9911796707
TMI Blog2023 (8) TMI 916X X X X Extracts X X X X X X X X Extracts X X X X ..... s, we are of the considered opinion that order of penalty levied by the Ld.AO u/s. 271B of the Act and confirmed by the Ld.CIT(A) is liable to be set aside with a direction to verify that the appointment of the statutory/tax auditor was done after the due date of completion of audit u/s 44AB of the Act, and if same is the case and audit was completed within a reasonable time of such appointment, then the penalty u/s 271B cannot be held as justified. We, therefore, set aside the order of the Ld.CIT(A) and restore the issue to the files of AO to verify the documents. Disallowance u/s 80P - Interest on the bank deposit - HELD THAT:- As issue involved in the present appeal regarding allowability of assessee s claim pertaining to sec.80P(2)(a)(i) of the Act, on the interest on the bank deposit remain the same as were there [ 2022 (8) TMI 597 - ITAT RAIPUR] as relied upon by the assessee, therefore, we respectfully following the same, direct the AO to allow the assessee s claim for deduction u/s. 80P(2)(a)(i). X X X X Extracts X X X X X X X X Extracts X X X X ..... d.CIT (Appeals), NFAC, Delhi did not come to the knowledge of the Appellant and therefore, proceeding could not be attended. 3. Without prejudice, that the Ld.CIT (Appeals) NFAC, Delhi, erred in passing ex parte order. He further erred in considering the explanation as filed before the learned AO and quoted by the Ld. Assessing officer in his penalty order. 4. The brief facts of the case are that the assessee is a Primary Agricultural Co-operative Society engaged in carrying out business of banking, paddy procurement, sale of fertilizers, seeds, manures, and pesticides and of control items under Public Distribution System. During the course of assessment proceedings, it was noticed that the assessee has failed to get its accounts audited within the specified due date i.e. 30.09.2012. Audit was done in the case on 23.02.2013. Thus, the AO observed that the assessee had committed default within the meaning of sec. 44AB of the Act. Accordingly, penalty proceedings were initiated. Notice u/s. 271B of the Act, was issued to show cause 'as to why' penalty should not be imposed. In response, the assessee submitted as under: "Every person (a) carrying on business shall, if his ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tence of a reasonable cause failed in this case. Reliance is placed in this case of Khuda Wood Products (P) Ltd. V. CIT, reported in (2008) 172 Taxman 49 (Gau), where the Hon'ble Gauhati High Court held that certificate issued by auditor giving reasons for delay in auditing accounts of assessee would not constitute a reasonable ground within meaning of section 271B as there was no evidence on record to show that any effort was made by assessee to get its accounts audited within scheduled time. The substantial questions of law in the above case before the Hon'ble Gauhati High Court are as under. (a) Whether, on the facts and in the circumstances of the case, the Tribunal ignoring the relevant materials, namely, auditor's letter dated 5-6-1991, before it was justified and did not err in holding that there was no reasonable cause for the delay in submitting the audit report by the assessee and this pass a perverse order? (b). Whether, on the facts and in the circumstances of the case, the Tribunal interpreted the word 'reasonable cause' appearing in section 273B under the Act contrary to the principle of interpretation of such words as has been laid down by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... noticed that there was no representation on behalf of the assessee, however, written submission was submitted by the assessee on 12.07.2023. Since, none is appeared on behalf of the assessee even in the second round of hearing, we find it appropriate to dispose off the matter on the basis of merits evident from material available on record. 10. Written submissions of the assessee in the present case are extracted as under: 1. Assessment & First Appellate Proceedings: I. The assessee is a primary agricultural cooperative society engaged in carrying out business of banking, paddy procurement, sale of fertilizers, seeds, manures, pesticides and sale of control items under Public Distribution System. 100% deduction of income from all the said activities has been claimed u/s. 80P of the I.T. Act 1961 while filing return for the year under consideration. II. The assessee had e-filled return of income on 31.03.2013 showing total income at Rs. NIL. III. That assessment was completed by the AO u/s. 143(3) of the Act on 23.03.2015 by determining total income of Rs. 11,68,460/-. That penalty proceeding was also initiated u/s. 271B for failure to get the books of account for the F.Y. