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TMI Blog2018 (9) TMI 287X X X X Extracts X X X X X X X X Extracts X X X X ..... e of CIT Mahalaxmi Sugar Mills Co. Ltd.[1986 (7) TMI 83 - SUPREME COURT] and CBDT Circular No.14(XL-35) Dated 11.04.1995 above, which provides that it is the duty of the A.O. to apply relevant provision of the Act for the purpose of determining the true figure of assessee’s total income and consequently, tax liability. CIT(A) should not have refuse to exercise his discretionary power in the matter. The assessee-society is entitled for deduction of ₹ 50,000/-. Set aside the orders of the authorities below and direct the A.O. to allow deduction of ₹ 50,000/- out of interest income in favour of the assessee-society. This ground of appeal of assessee is allowed. - ITA. Nos. 2787 & 2788/Del/2018 - - - Dated:- 4-9-2018 - Shri Bhavnesh Saini, Judicial Member And Shri Prashant Maharishi, Accountant Member Assessee by : Shri Rano Jain, Mr. Pranshy Singhal Ms. Mansi Jain Advocates Revenue by : Shri Vijay Kumar Jiwani, Sr. D.R. ORDER Per Bhavnesh Saini, JM Both the appeals by Assessee are directed against the common Order of the Ld. CIT(A)-13, New Delhi, Dated 19.02.2018, for the A.Ys. 2013-2014 and 2014-2015. 2. We have heard the Learned Representati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... accordingly assessed the income of the assessee at ₹ 7,47,298/-. 5. The assessee-society challenged the addition before Ld. CIT(A). Written submissions of the assessee-society is reproduced in the appellate order in which the assessee- society reiterated the same facts as was submitted before A.O. It was submitted that the interest income arising from investment with Saraswat Cooperative Bank is exempt in view of Section 80P(2)(d) of the I.T. Act. The A.O. made both the additions without giving show cause notice to the assessee-society. Further, deduction of ₹ 50,000/- should be allowed to the Cooperative Society under section 80P(2)(c)(ii) of the I.T. Act. The assessee-society relied upon Section 80P(2)(d) of the I.T. Act, 1961 which provides deduction in respect of income of Cooperative Societies i.e., in respect of any income by way of interest or dividend derived by the Cooperative Society from its investments with any other Cooperative Society, whole of such income . On perusal of the above provision of Section 80P(2)(d) of the I.T. Act, it is clear that a Cooperative Society shall be allowed deduction on interest received on investments in another Cooperative ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proposition relied upon the Order of ITAT, Delhi Bench in the case of ACIT vs. Jawala Cooperative Urban Thrift and Credit Society Ltd., New Delhi in ITA.No.2607/Del./2012, Dated 19.12.2014 and Order of ITAT, Bangalore Bench in the case of Menasi Seemeya Group Gramagala Seva Sahakari Sanga Niyamitha vs. CIT ITA.No.609 610/Bang/2014, Dated 05.02.2015 reported in 2015-(2) TMI-1094-ITAT-Bangalore. The assessee, therefore, prayed that assessee is eligible for deduction under section 80P(2)(d) of the I.T. Act. 5.1. The Assessee further submitted that on making the above additions, A.O. has not allowed deduction of ₹ 50,000/- in accordance with the provisions of Section 80P(2)(c)(ii) of the I.T. Act. According to the above provision, any Cooperative Society, which is not engaged in the business as specified in any of the clauses to this Section, shall be allowed deduction to the tune of ₹ 50,000/- from total income so computed . The A.O. however, did not allow even the same benefit. The assessee-society relied upon the Judgment of Hon ble Supreme Court in the case of CIT vs. Mahalakshmi Sugar Mills Co., Ltd., (1986) 160 ITR 920 (SC) in which it was held that that it is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he material available on record. Learned Counsel for the Assessee reiterated the submissions made before the authorities below. Learned Counsel for the Assessee as regards the interest income received from Saraswat Cooperative Bank Ltd., submitted that the issue under consideration is, whether interest income received on investments in cooperative bank are entitled for deduction u/s 80P(2)(d) of the Act i.e. whether cooperative bank would come under the ambit of cooperative society for the purpose of claiming deduction u/s 80P(2)(d) of the Act. This issue is squarely covered from the