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| The Tax Publishers2020 TaxPub(DT) 1232 (Mad-HC) INCOME TAX ACT, 1961
Section 80P
AO merely placing reliance on certain judgment rejected assessee's submissions cursorily stating in a single line that 'statutory reserve could also be considered as surplus funds of assessee. Mere reliance on a judgment without reference to the facts involved in both cases, those in case relied upon and those in case of assessee in question, could not justify the conclusion arrived at. Accordingly, matter was remanded to AO for de novo consideration.
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Deduction under section 80P - Primary Agricultural Co-operative Society - Allowability as regards interest income received from deposits of funds in banks - AO made disallowance relying on certain judgment rejecting assessee's submissions cursorily
Assessee a Primary Agricultural Co-operative Society claimed deduction under section 80P as regards interest income received by it from deposits/investments of funds in banks. such income, according to AO was ineligible for deduction under section 80P, since it did not form part of the operational income of assessee and was liable to be taxed in terms of section 56. Assessee argued that the investments in question did not comprise of surplus funds and the same constituted statutory reserve as mandated by TNCS Act. CIT v. Nawanshahar Central Co-Operative Bank Ltd. (2007) 208 CTR 438 (SC) : (2007) 289 ITR 6 (SC) : 2007 TaxPub(DT) 79 (SC), at worst interest received couldbe netted with interest paid. AO relying on judgment of Supreme Court in Totgars' Co-operative Sale Society Ltd. v. ITO (2010) 322 ITR 283 (SC) : 2010 TaxPub(DT) 1466 (SC) disallowed deduction. Assessee challenged disallowance made by AO by way of writ petition.Held: Order of assessment passed by a quashi judicial officer that decides an important question of law, raises a significant demand and having far reaching consequences has to speak for itself and take into account, and meet, arguments raised by assessee. AO was at liberty to decide and conlude the issue on merits in any manner as he might think fit, but only after proper discussion. Moreover, AO merely placing reliance on certain judgment rejected assessee's submissions cursorily stating in a single line that 'statutory reserve could also be considered as surplus funds of assessee. Mere reliance on a judgment without reference to the facts involved in both cases, those in case relied upon and those in case of assessee in question, could not justify the conclusion arrived at. Accordingly, matter was remanded to AO for de novo consideration.
REFERRED :
FAVOUR : Matter remanded.
A.Y. : 2017-2018
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