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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 ..... isheel Sahakari Sanstha Maryadit, (Hereinafter called Society). 2. M/s. Indore Pragatisheel Sahakari Sanstha Maryadit is assessed to income tax under the PAN AAAAI3124L. The assessment of the Society was framed against which the appeal was preferred before the Ld. CIT(A). The Income Tax work and the appellate work was look after by M/s. Yogesh Agrawal & Assciates, C. A., Indore. 3. The appellate order was by the NFAC Delhi on 23.12.2022 and was uploaded on E-mail address of M/s. Yogesh Agarwal & Associates. 4. M/s. Yogesh Agrawal & Associates were discontinued after the submissions before the Ld. CIT(A). They did not inform the Society about the order passed by the Ld. CIT(A). 5. The Society received the notice on 17th August, 2023, from the Income Tax Department about the payment of taxes. After the receipt of notice, the Society learned that the appeal has been dismissed by the Ld. CIT(A). 6. Now, the Society is filing the Tribunal appeal which is delayed." 3. Referring to the above affidavit, the Ld. Counsel for the assessee prayed for condoning the delay. On the other hand, the Ld. Departmental Representative opposed for the condonation of delay. We, however, on peru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , which needs to be set off against the business receipts and the interest income on FDR is liable to be taxed as income from other sources and accordingly completed the assessment by disallowing the claim made u/s 57 and u/s 80P(2)(f) of the Act, thereby assessing the income at Rs. 10,77,819/-. 6. Aggrieved the assessee preferred an appeal before the Ld. CIT(A) and made detailed submission stating that the assessee society also deals with daily deposit account and these deposits normally get matured in one year and in order to maintain the liquidity and solvency, the fund received on account of daily deposit from the members are deposited in the form of fixed deposit. The assessee also made alternate contention before the Ld. CIT(A) that the assessee is eligible to claim deduction u/s 57 of the Act against the interest on FDRs. However, the Ld. CIT(A) confirmed the view taken by the AO noting that the appellant's contention that the FDRs kept in Bank and to maintain solvency and liquidity as per Banking Regulations is not supported by any such guidelines. The Ld. CIT(A) also held that the appellant is not banking entity and not governed by the Banking Regulations Act. Aggrieved, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Cooperative Society from its investment with any other Cooperative Society. However, since we have come across this fact which are discernible from the paper book filed before us, it remains undisputed fact that the alleged FDR interest income of Rs. 1077,910/- has been received from FD held with Cooperative Bank. Before moving further, we would like to go through the provisions of Section 80P of the Act, which reads as under :- "Deduction in respect of income of co-operative societies 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 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) 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) a cottage industry, or (iii) the marketing of the agricultural produce of its members, or (iv) the purchase of agricultural implements, seed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and section 80J. [(4) Nothing contained in this section shall apply to a co-operative society carrying on insurance business in respect of the profits and gains of that business computed in accordance with section 44.]" 11. From specifically going through the provisions of Section 80P(2)(d) of the Act, we find that the assessee is eligible for deduction u/s 80P(1) in respect of the income derived by way of interest or dividend from its investment with any cooperative bank society. In the instant case, though the interest has been received from Cooperative Bank, but basically it is a Cooperative Society, which has taken a banking license. Recently in Coordinate Bench of Mumbai in the case of Amore Commercial Premises Co- Op. Society Limited vs. Central Processing Centre, I.T.A. Nos. 2873 & 2874/M/2022 dated 17.01.2023 has dealt with the similar issue and after placing reliance on the judgement of Hon'ble High Court of Karnataka in the case of Pr. CIT and Others vs. Totgars Co-operative Society Limited, (2017) 292 ITR 74 (Karnataka) and judgement of Hon'ble Gujarat High Court in the case of State Bank of India vs. CIT, (2016) 389 ITR 578 (Guj) has held that interest income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as a co-operative bank continues to be a co- operative society registered under the Co-operative 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, therefore, the interest income derived by a cooperative society from its investments held with a cooperative bank would be entitled for claim of deduction w/s 80P(2)(d) of the Act. We find that the aforesaid issue had exhaustively been looked into by the ITAT, "G" bench, Mumbai in the case of M/s Solitaire CHS Ltd, Vs. Pr.CIT-26, Mumbai ITA No.3155/Mum/2019, dated 29.11.2019, wherein the Tribunal had observed as under: "6. We have heard the authorized 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... serve, that what is relevant for claim of deduction under Sec. 80P(2)(d) is that the interest income should have been derived from the investments made by the assessee co- operative society with any other co-operative society. We are in agreement with the view taken by the Pr. CIT, that with the insertion of sub-section (4) of Sec. 80P, vide the Finance Act, 2006, with effect from 01.04.2007, the provisions of Sec. 80P would no more be applicable in relation to any co-operative bank, other than a primary agricultural credit society or a primary co-operative agricultural and rural 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 investments/deposits parked with a cooperative bank. In our considered view, as long as it is proved that the interest income is being derived by a cooperative 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 socie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at par with other banks would no more be entitled for claim of deduction under Sec. 80P(4) of the Act. Insofar the reliance placed by the Pr. CIT on the judgment of the Hon'ble Supreme Court in the case of Totgars Co-operative Sale Society Ltd. vs. ITO (2010) 322 ITR 283 (SC) is concerned, we are of the considered view that the being distinguishable on facts had wrongly been relied upon by him. The adjudication by the Hon"ble Apex Court in the aforesaid case was in context of Sec. 80P(2)(a)(i), and not on the entitlement of a cooperative society 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 observe that the Hon'ble High Court of Karnataka in the case of Pr. CIT Vs. Totagars cooperative 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 B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erein the order passed by the Pr. CIT u/s 263 of the Act was quashed, we, thus, respectfully follow the same. Backed by our aforesaid deliberations, we are unable to uphold the view taken by the Pr. CIT that the failure on the part of the A.O to be disallow the assessee's claim for deduction u/s 80P(2)(d) had rendered the assessment order passed by him u/s 143(3) of the Act, dated 31.08.2017 as erroneous in so far it was prejudicial to the interest of the revenue. 9. Accordingly, on the basis of our aforesaid observations, we 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. Hon'ble High Court of Karnataka in case of Pr. CIT & Anr. Vs. Totgar's Co-operative Sale Society Ltd. (2017) 292 ITR 74 (Kar.) and Hon'ble Gujarat High Court in case of State Bank of India vs. CIT (2016) 389 ITR 578 (Guj.) had held that interest income earned by a cooperative society on its investment held with cooperati ..... X X X X Extracts X X X X X X X X Extracts X X X X
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