TMI Blog2020 (10) TMI 416X X X X Extracts X X X X X X X X Extracts X X X X ..... see s contentions that it is a primary agricultural credit society and it was entitled to claim deduction - HELD THAT:- Whether the source of funds were assessee's own funds or out of liability was not the subject matter of decision of the TOTAGARS CO-OPERATIVE SALE SOCIETY [ 2017 (7) TMI 1049 - KARNATAKA HIGH COURT] relied on by the Id. PCIT. To this extent, the judgment of the Hon'ble Karnataka High Court in the case of Tumkur Merchants Souharda Credit Co-op. Society Ltd. [ 2015 (2) TMI 995 - KARNATAKA HIGH COURT] [relied on by the assessee] still holds good. Hence from this aspect, the issue should be considered by the AO after examining the facts in light of the judgment of the Hon'ble Apex Court in the case of Totagars Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lows: Assessee is a primary Agricultural Credit Society. For the assessment year 2015-16, the return of income was filed on 18.9.2015 declaring total income of ₹ 2,12,090/- after claiming deduction of ₹ 29,88,544/- u/s 80P of the Act. The assessee s case was selected for scrutiny and an order of assessment u/s 143(3) of the Act was passed on 30.6.2017 accepting the returned income of ₹ 2,12,090/-. 3.1 A notice u/s 263 of the Act was issued by the PCIT for the following reasons: a. It is seen from the records that the assessee had filed the return of income for the A.Y. 2015-16 on 18.09.2015 declaring the total income of ₹ 2,12,090/- after claiming deduction u/s 80P at ₹ 29,88,541/-. It is noted from t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds were relating to business of providing credit facilities to the members. Therefore, the assessee was eligible for deduction u/s 80P(2)(a)(i) of the Act in respect of the interest income received from banks. 4. The PCIT accepted the assessee s contentions that it is a primary agricultural credit society and it was entitled to claim deduction u/s 80P(2)(a)(i)of the Act. However, with regard to the interest income earned by the assessee on fixed deposits with the banks, the PCIT held the interest income derived from the FDs could not be considered as business income and therefore the assessee was not entitled to claim deduction on the same u/s 80P(2)(a)(i) of the Act. In taking the above view, the PCIT relied on judgement of the Ho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Society Ltd. (supra), hence the assessment order cannot be said to be erroneous and prejudicial to the interest of the revenue. Therefore, it was prayed that the revisionary order passed u/s 263 of the Act is to be quashed. 6. The Ld. D.R. on the other hand by referring to the assessment order submitted that there has been no examination of the issue by the assessing officer in the assessment order completed u/s 143(3) of the Act (Order dated 30.6.2017). It was stated that since there was no examination of the issue by the A.O., the order is erroneous and prejudicial to the interest of the revenue and PCIT has rightly invoked his powers u/s 263 of the Act. 7. We have heard the rival submissions and perused the material available on re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upreme Court judgment went against the assessee, were shifted from scheduled banks to co-operative banks. As per section 80P(2)(d) of the I.T. Act, income by way of interest or dividend derived by a co-operative society from his investments with any other co-operative society is entitled to deduction of the whole of such interest or dividend income. The claim of assessee before the Hon'ble High Court was that co-operative bank is essentially a co-operative society and therefore deduction has to be allowed under clause (d) of section 80P(2) of the I.T. Act. The Hon'ble High Court followed the judgment of the Hon'ble Supreme Court in the case of Totagars Co-operative Sales Society (supra) and held interest earned from scheduled ..... X X X X Extracts X X X X X X X X Extracts X X X X
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