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 List
← Previous Next →

2019 (11) TMI 407

..... siness “attributable to” the specified activities of the co-operative society. In our considered view, the term “attributable to” which is much wider in impact than the expression “derived from”, would thus also cover receipts from other activities related to the business of banking. 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. - Apart there from, we find that the Tribunal in the assesses own case for A.Y 2014-15 [2019 (6) TMI 1293 - ITAT MUMBAI] had concluded that the assessee society was duly entitled for claim of deduction u/s 80P(2)(a)(i) of the Act. - the assessee society was duly entitled for claim of deduction 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 .....

X X X X X X X

Full Text of the Document

X X X X X X X

..... 8377; 52,24,593 and section 80P(2)(d) of ₹ 3,13,796, without giving any notice or opportunity to the Appellant of being heard and to represent its case in this regard. 3. The CIT (Appeal) erred in law and in the circumstances of the case in treating interest earned on investment as investment income and not business income 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. 4. The CIT (Appeal) erred in law and in the circumstances of the case in treating interest earned on investment as investment income and not business income without taking into consideration the fact that the said CIT(Appeal) , in earlier year Assessments i.e for A.Y.201112 and A.Y.2010-11, has consider whole income as business income 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. w .....

X X X X X X X

Full Text of the Document

X X X X X X X

..... 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.com 113(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 cooperative 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 new ground, which may be necessary." 2. Briefly stated, the assessee which is a co-operative credit society engaged in the business of collecting deposits and providing credit facilities to its members had filed its return of income for A.Y 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 s .....

X X X X X X X

Full Text of the Document

X X X X X X X

..... e society which was carrying on the business of banking or providing credit facilities to its members would be eligible for deduction under Sec.80P(2)(a)(i) of the Act. In fact, the CIT(A) while concluding as hereinabove, was of the view that the use of the word attributable‟ in conjunction with the phrase any one or more of such activities‟ in Sec.80P(2)(a)(i), would mean, that in the course of its banking activity, if the society receives any income which is the outcome of the business of banking of such society, then such an income would be its profit and gains of the business that would be eligible for deduction under Sec.80P(2)(a)(i) of the Act. It was observed by the CIT(A), that the assesses claim for deduction under Sec.80P(2)(a)(i) comprised of interest received on loans given to members, rental income and printing 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 .....

X X X X X X X

Full Text of the Document

X X X X X X X

..... ) of the Act. 7. Both the assessee and the revenue being aggrieved with the order of the CIT(A) have carried the matter in appeal before us. Insofar the appeal of the revenue is concerned, the ld. authorized representative (for short A.R‟) for the assessee relied on the order of the CIT(A). Also, it was submitted by the ld. A.R, that the issue as regards the entitlement of the assessee towards claim of deduction under Sec.80P(2)(a)(i) was squarely covered by the order of the Tribunal passed in the assesses own case for A.Y.2014-15 i.e ITO-21(2)(2) Vs. M/s Mahapalika Kshetra Shikshak Shahkari Patsanstha (ITA No. 928/M/2018, dated 25.06.2019) (copy placed on record). As regards the appeal of the assessee, it was submitted by the ld. A.R that the bifurcation of the assessee claim of deduction under Sec.80P of ₹ 55,38,329/- 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 .....

X X X X X X X

Full Text of the Document

X X X X X X X

..... s co-operative bank , primary agricultural credit society and primary cooperative agricultural and rural development bank . It was also noticed by him that as per the Finance Act, 2006 sub-clause (viia) to Sec.2(24) had been inserted, which provided that the profit and gains of any business of banking (including providing credit facilities) carried out by a co-operative society with its members shall be included in the definition of income‟. On the basis of his aforesaid deliberations, it was observed by the A.O that as the assessee fulfilled all the three conditions laid down under Sec.56(c)(ccv) of Part V of the Banking Regulation Act, 1949 viz. (i) that, the primary object of the principal business of the co-operative society is the transaction of banking business; (ii) that, the paid-up share capital and reserves of the 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 b .....

