Tax Management India. Com
                        Law and Practice: A Digital eBook ...

Category of Documents

TMI - Tax Management India. Com
Case Laws Acts Notifications Circulars Classification Forms Manuals SMS News Articles
Highlights
D. Forum
What's New

Share:      

        Home        
 

TMI Blog

Home

2019 (11) TMI 407

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... n u/s 80P(2)(a)(i) of the Act. We thus not finding any infirmity in the order of the CIT(A), who had rightly concluded that the assesses claim for deduction under Sec. 80P(2)(a)(i) was in order, uphold his order in context of the issue under consideration. Deduction under Sec. 80P(2)(d) - Power of CIT(A) u/s 251 to bifurcate the income into Business income u/s 218 and investment income u/s 56 - HELD THAT:- the assesses claim for deduction under Sec. 80P was declined by the A.O on the standalone basis of a conjoint reading of Sec.80P(2)(a)(i) r.w.s 80P(4). In our considered view, the CIT(A) before resorting to the aforesaid fresh basis for restricting the assesses claim for deduction under Sec.80P to an amount of ₹ 52,12,193/-, in all fairness, should have afforded an opportunity of being heard to the assessee and called for his objections, if any, as regards the same. Appeal of the revenue is dismissed and the appeal the assessee is allowed for statistical purposes. - ITA No.4306/Mum/2018, ITA No.4582/Mum/2017, ITA Nos.4751 & 4752 /Mum/2017 - Dated:- 22-10-2019 - Shri Pramod Kumar, Vice President And Shri Ravish Sood, Judicial Member For the Appellant : Shri Nar en Sheth, A.R .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... and allowed deduction u/s 80(P)(2)(a)( i) on the said income 5. The CIT (Appeal) erred in law and in the circumstances of the case in applying section 80(P)(2)(d) on interest income earned on investment and consequently disallowing deduction of ₹ 3,13,796 on the ground that interest income is from co-operative bank and not from cooperative society. without taking into consideration the fact of the case and without giving any notice or opportunity to the Appellant of being heard and to represent its case in this regard. 6. The CIT (Appeal) erred in law and in the circumstances of the case by not treating the whole income of ₹ 55,38,329earned by the appellant society from engaging in the business of providing credit facilities to its members under section 28 and accordingly allowing deduction as per section 80P(2)(a)(i) but instead bifurcated the income of ₹ 55,38,329 into business and investment income as stated in ground 2 above, without taking into consideration the fact of the case and without giving any notice or opportunity to the Appellant of being heard and to represent its case in this regard. 7. The CIT (Appeal) erred in law and in the circumstances of th .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... 2012-13 on 26.09.2012, declaring its income at Rs. Nil. Subsequently, the case of the assessee was selected for scrutiny assessment under Sec.143(2) of the Act. 3. During the course of the assessment proceedings it was observed by the A.O that the assessee had claimed deduction under Sec.80P of ₹ 55,38,329/-. Observing, that pursuant to insertion of sub-section (4) of Sec.80P, vide the Finance Act, 2006 w.e.f 01.04.2007, the assessee would no more be entitled for claim of deduction under Sec.80P(a)(i), A.O called upon the assessee to put forth an explanation justifying its aforesaid claim for deduction. As the explanation of the assessee did not find favour with the A.O, therefore, he declined to allow the claim of deduction raised by the assessee under Sec. 80P and assessed its income at ₹ 55,38,329/-. 4. Aggrieved, the assessee assailed the assessment order before the CIT(A). After necessary deliberations, it was observed CIT(A) that the assesse‟s claim for deduction was liable to be bifurcated into two parts viz. (i). deduction under Sec.80P(2)(a)(i); and (ii). deduction under Sec. 80P(2)(d). On being queried, the assessee furnished the bifurcated details of it .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... inting and stationery receipts. The CIT(A) was of the view, that the income earned by the assessee from its activities of providing credit facilities to its members was eligible for deduction under Sec.80P(2)(a)(i) of the Act. At the same time, the CIT(A) observed, that the assesse‟s income from rent of guest house and printing and stationery receipts would not be eligible for deduction under Sec. 80P(2)(a)(i). Accordingly, the CIT(A) declined to allow the assesses claim of deduction under Sec.80P(2)(a)(i) to the extent the same was relatable to its rental income and printing and stationary receipts aggregating to ₹ 12,400/-. On the basis of his aforesaid observations the CIT(A) reworked out the assesse‟s entitlement towards claim of deduction under Sec. 80P(2)(a)(i) at ₹ 52,12,193/- [₹ 52,24,593/- (-) ₹ 12,400/-]. 