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e ITAT, Raipur in case of "Adim Jati Sewa Sahakari Samiti Maryadit, Mainpur Dhorra Vs. ITO in ITA No. 19/RPR/2022 dt. 24.04.2023" allowed the assessee's appeal and cancelled penalty levied u/s 271U by holding that "We have considered the rival contentions and perused the orders of the authorities below along with the relevant documents placed on record. It is fairly admitted that the statutory auditor has provided the audit certificate and audit report only on 22.08.2015 and thereafter the tax audit was conducted, completed and submitted. This being so, we are of the view that the assessee has sufficient and reasonable cause for delay in submitting the audit report. Since the auditor was appointed by the Registrar of Cooperative Societies, therefore, there is no delay on the part of the assessee. Accordingly, respectfully following the various judicial pronouncements, referred to above, we are of the considered opinion that the penalty levied by the AO u/s. 271 B of the Act and confirmed by the Id. CIT(A) deserves to be deleted and we do so. Thus, appeal of the assessee is allowed". Copy of said decision of ITAT is enclosed. The assessee society prays that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... we are of the considered opinion that the penalty levied by the AO u/s. 271B of the Act and confirmed by the ld. CIT(A) deserves to be deleted and we do so. Thus, appeal of the assessee is allowed. 12. The Ld.DR, on the other hand, submitted that since the assessee was non-compliant before the Ld.CIT(A), the appeal of the assessee should be dismissed on this count itself or alternatively, the issues in the present appeal needs to be restored back to the file of the Ld.CIT(A) for fresh adjudication of the same on merits. 13. We have considered the rival contentions and perused the materials available on record. Also, we have considered the order of the Tribunal in ITA No. 19/RPR/2022, wherein, the co-ordinate Bench of the ITAT has considered several case laws, having dealt the issue of levy of penalty u/s. 271B of the Act, and has held as under: i) Kendrapara Credit Co-operative Society Ltd., ITA No. 87/CTK/2021, order dated 07.06.2022, wherein it is held as under :- 8. We have considered the rival submissions. A perusal of the facts as recorded by the AO shows that the delay in submitting the audit report was on account of delay in obtaining audit report from the statutory a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nical breach and for this reason, penalty u/s. 271B of the Act, cannot be levied. This principle is supported by the decision of the Hon'ble jurisdictional High Court in the case of P.Senthil Kumar v. PCIT reported in 416 ITR 336, where an identical issue had been considered by the Court and held that for venial technical breach without any mala fide intention, penalty cannot be levied. The ITAT Cochin Bench in ITA No. 411/Cochin/2018 vide order dated 05.02.2019 had held that once audit report has been made available before the AO, when the assessment proceedings were completed, then, there is no reason for levy of penalty. 8. In this view of the matter and considering the facts and circumstances of the case, we are of the considered view that reasons given by the assessee for not filing tax audit report within due date comes under reasonable cause as provided u/s. 271B of the Act, and thus, the AO is erred in levying penalty u/s. 271B of the Act. Hence, we direct the AO to delete penalty levied u/s. 271B of Act. iii) Arambagh Co-op Agricultural Marketing Society Ltd., ITA No. 804 & 8056/Kol/2014, order dated 28.02.2017, wherein the Tribunal has held as under :- 8. We heard r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t is not in the control of the assessee. It is only then after that the assessee appoints tax auditor. The assessee filed the tax audit report immediately after obtaining the same from its Tax Auditor in Form No. 3CA on 14-09- 2009. We find that the issue on hand is similar to that case decided by order dated 03-06-2016 by the Coordinate Bench of this Tribunal passed in ITA No. 2396/Kol/2013 in the case of supra. Following the same, we are of the view that it is not a fit case to impose ITA Nos. 804 & 805/Kol/14-A-JM M/s. Arambagh Co-op Agrl. Mktg. Society Ltd 4 the penalty of Rs. 1,00,000/- u/s. 271B of the Act. Therefore, we cancel the penalty imposed by the AO and confirmed by the CIT(A). Therefore, the ground raised by the assessee is allowed. iv) Ahmedabad Co-operative Dept. Stores, [2001] 73 TTJ 784 (Ahmedabad-ITAT), wherein the Tribunal has held as under :- 5. I have given careful thought to the rival submissions advanced before me. There is no dispute that assessee is a cooperative society and its activities are governed by Gujarat Cooperative Societies Act, 1960. The accounts of the assessee are required to be audited by a special auditor appointed by the Registrar of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce auditor was not appointed by Registrar within stipulated time, audit report could not be submitted in time - Assessing Officer rejected assessee's explanation and imposed penalty upon it - Whether any penalty could be levied upon assessee - Held, No. vi) Iqbalpur Cooperative Cane Development Union Ltd. [2013] 218 Taxman 70 (Uttarakhand)(Mag.), wherein the Hon'ble Uttarakhand High Court has held as under :- Section 44AB, read with sections 271B and 273B of the Income-tax Act, 1961 - Tax audit [Appointment of auditor] - Assessee was a cooperative society, registered under U.P. Co-operative Societies Act, 1965 - Accounts of assessee was required to be audited in accordance with section 64 of U.P. Co-operative Societies Act - Since assessee's account was not audited within stipulated date, penalty under section 271B was imposed on assessee - Tribunal granted relief to assessee under section 273B holding that assessee established that appointment of auditor was not within his domain and, it was also not within his domain to have auditor to be appointed by Registrar or such person as appointed by State Government, to complete audit within specified date - Whether on fact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appointment of the statutory/tax auditor was done after the due date of completion of audit u/s 44AB of the Act, and if same is the case and audit was completed within a reasonable time of such appointment, then the penalty u/s 271B cannot be held as justified. We, therefore, set aside the order of the Ld.CIT(A) and restore the issue to the files of AO to verify the documents as discussed herein above, accordingly, in terms of our aforesaid observations herein either enforce or vacate the penalty imposed u/s. 271B of the Act in the present case. 15. In the result, appeal filed by the assessee is in ITA No. 108/RPR/2022 is partly allowed for statistical purpose. ITA Nos. 109, 110, 118, 125, 126/RPR/2022: 16. All these appeals are also barred by limitation as pointed out by the registry, for which the delay is condoned by us, being delayed on account of identical reasons as submitted by the assessee by way of affidavit, akin to affidavit furnished in ITA No. 108/RPR/2022. 17. The issue raised in ITA Nos. 109, 110, 118, 125, 126/RPR/2022 is identical to the issue raised in ITA No. 108/RPR/2022. Since, the assessee has submitted written submission in first set of appeals (ITA Nos. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pportunity to the applicant. Prayed that notice issued by the Ld. C1T(A) did not come to the Knowledge of tie appellant. The appellant is doing business in the remote village named Bitkuli, Hathband in the district of Baloda Bazar Chhattisgarh not well versed with electronic medium. 2. That under the facts and law, the Ld.CIT (Appeals) NFAC Delhi further erred in not allowing deduction of income from interest from banking business u/s. 80P(2)(a)(i) amounting to Rs 18,25,283/- confirming the order of the Ld AO. Prayed that appellant is eligible for deduction of above sum under the above section which kindly be allowed. 3. That under the facts and the law the Ld. CIT (Appeals) NFAC Delhi further erred in treating the 35% of the surplus of the paddy procurement business amounting Rs 1,93,998/- as ineligible for deduction u/s 80P(2) of the act. 4. That under the facts and the law, the Ld.CIT (Appeals) erred in treating the surplus of PDS business amounting to Rs. 1,70,480/- as ineligible deduction u/s. 80P(2). Prayed that the exemption u/s. 80P(2) be allowed and delete the addition. 5. That under the facts and the law, the Ld.CIT (Appeals) erred in treating the dividend income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eedings: i. The assessee is a primary agricultural cooperative society engaged in carrying out business of banking, paddy procurement, sale of fertilizers, seeds, manures, pesticides and sale of control items under Public Distribution System. 