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TMI Blog2024 (3) TMI 93X X X X Extracts X X X X X X X X Extracts X X X X ..... 2023, involving proceedings u/s. 143(3) of the Income Tax Act, 1961 (in short the Act ). Heard both the parties at length. Case file perused. 2. The assessee pleads the following substantive grounds in the instant appeal: 1. On the facts and circumstances of the case and in law, the Ld. CIT (A) has erred by confirming the disallowance of the deduction u/s. 80(P)(a)(i) of the IT Act, amounting to Rs. 23,62,370/- by the Ld. AO on the ground that Interest earned on Investment made in other Cooperative societies/Nationalized/ Scheduled Bank by the appellant is liable to be taxed under the Head of Income from Other Sources and not Income from Profits and Gains from Business/Profession which is eligible for deduction u/s. 80(P)(a)(i). 2. On the facts and circumstances of the case and in law, the Ld. CIT (A) has erred by confirming the direct addition to the income of Appellant gross commission earned from MSEDCL of Rs. 15,24,810/- instead of considering the direct expenses of Rs. 16,35,798/- incurred in running the MSEDCL bill collection center which in turn results into net loss of Rs. 1,03,539/-. 3. The Appellate craves the permission to add, amend, modify, alte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ers, viz. Shr. Ravikiran Pandurang Todkar, Chartered Accountant was taken unwell due to kidney failure and had undergone kidney transplant, therefore, due to his unavailability the appeal could not be filed within the stipulated time period. Our attention was drawn towards the affidavit ‟ of the assessee society wherein the aforesaid facts were deposed. On the basis of the aforesaid facts, it was submitted by the ld. A.R that the delay involved in filing of the present appeal in all fairness may be condoned. Per contra, the ld. D.R did not object to the seeking of condonation of the delay in filing of the appeal by the assessee society. After giving a thoughtful consideration, we are of the considered view, that as there were justifiable reasons leading to delay on the part of the assessee in filing of the present appeal before us, therefore, the same merits to be condoned. 5. On merits, it was submitted by the ld. A.R, that as the A.O while framing the assessment had after making necessary verifications taken a plausible view, therefore, the Pr. CIT had exceeded his jurisdiction by seeking to review the order passed by him in the garb of the revisional powers vested ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al hinges around the adjudication of the scope and gamut of sub-section (4) of Sec. 80P as had been made available on the statute, vide the Finance Act 2006, with effect from 01.04.2007. On a perusal of the order passed by the Pr. CIT under Sec. 263 of the Act, we find, that he was of the view that pursuant to insertion of sub-section (4) of Sec. 80P, the assessee would no more be entitled for claim of deduction under Sec. 80P(2)(d) in respect of the interest income that was earned on the amounts which were parked as investments/deposits with the co- operative bank, other than a Primary Agricultural Credit Society or a Primary Co-operative Agricultural and Rural Development Bank. Observing, that the co-operative banks from where the assessee was in receipt of interest income were not cooperative 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. 8. After necessary deliberations, we are unable to persuade ourselves to concur with the view taken by the Pr. CIT. Before proceeding any further, we may herein cull out the relevant extract of the aforesaid statutory ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 80P(2)(d) would be duly available. We find that the term co-operative society ‟ had been defined under Sec. 2(19) of the Act, as under:- (19) Co-operative society means a cooperative 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; We are of the considered view, that though the co- operative banks pursuant to the insertion of sub-section (4) to Sec. 80P would no more be entitled for claim of deduction under Sec. 80P of the Act, but as a cooperative 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 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. 9. In so far the judicial pronouncements that have been relied upon by the ld. A.R are concerned, we find that the issue that a co-operative society would be entitled ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al High Court ‟s, then a view which is in favour of the assessee is to be preferred as against that taken against him. Accordingly, taking support from the aforesaid judicial pronouncement 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 that of the 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 co-operative 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. 10. Be that as it may, in our considered view, as the A.O while framing the assessment had taken a possible view, and allowed the assessee s claim for 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 of the Act for dislodging the same. Accordingly, finding no justification on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Tribunal in Banganga Nagri Sah. Patsanstha Ltd. (supra) as a business activity, whose income is eligible for deduction u/s. 80P(2), the instant interest income of Rs. 20,000/- on security deposit with MSEDCL for carrying on the business of bill collection, which is a part and parcel of the overall activity of such business, cannot be accorded a different character. I, therefore, order to grant deduction on interest on security deposit with MSEDCL amounting to Rs. 20,000/-. A.Y. 2018-19 : 7. The only issue raised in this appeal is against the denial of deduction u/s. 80P(2)(a)(i) on the commission income amounting to Rs. 2,36,160/- earned from collection of MSEDCL bills. The AO denied the deduction by following his own view for the earlier years, which got echoed by the ld. CIT(A). 8. Having regard to the facts of the case, it is seen that the issue under consideration about earning of commission from MSEDCL bill collection is identical to the one considered above for the immediately preceding assessment year 2017-18. Following the view taken for such earlier year, I order to allow deduction u/s. 80P(2)(a) on the commission income earned from MSEDCL bill ..... X X X X Extracts X X X X X X X X Extracts X X X X
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