2022 (12) TMI 1011 - AT - Income Tax

Revision u/s 263 - grant of deduction u/s.80P by the AO in respect of interest income earned from other credit cooperative societies or Nationalised banks led to the passing of erroneous assessment orders prejudicial to the interest of the Revenue - HELD THAT - Coming to the cases of eligibility of deduction u/s.80P(2)(d), the respective assessees are Cooperative credit societies engaged in providing credit facilities to its members. The ld. PCIT has held the assessment order to be erroneous and prejudicial to the interest of the Revenue only on the ground that the claim of deduction u/s.80P on interest income was not in order. As observed that though co-operative banks, other than primary agricultural credit society or a primary co-operative agricultural and rural development bank, are not eligible for deduction pursuant to insertion of section 80P(4) w.e.f. 1.4.2007, but this provision does not dent the otherwise eligibility u/s 80P(2)(d) of a co-operative society on interest income on investments/deposits parked with a co-operative bank, which is a registered co-operative society as per section 2(19) defining co-operative society to mean a co-operative society registered under the Co-operative Societies Act, 1912 or under any law for the time being in force. The assessees are also Co-operative society registered. Similar view has been taken by the Pune Benches of the Tribunal in several cases including The Sesa Goa Employees Coop. Credit Society Ltd. Vs. ACIT 2022 (12) TMI 959 - ITAT PUNE Pune Benches of the Tribunal in series of decisions have held that the assessees are entitled to deduction u/s.80P(2)(a)(i)/80P(2)(d) in respect of interest income, we hold that the impugned orders cannot be sustained. All the orders are, therefore, overturned. All the appeals are allowed.

Summary

Issues Involved:
1. Delay in filing appeals due to the COVID-19 pandemic.
2. Dispute regarding the allowability of deduction u/s.80P.
3. Eligibility of deduction u/s.80P(2)(a)(i) and u/s.80P(2)(d) for interest income earned by cooperative societies.
4. Interpretation of relevant legal provisions and precedents.

Detailed Analysis:
1. The judgment addressed the issue of delay in filing appeals before the Tribunal due to the COVID-19 pandemic. The delay of 4 days and 12 days in two appeals was condoned based on the judgments of the Hon'ble Supreme Court regarding the extension of limitation during the pandemic period. This allowed the appeals to be admitted for disposal on merits.

2. The core issue revolved around the allowability of deduction u/s.80P challenged by the ld. Principal Commissioner of Income-tax (PCIT) under section 263 of the Income-tax Act, 1961. The dispute arose from the grant of deduction u/s.80P by the Assessing Officer (AO) for interest income earned from credit cooperative societies or Nationalised banks, leading to allegedly erroneous assessment orders prejudicial to the Revenue's interest.

3. The judgment extensively discussed the eligibility of deduction u/s.80P(2)(a)(i) and u/s.80P(2)(d) concerning interest income claimed by the assessees. The Tribunal referred to various precedents and legal interpretations to determine the availability of deduction. It analyzed conflicting views from different High Courts and emphasized the relevance of the specific provisions and factual backgrounds of the cases in question.

4. Regarding the interpretation of legal provisions, the Tribunal examined the eligibility of cooperative societies for deduction u/s.80P(2)(d) on interest income from investments made in cooperative banks. It clarified that despite certain restrictions on co-operative banks, cooperative societies meeting the defined criteria under the Act were entitled to claim deductions. The judgment cited previous decisions by the Pune Benches of the Tribunal to support the conclusion that the assessees were indeed eligible for the deductions claimed.

In conclusion, the Tribunal allowed all the appeals, overturning the impugned orders, based on the consistent interpretation of the law and precedents supporting the assessees' entitlement to deductions under sections 80P(2)(a)(i) and 80P(2)(d) for interest income.