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TMI Blog2022 (12) TMI 741X X X X Extracts X X X X X X X X Extracts X X X X ..... 5-16, for AY. 2014-15 and for AY. 2016-17 respectively. 2. Since both sides agree that the issues in all the three (3) assessment years/appeals of the revenue are similar, we take the revenue appeal for AY. 2014-15 as the lead appeal which decision of ours will be followed for other two appeals for AY. 2015-16 and AY. 2016-17. The grounds of appeal raised by revenue (for AY. 2014-15) are as under: - 1. Whether on the facts and circumstances of the case and in law the Ld CIT(A) was correct in allowing deduction u/s.80P(2)(d) of the Income Tax Act in respect of interest earned from deposits as cooperative bank ignoring that whether the deposits and investment of surplus funds of assessee not immediately required for its purposes made with Scheduled Bank or Nationalized Banks or with co--operative Banks does not make a difference as far as the character of the income earned by assessee is concerned and thus it does not partake the character of its operational income from its activity as cooperative housing society but such interest income falls in the category of Other Income which needs to be taxed u/s. 56 of Income Tax Act and therefore the provision of 80P not applicable on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mstances of the case and in law, the Ld.CIT(A) was correct in allowing deduction u/s 80P(2)(d) of the Income Tax Act in respect of interest earned from deposits though Hon'ble Karnataka High Court in a detailed judgment discussing the law and various related as the case of PCIT Vs Totagar's Cooperative Sales Society(392 ITR 74) has specifically decided the Question of Law about the allowability of interest earned from deposits with Cooperative Bank u/s. 80P(2)(d) of the Income Tax Act in favour of the Revenue. 6 The appellant craves leave to amend or alter or add a new ground which may be necessary. 3. From a perusal of the aforesaid grounds, it is noted that the issue raised by revenue is only against the action of the Ld. CIT(A) deleting the addition of Rs.2,04,21,374/- which was disallowed by the AO u/s 80P(2)(d) of the Income Tax Act, 1961 (hereinafter the Act ). 4. Brief facts the AO noted was that the assessee is Co-operative Society constituted by members (office tenement owners) for maintaining the Mittal Court Building. The assesse society returned income declaring in its return of income taxable income of Rs.3,34,640/-. The AO noted that the assessee h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... BMC), electricity, water, parking, maintenance of building and etc. by charging its prescribed fees. The assessee has filed return of income on 31.10.2015. The case was selected for scrutiny. It was submitted before AO that section 80P(2)(d) specifically provides for deduction pursuant to deposits placed with other co--operative banks so that interest was earned by way of placing deposits with other cooperative banks, which were registered co-- operative societies and copies of their registration certificates were submitted. The AO was not satisfied with the reply of the assessee and disallowance were made for the reason that deduction is not available to deposits placed with co--operative banks by virtue of section 80P(4) of the Act. Finally, AO made addition towards disallowance of interest u/s 80P of the Act of Rs.2,66,13,755/--. 5.2 In the appellate proceeding, the appellant made a detailed submission in which it is submitted by the appellant that section 80P(2)(d) specifically provides for deduction pursuant to deposits placed with other co--operative banks so that interest was earned by way of placing deposits with other cooperative banks, which were registered co--opera ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... )(d) of the Act. In view of the above discussion and following the above--mentioned decisions of Hon'ble High Court and jurisdictional Mumbai Bench of the ITAT, the deduction claimed by the appellant u/s 80P(2)(d) of the Act is allowed. Accordingly, Ground No. 1 of appeal is allowed. 6. Aggrieved by the aforesaid action of the Ld. CIT(A)/NFAC, the revenue is before us. 7. Having heard both parties and after perusal of the records, we note that the assessee is Co-operative Society and claimed deduction u/s 80P(2)(d) of the Act to the tune of Rs.2,04,21,374/-on the interest received from deposit at four Co. operative banks which was disallowed by AO. On appeal, the Ld. CIT(A)/NFAC allowed the claim of the assessee by relying on the decision of this Tribunal. The Ld. DR assailing the action of the Ld. CIT(A)/NFAC relied on the decision of the Hon ble Karnataka High Court in the case of PCIT Vs. Totagar s Co-operative Sales Society (395 ITR 611 (Kar) which according to her was in revenue s favour. Per contra, the Ld. AR of the assessee brought to our notice that the Hon ble Karnataka High Court has passed another order which is in favour of the assessee in PCIT Vs. Totagar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... definition of co-operative society by Finance Act, 2015 thereby intending to deduct tax at source under 194A that the said cooperative banks are not specifying of genus of co-operative society excluding them from exemption or deduction under the provisions of Chapter VIA by virtue of section 80P of the Act. Following the interpretation of the Hon ble Karnataka High Court in the above said decision, the Ld.PCIT held that the assessee was not entitled to deduction under 80P(2)(d) thereby directing the Assessing Officer to frame assessment de novo. We would like to place our