the constitutional provisions of fairness and reasonableness. It is also necessary to observe at this juncture that the purpose of the PMLA is to remove tainted money and also to initiate proceedings against the proceeds of crime which have been transformed or converted into other property or intermingled with legitimate sources and then the value of the intermingled gain will assume the colour of proceeds of crime. Such a provision cannot be used to enable the authorities to proceed against properties that are unconnected with any of the criminal activity in question.
As the provisionally attached immovable property was purchased in 2004 - more than a decade and a half before the predicate offence was allegedly committed, the order attaching the immovable property is ex-facie, ultra vires the powers of the statute and totally illegal and arbitrary to the extent of the said attachment. Since ex facie illegal acts can be interfered with under Article 226 of the Constitution of India, notwithstanding the existence of an alternative remedy, this Court is of the view that the provisional attachment of the immovable property as seen from schedule A to Exhibit P11 order dated 22.05.2024 is liable to be set aside.
The provisional attachment order dated 22.05.2024 produced as Exhibit P11, in so far as it relates to Schedule A is hereby set aside. The provisional attachment in relation to the movable properties shown in Schedule B to Exhibit P11 is not interfered with and the petitioner is relegated to pursue his alternative remedies - Petition allowed in part.
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2024 (6) TMI 1391
TP Adjustment in respect of corporate guarantee to Afcons Construction Mideast LLC - TPO noticed that the assessee has extended existing guarantee to First Gulf Bank in respect of the banking facilities availed by its AE - assessee submitted before the TPO that First Gulf Bank has fixed card rate for giving loan and guarantee which is 1.5% and since the assessee has given the counter guarantee the bank has charged 1% towards a guarantee to the AE - HELD THAT:- We noticed that during the year under consideration also the assessee has given the same set of guarantees to First Gulf Bank and that the facts for the year consideration are similar to the facts of AY 2009-10. Therefore, respectfully following the decision for AY 2009-10 [2023 (12) TMI 273 - ITAT MUMBAI] in assessee's own case we hold that no TP Adjustment is required to be made in assessee's case towards corporate guarantee. These grounds raised by the Revenue are dismissed accordingly.
Disallowance of interest u/s 36(1)(iii) in respect of loans - AO held that the assessee is paying interest at an average rate of 12.41% and on the other hand the assessee has not charged any interest on the advances given to the Joint Ventures - HELD THAT:- With regard to loans which have been continued from earlier years the Tribunal has held that no disallowance u/s 36(1)(iii) is warranted. With respect to the loans extended during the year we noticed that the own funds of the assessee for year ended 31.03.2010 is Rs. 60833.05 lacs and therefore, there is merit in the submission of the ld. AR that when own funds are available for extending advances no disallowance under section 36(1)(iii) is warranted.
Thus, no disallowance towards interest u/s 36(1)(iii) is warranted for the year under consideration and accordingly we see no reason to interfere with the decision of the CIT(A). Ground No.5 & 6 raised by the Revenue in this regard are dismissed.
Disallowance of depreciation on the written down value of Speed Boat - HELD THAT:- We notice that this is a recurring issue and that Coordinate Bench in assessee's case for AY 2009-10 [2023 (12) TMI 273 - ITAT MUMBAI] as held as per the facts on record, machinery was purchased by the principal but the assessee had been vested with the possession of them and utilized them for its business. It is not disputed that the principal has debited the cost of machinery to the assessee's account and the assessee has capitalized it in its books of account.
The assessee has claimed depreciation on the written down value of the same asset during the year under consideration and therefore, the above decision of the Co-ordinate Bench is clearly applicable for the year under consideration also. Accordingly, we see no infirmity in the order of the CIT(A).
Disallowance of Professional Fee paid for Arbitration Award - HELD THAT: -Reason for disallowance during the year under consideration is simply to follow the earlier year disallowance and to keep the issue alive. The AO for the year under consideration also has not disputed the fact that the professional fee is incurred for the purposes of business. Therefore, respectfully following the decision for AY 2009-10 [2023 (12) TMI 273 - ITAT MUMBAI] we hold that the CIT(A) has rightly deleted the disallowance made by the AO. Accordingly this ground raised by the Revenue is dismissed.
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2024 (6) TMI 1390
Deduction claimed u/s 80P - deduction as claimed towards interest received from deposits with Co-operative Bank - HELD THAT:- We notice that the Co-ordinate Bench has been consistently holding that the income derived by way of interest from Co-operative Banks is also eligible for deduction u/s 80P(2)(d). Assessee has placed the surplus funds in deposits with various Co-operative Banks and has received interest income on the same.
The assessee while filing the return of income has claimed such interest as a deduction u/s 80P(2)(d).
We notice that the lower authorities have denied the benefit of deduction for all the AYs under consideration for the reason that the interest received from Co-operative Bank is not eligible for deduction u/s 80P(2)(d).
We hold that the assessee is entitled for deduction under section 80P(2)(d) towards income derived from deposits with Co-operative Bank - Assessee appeal allowed.
