RESERVE BANK STAFF CO.OP. CREDIT SOC. LTD.,AHMEDABAD vs. ITO, WARD 3(3)(2), AHMEDABAD

Sec. 246A Order of assessment passed on surmises and conjectures The appellant prays that the order of assessment has been passed on surmises and conjectures. A cursory glance at the order of assessment would reveal that the Ld. Assessing Officer has blatantly ignored the functioning and the purpose of the co- operative society, has assumed the nature of the income, has assumed that the accounts of the co-operative society are un-audited, has assumed facts to disallow expenses and has assumed to deny exemption under Sec 80P. All these show that the order of assessment is passed on surmises and conjectures and is liable to be quashed and set aside. The CIT(A) has overlooked this fact and not given any comment on this to disallow the appellant's appeal. Asst. Year : 2020-21 - 2– 2. Sec 246A, Sec 80P, Sec 56 Wrong evidence collect by A.O. for idle funds investment. That the appellant had invested surplus and idle funds immediately which evidence is incorrectly collected by A.O and assumed by the Ld. Assessing Officer. In fact the appellant had withdrawn F.D. of Rs. 65 lakh in the year which was explained in letter dt. 31-08-2022. The primary purpose and the objective of the co-operative society is to provide loans to its members for which the society has to manage its own funds to ensure that the members can get money as they want. As a part of the same, the funds are invested in FD and withdrawn so that the interest loss can be shortened. These facts are blissfully ignored by the Ld. Assessing Officer and that he has assumed facts and proceeded to pass a high pitched order. Hence, the order of assessment must be quashed, the deduction under Sec 80P be granted and that the assumption that there are idle funds must be annulled looking at the objective of the co-operative society. The CIT(A) has also not considered in passing the order. 3. Sec. 246A, Sec. 80P Case law wrongly followed The CIT(A) has totally relied on the case law of Totgar's Co.op. Sale Soc. Ltd. v/s. ITO which case is not at all applicable to the appellant. The facts of the case are totally different to the facts of the appellant's case. Primarily this case refers to Sec. 80P(2)(a)(i) of the I. Tax Act and not to Sec. 80P(2)(d) which is clearly cited in case on Bhog Co. op. Housing Sec. Ltd. v/s Ass. Com. of Income Tax ITAT Mumbai. The ITAT Mumbai in it's decision has allowed deduction u/s. 80P(2)(d) in it's order stating that interest income earned by the society either from any other Co. operative Society or from a Co. operative bank is allowed u/s. 80P(2)(d) of the I. Tax Act. The appellant therefore urges that the deduction of Rs. 12,16,508 claimed u/s. 80P(2)(d) be allowed by following the said decision. 4. Sec. 246, Sec. 80P Case law cited wrongly over ruled. The CIT(A) has inappropriately overruled the case cited by appellant in case of ITO v/s. MTNL Employees Co. op. Credit Society Ltd. stating his invalid reason by overruling the ITAT and High Court decisions. The appellant therefore urges that the said case be followed and urges to allow the claim u/s. 80P(2)(d) of Rs. 12,16,508. 5. Sec. 246A, Sec. 80P Board circular of Sec. 80P(4) wrongly followed. The CIT(A) has disallowed the appellant's claim u/s. 80P(2)(d) by following Board Circular given for Sec. 80P(4) of the I. Tax Act. The appellant submits that in both the case law cited in case of Bhag Co.op. Housing Soc. Ltd. v/s. Ass. Com of I Tax and ITO V/s. MTNL Mumbai Employees Co.op. Credit Society Ltd. the Court has allowed claim u/s. 80P(2)(d) stating that as long as it is proved that the interest income is derived by a Co. operative Society from it's investment made with any other Co. operative Society, the claim of deduction u/s. 80P(2)(d) would be duly applicable. Thus the appellant submits that the deduction claimed u/s 80P(2)(d) be allowed in view of the two legal decision. Asst. Year : 2020-21 - 3– 6. Sec. 246A, Sec. 56, Sec. 57 No valid reason given to disallow expenses of Rs 4,64,812. That the appellant is working on Principle of Mutuality which fact is never denied by the A.O. in his assessment order and this fact is not understood by A.O. in disallowing expenses. The CIT(A) has also misunderstood the principle of Mutuality to disallow expenses claimed. That the appellant has filed ample evidence to prove the concept of mutuality on which the appellant is operating. Hence expenses incurred of Rs. 4,42,120 are for benefit of members of society which should be allowed u/s. 56 of the income tax act. It is incorrect to conclude by A.O. and CIT(A) that these expenses are claimed against interest income earned, when in fact the nature of income earned should be looked as per the concept of mutuality on which the society is formed. The A.O.'s wrong finding that appellant has claimed expenses just to suppress total income is incorrect. That these expenses are incurred for the members and for benefit of members only. Hence the expenses disallowed of Rs.4,42,120 should be deleted and be allowed u/s. 56 of the I. Tax Act. The appellant urges that once the assumption about the Society (appellant's) nature of work which is framed by the Ld. Assessing Officer is pared and the glass of surmises and conjectures is shattered, the expenses claimed are to be allowed which is also disallowed wrongly by CIT(A). 7. Sec. 246A, Sec. 57 Depreciation of Rs. 22,692 wrongly disallowed under Sec