The Cuttack Credit Co-Operative Society Ltd., Cuttack V. Principal CIT, Cuttack

ITA 201/CTK/2019

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 3328 (ITAT-CUTTACK)
• Duration Of Justice: 4 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-11-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2014-2015
• Appeal Filed On: 24-06-2019
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Revision of order; Assessment record; Set aside
• Section: 143(3); 80P; 201; 56; 263

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL CUTTACK BENCH CUTTACK BEFORE SHRI C.M. GARG, JM & SHRI L.P. SAHU, AM . / ITA NO. 201 /CTK/201 9 ( / ASSESSMENT YEAR : 20 1 4 - 20 1 5 ) THE CUTTACK CREDIT CO - OPERATIVE SOCIETY LTD., ARUNDOYA MARKET, LINK ROAD, CUTTACK - 753012 VS. PR. CIT, CUTTACK ./ PANNO. : A A DAT 5204 F ( / APPELLANT ) .. ( / RESPONDENT ) /ASSESSEE BY : SHRI N.R.BISWAL, AR /REVENUE B Y : SHRI S.M.KESHKAMAT, CITDR / DATE OF HEARING : 0 6 / 1 1 /2019 / DATE OF PRONOUNCEMENT : 13 / 1 1 /2019 / O R D E R PER L.P.SAHU , A M : THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF PR. COMMISSIO NER OF I NCOME TAX , CUTTACK , DATED 29.03.2019 FOR THE ASSESSMENT YEAR 201 4 - 201 5 ON THE FOLLOWING GROUNDS : - 1. FOR THAT, ON THE FACTS AND CIRCUMSTANCE OF THE CASE, THE LD. PC IT HAS ERRED IN LAW TO INVOKE SEC. 263 BY CONSIDERING THE ORDER PASSED BY THE LD. AO U/S 143(3) IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE WHEN THE LD. AO PASSED THE ORDER AFTER DUE CONSIDERATION OF LAW AND FACTS. THEREFORE INVOKING JURISDICTION U/S 263 IS NULL AND VOID. HENCE WE REQUEST TO SET ASIDE THE ORDER PASSED BY TH E LD. PC IT. 2. FOR THAT, ON THE FACTS AND CIRCUMSTANCE OF THE CASE, THE LD. PCIT HAS ERRED IN LAW, BY SET ASIDE THE ASSESSMENT ORDER FOR THE PURPOSE OF EXAMINING THE ELIGIBILITY OF ASSESSEE'S CLAIM U/S 80P(2)(A)(I) /80P(2)(D) AND COMPLETE THE FRESH ASSES SMENT. THEREFORE PASSING AN ORDER U/S 263 TO SET ASIDE THE ASSESSMENT ORDER PASSED U/S 143(3) IS ARBITRARY, UNJUSTIFIED, ILLEGAL ON THE ITA NO. 201 /CTK/201 9 2 FACTS & CIRCUMSTANCES OF THE CASE. HENCE WE REQUEST TO SET ASIDE THE ORDER PASSED BY THE LD. PCIT . 3. FOR THAT, THE APP ELLANT MAY ADD, ALTER, AMEND ANY OTHER GROUNDS OF APPEAL AT TIME OF HEARING. . 2 . BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A CREDIT CO - OPERATIVE SOCIETY AND FILED ITS RETURN OF INCOME ELECTRONICALLY ON 11.09.2014 DISCLOSING TOTAL INCOME OF RS.14, 360/ - . SUBSEQUENTLY, THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY UNDER CASS AND THE AO COMPLETED THE ASSESSMENT U/S.143(3) OF THE ACT . LATER ON THE PR.CIT, CUTTACK CALLED THE ASSESSMENT RECORD AND OBSERVED THAT THE ORDER PASSED BY THE AO IS ERRONEOU S AND HENCE, PREJUDICIAL TO THE INTEREST OF REVENUE AND DIRECTED THE AO TO MAKE FRESH ASSESSMENT AFTER EXAMINING THE ELIGIBILITY OF ASSESSEES CLAIM OF DEDUCTION U/S.80P(2)(A)(I) OF THE ACT. 