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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 ..... t considered the aforesaid decision and gone ahead and has concluded that the deduction has been wrongly allowed by the Assessing officer without verifying the said claim of the assessee cooperative society. We find that during the course of assessment proceedings, the Assessing officer did enquire about the claim of deduction from the assessee and in response, the assessee has submitted its response which was considered and the claim of deduction was accordingly allowed. Therefore, it is not a case of lack of enquiry on part of the Assessing officer. Also we 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 High Court, where there are two views in the matter of a non-jurisdictional High Court in terms of construing a taxing statue and the AO has taken one of the views in the matter which favours the assessee, the view so taken by the AO, being a plausible view taken by a quasi-judicial authority cannot be held as erroneous in nature as the same is in consonance with the legal proposition laid down by the Hon ble Supreme Court in case of Vegetable Products Ltd. [ 1973 (1) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shed by the assessee accepted the declared income u/s 143(3) dt. 06.12.2017. 3. It was submitted that the ld. PCIT thereafter issued notice dt. 29.11.2018 u/s 263 stating that interest earned on FDR with cooperative bank of Rs. 3,69,19,911/- and interest earned from Milk Unions of Rs. 44,98,130/- does not fall within the scope of provision of section 80P(2)(d). Thus, the order passed u/s 143(3) is erroneous so far as it is prejudicial to the interest of Revenue. 4. It was submitted that in response to this notice, the assessee filed detailed reply vide letter dt. 29.01.2019 stating that interest income of Rs. 3,69,19,911/- has been received from Jaipur Central Cooperative Bank Ltd. which is a cooperative society. In support of the same, registration certificate of Jaipur Central Cooperative Bank Ltd. issued by co-operative department was also filed. Similarly, Milk Unions are also constituted as co-operative society, thus, interest income of Rs. 44,98,130/- received from them is also deductible u/s 80P(2)(d). Further vide reply dt. 10.09.2019, the assessee filed the order of Hon ble ITAT in case of Jaipur Zila Dugdh Utpadak Sahakari Sangh Ltd. wherein Hon ble ITAT held that i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion as can be expected of a of a prudent, judicious and responsible AO in normal course of his assessment work. The Ld. CIT has not specified as to what type of enquiry ought to have been made by AO which would have resulted into income or disallowance or any other adverse action. Thus, none of the condition of clause (a), (b) or (c) of Explanation 2 to section 263 is attracted. Hence, the order passed by AO can't be branded as erroneous and prejudicial to the interest of revenue. 8. It was further submitted that section 80P(2)(d) provides deduction in respect of income by way of interest or dividend derived by the cooperative society from its investment with any other cooperative society. Deduction of Rs.3,69,19,911/- claimed u/s 80P(2)(d) is in respect of interest earned on FDR maintained with Jaipur Central Cooperative Bank Ltd. The Jaipur Central Cooperative Bank Ltd. is constituted under the provision of Jaipur Cooperative Societies Act, 1943. Copy of registration certificate of Jaipur Central Cooperative Bank Ltd. issued by cooperative department is enclosed as part of paperbook at page 18. Thus, it is apparent that Jaipur Central Cooperative Bank Ltd. is a cooperativ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... equent decision of the Karnataka High Court of equal strength reported in 395 ITR 611 without referring to the Full Bench. Therefore, in view of the decision of Hon ble Bombay High Court in case of K. Subramanian Anr. Vs. Siemen s India Ltd. Anr. (1985) 156 ITR 11 where there is conflict between the decisions of non jurisdictional High Courts, then a view which is in favour of the assessee is to be preferred as against that taken against him. The Hon ble Supreme Court in case of CIT Vs. Vegetable Products Ltd. 88 ITR 192 has held that where two reasonable constructions of a taxing provisions are possible, then the construction which favours the assessee must be adopted. The effect of both the decisions of Karnataka High Court has been considered by ITAT Mumbai Benches in case of Kaliandas Udyog Bhavan Premises Cooperative Society Ltd. Vs. ITO (ITA No.6547/Mum/2017 dt. 25.04.2018). In view of above decisions, it is evident that there are two views on allowability of deduction u/s 80P(2)(d) on interest received by a cooperative society on the investment made with a cooperative bank. There is no decision of jurisdictional High Court/ Supreme Court against the assessee directly dec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 passing of an erroneous order by the Assessing Officer in the case due to non-application of mind to relevant material, reflecting non appreciation of facts and an incorrect application of mind to law which is prejudicial to the interest of the revenue. Thus, the order passed u/s 143(3) on 06.12.2017 is erroneous and prejudicial to the interest of the revenue. 11. Accordingly, by virtue of powers conferred on the undersigned under the provisions of section 263 of the Income Tax Act, 1961, I hold that the order under Section 143(3) of the IT Act dated 06.12.2017 for AY 2015-16 passed by the Assessing Officer is erroneous in so far as it prejudicial to the interest of revenue as the said order has been passed by the Assessing Officer in a routine and perfunctory manner without examining the issue of deduction u/s 80P(2)(d) of the Act. The order has thus resulted in wrong deduction of income to the assessee. The order of the Assessing Officer is therefore liable to revision under the clause (a), (b) (c) of Explanation (2) to Section 263 ofthe Income Tax A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e ITAT itself in different cases. Moreover the word Co-operative 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. Co-Operative Society can be of different nature, and can be involved in different activities; the Co-operative Society Bank is merely a variety of the Co-operative Societies. Thus the Co-operative Bank which is a species of the genus would necessarily be covered by the word Co- operative Society . 9. Furthermore, even according to Section 56(i)(ccv) of the Banking Regulations Act, 1949, defines a primary Co-Operative Society bank as the meaning of Co-Operative Society. Therefore, a Co-operative Society Bank would be included in the words 'Co-operative Society'. 10. Admittedly, the interest which the assessee respondent had earned was from a Co-operative Society Bank. Therefore, according to Sec. 80P(2)(d) of the I.T. Act, the said amount of interest earned from a Co-operative Society Bank would be deductable from the gross income of the Co-operative Society in order to assess its ..... X X X X Extracts X X X X X X X X Extracts X X X X
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