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13-03-2020, Akshaya Souharda Credit, Section 80P(2)(a)(i), Tribunal Bangalore

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1 year 7 months ago #12367 by amit
Section - 80P(2)(a)(i), 147, 148, 152
Order Date - 13-03-2020
Favouring - Assessee
Court - Tribunal Bangalore
Appellant - Akshaya Souharda Credit Cooperative Limited
Respondent - ITO
Justice - Chandra Poojari AM
Citation - 320Taxpundit574
Appeal No. - ITA No.2574/Bang/2019
Asstt. Year - 2014-2015

Order

PER : Chandra Poojari

This appeal filed by the assessee is directed against the order of the CIT(A) dated 31.10.2019. The relevant assessment year is 2014-2015.

2. The assessee has raised following grounds:-

“1. That the order of the learned Commissioner of Income-Tax (Appeals) in so far it is prejudicial to the interests of the appellant is bad and erroneous in law and against the facts and circumstances of the case.

2. That the notice issued u1s. 148 is bad in law.

3. That the assessment made u/s. 147 is without jurisdiction and not valid.

4. That the learned Commissioner of Income-tax (Appeals) ought to have quashed the assessment proceedings made u/s. 147 as the assessment completed was not based on the reasons recorded.

5. That the learned Commissioner of Income-Tax (Appeals) erred in law and on facts in disallowing Rs.32,37,381/- claimed as deduction u/s. 80P(2)(a)(i) of the Act on the ground that the appellant is not a Co-operative Society since it is registered under Karnataka SouhardaSahakari Act, 1997.

6. That the learned lower authorities erred in law and on facts in disallowing Rs.32,37,381/- claimed as deduction u/s. 80P(2)(a)(i) of the Act on the ground that the appellant being a Co-operative Society deals with associate members and nominal members.

7. That the learned lower authorities erred in law and on facts in disallowing interest income of Rs.6,06,914/- earned from surplus funds kept as deposits in nationalised Banks and Co-operative banks since they are attributable to the business activities of the appellant which is eligible for deduction u/s. 80P(2)(a)(i) of the Act.

8. That the learned lower authorities erred in law and on facts in disallowing the deduction u/s. 80P(2)( d) of the Act on the interest income earned from deposits kept in the Co-operative Banks.

9. That the learned lower authorities ought to have provided deduction u/s 80P(2)(a)(i) proportionately to the extent of profit from the activities with the regular and associate members.

Each of the above grounds is without prejudice to one another, the appellant seeks the leave of the Hon’ble Income Tax Appellate Tribunal, Bangalore to allow, delete, amend or modify otherwise each of any of the grounds of appeal either before or at the time of hearing this appeal.”

3. The facts of the case are that the assessee is a cooperative engaged in providing credit facilities to its members. For the A.Y. 2014-15, the assessee filed its return of income, claiming deduction u/s. 80P (2)(a)(i) of the Act. The assessee’s case was selected for scrutiny and the assessment was completed U/s 143(3) of the I.T.Act accepting the returned income. On examination of the financial statements of the assessee, the AO noticed that the assessee had earned interest
to the tune of Rs.6,06,914 on FDs kept with Scheduled banks, which had to be taxed as income from other sources u/s 56 the Act. A notice u/s 148 of the Act dated 03.11 2017 was issued by the AO, directing the assessee to file the return of income. In response, the assessee filed a letter dated 22.11.2017 requesting the AO to treat the return of income filed on 30.11.2014 as its return filed u/s 148 of the Act. The assessee requested for copy of the reasons recorded which
were furnished to it. The assessee filed its objections to the reasons recorded, which the AO disposed of. Notice u/s 143(2) dated 30/05/2018 was served on the assessee. During the reassessmen proceedings, the AO disallowed the claim of deduction u/s 80P(2)(a)(i) of the I.T.Act to the extent of interest income of Rs.6,06,914 earned from deposits kept in Nationalised Banks and Co-operative Banks, relying on the decision of the Hon'ble Supreme Court in the case of Totagar's Co-operative Sale Society Ltd. Vs ITO (2010)188 Taxman 282(SC). The AO also sought for the details of members of the assessee. After examining the details of members of the society submitted by the assessee, the AO held that the assessee was not entitled for deduction u/s. 80P(2)(a)(i) of the Act on the ground that the assessee was providing services of banking/ credit facility to the associate and non-associate members and

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