3. LD. AR BEFORE US SUBMITTED WRITTEN SYNOPSIS IN THE PAPER BOOK AT PAGES 1 TO 9, WHICH READ AS UNDER : - THE ASSESSEE IS A CREDIT CO - OPERATIVE SOCIETY. THE MAIN ACTIVITY OF THE ASSESSEE IS LENDING AND RECEIVING DEPOSITS OF MONEY FROM ITS MEMBERS. DURING THE ASST. YEAR 2014 - 15 THE ASSESSEE HAD FILLED HIS RETURN OF INCOME BY DECLARING TOTAL INCOME OF RS. 14,360/ - . THE LD. A.O. COMPLETED THE ASSESSMENT U/S 143(3) ON DTD. 28.06.2016 BY WAY OF ADDITION OF RS. 533/ - AS INTEREST EARNED FROM OTHER THAN COOPERATIVE BANK AND ALLOWED THE DEDUCTION OF RS. 56,96,017/ - U/S 80P(2)(D) C LAIMED BY THE ASSESSEE TOWARDS INTEREST FROM COOPERATIVE BANK AND COOPERATIVE SOCIETY & DETERMINED THE TOTAL INCOME AT RS. 14,890/ - . SUBSEQUENTLY, THE LD. PR.CIT BY EXERCISING POWERS CONFERRED UNDER SEC. 263 HAS ISSUED A SHOW CAUSE NOTICE (PG. NO. 27 TO PG . NO. 29 OF THE PAPER BOOK) CONSIDERING THE FINDINGS OF THE A.O. AS RECORDED IN THE ASSESSMENT ORDER FRAMED U/S 143(3) OF THE IT. ACT'1962 DTD. 28.06.2016 IS CONSIDERED TO ERRONEOUS IN SO FAR AS PREJUDICIAL TO THE INTEREST OF REVENUE. THE REASON FOR HOLDIN G SO IS AS FOLLOWS: 1. DEDUCTION OF RS. 56,96,017/ - CLAIMED U/S 80P(2)(D) WAS ALLOWED BY THE LD. A.O. ITA NO. 201 /CTK/201 9 3 2. THE SOCIETY EARNS INTEREST ON FUNDS NOT IMMEDIATELY REQUIRED FOR THE PURPOSE OF BUSINESS. RELIANCE IS PLACE ON THE TOTGAR'S CO - OPERATIVE SALE SOC IETY LTD. VS. ITO (2010) 322 ITR 253(SC). SO INTEREST INCOME IS TAXABLE U/S 56 OF THE I. T. ACT UNDER THE HEAD 'INCOME FROM OTHER SOURCES' THE ASSESSEE HAS MADE A DETAILED SUBMISSION BY STATING THAT HE IS ELIGIBLE FOR DEDUCTION U/S 80P(2)(A)(I). HOWEVER, THE LD. PR.CIT NOT AGREEING WITH THE SUBMISSIONS MADE BY THE ASSESSEE AND BY CONSIDERING THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF TOTGAR'S CO - OPERATIVE SALE SOCIETY LTD. VS. INCOME TAX OFFICER, KARNATAKA (2010) 188 TAXMANN 282(SC),(322 ITR 283) (SC) SET ASIDE THE ASST. ORDER FOR THE PURPOSE OF EXAMINING THE ELIGIBILITY OF ASSESSEE'S CLAIM OF DEDUCTION U/S 80P(2)(A)(I) AND/OR 80P(2)(D) OF THE ACT AND DIRECTED THE ASSESSING OFFICER TO COMPLETE THE ASSESSMENT AFRESH KEEPING IN VIEW THE RATIO OF JUDICIAL PRECEDENTS ON THE ISSUE CITED SUPRA. BEING AGGRIEVED, THE ASSESSEE PREFERRED THE PRESENT APPEAL. 1. W.R.T. 1 ST GROUNDS OF APPEAL: GROUND NQ.1: FOR THAT, ON THE FACTS AND CIRCUMSTANCE OF THE CASE, THE LD. PCIT HAS ERRED IN LAW TO INVOKE SE C. 263 BY CONSIDERING THE ORDER PASSED BY THE LD. AO U/S 143(3) IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE WHEN THE LD. AO PASSED THE ORDER AFTER DUE CONSIDERATION OF LAW AND FACTS. THEREFORE INVOKING JURISDICTION U/S 263 IS NULL AND VOID. HEN CE WE REQUEST TO SET ASIDE THE ORDER PASSED BY THE LD. PCIT. SUBMISSION: THE ASSESSING OFFICER WHILE PASSING AN ORDER OF ASSESSMENT, PERFORMS QUASI JUDICIAL FUNCTION, APPLIES HIS MIND JUDICIOUSLY BASED ON FACTS AND CIRCUMSTANCES OF