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TMI Blog2021 (5) TMI 446X X X X Extracts X X X X X X X X Extracts X X X X ..... di - CA For the Revenue : Shri Ritesh Mishra - CIT-DR ORDER PER PAWAN SINGH, JUDICIAL MEMEBER: 1. This appeal by the Assessee is directed against the order of ld. Principal Commissioner of Income Tax-2, Surat hereinafter referred as "Ld. PCIT", passed under section 263 of Income-tax Act (Act) dated 26.03.2019 for the Assessment Year (AY) 2014-15. 2. Brief facts of the case are that the assessee is a Co-operative Society engaged in the business of providing credit facility to its members by accepting the deposits from members and lending money them too. The assessee filed its Return of Income for A.Y. 2014-15 on 21.08.2013 declaring Nil income. In the computation of income, the assessee claimed deduction 80P of the Act of ₹ 7,03,56,728/-. The return of income was selected for scrutiny. The assessment was completed under section 143(3) of the Act on 18.02.2016. During the assessment, the Assessing Officer (AO) noted that assessee derived interest income from savings bank account with HDFC Bank and UTI Bank. The AO was of the view that as per section 80P(2)(a)(d) of the Act, the interest earned out of the investment /deposits Co-op Societies or Co-operative Banks are only ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ply dated 16.10.2016, wherein the AO raised quarries about the deduction of claim under section 80P(2)(d). The assessee also submits that similar deductions were claimed in earlier years and was allowed in favour of assessee. The assessee prayed for dropping the proceedings under section 263 of the Act. 7. The reply furnished by the assessee was not accepted by ld. PCIT. The ld. PCIT took his view that Hon'ble Supreme Court in Totagars Co-operative Sale Society held that assessee is not entitled for deduction under section 80P(2)(d) of the Act. The ld. PCIT further in para 4.1 of the order recorded that Hon'ble Karnataka High Court in CIT Vs Totagars Cooperative Sale Society (2017) 83 taxmann.com 140 (Kar) dated 16.06.2017, held the cooperative societies are not eligible for deduction of interest earn on deposits with Cooperative Bank under section 80P(2)(d) of the Act. The Cooperative Societies and Co-operative Banks are two separate entities and Cooperative Banks are not species of genes Cooperative Societies. The assessment orders dated 18.10.2016 was set-aside and the AO was directed to pass the assessment order afresh by giving opportunity to the assessee. Aggrieved ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee was allowed deductions under section80P(2)(d). On further appeal by the revenue before the Tribunal the appeal of the revenue was dismissed in ITA No. 2166/Ahd/2014 dated 18.04.2017, ITA No. 2582/Ahd/2014 dated 28.06.2018 and in ITA No.2617/Ahd/2016 dated 18.12.2018 for A.Y. 2009-10, 2010-11 and 2012-13 respectively. The copies of the decisions of Tribunal are placed on record. The ld.PCIT for the first time revised the assessment order on the issue. 9. On merit of the case the learned AR for the assessee submits that the assessee earned interest from its investment in cooperative bank. The cooperative banks are primarily a cooperative society, as has been held by various benches of Tribunal. Cooperative societies interest income from deposit with the cooperative bank is eligible for claim of deduction under section 80P(2)(d). The learned AR of the assessee further submits he has also furnished his written submission and the same may be considered in support of his various other submissions. In support of his submission the learned AR of the assessee relied upon the following decisions: * Surat Vankar Sahkari Sangh Vs ACIT [2016] 72 taxmann.com 169 (Gujarat), * CI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee filed its reply through its CA (AR) and furnished required details and after examining the issue allowed the deductions under section 80P(2)(d) as discussed in para 4 of the assessment order. The Assessing Officer passed assessment order on 18.10.2016. 12. The ld. PCIT before passing under section 263 of the Act, identified the issue regarding the claim of deduction under section 80P(2)(d) in its show cause notice dated 06.03.2019. The assessee in its reply dated 7.03.2019 clearly explained that the issue was examined by Assessing Officer and that the assessment order is not erroneous. The assessee also explained that similar disallowances /issues was subject matter in the appeal filed by the revenue before Tribunal in A.Y. 2009-10, 2010-11 and 2012-13 and the assessee was allowed similar deductions. 13. The Hon'ble Jurisdictional High Court in Aryan Arcade Ltd., vs PCIT (2019) 412 ITR 277 (Gujarat) held that merely because Commissioner held a different belief that would not permit him to take the order in revision, it if further held that when Assessing Officer made full enquiry, he made up his mind, the notice of revision is not valid. (emphasis added by us). Fur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l before Ld. CIT(A) , the disallowances were deleted and the order of the Ld. CIT(A) in all years were confirmed. 18. The ld. DR for the revenue relied on the case law in PCIT Vs. Totagars Co-operative Sales Society (second case)/(supra), wherein the Hon'ble Karnataka High Court held that interest earned by a Co-operative Society from surplus deposits kept with Co-operative bank, is not eligible for deduction under section 80P(2)(d). Considering the legal position that when there are conflicting decisions of non-jurisdictional High Courts, on similar issue, the decision of Jurisdictional High Court is having binding precedent. Thus, keeping in view of the decision Hon'ble Jurisdictional High Court in Surat Vankar Sahakari Sangh Ltd., vs. ACIT (supra) wherein the assessee-co-operative society is held eligible for deduction under section 80P(2)(d) in respect of gross interest received from co-operative bank without adjusting interest paid to said bank, we conclude that the order passed by assessing officer is not erroneous. Hence, the grounds of appeal raised by assessee are allowed. 19. In the result, appeal of the assessee is allowed. Order pronounced on 12th May, 2021 b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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