100% deduction of income from all the said activities has been claimed u/s. 80P of the I.T. Act 1961 while filing return for the year under consideration. ii. The assessee had e-filed return of income on 24.03.2013 showing total income at Rs. NIL. iii. That assessment was completed by the AO u/s. 143(3) of the Act on 24.03.2014 by determining total income of Rs. 16,97,234/-. Aggrieved with this order framed by the Assessing Officer the assessee society had filed an appeal before the CIT(A), NFAC, Delhi, which was dismissed without considering the facts and circumstances of the case properly and judicially and without perusing binding past decisions of jurisdictional hon'ble IT AT, Raipur Bench in similar issues in cases of various co-operative societies involved in similar business activities. 2. Assessee's submissions before hon'ble ITAT: - Ground No. 1 :- Not pressed. • Ground No. 2 :- That under the facts and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y reference: "7. Adverting to the disallowance of the assessee's claim for deduction of the interest on bank deposits of Rs. 1,39,450/- u/s. 80P(2)(a)(i) of the Act, the Ld. Authorized Representative (for short 'AR') submitted that the issue was squarely covered by the order of this Tribunal in "ITA No. 114/RPR/2016 & Ors., dated 23.02.2022 in the case of Gramin Sewa Sahakari Samiti Maryadit & Ors Vs. the ITO, Ward- 1(3), Raipur". The Ld. AR submitted that the facts and the issue involved in the present appeal as regards its claim for deduction remains the same as were there before the Tribunal in its aforesaid order. (Page No. 8 of the ITAT order) 8. Per contra, the Ld. Departmental Representative (for short 'DR.') conceded to the submissions put forth by the Ld. AR of the assessee. (Page No. 9 of the ITAT order) 9. We have heard the Id. Authorized Representatives of both the parties, perused the orders of the lower authorities and the material available on record, as well as considered the order of the Tribunal in ITA No. 114/RPR/2016 & Ors (supra) that have been pressed into service by the Ld. AR to drive home his contentions. As stated b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from the members of the society which would have helped to determine the quantum of amount of deduction eligible u/s 80P(2). The assessee society prays that - That since, verification of above stated documents is necessary to determine as to what extent the assessee society had facilitated the marketing of the agricultural produce grown by the members, your honour is kindly requested to set aside this issue to the file of AO with the direction to call for and consider necessary documents and to re-adjudicate on this issue after considering the same. That your honour, aforesaid request is made in way of decision of divisional bench of hon'ble ITAT, Raipur dt. 23.02.2022 in ITA No. 114/RPR/2016 and 15 other co-operative societies' cases, wherein on Page No. 28, Para 17 of the ITAT order it is held that:- (Copy of said decision of ITAT is enclosed) "We, thus, in terms of the aforesaid observation set-aside the matter to the file of the Assessing Officer, with a direction to re-adjudicate the same after considering the additional documentary evidence that had been filed by the assessee before us. The A.O. shall after determining as to what extent the assessee socie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... remanded to the file of the A.O with a direction to restrict the assessee's claim for deduction as regards its profit from PDS only to the extent of its net profit i.e., after considering the proportionate expenses. ( Page Nos. 20 to 21 of the ITAT order) Considering our aforesaid observations in the order passed in ITA No. 114/RPR/2016 & Ors, dated 23.02.2022, We on the same terms restore the matter to the file of the AO, with a direction to restrict the assessee's claim for deduction as regards its profit from PDS only to the extent of its net profit i.e., after considering the proportionate expenses. Thus, the Ground of appeal No. l (iv) is allowed for statistical purposes in terms of our aforesaid observations". (Page No. 22 of the ITAT order) The assessee society prays that - As can be affirmed from the decision of the divisional bench of Hon'ble ITAT' Raipur in ITA No. 126/RPR/2017 & Ors (supra.), net surplus/ profit from PDS business is duly eligible for deduction u/s 80P(2) and hence, the same should kindly be allowed. Ground No. 5 :- That under the facts and the law, the Ld CIT (Appeals) erred in treating the dividend income amounting to Rs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in ITA No. 114/RPR/2016 & Ors (supra), dated 23.02.2022, therefore, principally concurring with the claim of the Id. AR we herein vacate the disallowance of the assessee's claim for deduction u/s 80P(2)(d) qua the dividend received on shares of a co-operative bank, viz. Jila Sahakari Bank. Thus, the Ground of appeal No. l(v) raised in appeal by the assessee is allowed in terms of our aforesaid observations". (Page Nos. 27 to 28 of the ITAT order) The assessee society prays that - As can be affirmed from the decision of the divisional bench of Hon'ble ITAT' Raipur in ITA number No. 126/RPR/2017 & Ors (supra.), dividend received on shares of a co-operative bank, i.e. Jila Sahakari Bank, is duly eligible for deduction u/s, 80P(2)(d) and hence, the same should kindly be allowed. 