THE CASE FOR THE P URPOSE OF PROTECTING THE INTEREST OF REVENUE. IN THE PRESENT CASE THE LEARNED ASSESSING OFFICER AFTER VERIFYING AUDITED STATEMENT OF ACCOUNTS AS WELL AS AFTER CALLING FOR DETAILS AS REQUIRED FOR HIS SATISFACTION AND APPLYING HIS MIND JUDICIOUSLY PASSED AN ORDER U/S, 143(3) OF THE I.T.ACT,1961 AFTER ALLOWING THE DEDUCTION OF RS. 56,96,017/ - U/S 80P(2)(D) . THE LD. A.O. OBSERVED THE FOLLOWING IN THE SECOND AND THIRD PARA OF THE ASSESSMENT ORDER. 'DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE WAS ASKED TO PRODUCE DETAILS OF INTEREST EARNED ON THE INVESTMENTS WITH OTHER AGENCIES AS SHOWN IN THE P ROFIT & LOSS ACCOUNT AND TO EXPLAIN AS TO WHY THE INTEREST EARNED WILL NOT BE TAXED. IN COMPLIANCE TO THE ABOVE, THE AUTHORISED REPRESENTATIVE OF THE ASSES SEE HAS SUBMITTED A RECONCILED STATEMENT SHOWING INTEREST INCOME ON INVESTMENT FROM VARIOUS ORGANIZATIONS. ITA NO. 201 /CTK/201 9 4 THE ASSESSEE HAS SUBMITTED THAT THE ABOVE INTEREST EARNED WOULD BE DEDUCTED FROM T H E TOTAL INCOME UNDER THE PROVISION OF SECTION 80P(2)(D) OF THE I NCOME TAX ACT, 1 961 AS THE INTEREST HAS BEEN EARNED FROM OTHER CO - OPERATIVE SOCIETIES. THE CONTENTION OF THE ASSEESSE FOUND CORRECT. SECTION 80P(2)(D) OF THE INCOME TAX ACT, 1961 STIPULATES THAT 'IN RESPECT OF ANY INCOME BY WAY OF INTEREST OR DIVIDENDS DER IVED BY THE CO - OPERATIVE SOCIETY FROM ITS INVESTMENT WITH ANY OTHER CO - OPERATIVE SOCIETY, THE WHOLE OF SUCH INCOME WILL BE DEDUCTED FROM THE TOTAL INCOME'. THEREFORE THE ASSESSEE HAS PRODUCED ALL DOCUMENTS AS REQUIRED BY LAW DURING THE COURSE OF ASSESSME NT PROCEEDING. IF THE ORDER IS SILENT ON CERTAIN POINT, IT DOES NOT MEAN THAT THERE IS NO APPLICATION OF MIND BY THE LD. A.O. IF THE ASSESSEE REPLIED TO ALL THE QUERY RAISED BY THE LD. A.O.. SUBSEQUENTLY, THE LD. PR.CIT BY EXERCISING POWERS CONFERRED UNDE R SEC. 263 HAS ISSUED A SHOW CAUSE NOTICE. THE GIST OF THE NOTICE IS AS FOLLOWS : 'THE FINDINGS OF THE A.O. AS RECORDED IN THE ASSESSMENT ORDER FRAMED U/S 143(3) OF THE IT. ACT'1962 DTD. 28.06.2016 IS CONSIDERED TO ERRONEOUS IN SO FAR AS PREJUDICIAL TO THE INTEREST OF REVENUE. THE REASON FOR HOLDING SO IS AS FOLLOWS: 3. DEDUCTION OF RS. 56,96,017/ - CLAIMED U/S 80P(2)(D) WAS ALLOWED BY THE LD. A.O. 4. THE SOCIETY EARNS INTEREST ON FUNDS NOT IMMEDIATELY REQUIRED FOR THE PURPOSE OF BUSINESS. RELIANCE IS PLACE ON THE TOTGAR'S CO - OPERATIVE SALE SOCIETY LTD. VS. 170 (2010) 322ITR 253(SC). SO INTEREST INCOME IS TAXABLE U/S 56 OF THE I. T. ACT UNDER THE HEAD 'INCOME FROM OTHER SOURCES' THUS THE MANNER IN WHICH THE ASSESSING OFFICER COMPLETED THE ASSESSMENT HA S PRIMA - FACIE RENDERED THE ASSESSMENT ORDER ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE.' IN RESPONSE TO THE SHOW CAUSE NOTICE, THE A/R OF THE ASSESSEE HAS SUBMITTED THE WRITTEN SUBMISSION. (THE COPY OF THE SAME IS ENCLOSED IN PG. NO. 30 TO P G. NO.34 OF THE PAPER BOOK). THE