TMI Blog2021 (2) TMI 578X X X X Extracts X X X X X X X X Extracts X X X X ..... which is a subject matter of adjustment under section 143(1)(a) - despite noting that there are tribunal decisions in favour of assessee, the learned CIT(A) has chosen not to follow the same by referring to some other decisions.Further find that learned CIT(A) has completely erred in treating the assessee as cooperative bank and invoking the provisions of section 80P(4). Honourable Supreme Court in the case of Citizen Cooperative Society Ltd. [ 2017 (8) TMI 536 - SUPREME COURT ] has settled the law that for being considered as a cooperative bank licence from RBI in this regard is a sine qua non. In absence of the RBI licence as such the assessee cannot be treated as cooperative bank. Hence disallowing the deduction by referring to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rocessing Centre, Bengaluru to the returned income without giving any intimation for making any adjustments of disallowing the deduction claimed by the Appellant u/s. 80P of ₹ 2,91,169/-. The Appellant submits that the adjustments made to the Returned Income be deleted and deduction claimed u/s. 80P be allowed. 2. On the facts and in the circumstances of the case, the Appellant submits that the Honorable Commissioner of Income Tax (Appeal) erred in upholding the action of Centralized Processing Centre, Bengaluru of disallowing the interest income of ₹ 2,41,169/- earned on Fixed Deposits held with Cooperative banks claimed by the Appellant u/s. 80P(2)(d) of the Income Tax Act, 1961. The Appellant submits that the d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t done to the returned income filed by the appellant without giving any intimation for making any adjustments either in writing or in electronic mode as per the provisions of Section 143(1)(a) of the Act. Learned CIT(A) rejected the contention regarding disallowance made u/s. 80P(2)(d) for ₹ 2,47,769/- being interest receipt from cooperative bank. In this regard he referred to the provisions of the Act and referred to several other decisions. He finally held as under:- In view of the above discussions and respectfully following the decision of the Hon'ble Karnataka High Court in the above referred case of PCIT vs. Totagars Co-operative Sale Society, I am of the considered opinion that the interest income earned by the appella ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... able to such activities as does not exceed. (ii) in any other case, twenty thousand rupees. Explanation-In this clause, 'consumers co-operative society' means a society for the benefit of the consumers;] 8. First of all it is noted that the adjustment has been done by the CPC Bengaluru under section 143(1)(a) of the Act. Section 143(1)(a) provides for processing of return where the total income is computed after making certain adjustment. It reads as under:- 143.(1) Where a return has been made under section 139, or in response to a notice under sub-section (1) of section 142, such return shall be processed in the following manner, namely:-- (a) the total income or loss shall be computed after making the followin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... opinion the adjustment done by denial of deduction u/s. 80P(2)(d) and 80P(2)(c)(ii) in this case does not fall in any of the above. That a cooperative society will not get exemption on the interest earned on deposits in cooperative bank is not something which is a subject matter of adjustment under section 143(1)(a) of the Act. I find that despite noting that there are tribunal decisions in favour of assessee, the learned CIT(A) has chosen not to follow the same by referring to some other decisions. I further find that learned CIT(A) has completely erred in treating the assessee as cooperative bank and invoking the provisions of section 80P(4). Section 80P(4) provides that:- (4) The provisions of this section shall not apply in relation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 50 of 2019 dated 12.1.2021 and the issue was decided in favour of the assessee. We may gainfully refer to the Hon'ble Apex Court observation in para 21 as under, wherein the Hon'ble Apex Court referred to its earlier decision of Citizen Cooperative Society Ltd. (supra):- The following propositions may be culled out from the judgment: (I) That section 80P of the IT Act is a benevolent provision, which was enacted by Parliament in order to encourage and promote the growth of the co-operative sector generally in the economic life of the country and must, therefore, be read liberally and in favour of the assessee; (II) That once the assessee is entitled to avail of deduction, the entire amount of profits and gains of busi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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