27. While making the written submissions, the assessee placed his reliance on the order of the ITAT Raipur, in ITA No. 126/RPR/2017 & Others in the case of Gramin Sewa Sahakari Samiti Maryadit (Group), wherein the issue assailed in the present appeal were discussed and decided, therefore, the issues in the present appeals are squarely covered by the said order. 28. The Ld.DR, on the other ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... surplus funds which were parked as deposits in the normal course of its business of providing credit facilities to its members, i.e., at the point of time when there were no takers for the said funds, was eligible for deduction u/s. 80P(2)(a)(i) of the Act. We have given a thoughtful consideration to the contentions advanced by the Ld. Authorized representatives for both the parties. Before proceeding any further, we deem it fit to cull out the provisions of section 80P(2)(a)(i) of the Act, the scope and gamut of which is the primary bone of contention before us, which reads as under : "80P. (1) Where, in the case of an assessee being a co-operative society, the gross total income includes any income referred to in sub-section (2), there shall be deducted, in accordance with and subject to the provisions of this section, the sums specified in subsection (2), in computing the total income of the assessee. (2) The sums referred to in sub-section (1) shall be the following, namely :-- (a) in the case of a co-operative society engaged in-- (i). carrying on the business of banking or providing credit facilities to its members, or (ii) to (iii)…………& ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unt deposited by the assessee-society with the bank, viz. Jila Sahakari Kendriya Bank (supra) was in the nature of simpliciter surplus or idle funds of the assessee society, for which there were no takers for the time being in course of its business of providing credit facilities to its members, therefore, depositing of the same by way of short-term deposits with the aforesaid bank, as stated by the ld. A.R, and rightly so, would clearly be inextricably interlinked, or in fact interwoven with its aforesaid primary business activity, i.e., providing of credit facilities to its members. At this stage, we may herein observe, that the Hon'ble Supreme Court in the case of M/s. Totgars Co-operative Sale Society Ltd. Vs. ITO, Karnataka, 322 ITR 283 (SC), had held, that in a case where the assessee-cooperative society apart from providing credit facilities to its members was also in the business of marketing of agricultural produce grown by its members, and the sale consideration of the agricultural produce due towards its members was thereafter retained and invested as a short-term deposit/security with the bank, then, the interest income therein earned to the said extent could not be sai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o consider the meaning of the word 'attributable' as supposed to derive from its use in various other provisions of the statute in the case of CAMBAY ELECTRIC SUPPLY INDUSTRIAL CO. LTD. VS. COMMISSIONER OF INCOME TAX, GUJARAT-II reported in ITR Vol.113 (1978) Page 842 at Page 93 as under: As regards the aspect emerging from the expression "attributable to" occurring in the phrase "profits and gains attributable to the business of" the specified industry (here generation and distribution of electricity) on which the learned Solicitor General relied, it will be pertinent to observe that the Legislature has deliberately used the expression "attributable to" and not the expression "derived from". It cannot be disputed that the expression "attributable to" is certainly wider in import than the expression "derived from". Had the expression "derived from" been used it could have with some force been contended that a balancing charge arising from the sale of old machinery and buildings cannot be regarded as profits and gains derived from the conduct of the business of generation and distribution of electricity. In thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... short-term deposit/security. Such an amount which was retained by the assessee-society was a liability and it was shown in the balance sheet on the liability side. Therefore, to that extent, such