GIST OF THE SUBMISSION IS AS FOLLOWS : THE ASSESSEE IS A COOPERATIVE SOCIETY REGISTERED UNDER THE ORISSA STATE CO OPERATIVE SOCIETY ACT AND ITS MAIN ACTIVITIES ARE LENDING AND RECEIVING DEPOSITS OF MONEY FROM ITS MEMBERS. THE ASST. ORDER IS NOT ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE AND ASST. ORDER HAS BEEN MADE AFTER MAKING INQUIRIES OR VERIFICATION ON ALL THE FACTS AS HAVE BEEN ALLEGED IN THE SHOW CAUSE NOTICE. THE INTEREST INCOME OF THE SOCIETY WHICH HAS B EEN EARNED AND INVESTED IN VARIOUS BANKS COULD NOT BE TERMED AS SURPLUS FUNDS NOT REQUIRED ITA NO. 201 /CTK/201 9 5 IMMEDIATELY FOR THE BUSINESS PURPOSE AND ENTITLED TO DEDUCTION U/S 80P(2)(A)(I). THE SOCIETY EARNS PROFITS AND GAINS OF BUSINESS BY PROVIDING CREDIT FACILITIES TO , TS MEMBERS. THE INTEREST INCOME SO DERIVED OR THE CAPITAL, IF NOT IMMEDIATELY REQUIRED TO BE LEND TO THE MEMBERS CANNOT NOT BE KEPT IDLE. THE SOCIETY DEPOSIT THE SAME INTO THE COOPERATIVE BANK TO EARN INTEREST INCOME IS ATTRIBUTABLE TO THE PROFITS AND GAIN S OF THE BUSINESS OF PROVIDING CREDIT FACILITIES TO ITS MEMBERS. THEREFORE THE INCOME SO DERIVED BY THE SOCIETY IS ATTRIBUTABLE TO THE PROFITS AND GAINS OF THE BUSINESS OF BANKING OR PROVIDING CREDIT FACILITIES TO ITS MEMBERS AND LIABLE T O GET DEDUCTION U /S 80P OF THE INCOME TAX ACT. THE FACTS OF THE JUDGEMENT IN TOTGAR'S CO - OPERATIVE SALE SOCIETY LTD. VS. 170 (2010) 322 ITR 253(SC) RELIED BY THE LD. PR. CIT IS DIFFERENT FROM THE FACTS OF THE SOCIETY. THE AMOUNT WHICH WAS INVESTED IN THE COOPERATIVE BANK T O EARN INTEREST WAS NOT AN AMOUNT DUE TO ANY MEMBERS AND NOT SHOWN AS LIABILITY TO ANY MEMBERS IN THEIR ACCOUNT. THE AMOUNT IS IN THE NATURE OF PROFIT AND GAIN WAS NOT REQUIRED BY THE ASSESSEE IMMEDIATELY FOR LENDING MONEY TO MEMBERS. THEREFORE INTEREST SO EARNED IS ATTRIBUTABLE TO CARRYING ON BUSINESS OF THE ASSESSEE. SO THE SAME IS ENTITLED TO BE DEDUCTED U/S 80P(2)(D) OR 80P(2)(A)(I).SINCE THE DEPOSIT WAS KEPT IN THE COOPERATIVE BANK, THE LD. A.O. RIGHTLY ALLOWED THE DEDUCTION U/S 80P(2)(D). FURTHER IT HAS BEEN SUBMITTED BEFORE THE LD. PR. CIT THAT THE SAID JUDGEMENT IS CONFINED TO FACTS OF THAT CASE ON/Y.(2 ND LINE OF THE SAID JUDGEMENT ENCLOSED HEREWITH IN PG. NO. 147 OF THE PAPER BOOK) 5 THE ASSESSMENT FRAMED BY THE LD. A.O. WAS AFTER DUE APPLICATION OF MIND AND AFTER CONSIDERING THE DETAILS REPLY DURING THE COURSE OF ASST. PROCEEDINGS. HENCE NOTICE U/S 263 IS ILLEGAL, BAD IN LAW AND WITHOUT JURISDICTION. 6. THE ASSESSEE HAS PRODUCED ALL DOCUMENTS AS REQUIRED BY LAW DURING THE COURSE OF ASSESSMENT P ROCEEDING. IF THE ORDER IS SILENT ON CERTAIN POINT, IT DOES NOT MEAN THAT THERE IS NO APPLICATION OF MIND IF THE ASSESSEE REPLIED TO ALL THE QUERY RAISED BY THE LD. A.O.. THEREFORE NOTICE U/S 263 IS NOT APPLICABLE. 