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TMI Blog2021 (11) TMI 1120X X X X Extracts X X X X X X X X Extracts X X X X ..... is also covered in favour of the assessee by the order of Hon'ble ITAT, Jaipur for earlier AYs." 2. The ld A/R submitted that the facts of the case are that the assessee is an Apex body responsible for development of dairy activities in cooperative sector in the State of Rajasthan. It filed its return of income on 24.09.2015 declaring nil income after claiming deduction u/s 80P(2) at Rs 4,14,68,041/-. The AO vide notice u/s 142(1) dt. 09.10.2017, in Q. No.4 required the assessee to explain allowability of deduction u/s 80P, especially in case of other incomes. In response to same, assessee vide reply dt. 23.10.2017 submitted that deduction of Rs.4,14,68,041/- has been claimed under clause (c) & (d) of sub-section (2) of section 80P. It also provided break-up of deduction as per which interest on FDR with cooperative bank of Rs.3,69,19,911/- has been claimed as deduction u/s 80P(2)(d). The assessee further submitted that deduction u/s 80P has been allowed to assessee in past while completing assessment u/s 143(3) of the Act. The AO after examining all the details/ explanation furnished by the assessee accepted the declared income u/s 143(3) dt. 06.12.2017. 3. It was submitted tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 80P. It also provided break-up of deduction as per which interest on FDR with cooperative bank of Rs.3,69,19,911/- has been claimed as deduction u/s 80P(2)(d). The assessee further submitted that deduction u/s 80P has been allowed to assessee in past while completing assessment u/s 143(3). The AO after examining all the details/ explanation furnished by the assessee accepted the declared income u/s 143(3) dt. 06.12.2017. Thus, when the AO has made necessary verification of claim of deduction u/s 80P(2)(d), his order cannot be said to be erroneous so far as it is prejudicial to the interest of revenue. For this purpose, reliance is placed on the following cases:- * Sir Dorabji Tata Trust Vs. DCIT(E) 188 ITD 38 dt. 28.12.2020 (Mum.) (Trib.) * CIT Vs. Vijay Kumar Koganti (2020) 275 Taxman 394 (Mad.) (HC) * CIT Vs. Green Fields Commercial Pvt. Ltd. (2015) 119 DTR 303 (J&K) (HC) 7. The principles laid down in these decision when applied to the facts of assessee's case is evident that in the assessee's case AO has made all the necessary enquiry and verification as can be expected of a of a prudent, judicious and responsible AO in normal course of his assessment work. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ter considering the decision of Karnataka High Court in case of PCIT Vs. Totagars Cooperative Sales Society 395 ITR 611 where it is held that interest earned on deposits with cooperative bank is not eligible for deduction u/s 80P(2)(d). Therefore, in view of this decision of coordinate bench, the order passed by PCIT u/s 263 be quashed. 10. It was further submitted that ld PCIT/DR has relied on the decision of Hon'ble Karnataka High Court in case of CIT Vs. Totagars Cooperative Sales Society dt. 16.06.2017 reported at 395 ITR 611 where it is held that interest earned on deposits with cooperative bank is not eligible for deduction u/s 80P(2)(d). It is submitted that the Hon'ble Karnataka High Court in the same case vide order dt. 05.01.2017 reported at 392 ITR 74 has held that cooperative banks is a cooperative society and therefore, the interest earned from investment made is FDR of cooperative banks is eligible for deduction u/s 80P(2)(d). The said decision of Karnataka High Court by the divisional bench reported in 392 ITR 74 has been distinguished in the subsequent decision of the Karnataka High Court of equal strength reported in 395 ITR 611 without referring to the Full Bench ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nterest earned. 8. Thus, AO during the course of assessment proceedings has not verified the claim of deduction u/s 80P(2)(d) of the assessee society. This has resulted in order being erroneous and prejudicial to the interest of revenue. 10. I have gone through the assessment order and case records and submission filed by the assessee, in the facts and circumstances of the case. The contentions of assesse are not tenable. On bare perusal of the Act it is clear that any income by way of interest or dividends derived by the co-operative society from its investments with any other cooperative society, is wholly exempt. However, the assessee cooperative society has received interest from banks who are not themselves cooperative societies, therefore the interest received is taxable and deduction u/s 80P(2)(d) is not available to it. From the above facts and circumstances of the case and having regard to the material available on record, I am of the considered opnion that the Assessing Officer failed to consider/apply his mind to the information available on record with regard to the deduction allowed to the cooperative society u/s 80P(2)(d) of the Act. This in turn has resulted in p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r Zila Dugdh Utpadak Sahakari Sangh Ltd. has held that for the purpose of section 80P(2)(d), Jaipur Central Cooperative Bank shall be treated as cooperative society and therefore, interest received by the assessee cooperative society from Jaipur Central Cooperative Bank Ltd. is eligible for deduction u/s 80P(2)(d) of the Act. The ld PCIT however referred to the Banking Regulation Act of 1949 and held that as per Part V of the Banking Regulation Act, a co-operative bank is different from the cooperative society and the deduction has been wrongly allowed by the Assessing officer. In case of M/s Jaipur Zila Dugdh Utpadak Sahakari Sangh Ltd, we find that the Coordinate Bench has considered the meaning of cooperative society and cooperative bank and has referred to the decision of the Hon'ble Karnataka High Court in case of Totagars Co- operative sale society 392 ITR 74 wherein it was 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 ITAT itself in different cases. Moreover the word "Co-operative Society" are the words of a large extent, and denotes a genus, whereas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... here there is a direct decision of the Hon'ble Karnataka High Court and which has been followed by the jurisdictional Tribunal on identical set of facts, the view taken by the Assessing officer in allowing the deduction to the assessee cooperative society cannot be held as erroneous in nature as the same is clearly a plausible view supported by the aforesaid High Court and Tribunal decisions. 15. As regards reliance placed by the ld PCIT/DR on the subsequent decision of the Hon'ble Karnataka High Court in case of Totgar Cooperative Sale Society 395 ITR 611 where it was held that interest earned on deposits with cooperative bank is not eligible for deduction u/s 80P(2)(d), we note that in the decision of M/s Jaipur Zila Dugdh Utpadak Sahakari Sangh Ltd, the Coordinate Jaipur Benches did consider the latter decision of Hon'ble Karnataka High Court in case of Totgar Cooperative Sale Society 395 ITR 611 while referring to Coordinate Bench decision in case of Kaliandas Udyog Bhavan Premises Co-op society Ltd. We further respectfully note that even among the different benches of the same High Court, there are divergent views on the matter and in absence of decision of the jurisdictional ..... X X X X Extracts X X X X X X X X Extracts X X X X
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