IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH : BANGALORE BEFORE SHRI GEORGE GEORGE K, VICE PRESIDENT SHRI LAXMI PRASAD SAHU, ACCOUNTANT MEMBER ITA No.517/Bang/2024 Assessment Year : 2017-18

P Karnataka Power Corporation Limited Employees Credit Coop. Society Limited, No.116/2, Trade Centre, Race Course Road, Gandhinagar, Bangalore-560 001. AN : AADAK 0351 Q	Vs.	The Income Tax Officer, Ward-1(2)(1), Bangalore
APPELLANT		RESPONDENT

Date of hearing : 16.04.2024 Date of Pronouncement : 16 .04.2024

O R D E R

PER SHRI LAXMI PRASAD SAHU, ACCOUNTANT MEMBER This is an appeal filed by the assessee against the order passed by the NFAC, New Delhi dated 13/02/2024 in DIN No. ITBA/APL/S/250/2023-24/1060855009(1) for the assessment year 2017-18 with the following grounds of appeal:-

“1. The order passed by the learned Commissioner of Income Tax (Appeals) – NFAC ("CIT(A)") under section 250 of the Act insofar as it is against the Appellant, is opposed to law, weight of evidence, natural justice and probabilities on the facts and circumstances of the Appellant's case.

2. The Appellant denies itself liable to be assessed at Rs. 11,28,527/- as against the returned income of NIL on the facts and circumstances of the case.

3. The learned CIT(A) was not justified in passing the order by relying on data of a different assessee and without appreciating that there was no delay in filing the appeal, on the facts and circumstances of the case.

4. The appellant prays that the cost of preferring the appeal before this Hon'ble Tribunal of Rs. io,000/- be directed to be refunded to the appellant, since the order passed is without application of mind, on the facts and circumstances of the case. 5. The learned CIT(A) was not justified in not deciding on the merits of the matter and upholding the addition made under section 80P(2)(d) of the Act, when such interest income is treated as income from other sources, the respective cost of fund expenses were to be deducted, on the facts and circumstances of the case.

6. The learned CIT(A) failed to appreciate that the Assessing Officer was not justified in considering only the interest earned for computing the income under other sources and ought to have reduced the cost of funds from the expenditure to arrive at the true income from other sources, on the facts and circumstances of the case.

7. The Appellant denies the liability to pay interest under section 234B of the Act in view of the fact that there is no liability to additional tax as determined by the learned Assessing Officer on the facts and circumstances of the case.

8. The Appellant craves to add, alter, modify, substitute, change and delete any or all of the grounds and to file a paper book at the time of hearing the appeal.

9. In the view of the above and other grounds that may be urged at the time of the hearing of appeal, the Appellant prays that the appeal may be allowed in the interest of justice and equity.”

2. The brief facts of the case are that the assessee filed return of income on 27/10/2017 declaring Nil income after claiming deduction under Chapter VIA of Rs.78,96,401/-. The case was selected for scrutiny under CASS and statutory notices were issued to the assessee.

3. From the submissions, it was noticed that the assessee is a credit co-operative society registered under the Karnataka State Co-operative Societies Act 1959 and engaged in providing credit facilities to its members. Besides, the assessee made investments in fixed deposits and earned interest there from.

4. Further, the AO noted from the balance sheet that the assessee has made investment in banks and earned interest income on which, deduction u/s 80P(2)(d) of the Act has been claimed. Accordingly, further notice was issued to the assessee with regard to the interest earned on investments/deposits with the banks financial institutions, which are not in the category of co-operative society in terms of sec. 80P(2)(d) of the Act. In reply, the assessee submitted that the

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