Adarsha Souharda Sahakari Niyamit Vs PCIT (ITAT Bangalore)
ITAT Bangalore held that revisionary power u/s. 263 of the Income Tax Act is not justifiable since AO took plausible view of treating the interest chargeable u/s 28 of the Act being attributable to the business & allowed the deduction claimed u/s 80P(2)(a)(i) of the Act. Accordingly, appeal is allowed.
Facts- The assessee is a co- operative society registered under the Karnataka Co-operative Society Act, 1959 and it was converted to a Souharda Co-operative under the Karnataka Souharda Sahakari Act,1997 & accordingly now governed by the Karnataka Souharda Sahakari Act,1997. The main objectives of the assessee society are providing credit facilities to the members of the society.
The Principal Commissioner noticed that the assessee society had earned interest income from Co-operative Banks/ Commercial Banks amounting to Rs.65,88,141/- which according to him did not constitute business income and therefore the same needed to be taxed under the head “Income from other Sources” u/s 56 of the Act. Hence, the said amount would be ineligible for deduction u/s 80P(2)(a)(i) of the Act, which the AO had failed to examine and considered the same in the total income under the head income from other sources.