7. THERE IS A DISTINCTION BETWEEN 'LAC K OF ENQUIRY AND INADEQUATE ENQUIRY'. IF THE LD. A.O. CALLED FOR THE NECESSARY DETAILS AND THE ASSESSEE HAS FURNISHED THE SAME AND THE LD. A.O. IS SILENT IN THE ASSESSMENT ORDER IT DOES NOT MEAN THAT LD. A.O. HAS NOT APPLIED HIS MIND WHICH LEADS TO INVOKE SEC.263. 8. THEREFORE DEDUCTION U/S 80P IS JUSTIFIED. HENCE NOTICE U/S 263 IS LIABLE TO BE DROPPED. THEREAFTER THE LD. PR.CIT NOT AGREEING WITH THE SUBMISSIONS MADE BY THE ASSESSEE AND CONSIDERING THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE O F TOTGAR'S CO - OPERATIVE SALE SOCIETY LTD. VS. INCOME TAX ITA NO. 201 /CTK/201 9 6 OFFICER, KARNATAKA (2010) 188 TAXMANN 282(SC), (322 ITR 283) (SC) SET ASIDE THE ASST ORDER FOR THE PURPOSE OF EXAMINING THE ELIGIBILITY OF ASSESSEE'S CLAIM OF DEDUCTION U/S 80P(2)(A)(I) AND/OR 80P(2) (D) OF THE ACT IN THE LIGHT OF THE OBSERVATIONS MADE IN THE ORDER AND DIRECTED THE ASSESSING OFFICER TO COMPLETE THE ASSESSMENT AFRESH KEEPING IN VIEW THE RATIO OF JUDICIAL PRECEDENTS ON THE ISSUE CITED SUPRA. THEREFORE THE LD. PR. CIT COULD NOT ESTABLISH THE ORDER IS ERRONEOUS SO FAR AS PREJUDICIAL TO THE INTEREST OF REVENUE AND RESTORE THE MATTER FOR THE PURPOSE OF EXAMINING THE ELIGIBILITY OF ASSESSEE'S CLAIM OF DEDUCTION U/S 80P(2)(A)(I) AND/OR 80P(2)(D) OF THE ACT. WHERE THE LD. A.O. HAD ALREADY ALLOW ED THE DEDUCTION U/S 80P(2)(D). FURTHER WE DISAGREE WITH THE LD. PR. CIT THAT HON. SC HAS LAID DOWN ANY LAW WHICH IS BINDING UNDER ARTICLE 141 OF THE CONSTITUTION OF INDIA. SINCE IT HAS BEEN SUBMITTED BEFORE THE LD. PR. CIT THAT THE SAID JUDGEMENT IS CONF INED TO FACTS OF THAT CASE ON/Y.(2 ND LINE OF THE SAID JUDGEMENT ENCLOSED HEREWITH FROM PG. NO. 147 OF THE PAPER BOOK ).WE RELY UPON THE FOLLOWING JUDGEMENTS IN SUPPORT OF OUR CLAIM. TUMKUR MERCHANTS SOUHARDA CREDIT COOPERATIVE LIMITED VS. ITO (2015) 230 T AXMANN 309 (KAR) (COPY ENCLOSED IN PG. NO.66 TO PG. NO.78 OF THE PAPER BOOK). IN THE SAID JUDGEMENT IT HAS BEEN HELD THAT ' **** FURTHER THEY MADE IT CLEAR THAT THEY ARE CONFINING THE SAID JUDGEMENT TO THE FACTS OF THAT CASE. THEREFORE IT IS CLEAR, SUPREME COURT WAS NOT LAYING DOWN ANY LAW.'( 1 ST LINE OF PG. NO. 77 OF THE PAPER BOOK) FURTHER WE RELY UPON THE JUDGEMENT OF LD. IT AT CUTTACK BENCH, CUTTACK IN CASE OF 1. HARICHANDANPUR LAMPS VS. ITO (ITA NO. 142 & 142/CTK/2019). WHERE IT HAS BEEN HELD THAT IN TEREST INCOME IS ALLOWED U/S 80P(2)(A) (I)). (COPY ENCLOSED IN PG. NO.56 TO PG. NO.60 OF THE PAPER BOOK). . THE HON. ITAT FOLLOWED THE JUDGEMENT OF ITO VS PRESIDENCY CO - OP. HOUSING SOCIETY LTD.(ITA NO.4058/MUM/2017) (2018)TAXPUB (DT) 1870 (MUM - TRIB) (COPY ENCLOSED IN PG. NO.61 TO PG. NO.65 OF THE PAPER BOOK). THEREFORE THE ORDER PASSED BY THE LEANED ASSESSING OFFICER AND ALLOWED THE DEDUCTION U/S 80P(2)(D) IS AFTER APPLICATION OF MIND, ACTING IN ACCORDANCE WITH LAW. SECTION 263 OF THE INCOME TAX ACT, 1961 DOES NOT VISUALIZE, A CASE OF SUBSTITUTION OF THE JUDGMENT OF THE COMMISSIONER FOR THAT OF THE SUBORDINATE AUTHORITY