decision of Karnataka High Court in the case of The Pr. CIT v. Totagars Cooperative Sale Society, [2017] 392 ITR 74, where it was specifically held as under:- 8. The issue whether a Co-operative Bank is considered to be a Co-operative Society is no longer res integra. For the said issue has been decided by the IT AT itself in different cases. Moreover the word Cooperative Society are the words of a large extent, and denotes a genus, whereas the word Co-operative Bank is a word of limited extent, which merely demarcates and identifies a particular species of the genus Co - operative Societies. C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the case of The Totgars Co-operative Sale Society Ltd. Vs. Income Tax Officer, (supra). However, the said case dealt with the interpretation, and the deduction, which would be applicable under Section 80P(2)(a)(i) of the I. T. Act. For, in the present case the interpretation that is required is of Section 80P(2)(d) of the I.T. Act and not Section 80P(2)(a)(i) of the I.T. Act. Therefore, the said judgment is inapplicable to the present case. Thus, neither of the two substantial questions of law canvassed by the learned counsel for the Revenue even arise in the present case. 8.3. Thus, from the above position, it is clear that the present case of the assessee-society relates to the provisions as laid down under section 80P(2)(d) and not under 80P(2)(a)(i) and the issue under consideration has been wrongly dealt by Ld. CIT(A). The Learned Counsel for the Assessee placed further reliance on the following cases i. ITO-21 (1) (1) , Mumbai vs., M/s. Abhaylaxmi Co-op. Credit Society Ltd. And Vice-Versa, ITA NO. 1525/MUM/2017 And ITA NO. 1614/MUM/2017, dt. 31.07.2017 ii. Merwanjee Cama Park Co-op Housing society Ltd. vs., Income Tax Officer- Range, Mumbai, ITA No. 6139/Mum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h were again used for the purpose of business of assessee - Decided against revenue. 10.2. The ITAT, Bangalore Bench in the case of Menasi Seemeya Group Gramagala Seva Sahakari Sanga Niyamitha vs., CIT (supra) in Reference Proceedings under section 263 of the I.T. Act held as under : Now coming to the question as to whether the interest on deposits earned by a Co-operative Society, where such deposits were with a Co-operative Bank, we are of the opinion that restrictive interpretation given by the learned CIT(A) to section 80P(2)(d) was not warranted by it wordings. This Tribunal in the case of Bagalkot District Central Co-operative Bank [2015 (1) TMI 1005 - ITAT BANGALORE] had held that a Co- operative bank which is also a Co-operative Society cannot be excluded from the purview of benefits available to a Cooperative Society, unless the provisions of the Act so stipulate. No doubt in the said decision, the Tribunal was considering the application of Section 194A(3)(v) of the Act, wherein it was mandated that a Cooperative Society was not required to deduct tax at source if the interest credit were paid to any Co-operative Society. It had unequivocally held that the said ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee reiterated the submissions made before the Ld. CIT(A). 13. On the other hand, Ld. D.R. relied upon the orders of the authorities below. 14. After considering the rival submissions, we are of the view that assessee-society is entitled for claim of deduction of ₹ 50,000/-. The Hon ble Delhi High court in the case of CIT vs. Jai Parabolic Springs Ltd., 306 ITR 42 (Del.) (HC) considering the Judgment of the Hon ble Supreme Court in the case of NTPC 229 ITR 383 and Goetz (India) Ltd., 284 ITR 323 (SC) held that there is no prohibition on the power of the Tribunal to entertain an additional ground which according to the Tribunal arose in the matter and for the just decision of the case. In this case, the assessee-society pleaded that when the interest has been disallowed by the A.O. for exemption, only then, assessee made an alternative claim before Ld. CIT(A). The Ld. CIT(A) accepted the claim of assessee-society in principle, but, denied the claim because no such claim was made in the return of income or no claim was raised in the revised return. However, there is no prohibition on the powers of the appellate authority to consider the claim of assessee, if assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X
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