Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, COCHIN BENCH, COCHIN
This appeal at the instance of the assessee is directed against the order of the PCIT, Kozhikode dated 27/03/2019 passed under section 263 of the Act.
The relevant assessment year is 2014-15.
The grounds raised reads as follows:
The order of the learned Principal Commissioner of Income Tax, Kozhikode in C. No. Tech 601/263 PRCIT/CLT 1018-19 dated 27th March, 2019, setting aside the assessment order of the appellant for assessment year 2014-15 for the limited purpose of considering the matter regarding the eligibility of the appellant for deduction U/s.80P(2)(d) afresh by the Assessing Officer is infirm in law and contrary to facts and circumstances of the case.
2. The learned Principal Commissioner of Income Tax ought to have found that the Assessing Officer after verifying the accounts has allowed the deduction and therefore, there is no justification to set aside the order U/s. 263 of the I.T. Act, 1961.
3. The learned Principal Commissioner of Income Tax ought to have found that the appellant had claimed deduction U/s.80P(2)(d) in respect of interest received on investments made with Co-operative Societies and as such, there is no error in the assessment order passed by the Assessing Officer and he ought not to have invoked Sec. 263 of the Act.
4. A copy of the grounds of submission filed before the Principal Commissioner of Income Tax is enclosed. The contentions raised therein to the extent it is applicable to the matters impugned above may also be treated as part of this grounds of appeal as well.
5. For the above and other grounds that may be urged at the time of hearing, the appellant humbly prays that the Hon'ble Income Tax Appellate Tribunal, Cochin Bench, Cochin-16, may be pleased to cancel the order U/s.263 of the I.T. Act, 1961, and render justice to the appellant and allow this appeal.
The brief facts of the case are as follows:
The assessee is a co-operative society which is engaged in running toddy shop and providing credit facilities to its members. For the assessment year 2014-15, the return of income was filed on 28/11/2014 declaring nil income. The assessment was taken up for scrutiny and order u/s. 143(3) of the Act was passed vide order dated 23/04/2016.
The PCIT issued show cause notice u/s. 263 of the Act proposing to revise the assessment order passed u/s. 143(3) of the Act dated 23/11/2016. The reasons for issuing notice u/s. 263 of the Act reads as follows:
Assessee had claimed amount of Rs.71,77,427/- being the interest received on deposits with various societies, co-operative banks and other financial institutions as deduction u/s. 80P(2)(d) and was allowed during the assessment.
As per section 80P(2)9d), deduction is allowed only in respect of income derived by way of interest or dividends by the co-operative society from its investments with any other co-operative society and not from any co- operative bank or other financial institutions.
On verification, it is seen that the deduction u/s. 80P(2)(d) is allowable only to the certain extend claimed by the assessee. However, the assessing officer has allowed an amount of Rs.71,77,427/- claimed by the assessee as deduction u/s.80P(2)(d) out of the total interest income of Rs.81,15,842/- received by the assessee.
In response to the notice issued u/s. 263 of the Act, the assessee vide its letter dated 31/01/2019 raised objections. The objections raised by assessee reads as follows:
The assessment is completed by the Assessing Officer after verifying the accounts in detail and it cannot be said that there was lack of enquiry on the part of the Assessing Officer. The decision of the Apex Court in the case of M/s. Totgars Co-operative Sale Society is not applicable to the facts of the instant case as the decision is dealing with deduction u/s. 80P(2)(a)(i).
The assessee has also enclosed decisions of the Supreme Court wherein the Hon’ble Supreme Court has held that satisfaction of the twin conditions is a pre-requisite for invoking s. 263.
The submissions/objections of the assessee were rejected by the PCIT and he passed an order u/s. 263 of the Act, setting aside the assessment order dated 23/11/2016. The PCIT directed the Assessing Officer to examine afresh the claim of deduction u/s. 80P(2)(d) of the I.T. Act. The relevant findings of the PCIT read as follows:
“The Act is very dear regarding the provisions discussed above. Section 80P(2)(d) states that the assessee being a co-operative society, there shall be deducted from the gross total income by way of interest or dividend any income derived by the society from investments with any other co-operative society. The assessee is seen to have made investments with financial institutions other than co-operative societies. As such, the assessee is not eligible for deduction n/s, 80P(2)(d). However, the assessing officer without applying his mind has granted deduction on the whole amount claimed by the assessee even though the assessee qualified only for a lesser amount of deduction u/s. 80P(2)(d) as the assessee is seen to have to made investments in financial institutions other than co-operative societies. As such the assessment is erroneous and prejudicial to the interest of the revenue.
The issue is that the AO has not considered or had applied his mind to the facts of the case and with relation to the provision of the Act, Therefore, the assessment for the AY 2014-15 is hereby set aside for the limited purpose of considering the matter regarding the eligibility of the assessee for deduction u/s, 80P(2)(d) afresh by the AO, after going through relevant circulars and case laws, as necessary examination/verification has not been made during the assessment.”
Aggrieved by the order passed u/s. 263 of the Act, the assessee has filed the present appeal before the Tribunal. The Ld. AR reiterated the submissions made before the CIT(A).
The ld. DR on the other hand relied on the order of the CIT(A).
We have heard the rival submissions and perused the record. Section 80P(2)(d) of the Act states that deduction is allowed for interest/dividend income received by a co-operative society from investment made with other co-operative societies. In the instant case, the assessee has not proved that interest income allowed as deduction u/s. 80P(2)(d) of the I.T. Act by the Assessing Officer was received from investments with co-operative societies. Even before the Tribunal, the assessee has not provided necessary proof to show that the claim of deduction u/s.80P(2)(d) is with regard to interest/dividend income received from investment with other co-operative societies. The PCIT had set aside the assessment for the limited purpose of considering the eligibility of deduction u/s. 80P(2)(d) of the I.T. Act. According to us the PCIT has correctly directed the AO to re-examine the above issue. Therefore, we see no reason to interfere with the order passed by the PCIT u/s. 263 of the Act and we uphold the same as correct and in accordance with law. It is ordered accordingly.