interest income cannot be said to be attributable either to the activity mentioned in section 80P(2)(a)(i) of the Act or under section 80P(2)(a)(iii) of the Act. Therefore, in the facts of the said case, the Apex Court held the assessing Officer was right in taxing the interest income indicated above under section 56 of the Act. Further they made it clear that they are confining the said judgment to the facts of that case. Therefore, it is clear, Supreme Court was not laying down any law. 10. In the instant case, the amount which was invested in banks to earn interest was not an amount due to any members. It was not the liability. It was not shown as liability in their account. In fact this amount which is in the nature of profits and gains, was not immediately required by the assessee for lending money to the members, as there were no takers. Therefore, they had deposited the money in a bank so as to earn interest. The said interest income is attributable to carrying on the business o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3,900/- u/s. 80P(2)(a)(iii) of the Act. 34. For adjudication of this issue in Ground No. 3, we have considered the written submissions of the assessee on which the Ld.DR did not raise any objection . 35. Since the issue pertaining to deduction u/s. 80P(2)(a)(iii) of the Act, is also squarely covered by the order of the ITAT in ITA No. 126/RPR/2017 & Others (supra), wherein the observation of the Tribunal are as under: 13. We find that the Tribunal while disposing off the appeal in the case of Gramin Sewa Sahakari Samiti Maryadit & Ors Vs. the ITO, Ward-1(3), Raipur in ITA No. 114/RPR/2016 & Ors., dated 23.02.2022, while dealing with the assessee's claim for deduction of the income from paddy procurement business u/s. 80P(2)(a)(iii) of the Act had remanded the issue to the file of the A.O observing as under: "16. Admittedly, the assessee as an 'agent' of Chhattisgarh Marketing Federation (CMF) had facilitated the procurement of paddy from the agriculturists, and for the said service was paid a fixed commission as per the rates prescribed by the Government. The gross profit of Rs. 16,21,218/- that was earned by the assessee from its aforesaid stream of business activity, i.e., ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y on the higher side, but in fact exorbitant and unrealistic. 17. After giving a thoughtful consideration to the aforesaid issue, we find substantial force in the claim of the Ld. AR that now when only a small fraction of the procurement of paddy was made by the assessee-society in the course of its paddy procurement business from non-members, therefore, restricting of its claim for deduction u/s. 80P(2)(a)(iii) of the Act to 35% of the profits earned from the said business activity was not justified. Be that as it may, we are of the considered view that as the compilation of the paddy procurement by the assessee-society has been filed before us as additional documentary evidence, and the same was not there before the lower authorities, therefore, the matter in all fairness requires to be re-visited by the Assessing Officer. We, thus, in terms of the aforesaid observation set-aside the matter to the file of the Assessing Officer, with a direction to re-adjudicate the same after considering the additional documentary evidence that had been filed by the assessee before us. The A.O shall after determining as to what extent the assessee society had facilitated the marketing of the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cultural produce of its members. Though, we agreed with the claim of the assessee that the assessee's society is entitled for deduction of its income from paddy procurement business u/s. 80P(2)(a)(iii) of the Act, but restore the matter to the file of the AO for limited purpose of restricting the said claim of deduction to the extent of the profit relatable to the marketing of agricultural produce of the members of the agricultural society. In the result, Ground No. 3 of the appeal is partly allowed for statistical purposes. Ground No. 4 37. We shall now take up Ground No. 4 of the assessee, wherein, the grievance of the assessee is that the surplus of PDS business amounting to Rs. 17,480/- was held as ineligible deduction u/s. 80P(2)(c)(ii) of the Act by both the revenue authorities. 38. For adjudication of this issue in Ground No. 4, we have considered the written submissions of the assessee, on which the Ld.DR did not raise any objection. 