TMI Blog2021 (7) TMI 453X X X X Extracts X X X X X X X X Extracts X X X X ..... le with it, is part of the banking/credit business of the assessee-society. Therefore, the investment of the surplus amount in the mutual funds by the assessee-society cannot be said to be not related to the business activity of the assessee-society. Therefore, the interest/dividend income earned by the assessee for such investment, in my view, will be eligible for deduction u/s 80P(2) - AO is directed to allow the deduction on the income earned by the assessee from investment in SBI mutual fund. Not allowing TDS - assessee has submitted that he mistakenly registered itself as local authority with the Income Tax department (PAN) and not as association of persons , therefore, the TDS amount claimed in the return of income has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tal income shown at NIL after deduction of income under section 80P of the I.T. Act, 1961, which is confirmed by Ld. CIT(A), therefore, his finding is completely arbitrary, unjustified and illegal. 3. For that on the facts of the case, The Ld. CIT(A) was wrong in not considering the fact that the assessee being a registered co-operative society 1s carrying on business and providing credit facilities to its members. The investment made on schedule banks and income earned on accrual basis reflected in its account was purely a business income, therefore, interest earned from banks eligible for deduction under section 80P(2) of the Income Tax Act, as such his action is baseless and should be quashed. 4. For that on the facts of the ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee-society was not entitled to the exemption u/s 80P(2) of the Income Tax Act in respect of the said dividend income. He, therefore, made the addition of the aforesaid amount into the income of the assessee. 6. Being aggrieved by the said order of the Assessing Officer, the assessee filed appeal before the CIT(A). However, the ld. CIT(A) observed that the aforesaid amount since was not generated from the business activity of the assessee, therefore, the same was not allowable u/s 80P(2) of the Income Tax Act. 7. Being aggrieved by the said order of the ld. CIT(A), the assessee has come in appeal before this Tribunal. 8. I have heard the rival contentions and gone through the records. The relevant provision of section 80P(2) are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rules and bye-laws of the society restrict the voting rights to the following classes of its members, namely:- (1) the individuals who contribute their labour or, as the case may be, carry on the fishing or allied activities; (2) the co-operative credit societies which provide financial assistance to the society; (3) the State Government; 9. As per the above reproduced provisions, in case of a cooperative society engaged in carrying on business of banking or providing credit facilities to its members, the whole of the amount of profits of business attributable to any or more of such activities as mentioned in section 80P(2), are exempt from taxation. Admittedly, as mentioned by the Assessing Officer in the assessment or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the TDS amount of ₹ 2,19,211/- claimed in the return of income has been denied to the assessee. 12. I find that there is no discussion on this issue in the assessment order. This issue was raised for the first time before the CIT(A). However, the ld. CIT(A) declined to interfere by observing that there is no discussion about this in the assessment order. He has, therefore, observed that if it was a mistake on the part of the assessee, no appellate remedy lies on the same. 13. I am not convinced with the above observation of the ld. CIT(A). If the assessee by mistake has wrongly registered itself under a wrong category that does not mean that the said mistake is not curable or that the assessee is to be punished for its bona fide ..... X X X X Extracts X X X X X X X X Extracts X X X X
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