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2024 (6) TMI 1389
Rectification of mistake u/s 154 - Deduction u/s 80IA claimed through belated filling of return of income - Without verifying whether the return of income is filed in time or not, AO allowed the claim - HELD THAT:- When the assessee is making a claim, he has to file return of income in time otherwise as per the provisions of section 80AC of the Act, no deduction under section 80IA of the Act would be allowed. Prima-facie, the AO committed a patent mistake allowing the claim of the assessee. The mistake committed by the AO is a mistake apparent on record. In our opinion, the mistake committed by the AO which is apparent on record can be rectified by the AO u/s 154 of the Act.
In this case, the AO has rightly invoked provisions of section 154 and rectified the mistake committed by him. Moreover, the rectification done by the AO in this case is not at all a debatable issue for the reason that it is an admitted fact that the assessee filed return of income belatedly. As per the provisions of section 80AC of the Act, no claim can be allowed if the return of income is filed belatedly. Therefore, the AO has rightly exercised his power and rectified the mistake and no debatable issue is involved. Assessee’s appeal is dismissed.
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2024 (6) TMI 1388
Dishonour of Cheque - Violation of principles of natural justice - opportunity of cross-examination was not afforded to the accused - applicability of section 145(2) of the NI Act for cross-examining the witnesses - HELD THAT:- It is undisputed that the accused was not allowed to cross-examine the witnesses. The complainant appeared as (CW1) on 25.1.2022 and tendered his affidavit and documents in the evidence. There is nothing on record to show that an opportunity for cross-examination was afforded to the accused. Thus, the learned Appellate Court had rightly held that the opportunity of cross-examination was not afforded to the accused.
In the United States of America, the right of confrontation of a witness is part of the fundamental right guaranteed by the Sixth Amendment. This is in recognition of the principle of natural justice incorporating the right of cross- examination given to a person.
The Hon'ble Supreme Court also held in Noor Mohammed v. Khurram Pasha, [2022 (8) TMI 924 - SUPREME COURT] that the right of cross-examination cannot be denied because the accused had failed to deposit the interim compensation and if such a right is denied, it will constitute an inherent infirmity.
In the present case, the complainant relied upon an affidavit prepared by him out of the Court in the absence of the complainant. He tendered the affidavit without allowing the accused to cross-examine him. This amounted to the admission of the evidence recorded outside the Court not tested by the cross-examination reminding one of Sir Walter Raleigh's trial and the accusations at Star Chambers - the learned First Appellate Court had rightly held that the trial suffered from inherent infirmity and remanded the matter to the learned Trial Court to correct the infirmity. No fault can be found with the approach of the learned First Appellate Court.
The present petition fails and the same is dismissed.
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2024 (6) TMI 1387
Deduction u/s 80P(2)(a)(i) and 80P(2)(d) in respect of bank interest and dividend income - DR submitted that from the assessment order it is not clear whether assessee had given loans exclusively to the members or no, therefore, case may kindly be set-aside to the Assessing Officer for de-novo adjudication - HELD THAT:- Admittedly, the Assessee is a Co-Operative Society registered under the Maharashtra State Co-Operative Society Act 1960 vide registration certificate dated 12/03/1986.
AO has held assessee to be a Co-Operative Bank based on the Capital and Reserve of the assessee and based on the activities of the Assessee. No where neither the AO nor the CIT(A) has stated that the Assessee has received Banking License from RBI under the Banking Regulation Act.
As decided in MAVILAYI SERVICE COOPERATIVE BANK LTD. & ORS. [2021 (1) TMI 488 - SUPREME COURT] a Co-Operative Society will be treated as a Co-Operative Bank only if it has received License from RBI. In the case of the Assessee neither the AO nor the CIT(A) has stated that the Assessee is in receipt of License from RBI. Therefore, in the absence of Banking License, respectfully following the Hon’ble Supreme Court (Supra), it is held that the assessee is not a Co- Operative Bank as envisaged in section 80P(4) of the Income Tax Act. Hence, provisions of Section 80P(4) will not be applicable in the case of the Assessee.
As specifically mentioned in the Assessment Order that Assessee has invested ‘Surplus funds’ in the PDCC and other banks and earned Interest Income. Thus, it is an admitted fact by the Assessing officer that the investment is of the income derived from the Business of the assessee. As per Assessment Order the main object of the assessee society is to provide credit facility to its members and also accept deposits from members. Thus, admittedly the assessee is providing credit facility to its members. Thus, the investments made by the assessee are from the Surplus generated by assessee during the course of providing credit facility to its members and the assessee has earned Interest Income by investing these surplus funds in PDCC Bank. Therefore, the section 80P(2)(a) is applicable in the case of the assessee.
As decided in THE VAVVERU CO-OPERATIVE RURAL BANK LTD. [2017 (4) TMI 663 - ANDHRA PRADESH HIGH COURT] interest Income earned by investing Income derived from Business of providing credit facility by a Co-Operative Society was eligible for deduction u/sec.80P(2)(a) of the Act.
Thus we are of the considered view that the Interest earned by the assessee is eligible for deduction u/s 80P(2) of the Act. Accordingly, the AO is directed to delete the addition made by AO of the Interest Income.
Assessee has also earned Dividend - The assessee has claimed deduction u/sec.80P(2)(d) of the Act. For all the reasons discussed in earlier paras, we hold that the assessee is eligible for deduction u/s 80P(2)(d) of the Act for the dividend earned from investments made in PDCC Bank.
Assessee appeal allowed.
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9911796707