reliance on the decisions relied upon by the Ld.AR in the cases mentioned below:- 1. M/s Petit Powers Co-op. Housing Society Ltd vs ITO (ITA No.549/MUM/2021) 2. M/s Solitaire CHS Ltd Society Office, Solitaire CHS Ltd vs PCIT (ITA No.3155/Mum/2019) 3. Jai Hind Co-operative Housing Society Ltd vs ACIT-25(2) (ITA No.1762 1763/Mum/2020) 4. M/s Vadasinor Pragati Samaj Co-operative Credit Society Ltd vs PCIT-18 (ITA No.2539/Mum/2019) 5. M/s Doshi Palace Co-operative Hsg Soc. Ltd vs ACIT-19(1) (ITA No.2510/MUM/2019) 6. The Salsette Catholic Co-operative Housing Ltd vs ACIT Circle-23(3) (ITA No.3870 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6. We have heard the authorised representatives for both the parties, perused the orders of the lower authorities and the material available on record, as well as the judicial pronouncements relied upon by them. Our indulgence in the present appeal has been sought, for adjudicating, as to whether the claim of the assessee for deduction under section 80P(2)(d) in respect of interest income earned from the investments/deposits made with the co-operative banks is in order, or not. In our considered view, the issue involved in the present appeal revolves around the adjudication of the scope and gamut of sub-section (4) of Sec. 80P as had been made available on the statute, vide the Finance Act 2006, with effect from 01.04.2007. On a perusal of the order passed by the Pr. CIT under Sec. 263 of the Act, we find, that he was of the view that pursuant to insertion of sub-section (4) of Sec. 80P, the assessee would no more be entitled for claim of deduction under Sec. 80P(2)(d) in respect of the interest income that was earned on the amounts which were parked as investments/deposits with co-operative banks, other than a Primary Agricultural Credit Society or a Primary Co-operative Agricult ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... development bank. However, at the same time, we are unable to subscribe to his view that the aforesaid amendment would jeopardise the claim of deduction of a co-operative society under Sec. 80P(2)(d) in respect of its interest income on investments/deposits parked with a co-operative bank. In our considered view, as long as it is proved that the interest income is being derived by a co-operative society from its investments made with any other co-operative society, the claim of deduction under the aforesaid statutory provision, viz. Sec. 80P(2)(d) would be duly available. We find that the term cooperative society‟ had been defined under Sec. 2(19) of the Act, as under:- (19) Co-operative society means a cooperative society registered under the Cooperative Societies Act, 1912 (2 of 1912), or under any other law for the time being in force in any state for the registration of co-operative societies; We are of the considered view, that though the co-operative banks pursuant to the insertion of subsection (4) to Sec. 80P would no more be entitled for claim of deduction under Sec. 80P of the Act, but as a co-operative bank continues to be a co-operative society registe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... towards deduction under Sec. 80P(2)(d) on the interest income on the investments/deposits parked with a co-operative bank. Although, in all fairness, we may herein observe that the Hon'ble High Court of Karnataka in the case of Pr. CIT Vs. Totagars co-operative Sale Society (2017) 395 ITR 611 (Karn), had concluded that a co-operative society would not be entitled to claim of deduction under Sec. 80P(2)(d). At the same time, we find, that the Hon'ble High Court of Karnataka in the case of Pr. Commissioner of Income Tax and Anr. Vs. Totagars Cooperative Sale Society (2017) 392 ITR 74 (Karn) and Hon ble High Court of Gujarat in the case of State Bank Of India Vs. CIT (2016) 389 ITR 578 (Guj), had observed, that the interest income earned by a co-operative society on its investments held with a cooperative bank would be eligible for claim of deduction under Sec.80P(2)(d) of the Act. We find that as held by the Hon'ble High Court of Bombay in the case of K. Subramanian and Anr. Vs. Siemens India Ltd. and Anr (1985) 156 ITR 11 (Bom), where there is a conflict between the decisions of non-jurisdictional High Court s, then a view which is in favour of the assessee is to be pref ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... herein not finding favor with the view taken by the Pr. CIT that the order passed by the A.O u/s 143(3), dated 31.08.2017 was erroneous in so far it was prejudicial to the interest of the revenue within the meaning of Sec. 263 of the Act set-aside the same and restore the order passed by the A.O u/s 143(3) of the Act, dated 31.08.2017. 9. From the above observation, we are of the view that the facts of the present case are similar to the decisions that have been cited above and by respectfully following the said decisions, we hold that the Ld.PCIT has erred in concluding that the assessment order passed by the Assessing Officer under section 143(3) dated 19/04/2021 was erroneous insofar as it is prejudicial to the interest of the revenue as per the provisions of section 263 of the I.T. Act, 1961, we set aside the order of the Ld.PCIT and restore the order passed by the Assessing Officer vide order dated 15/12/2017 passed under section 143(3) of the I.T. Act. 9. Respectfully following the ratio laid by the Co-ordinate bench (supra), we are inclined to confirm the action of the Ld. CIT(A) and dismiss the appeal of the revenue. Therefore, all the appeals of revenue are dismiss ..... X X X X Extracts X X X X X X X X Extracts X X X X
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