2024 (5) TMI 1472 - AT - Income Tax

Deduction u/s 80P(2)(a)(i)/80P(2)(d) - interest from cooperative bank(s) and other nationalized bank(s) - HELD THAT - This issue is no more res integra in light of this tribunal s recent case of The Rena Sahakari Sakhar Karkhana Ltd. vs. PCIT s 2022 (1) TMI 419 - ITAT PUNE as rejected the Revenue s identical arguments and held AO while framing the assessment had taken a possible view, and allowed the assessee s claim for deduction under Sec. 80P(2)(d) on the interest income earned on its investments/deposits with co-operative banks, therefore, the Pr. CIT was in error in exercising his revisional jurisdiction u/s 263 of the Act for dislodging the same. Decided in favour of assessee.

Summary

Issues Involved:
1. Eligibility of the assessee for claiming deductions under Section 80P(2)(a)(i) and 80P(2)(d) of the Income Tax Act, 1961.
2. Validity of the Principal Commissioner of Income Tax's (Pr. CIT) order under Section 263 of the Act.
3. Condonation of delay in filing the appeal.

Analysis:

1. Eligibility for Deductions under Section 80P(2)(a)(i) and 80P(2)(d):
The assessee claimed deductions under Section 80P(2)(a)(i) and 80P(2)(d) amounting to Rs. 43,42,704, which included interest from cooperative banks and nationalized banks. The tribunal referred to its previous order in The Rena Sahakari Sakhar Karkhana Ltd. vs. PCIT, which had rejected similar arguments from the Revenue. The tribunal emphasized that interest income derived by a cooperative society from its investments with another cooperative society qualifies for deduction under Section 80P(2)(d). The tribunal also highlighted that the insertion of subsection (4) to Section 80P does not affect the eligibility of a cooperative society for deductions under Section 80P(2)(d) as long as the interest income is derived from investments with a cooperative society.

2. Validity of Pr. CIT's Order under Section 263:
The Pr. CIT had set aside the assessment order under Section 263, arguing that the assessee was not eligible for the deduction under Section 80P(2)(d) because cooperative banks are commercial banks and not cooperative societies. The tribunal disagreed, stating that cooperative banks are still cooperative societies under the Cooperative Societies Act, 1912, and thus, interest income from such banks is eligible for deduction under Section 80P(2)(d). The tribunal cited various judicial pronouncements, including M/s Solitaire CHS Ltd. vs. Pr. CIT and Majalgaon Sahakari Sakhar Karkhana Ltd. vs. ACIT, which supported the assessee's claim. The tribunal concluded that the Pr. CIT had exceeded his jurisdiction and that the original assessment order by the A.O. was valid.

3. Condonation of Delay:
The assessee appealed against the Pr. CIT's order with a delay of 52 days, citing the illness of their counsel as the reason. The tribunal found the reasons justifiable and condoned the delay, noting that the Departmental Representative did not object to the condonation.

Conclusion:
The tribunal allowed the assessee's appeal, setting aside the Pr. CIT's order and restoring the original assessment order. The tribunal upheld the assessee's eligibility for deductions under Section 80P(2)(a)(i) and 80P(2)(d) for interest income from both cooperative and nationalized banks, emphasizing that the interest income qualifies for deduction as long as it is derived from investments with a cooperative society. The tribunal also condoned the delay in filing the appeal, finding the reasons for the delay justifiable.