2022 (6) TMI 937 - AT - Income Tax

Deduction u/s. 80P(2)(d) - AO disallowed the claim of deduction of interest income earned from Villupuram District Co-operative Bank - HELD THAT - As assessee could not deny that the assessee has earned interest from Villupuram District Co-operative Bank and Villupuram District Co-operative Bank is not a bank and co-operative society. He admitted that the Villupuram District Cooperative Bank is holding the license from RBI and is governed by Banking Regulation Act, 1949. Once the assessee has deposited amount with Villupuram District Co-operative Bank, which is a bank regulated by RBI and Banking Regulation Act, 1949, the interest earned from the deposits made with the same cannot be claimed as deduction u/s. 80P(2)(d) of the Act, because it does not fulfill the condition as prescribed under clause (d), which says that the deduction can be claimed in respect of any income by way of interest or dividend derived by co-operative society from its investment with any other co-operative society and not with the bank or co-operative bank governed by the regulation of RBI and the Banking Regulation Act, 1949. In view of the above, we dismiss the appeal of assessee.

Summary

Issues:
- Appeals by Revenue and Assessee arising out of a common order of Commissioner of Income Tax (Appeals)
- Time-barred appeals by Revenue with a delay of 248 days
- Applicability of CBDT Circular No. 17/2019 on appeals with tax effect below Rs. 50.00 lakhs
- Dismissal of appeals by Revenue based on monetary limits
- Cross objections by Assessee becoming infructuous due to dismissal of Revenue's appeals
- Time-barred appeal by Assessee with a delay of 73 days
- Disallowance of exemption u/s. 80P(2) on interest earned from Villupuram District Co-operative Bank
- Interpretation of statutory provisions and case laws related to co-operative societies and banks

Analysis:

1. Time-barred Appeals by Revenue:
- Revenue's appeals were time-barred by 248 days, attributed to Covid-19 restrictions.
- Condonation of delay granted based on directions from the Hon'ble Supreme Court.

2. Applicability of CBDT Circular No. 17/2019:
- Tax effect below Rs. 50.00 lakhs rendered appeals not maintainable as per the circular.
- Circular applied retrospectively to pending appeals, leading to the dismissal of Revenue's appeals.

3. Dismissal of Revenue's Appeals:
- Dismissal based on the CBDT Circular and the monetary limits set therein.

4. Infructuous Cross Objections:
- Cross objections by Assessee dismissed due to the dismissal of Revenue's appeals.

5. Time-barred Appeal by Assessee:
- Assessee's appeal was time-barred by 73 days, with a delay condoned due to Covid-19, following Supreme Court directions.

6. Disallowed Exemption u/s. 80P(2):
- Dispute centered on disallowance of exemption on interest earned from Villupuram District Co-operative Bank.
- AO and CIT(A) held that the bank did not qualify as a co-operative society under section 80P(2)(d) of the Act.

7. Interpretation of Statutory Provisions and Case Laws:
- Detailed analysis of statutory provisions, including section 80P and related explanations.
- Reference to case laws and judicial dictums regarding the definition and treatment of co-operative societies and banks under the Act.

8. Final Decision:
- Tribunal dismissed all appeals by Revenue and Assessee, including cross objections, based on the above analysis and interpretations.
- Order pronounced on 8th June, 2022, at Chennai.