WHO PASSED THE ORDER WHICH IS SOUGHT TO BE REVISED. THEREFORE THE ORDER PASSED BY A SUBORDINATE AUTHORITY IN EXERCISE OF ITS QUASI JUDICIA L POWER VESTED ON HIM IN ACCORDANCE WITH LAW, CANNOT TERMED ERRONEOUS. THE ASSESSING OFFICER HAS TAKEN INTO CONSIDERATION THE MATERIAL BEFORE HIM AND AFTER DUE APPLICATION OF LAW AND OF FACTS AND THEN REACHED AT ITA NO. 201 /CTK/201 9 7 THE CONCLUSION TO CONCLUDE THE ASSESSMENT U /S 143(3) OF THE ACT BY CONSIDERING THE DEDUCTION U/S 80P(2)(D). IT WAS NOT A CASE WHERE ASSESSING OFFICER COMPLETED THE ASSESSMENT WITHOUT APPLICATION OF MIND AND WITHOUT APPLICATION OF LAW. EVEN THE LD. A.O. HAS NOT MENTIONED THE SAME IN THE ASST. ORDER . TO PROTECT THE INTEREST OF REVENUE, KEEPING IN MIND & FOLLOWING ALL THE JUDGEMENTS INCLUDING THE HON. APEX COURT JUDGEMENT CITED SUPRA , THE LD. A.O. PASSED THE ASSESSMENT ORDER. THEREFORE AFTER CONSIDERING THE SAME THE LD. A.O. HAS VERIFIED THE FACT & CO MPLETED THE ASSESSMENT U/S 143(3). THE SAID PRACTICE IS CONSISTENTLY FOLLOWED YEAR AFTER YEAR. THE ISSUE RAISED BY THE LD. PR.CIT HAD ALREADY BEEN CONSIDERED BY THE ASSESSING OFFICER AT THE TIME OF ASSESSMENT. THEREFORE THE ORDER PASSED BY THE ASSESSING OF FICER IS NOT ERRONEOUS, IN SO FAR AS IT IS PREJUDICIAL TO THE INTEREST OF THE REVENUE. THE FACTS IN CASE OF TOTGAR'S CO - OPERATIVE SALE SOCIETY LTD. IS DIFFERENT FROM THE FACTS OF THE ASSESSEE. THEREFORE THE ISSUE RAISED BY THE LD. PR. CIT FOLLOWING THE DEC ISION OF THE HON'BLE SUPREME COURT IN THE CASE OF TOTGAR'S CO - OPERATIVE SALE SOCIETY LTD. VS. INCOME TAX OFFICER, KARNATAKA (2010) 188 TAXMANN 282(SC),{322 ITR 283) (SC) IS NOT APPLICABLE TO THE ASSESSEE. WE RELY UPON THE JUDGEMENTS OF TUMKUR MERCHANTS SOU HARDA CREDIT COOPERATIVE LIMITED VS. ITO (2015) 230 TAXMANN 309 (KAR) IN SUPPORT OF OUR CONTENTION. THEREFORE IT IS NOT CORRECT TO INVOKE SEC. 263 WHERE THE ORDER PASSED BY THE ASSESSING OFFICER IS NOT ERRONEOUS, IN SO FAR AS IT IS PREJUDICIAL TO THE INTER EST OF THE REVENUE. THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. GABRIAL INDIA LTD., REPORTED IN 203 ITR 108, HAS HELD THAT, 'CIT CANNOT REVISE ORDER MERELY BECAUSE HE DISAGREES WITH THE CONCLUSION ARRIVED AT BY THE ITO'. THE PHRASE 'PREJUDICIAL TO THE INTERESTS OF THE REVENUE' IN SECTION 263 OF THE INCOME - TAX ACT, 1961, HAS TO BE READ IN CONJUNCTION WITH THE EXPRESSION 'ERRONEOUS' ORDER PASSED BY THE ASSESSING OFFICER. EVERY LOSS OF REVENUE AS A CONSEQUENCE OF AN ORDER OF THE ASSESSING OFFICER CA NNOT BE TREATED AS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. FOR EXAMPLE, WHEN THE ASSESSING OFFICER ADOPTS ONE OUT OF TWO COURSES PERMISSIBLE IN LAW AND IT HAS RESULTED IN LOSS OF REVENUE, OR WHERE TWO VIEWS ARE POSSIBLE AND THE ASSESSING OFFICER HAS T AKEN ONE VIEW TO WHICH THE COMMISSIONER DOES NOT AGREE, IT CANNOT BE TREATED AS AN ERRONEOUS ORDER PREJUDICIAL TO THE INTEREST OF THE REVENUE, UNLESS