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TMI Blog2024 (2) TMI 190X X X X Extracts X X X X X X X X Extracts X X X X ..... eld with Cooperative Bank would be eligible for claim of deduction u/s 80P(2)(d). Thus we are inclined to hold that the assessee is eligible for deduction u/s 80P(2)(d) in respect of FDR interest received from Cooperative Bank. Decided in favour of assessee. - SHRI VIJAY PAL RAO, JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER For the Assessee : Shri S.S.Deshpande, CA For the Revenue : Shri Ashish Porwal, Sr. DR ORDER PER MANISH BORAD, A.M.: This appeal at the instance of assessee is directed against the appeal-order dated 23.12.2022 passed by learned Commissioner of Income-Tax(A), N.F.A.C., Delhi [ Ld. CIT(A) ], which in turn arises out of assessment-order dated 11.02.2021 passed by Income-tax Department, N.F.A.C.,Delhi, u/s 143(3) of Income-tax Act, 1961 [ the Act ] for Assessment-Year [ AY ] 2018- 19. 2. The Registry has informed that there is a delay of 181 days in filing this appeal. The affidavit in support of request for condonation of delay is filed and the contents of the same are as follows :- Nitin S/o Shri Madan Lal Kushwaha aged 41 years resident of Chhoti Bhamori, Indore, state on oath as under :- 1. That I am a Chai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case are that the assessee is a registered Credit Cooperative Society governed under Madhya Pradesh Cooperative Societies Act. The revised return of income for assessment year 2018-19 filed on 29.10.2018 declaring total income of Rs. 18,920/-. Case selected for limited scrutiny for the reasons, deduction from total income under Chapter VIA . Statutory notices u/s 143(2) and 142(1) of the Act were issued and duly served upon the assessee. During the course of assessment proceedings, the ld. AO noticed that the assessee had claimed deduction u/s 57 of the Act at Rs. 10,38,991 against the income from interest on FDR of Rs. 10,77,910/- and deduction of Rs. 20,000/- u/s 80P(2(f) of the Act. During the course of assessment proceedings, the assessee stated that the interest income on FDR is part of business income and should not be treated as income from other sources. However, the ld. AO noticed that the assessee has itself declared the interest income on FDR at Rs. 10,77,910/- as income from other sources and has claimed the deduction towards interest paid to members and commission paid to Agents and certain incidental charges. The ld. AO came to the conclusion that the expenditure cl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submissions and perused the record placed before us. The assessee is a Credit Cooperative Society and during the year under consideration, it has earned interest income of Rs. 10,77,910/- on FDRs. The assessee has shown the interest income on FDR under the head income from other sources and against such interest income has claimed incidental expenses including interest paid to depositors at Rs. 5,38,955/-, commissioner paid to Collection Agent at Rs. 4,71,586/- and stationery and printing expenses at Rs. 28,450/-. Both the lower authorities have held that the incidental expenses claimed are in the nature of business expenditure and needs to be allowed against business receipts and have also observed that FDR interest being income from other sources is not eligible for deduction u/s 80-P of the Act. 10. We, however, on perusal of computation of income filed in the paper book at page no.11 noticed that the alleged FDR interest income has been received by the assessee from deposits made with Indore Premier Cooperative Bank Limited. Though during the course of hearing, the Ld. Counsel for the assessee has not made any specific contention regarding the eligibility of the deduction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from the letting of godowns or warehouses for storage, processing or facilitating the marketing of commodities, the whole of such income; (f) in the case of a co-operative society, not being a housing society or an urban consumers' society, or a society carrying on transport business or a society engaged in the performance of any manufacturing operations with the aid of power, where the gross total income does not exceed twenty thousand rupees, the amount of any income by way of interest on securities chargeable under section 18 or any income from house property chargeable under section 22. Explanation. For the purposes of this section, an urban consumers' cooperative society means a society for the benefit of the consumers within the limits of a municipal corporation, municipality, municipal committee, notified area committee, town area, or cantonment. (3) In a case where the assessee is entitled also to the deduction under section 80H or section 80J, the deduction under sub-section (1) of this section, in relation to the sums specified in clause (a) or clause (b) or clause (c) of sub-section (2), shall be allowed with reference to the income, if any, as referred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0P(2)(d) of the Act by returning following findings: 8. We have given a thoughtful consideration to the contentions advanced by the Id. Authorized representatives for both the parties in context of the aforesaid issue under consideration. As stated by the ld. A.R, and rightly so, the issue that interest received by a co-operative society on its deposits with co-operative banks would be eligible for deduction w/s 80P(2)(d) of the Act is covered in assessee s favour by orders of the various coordinate benches of the Tribunal in the following cases: (i). M/s Solitaire CHS Ltd. Vs. Pr.CIT-26, Mumbai, ITA No.3155/Mum/2019, dated 29.11.2019 (ii) Land and Cooperative Housing Society Ltd. Vs. ITO (2017) 46 CCH 52 (Mum.) (iii) M/s C. Green Cooperative Housing and Society Ltd. Vs. ITO-21(3)(2), Mumbai (ITA No. 1343/Mum/2017, dated 31.03.2017. (iv) Marvwanjee Cama Park Cooperative Housing Society Ltd. V s. ITO-Range 20(2)(2), Mumbai (ITA NO. 6139/Mum/2014, dated 27.09.2017. (v) Kaliandas Udyog Bhavan Pemises Co-op. Society Ltd. Vs. ITO, 21(2)(1), Mumbai. In the aforesaid orders, it has been held by the Tribunal that though the cooperative banks pursuant to the insertion ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he 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 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) .. (b) .. (c) .. (d) in respect of any income by way of interest or dividends derived by the co-operative society from its investments with any other co-operative society, the whole of such income; On a perusal of Sec. 80P(2)(d), it can safely be gathered that interest income derived by an assessee co-operative society from its investments held with any other cooperative society shall be deducted in computing its total income. We may herein obs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ith a cooperative bank is covered in favour of the assessee in the following cases: (i) Land and Cooperative Housing Society Ltd. Vs. ITO (2017) 46 CCH $2 (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 (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 held, that the interest income earned by the assessee on its investments with a co-operative bank would be eligible for claim of deduction under Sec. 80P(2)(d) of the Act. Still further, we find that the CBDT Circular No. 14, dated 28.12.2006, also makes it clear beyond any scope of doubt that the purpose behind enactment of sub-section (4) of Sec. 80P was that the co-operative banks which were funct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 cooperative 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 Society Ltd. Vs. ITO (2017) 46 CCH 52 (Mum). Accordingly, finding no justification on the part of the Pr. CIT, who in exercise of his powers under Sec. 263, had dislodged the view that was taken by the A.O as regards the eligibility of the assessee towards claim of deduction under Sec. 80P(2)(d), we set aside his order and restore the order passed by the A.O under Sec. 143(3), date 14.09.2016. As the facts and the issue involved in the present case before us remains the same as were there before the Tribunal in the case of M/s Solitaire CHS Ltd. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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