X X X X X X X

Full Text of the Document

X X X X X X X

..... hereinabove can safely be held to have not been satisfied by the assessee before us.Apart there from, we find that there is a clear distinction between co-operative banks registered under the Banking Regulations Act, 1949 and co-operative societies registered under Co-operative Societies Act. In our considered view, the assessee which is a co-operative credit society cannot be categorised as a co-operative bank which is governed under the Banking Regulations Act, 1949. Our aforesaid view is fortified by the judgment of the Hon ble High Court of Karnataka in the case of Shri Vardhaman Urban Co-operative Credit Society Ltd. Vs. CIT [ITA No. 100038 of 2014, dated 21.09.2015]. In the said case, the Hon‟ble High Court while deliberating on the scope of Sec. 80P(4), had observed, that all the co-operative credit societies are eligible 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 .....

X X X X X X X

Full Text of the Document

X X X X X X X

..... ), and also the consequential adverse inferences emerging therefrom. We have perused the order of the CIT(A) and find substantial force in the claim of the ld. A.R, that the entire exercise of bifurcating the assesses claim for deduction under Sec.80P had been carried out by the CIT(A) without affording any opportunity to the assessee to rebut the same. In fact, we find 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. 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 .....

X X X X X X X

Full Text of the Document

X X X X X X X

..... lter, amend and / or delete any grounds of appeal during the course of appeal. On the other hand, the revenue has challenged the order passed by the CIT(A) by raising before us the following grounds of appeal: 1. On the facts and circumstances of the case and in law, the Ld.CIT(A) has erred in allowing the assessee a deduction of ₹ 57,82,752/- u/s.80P(2)(a)(i) of the Income-tax Act, 1961. 2. On the facts and circumstances of the case and in law, the Ld.CIT(A) has erred in allowing 89.96% of deduction u/s.80P(2)(d) of the Income-tax Act, 1961 by way of interest from Fixed Deposit of ₹ 38,06,251/- and Dividend of ₹ 5,66,400/- from Co-operative Banks. 3. On the facts and circumstances of the case and in law, the Ld.CIT(A) has erred in allowing 89.66% of Guest House Rent of ₹ 1,10,000/- and ₹ 33,090/- by 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, a .....

X X X X X X X

Full Text of the Document

X X X X X X X

..... A.Y. 201213. However, as the sasessee had niether furnished its profit and loss account for the year under consideration nor had filed the bifurcation of its receipts from different sources for the year under consideration, therefore, the CIT(A) directed the A.O to obtain the necessary details from the assessee, and after carrying out the necessary befurcations as was done in A.Y.201213, therein re-work out the assesses claim for deduction under Sec.80P. It was specifically directed by the CIT(A), that the assessee would not be entitled for claim of deduction under Sec.80P(2)(a)(i) insofar its rental receipts or receipts from printing and stationery or income of any such nature were concerned. Also, it was observed by him, that the assessee would not be entitled to claim deduction under Sec.80P(2)(d) in respect of its interest income 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 .....

X X X X X X X

Full Text of the Document

X X X X X X X

..... pronouncments relied upon by them. On a perusal of the order of the CIT(A), we find, that the same is materially the same as in comparison to the order that was passed by him while disposing off the appeal of the asessee for the immediately preceing year i.e A.Y. 2012-13. In fact, the only difference during the the year under consideration is that in the absence oif the profit and loss account and also the bifurcated details of income, as the CIT(A) was not able to rework the assesses entitlement towards claim for deduction under Sec.80P(2)(a)(i) and under Sec.80P(2)(d), had thus, directed the A.O to rework out the same by following the observations which were recorded by him while disposing off the appeal of the assessee for A.Y. 2012-13. On similar line, as in A.Y. 2012-13, the CIT(A) while disposing off the appeal for A.Y. 2013-14 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 .....

X X X X X X X

Full Text of the Document

X X X X X X X

 

 

← Previous Next →

 

 

|| 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.
|| Blog || Site Map - Recent || Site Map ||