THE VIEW TAKEN BY THE ASSESSING OFFICER IS UNSUSTAINABLE IN LAW. THE JUDGEMENT OF THE SRI GOWRI CO - OPERAT IVE SOCIETY VS. PR. CIT (ITA NO. 26/VIZ/2018) IS SQUARELY APPLICABLE TO THE ASSESSEE . WHERE THE ORDER U/S 263 IS SET ASIDE BY THE HON. ITAT. (COPY OF THE JUDGEMENT IS ENCLOSED IN PG. NO.79 TO PG. NO. 96 OF THE PAPER BOOK) FURTHER THE LD. AR OF THE ASSESSE E, APART FROM THE WRITTEN SUBMISSIONS, HAS PLACED RELIANCE ON THE FOLLOWING DECISIONS : - I) CIT VS. MAX INDIA LTD. (295 ITR 282) (SC) ; ITA NO. 201 /CTK/201 9 8 II) MALABAR INDUSTRIAL CO. LTD. V. CIT [ 2000 ] 243 ITR 83 (SC) ; III) CIT VS. GREEN WORLD CORPORATION (314 ITR 81) (SC) ; IV ) CIT VS. M/S CHAMBAL FERTILIZERS & CHEMICALS LTD.(RAJ HC) (2014) 51 TW (III) 157; V) CIT VS. M/S DEEPAK REAL ESTATE DEVELOPERS PVT. LTD. (RAJ HC) (2014) 51 TW (IV) 186; VII) M/S EMGEE CABLES & COMMUNICATION LTD. VS. CIT (2014) 51 TW(IV); VI) ITO VS. DG HO USING PROJECTS LTD. (74 DTR 153)(DEL) V) MAYA GUPTA VS. CIT (2015) TAXPUB (DT) 2975 (DEL - TRIB) 4. WITH REGARD TO DIRECTION OF PR. CIT TO THE AO FOR THE PURPOSE OF EXAMINING THE ELIGIBILITY OF ASSESSEE'S CLAIM U/S 80P(2)(A)(I) /80P(2)(D) AND COMPLETE THE FRESH ASSESSMENT, LD. AR SUBMITTED THAT THE AMOUNT WHICH WAS INVESTED IN THE COOPERATIVE BANK TO EARN INTEREST WAS NOT AN AMOUNT DUE TO ANY MEMBERS AND NOT SHOWN AS LIABILITY TO ANY MEMBERS IN THEIR ACCOUNT. THE AMOUNT IS IN THE NATURE OF PROFIT AND GAIN W AS NOT REQUIRED BY THE ASSESSEE IMMEDIATELY FOR LENDING MONEY TO MEMBERS. FURTHER AS PER STATUTORY REQUIREMENT OF THE REGISTRAR OF CO - OPERATIVE SOCIETIES , ORISSA , T HE SOCIETY REQUIRED TO INVEST IN ANY CCB OR OSCB AT LEAST 20% OF THE TOTAL DEPOSITS AS SLR & 3% TO 5% OF THE DEPOSIT AS CASH RESERVE. (THE COPY OF THE SAME IS ENCLOSED IN PG. NO. 55 OF THE PAPER BOOK). THEREFORE INTEREST SO EARNED IS ATTRIBUTABLE TO CARRYING ON BUSINESS OF THE ASSESSEE. SO THE SAME IS ENTITLED TO BE DEDUCTED U/S 80P(2)(D) OR 80P( 2)(A)(I) OF THE ACT.SINCE THE DEPOSIT WAS KEPT IN THE COOPERATIVE BANK, THE A.O. HAS RIGHTLY ALLOWED THE DEDUCTION U/S 80P(2)(D) OF THE ACT. 5. ON THE OTHER HAND, LD. DR RELIED ON THE ORDER OF PR. CIT. ITA NO. 201 /CTK/201 9 9 6. AFTER HEARING BOTH THE SIDES AND PERUSING THE ENTIR E MATERIAL ON RECORD AND SUBMISSIONS OF THE ASSESSEE ALONG WITH THE PAPER BOOK FILED BEFORE US, WE , ON PERUSAL OF THE ASSESSMENT ORDER , FOUND THAT DURING THE COURSE OF ASSESSMENT PROCEEDING, THE AO ASKED THE ASSESSEE TO PRODUCE THE DETAILS OF INTEREST EAR NED ON THE INVESTMENTS WITH OTHER AGENCIES AS SHOWN IN THE PROFIT & LOSS ACCOUNT AND TO EXPLAIN AS TO WHY THE INTEREST EARNED WILL NOT BE TAXED , IN COMPLIANCE OF WHICH THE ASSESSEE SUBMITTED A RECONCILED STATEMENT SHOWING INTEREST INCOME ON INVESTMENT FROM VARIOUS ORGANIZATIONS. THE AO ALSO ACCEPTED THE SUBMISSION OF THE ASSESSEE THAT THE INTEREST EARNED WOULD BE DEDUCTED FROM THE TOTAL INCOME UNDER