6. It was further observed by the CIT(A), that the interest income earned by the assessee on its investments viz. FDs would be covered by the provisions of Sec.80P(2)(d). The CIT(A) was of the view that pursuant to insertion of sub-section (4) of Sec.80P, vide the Finance Act, 2006 w.e.f 01.04.2007, the claim for deduction under Sec.80 .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... /- into two parts viz. (a). Sec.80P(2)(a)(i)): ₹ 52,24,593/-; and(ii) Sec. 80P(2)(d): ₹ 3,13,736/-, was carried out by the CIT(A) absolutely at the back of the assesse, without affording any opportunity to the assessee to rebut the said observations and the adverse inferences which were sought to drawn in its hands. In sum and substance, it was the claim of the ld. A.R, that the CIT(A) without affording any opportunity of being heard to the assessee had on a suo motto basis bifurcated the assesses claim for deduction under Sec. 80P(2)(a)(i) and 80P(2)(d) of the Act. In the backdrop of the aforesaid facts, it was averred by the ld. A.R, that as the assessee was not afforded any opportunity to meet out the adverse inferences which were sought to be drawn by the CIT(A), therefore, in all fairness the matter may be restored to his file for fresh adjudication after providing an opportunity of being heard to the assessee. 8. Per contra, the ld. Departmental Representative (for short D.R‟) relied on the order of the CIT(A) to the extent he had partly declined to allow the assesses claim for deduction under Sec.80P of the Act. As regards the appeal of the revenue, it was .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... co-operative society are not less than one lakh of rupees; and (iii) that, the bye laws of the co-operative society did not permitted admission of any other co-operative society as a member, therefore, it clearly fell within the category of a primary co-operative bank. In the backdrop of his aforesaid deliberations the A.O had concluded that the assessee being a primary co-operative bank would not be eligible for claim of deduction under Sec. 80P(2)(a)(i). It was on the basis of his aforesaid observations that the assesses claim for deduction under Sec.80P of ₹ 55,38,329/- was declined by te A.O. 10. We have deliberated at length on the issue under consideration and are unable to persuade ourselves to accept the view taken by the A.O. As per sub-section (4) of Sec. 80P that was inserted by the Finance Act, 2006 w.e.f 01.04.2007, the provisions of the said section were not to apply in relation to any co-operative bank other than a primary agricultural credit society or a primary agricultural and rural development bank . As is discernible from a perusal of Sec. 80P(2)(a)(i), the same envisages a deduction in respect of the whole of the amount of profits and gains of business a .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... igible for deduction under Sec.80P(2)(a)(i), unless they were declared as a bank by the Reserve Bank of India. Since the assessee society before us is not recognized as a bank by the Reserve Bank of India, therefore, in our considered view it cannot be treated as a co-operative bank. On the basis of our aforesaid observations, we are of the considered view that as the assessee is a co-operative credit society and not a co-operative bank, therefore, it would not be hit by the provisions of Sec. 80P(4) of the Act. 11. As the assessee before us is co-operative credit society and not a co-operative bank, therefore, it would not be hit by the provisions of Sec.80P(4) as had been made available on the statute by the Finance Act, 2006, w.e.f 01.04.2007. In fact, as observed by us hereinabove, it is absolutely mandatory for a co-operative society to seek a licence from the Reserve Bank of India to form and operate as a co-operative bank. Further, a perusal of Circular No. 312 of Reserve Bank of India reveals the process involved for conversion of a co-operative credit society into a primary co-operative bank. Admittedly, in the case before us, as the assessee being a co-operative credit so .