39. Since the issue pertaining to deduction u/s. 80P(2)(c)(ii) of the Act, is also squarely covered by the order of the ITAT in ITA No. 126/RPR/2017 & Others (supra), wherein the observation of the Tribunal are as under: 18. We have give ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 126/RPR/2017 & Others (supra), we on the same terms restore the matter to the file of the AO, with a direction to restrict the assessee's claim for deduction as regards its profit from PDS only to the extent of its net profit i.e., after considering the proportionate expenses. In the result, Ground No. 4 is allowed for statistical purposes in terms of our aforesaid observations. 41. We shall now take up Ground No. 5 of the assessee, wherein, the grievance of the assessee is that both the revenue authorities had erred in treating dividend income amounting to Rs. 36,816/- as ineligible deduction u/s. 80P(2)(d) of the Act. 42. For adjudication of this issue in Ground No. 5, we have considered the written submissions of the assessee on which the Ld. DR did not raise any objection. 43. Since the issue pertaining to deduction u/s. 80P(2)(d) of the Act, is also squarely covered by the order of the ITAT in ITA No. 126/RPR/2017 & Others (supra), wherein the observation of the Tribunal are as under: 21. We have given a thoughtful consideration to the aforesaid issue in hand. Admittedly, in the case of Gramin Sewa Sahakari Samiti Maryadit & Ors. Vs. the ITO, Ward-1(3), Raipur in ITA No ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee was in receipt of interest income were not co-operative societies, the Pr. CIT was of the view that the interest income earned on such investments/deposits would not be eligible for deduction under Sec. 80P(2)(d) of the Act. 7. After necessary deliberations, we are unable to persuade ourselves to be in agreement with the view taken by the Pr. CIT. Before proceeding any further, we may herein reproduce the relevant extract of the aforesaid statutory provision, viz. Sec. 80P(2)(d), as the same would have a strong bearing on the adjudication of the issue before us. "80P(2)(d) (1). Where in the case of an assessee being a co-operative society, the gross total income includes any income referred to in sub-section (2), there shall be deducted, in accordance with and subject to the provisions of this section, the sums specified in sub-section (2), in computing the total income of the assessee. (2). The sums referred to in sub-section (1) shall be the following, namely (a)............................................................................................ (b)............................................................................................ (c)....... ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng in force in any State for the registration of co-operative societies, therefore, the interest income derived by a co-operative society from its investments held with a co-operative bank would be entitled for claim of deduction under Sec.80P(2)(d) of the Act. 8. We shall now advert to the judicial pronouncements that have been relied upon by the ld. A.R. We find that the issue that a co-operative society would be entitled for claim of deduction under Sec. 80P(2)(d) on the interest income derived from its investments held with a co-operative bank is covered in favour of the assessee in the following cases: (i) Land and Cooperative Housing Society Ltd. Vs. ITO (2017) 46 CCH 52 (Mum) (ii) M/s C. Green Cooperative Housing and Society Ltd. Vs. ITO-21(3)(2), Mumbai (ITA No. 1343/Mum/2017, dated 31.03.2017 (iii) Marvwanjee Cama Park Cooperative Housing Society Ltd. Vs. ITORange-20(2)(2), Mumbai (ITA No. 6139/Mum/2014, dated 27.09.2017. (iv). Kaliandas Udyog Bhavan Pemises Co-op. Society Ltd. Vs. ITO, 21(2)(1), Mumbai We further 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uncement of the Hon"ble High Court of jurisdiction, we respectfully follow the view taken by 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), wherein it was observed that the interest income earned by a cooperative society on its investments held with a co-operative bank would be eligible for claim of deduction under Sec.80P(2)(d) of the Act. 9. Be that as it may, in our considered view, as the A.O while framing the assessment had taken a possible view, and therein concluded that the assessee would be entitled for claim of deduction under Sec. 80P(2)(d) on the interest income earned on its investments/deposits with co-operative banks, therefore, the Pr. CIT was in error in exercising his revisional jurisdiction u/s 263 for dislodging the same. In fact, as observed by us hereinabove, the aforesaid view taken by the A.O at the time of framing of the assessment was clearly supported by the order of the jurisdictional Tribunal in the case of Land and Cooperative Housing Soci ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
