9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2024 (9) TMI 143 - AT - Income TaxAllowability of deduction u/s. 80P(2)(d) - Interest Income deposits/investments in a Co-operative Bank - assessee is a co-operative Society registered with the Registrar of Cooperative Societies for Rajasthan having its primary object to carry on the business of providing credit facilities to its members - Whether the assessee being co-operative society be denied benefit of section 80P(2)(d) of the Act on interest received from another cooperative Societies Running as co-operative bank as per banking regulations .? - HELD THAT - The similar issue has been decided by the Hon ble Rajasthan High court, Jodhpur while dealing with the Revenue s appeal filed for the assessment year 2014-15 in the case of PCIT, Ajmer vs M/s Bhilwara Zila Dugdh Utpadak Sahakari Sangh Ltd. 2019 (8) TMI 1131 - RAJASTHAN HIGH COURT as held revenue's contention is unsustainable. Section 22 in uncertain terms categorically deems Regional Rural Banks (of which description Baroda Rajasthan Regional Rural Banks answer to) as Cooperative Societies for the purposes of Income Tax Act, In the absence of non-obstante clause, the mere fact that a restrictive condition was imposed in relation to a Cooperative Bank for regulating the benefit of Section 80P, does not in any manner, alter the pre-existing situation. By virtue of Section 22, Regional Rural Banks continue to be deemed Cooperative Societies and all the contingent consequences that flow from it. For the above reasons, this court is of the opinion that there is no substantial question of law involved in the present appeal. As perused the various provisions of Regiona Rural Bank Act 1976. Baroda Rajasthan Kshetriya Gramina Bank was set up under the provisions of under the provisions of Regional Rural Bank Act. Section 22 of the Regional Rural Bank Act provides that Regional Rural Bank to be deemed to be a co-operative society for purpose of the Income-tax Act, 1961. In our considered view the the Circular of CBDT cannot override the provisions of the Act of Parliament. Even the careful reading of the Circular No. 6 of CBDT make it clear that exemption is withdrawn with respect to Regional Rural Banks are not eligible for deduction under section 80P of the Income-tax Act, 1961 from the assessment year 2007-08 onwards, and not the co-operative societies. The assessee before us is the cooperative society and not the Regional Rural Bank. Therefore, considering the provisions of section 22 of Regional Rural Bank Act, wherein the status of the banks established are of the co-operative society the assessee is entitled for the exemption on the interest earned on the deposits. In the result the ground of the appeal are allowed.
Issues Involved:
1. Allowability of deduction under Section 80P(2)(d) of the Income Tax Act, 1961 on interest income from deposits/investments in a co-operative bank. 2. Whether the CIT(A) was justified in ignoring the findings of the Rajasthan High Court in the assessee's own case for AY 2007-08. Detailed Analysis: Issue 1: Allowability of Deduction under Section 80P(2)(d) - Facts: The assessee, a co-operative society registered in Rajasthan, filed returns for AY 2017-18 and 2020-21 declaring nil income. The society claimed a deduction under Section 80P(2)(d) for interest income from deposits in co-operative banks. The AO disallowed this deduction, arguing that the interest income was from banks and not co-operative societies, thus not eligible under Section 80P. - AO's Position: The AO stated that the society's interest income from FDRs and deposits in banks other than co-operative societies is taxable under Section 56 of the Act. The AO invoked Section 80P(4) to deny the deduction, arguing that the co-operative banks in which the society invested are not eligible for deductions under Section 80P. - CIT(A)'s Decision: The CIT(A) allowed the deduction, stating that the appellant society is not a co-operative bank and hence Section 80P(4) does not apply. The CIT(A) found that the interest income from co-operative banks qualifies for deduction under Section 80P(2)(d). - Revenue's Argument: The revenue argued that the interest income from co-operative banks should not be eligible for deduction under Section 80P(2)(d) based on the CBDT Circular No. 6/2010 and the Karnataka High Court decision in Totagars Co-operative Sales Society. - Assessee's Argument: The assessee contended that the interest income from co-operative banks should be eligible for deduction under Section 80P(2)(d), citing various judicial precedents including decisions from the Rajasthan High Court and ITAT Jaipur. Issue 2: Ignoring Rajasthan High Court's Findings - Facts: The AO referred to a Rajasthan High Court decision in the assessee's own case for AY 2007-08, where the court ruled that interest income from nationalized banks should be taxed under "income from other sources." - CIT(A)'s Decision: The CIT(A) distinguished this case by noting that the interest income in question was from co-operative banks, not nationalized banks, thus qualifying for deduction under Section 80P(2)(d). - Revenue's Argument: The revenue argued that the CIT(A) ignored the Rajasthan High Court's findings, which should apply to the current case. - Assessee's Argument: The assessee maintained that the interest income from co-operative banks is distinct from interest income from nationalized banks and should be eligible for deduction under Section 80P(2)(d). Tribunal's Decision: - Ruling: The Tribunal dismissed the revenue's appeal, upholding the CIT(A)'s decision to allow the deduction under Section 80P(2)(d). - Reasoning: The Tribunal relied on the Rajasthan High Court's decision in PCIT, Ajmer vs. M/s Bhilwara Zila Dugdh Utpadak Sahakari Sangh Ltd., which held that interest income from co-operative societies, including co-operative banks, is eligible for deduction under Section 80P(2)(d). The Tribunal also noted that the CBDT Circular No. 6/2010 does not override the statutory provisions of the Income Tax Act, which deem Regional Rural Banks as co-operative societies for tax purposes. - Conclusion: The Tribunal found no substantial question of law and upheld the CIT(A)'s decision, allowing the deduction under Section 80P(2)(d) for interest income from co-operative banks. Summary: The Tribunal upheld the CIT(A)'s decision to allow the deduction under Section 80P(2)(d) for interest income from co-operative banks, dismissing the revenue's appeal. The Tribunal relied on judicial precedents, including a Rajasthan High Court decision, and found that the CBDT Circular No. 6/2010 does not override the statutory provisions of the Income Tax Act. The Tribunal concluded that the interest income from co-operative banks qualifies for deduction under Section 80P(2)(d).
|