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... rds the same. As is discernible from the records, no opportunity was afforded by the CIT(A) to the assessee prior to embarking on the aforesaid fresh basis for confining the assesses claim for deduction under Sec.80P of the Act. In the backdrop of the aforesaid facts, we are of the considered view, that insofar the assesses claim for deduction under Sec.80P of ₹ 3,13,736/- has been declined by the CIT(A), the same in all fairness would require to be revisited by him. Accordingly, for the limited purpose of reconsidering the assesses entitlement towards claim of deduction under Sec.80P of ₹ 3,13,736/- the matter is restored to the file of the CIT(A) for fresh adjudication. Needless to say, the CIT(A) shall during the course of the set aside proceedings afford a sufficient opportunity of being heard to the assessee. The Grounds of appeal No.1 to 7 raised by the assessee are allowed for statistical purposes in terms of our aforesaid observations. 14. The Ground of appeal No. 8 being general in nature is dismissed as not pressed. 15. The appeal of the assessee is allowed for statistical purposes in terms of our aforesid observations A.Y.2013-14 ITA No.4306/Mum/2018\ 16. We .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... way of sale of pass-book. 4. On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in not appreciating the fact that the assessee fulfills the conditions laid down u/s.56(c)(ccv) of Part V of Banking Regulation Act, 1949 and required to be considered as a co-operative bank and therefore, under the purview of a co-operative bank, assessee is not eligible for deduction u/s.80P(2)(a)(i) of the Act. 5. On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in ignoring the fact that the facts are different in this case than the judgment of Hon'ble Bombay High Court in the case of Quepem Urban Cooperative Credit Society Ltd. Vs. ACIT, dt.17.04.2015 (2015) 58 Taxmann.com113(Bombay) and erred in not appreciating the fact that the assessee fulfills the conditions laid down u/s.56(c)(ccv) of Part V of Banking Regulation Act, 1949 and covered under purview of co-operative bank. 6. The appellant prays that the order of Ld. CIT(A) on the above grounds be set aside and that of the Assessing Officer be restored. 7. The appellant craves leave to amend or to alter any ground or add a newground, which may be necessary. 17. Briefly stated, the a .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... ncome received during the year form FDs or other investments which were kept in the financial institutions or banks. In sum and substance, the CIT(A) had directed the A.O to principally work out the assesses claim for deductoin under Sec.80P, in the same manner in which the same was done by him while disposing off the appeal of the assessee for A.Y. 2012-13. 20. Both the assessee and the revenue being aggreived with the order of the CIT(A) have carried the matter in appeal before us. Insofar the appeal of the revenue is concerned, it was submitted by the ld. A.R, that the CIT(A) had rightly concluded that the assessee was entitled for claim of deductoin under Sec. 80P(2)(a)(i) of the Act. As regards the appeal of the assessee, it was submitted by the ld. A.R, that as the CIT(A) had without affording any opportunity of being heard to the assessee directed the A.O to rework out the assesses entitlement towards claim of deduction under Sec.80P after bifurcating the same into two parts, viz. (i) deduction under Sec.80P(2)(a)(i); and (ii) deduction uner Sec. 80P(2)(d), therefore, the assesee had remained divested of putting forth any objection as regards the same. It was averred by the .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... 3-14 had directed the A.O not to allow deduction under Sec.80P(2)(d) with respect to the interest income received by the assesee during the year from FDs or other investments kept in financial institutions or banks. Also, as in the preceding year, the CIT(A) had directed the A.O not to allow deduction under Sec.80P(2)(a)(i) to the asseseee in respect of its rental income or receipts from printing and stationery or income of any such nature. We find that as the facts and the issue invovled in the present appeal remains the same as were there before us in the cross appeals of the assessee and the revenue for A.Y. 2012-13, therefore, our order therein passed while disposing off the said respective appeals shall apply mutatis mutandis for disposal of the present appeals. Accordingly, in the same terms, the appeal of the revenue is dismissed and the appeal the assessee is allowed for statistical purposes. 23. The appeal of the assessee for A.Y. 2012-13 and A.Y. 2013-14 in ITA No. 4582/Mum/2017 & ITA No. 4306/Mum/2018 are allowed for statistical purposes. On the other hand, the appeals of the revenue for A.Y. 2012-13 and A.Y 2013-14 in ITA No.4751/Mum/2017 & ITA No. 4752/Mum/2017 .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

 

 

 

 

|| Home || About us || Feedback || Contact us || Disclaimer || Terms of Use || Privacy Policy || Database || Members || Refer Us ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.
|| Site Map - Recent || Site Map ||