TMI Blog2021 (8) TMI 1087X X X X Extracts X X X X X X X X Extracts X X X X ..... ioned the interest on saving bank and interest on fixed deposits under the head Income from other sources , does not mean that assessee would not be eligible to claim deduction under section 80P(2)(d) of the Act. Right income should be taxable in the hands of the assessee in the right assessment year. Income returned under an erroneous understanding or misconception of law is not chargeable under the Act [Abdul v CIT [ 1989 (12) TMI 37 - ALLAHABAD HIGH COURT] ]. During the assessment proceedings, the AO has issued notice under section 142(1) of the Act, dated 8th September, 2016, wherein the AO asked the assessee to furnish the details, documents and explanations about the deduction claimed under chapter VIA - Therefore, the AO having examined the submissions and documents filed by the assessee, passed the order under section 143(3) of the Act dated 18.10.2016. We also note that assessment order passed by the assessing officer is sustainable in law, as the Coordinate Bench of ITAT Mumbai in the case of Lands and Co-Operative Housing Society Ltd. [ 2016 (2) TMI 620 - ITAT MUMBAI] has held that interest earned by Co-Operative Housing Society on Investment with a Co-Operative Ba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Surat-I, be annual and be set-aside. 2. Briefly stated, the relevant material facts are as follows. The assessee, M/s Sarjan Co-op Housing Society Ltd, is a Co-operative Housing Society registered in 1965 under the Gujarat Co-operative Societies Act. The main object of the society is to maintain the assets of the Society and to provide the common facilities to the members for which they collect contributions from the members. The assessee filed return of income on 26.08.2014, declaring total income at Rs. Nil, after claiming deduction u/s 80P of the Act. The assessee has shown interest income from savings bank accounts, bank fixed deposits, sale proceeds of old newspapers etc. Scrutiny assessment u/s 143(3) of the Act was finalized on 18.10.2016 accepting the returned income shown by the assessee. 3. Later, Learned Principal Commissioner of Income Tax, Surat-1 (ld PCIT), has exercised his jurisdiction under section 263 of the Income Tax Act, 1961. On perusal of Scrutiny records, it was noticed by ld PCIT that assessee had offered income at Rs.NIL, after claiming deduction u/s 80P(2)(d) of the I.T. Act, 1961 amounting to ₹ 31,57,772/-, which includes, FD interest, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3135327/- iii. Dividend from The Surat Dist. Co Op Bank Ltd. 15/- Total 3157772/- Sub Section 2(d) of Section 80P says that any co-operative society have gross income which includes interest or dividend derived from its investments with any other Co-Operative Society, the whole such income is eligible for deduction. (2)The Surat District Co Op Bank Ltd. (from which Interest/Dividend Income is earned] is a duly registered Co-Operative Society vide Reg. No. S.E./526 of 1965. We are enclosing herewith copy of letter issued by the Branch Manager of The Surat District Co Op Bank Ltd. in the support of the same. (3)The issue whether cooperative Bank is considered to be co-operative society is no longer res integra. For the said issue has been decided by the ITAT itself in different cases. We are enclosing herewith copy of Hon'ble ITAT Jaipur decision in the case of ITO vs. Shree Keshorai Patan Sahakari Sugar Mill dated 31/01/2018 all ITAT (5246) ITAT Jaipur (100). (4)Further as per the definition of the term ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... marketing members agriculture product, from surplus deposits kept with a co-operative bank, was not eligible for deduction under section 80P(2)(d) of the Act. In view of the above facts, learned PCIT held that as per Section 80P(2)(d) of the Act, the deduction claimed by the assessee was not allowable and it was required to be disallowed which was not done in the assessment proceedings. Therefore, learned PCIT held that there was an under assessment of income to the tune of ₹ 31,57,772/-. Therefore, learned PCIT held that the order passed by the AO under section143(3) of the Act dated 18.10.2016 is erroneous and prejudicial to the interest of the Revenue and therefore, he directed the AO to pass a fresh assessment order after considering the above issues raised by the learned PCIT. 6. Aggrieved by the order of learned PCIT, the assessee is in appeal before us. 7. Learned Counsel for the assessee submitted that during the assessment stage assessee has submitted every details and documents required by the assessing officer. The AO has passed the assessment order under section 143(3) of the Act after verification of documents submitted by the assessee, therefore, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is a Co-operative Housing Society registered in 1965 under the Gujarat Co- Operative Societies Act. As per details, the main object of the society is to maintain the assets of the Society and to provide the common facilities to the members for which they collect contributions from the members. The assessee has shown income from other sources comprising interest income from savings bank accounts, bank fixed deposits, Sale proceeds of old news papers etc. After verification of details, documents and explanations and discussion with the AR, the income returned by the assessee is accepted. Returned Income NIL Assessed Income NIL Assessed u/s 143(3) of the I.T.Act at the returned NIL income. Calculate tax and interest accordingly. Give credit for pre-paid taxes. Issue necessary forms. 10. From the above assessment order, it is abundantly clear that assessee has shown income from other sources comprising interest income from savings bank account, fixed deposits, sale proceeds of old newspapers. The AO has examined these issues in respect of interest and interest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... c. may also be furnished. 13. In response to the notice of the AO under section 142(1) of the Act, the assessee has submitted its reply, dated 22nd September, 2016, which is reproduced below (to the extent relevant for our analysis): To, 22/09/2016 The Dy. Commissioner of Income Tax, Circle-1 [3], Aaykar Bhavan, Room No.301, Majura Gate, Surat. Sub: Assessment Proceedings in the case of Sarjan Co.Op.Housing Society Limited for the A.Y.2014-15.PAN No.AADAS2575C Ref:Your Notice U/s 142[1] r.w.s.129 DT.08/09/16 Dear Sir, With reference to above as per your requirement we are submitting herewith following details. First of all we would like to state that we have received your Notice dt.8/9/16 on 21/9/2016 hence we could not attend the hearing fixed by you on 19/9/2016. 1.Regarding justification for Deduction Claimed U/s 80P amounting to ₹ 3166903 For the A.Y.2014-15 of the Income Tax Act, 1961 we reproduced herewith basic provisions which read as under. (1)We being a Co Op Housi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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