TMI Blog2020 (9) TMI 964X X X X Extracts X X X X X X X X Extracts X X X X ..... business of providing credit facilities to the members will be broken if despite there being the members wanting to avail credit facilities, the cooperative society chooses to prefer making deposits with banks etc. rather than advancing sums to its members. CIT has not returned any contrary finding. In such a scenario, the entire interest income - not only the one derived from its members by providing credit facilities but also that earned by utilizing the surplus available funds for the time being at some places like investment in FDR etc. Exercise of such a power u/s 263 is ousted in case of a debatable issue. An assessment order can be termed as erroneous and prejudicial to the interest of the Revenue if the AO has taken a view which is not legally sustainable. Per contra , if two views are available on a particular issue and the AO adopts one of such possible views, the case goes outside the purview of revisional power to be exercised by the Pr.CIT u/s.263 of the Act. So many decisions relied on by the AR amply go to prove that the view taken by the AO, cannot by any standard, be construed as not a possible view. CIT was not justified in exercising the revisional pow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich was not disclosed in the return. When confronted, the assessee submitted on the first issue that it had claimed deduction u/s.80P(2)(a)(i) of the Act and no claim was made u/s.80P(2)(d). Detailed submissions were filed. After considering such submissions, the ld. Pr.CIT held the assessment order to be erroneous and prejudicial to the interest of the Revenue by observing that deduction u/s.80P(2)(d) could not be allowed on interest on investments made by a co-operative society with co-operative banks. As a co-operative bank is akin to a commercial bank, it does not fall under the purview of co-operative society. Interest income earned from it was held to be not eligible for deduction u/s.80P(2)(d). As regards interest u/s.244A of the Act, the ld. Pr.CIT held the assessment order to be amenable to revision inasmuch as such interest was not offered for taxation. Aggrieved thereby, the assessee is in appeal before the Tribunal. 3. We have heard the rival submissions through virtual court and gone through the relevant material on record. The assessee is admittedly a credit co-operative society providing credit facility to its members. The assessee earned interest income, i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h provides that: `(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 ., the whole of the amount of profits and gains of business attributable to any one or more of such activities shall be allowed as deduction. The assessee is admittedly a co-operative society engaged in carrying on the business of providing credit facilities to its members. In such a situation, the whole of the amount of profits and gains of business attributable to providing credit facilities to its members becomes deductible u/s 80P(2) of the Act. 6. The term profits and gains of business attributable to providing credit facilities has a wider connotation. It encompasses not only the income derived strictly from providing credit facilities to its members but also any other income which is attributable to such business. So long as there exists a live link, not necessarily direct, between the income and carrying on of the business of providing credit facilities, the resultant income qualifies for deduction. If a particular amount is received by a co-operative society from its members as deposits and a part of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court in Tumkur Merchants Souharda Credit Cooperative Ltd. Vs. ITO (2015) 230 Taxman 309 (Kar.) allowing deduction u/s. 80P on interest income and that of the Hon ble Delhi High Court in Mantola Cooperative Thrift Credit Society Ltd. Vs. CIT (2014) 110 DTR 89 (Delhi) not allowing deduction u/s.80P on interest income earned from banks. Both the Hon ble High Courts took into consideration the ratio laid down in the case of Totgar s Cooperative Sale Society Ltd. (2010) 322 ITR 283 (SC) . There being no direct judgment from the Hon ble jurisdictional High Court on the point, the Tribunal in Shri Laxmi Narayan Nagari Sahakari Pat Sanstha Maryadit ( supra ) preferred to go with the view in favour of the assessee by the Hon ble Karnataka High Court in the case of Tumkur Merchants Souharda Credit Cooperative Ltd. (supra). 10. Insofar as the reliance of the ld. DR on the case of Pr. CIT and Another Vs. Totagars Cooperative Sales Society (2017) 395 ITR 611 (Kar.) is concerned, we find that the issue in that case was the eligibility of deduction u/s.80P(2)(d) of the Act on interest earned by the assessee co-operative society on investments made in co-operative banks. In t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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