THE PROVISION OF SECTION 80P(2)(D) OF THE ACT AS THE INTEREST HAS BEEN EARNED FROM OTHER CO - OPERATIVE SOCIETI ES INCLUDING COOPERATIVE BANK AND DISALLOWED RS.533.35 AS INTEREST EARNED FROM OTHER THAN CO - OPERATIVE BANK . HOWEVER, THE PR. CIT INVOKING POWERS U/S.263 OF THE ACT SET ASIDE THE ASSESSMENT ORDER DIRECTING THE AO TO EXAMINE THE ELIGIBILITY OF ASSESSEES CL AIM OF DEDUCTION U/S.80P(2)(A)(I) AND/OR 80P(2)(D) OF THE ACT, WHICH AMOUNTS TO ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. ON GOING THROUGH THE ORDER PASSED BY THE AO, WE NOTICED THAT THE AO HAS GIVEN DEDUCTION U/S.80P(2)(D) OF THE ACT TO THE TUNE OF RS.56,96,017/ - (57,10,378 - 533) AFTER DEDUCTING INTEREST FROM VYSYA BANK, CUTTACK OF RS.533.35/ - . WHILE GOING THROUGH THE FINANCIAL STATEMENTS SUBMITTED BY ITA NO. 201 /CTK/201 9 10 THE ASSESSEE, WHICH IS PLACED AT PAPER B OOK 53 IN SCHEDULE NO.12 & 13, THE ASSESSEE HAS EARNED INTEREST F ROM LOANS AND ADVANCES, INCOME FROM INVESTMENTS AND OTHER INCOME. I T IS OBVIOUS THAT FOR EARNING INCOME EXPENDITURE MUST BE REQUIRED. IN THIS CASE, THE TOTAL PROFIT IN THE PROFIT AND LOSS ACCOUNT SHOWN BY THE ASSESSEE OF RS.57, 10, 378/ - AND ASSESSEE HAS CLAIMED DEDUCTION U/S.80P(2)(D) OF THE ACT AS STATED ABOVE. THE AO HAS NOT ENQUIRED AS TO HOW MUCH AMOUNT IS ELIGIBLE FOR DEDUCTION U/S.80P(2)(D) OF THE ACT AND FOR EARNING THIS INCOME HOW MUCH EXPENDITURE HAS BEEN INCURRED. THE AO HAS STRAIGHTWAY ACCEPTED THE DEDUCTION CLAIMED BY THE ASSESSEE U/S.80P(2)(D) OF THE ACT. T HE A O IS AN INVESTIGATING OFFICER, WHO OUGHT TO HAVE ENQUIRED /INVESTIGATED ON ACCOUNT OF ANY DEDUCTION/EXEMPTION TO BE ACCEPTED BY HIM. T HE AO SHOULD HAVE CALCULATED THE TAXABLE PROFIT, WHICH IS LACKING IN THIS CASE. WE HAVE GONE T HROUGH THE ORDER OF THE PR. CIT , WHO HAS AFTER GOING THROUGH THE DETAILS, HAS NOTED THAT THERE IS A LACUNA ON THE PART OF THE AO FOR COMPUTING EXACT TAXABLE PR OFIT. THEREFORE, THE ORDER PASSED BY THE AO IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. IN THE TOTALITY OF FACTS AN D CIRCUMSTANCES OF THE CASE, THE CASE LAW S RELIED ON BY THE LD. AR OF THE ASSESSEE ARE NOT APPLICABLE IN THE PECULIAR FACTS OF TH E CASE IN HAND. ACCORDINGLY, WE UPHOLD FINDINGS RECORDED BY THE PR. CIT AND DISMISS THE GROUNDS RAISED BY THE ASSESSEE. ITA NO. 201 /CTK/201 9 11 7 . IN THE RESULT, APPEAL OF THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 13 /1 1 /2019. S D/ - ( C.M.GARG ) SD/ - (L.P.SAHU) / JUDICIAL MEMBER / ACCOUNTANT MEMBER CUTTACK; DATED 13 / 11 /201 9 PRAKASH KUMAR MISHRA, SR.P.S. / COPY OF THE ORDER FORWARDED TO : / BY ORDER, ( SENIOR PRIVATE SECRETARY ) ITAT CUTTACK BENCH, CUTTACK 1. / THE APPELLANT - THE CUTTACK CREDI T CO - OPERATIVE SOCIETY LTD., ARUNDOYA MARKET, LINK ROAD, CUTTACK - 753012 2. / THE RESPONDENT - PR. CIT, CUTTACK 3. ( ) / THE CIT(A), 4. / CIT 5. , , / DR, ITAT, CUTTACK 6. / GUARD FILE. //TRUE COPY//