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TMI Blog2023 (10) TMI 1432X X X X Extracts X X X X X X X X Extracts X X X X ..... )(2)(d) of the Act. Thus, we hereby allow the grounds of the assessee and delete the addition made by the Assessing Office - Decided in favour of assessee. - Shri Waseem Ahmed, Accountant Member And Shri T.R. Senthil Kumar, Judicial Member For the Assessee : Shri Rushin Patel, A.R. For the Revenue : Ms. Saumya Pandey Jain, Sr. D.R. ORDER PER : T.R. SENTHIL KUMAR, JUDICIAL MEMBER:- This appeal is filed by the Assessee as against the order dated 31.10.2022 passed by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi, (in short referred to as NFAC ), arising out of the assessment order passed under section 143(3) of the Income Tax Act, 1961 (hereinafter referred to as the Act ) relating to the Assessment Year (A.Y) 2017-18. 2. The solitary issue in this appeal is that the interest of Rs. 2.55 lakhs received on fixed deposit received from Sabarkantha District Co.Op. Bank should not be disallowed and the same did not qualify for deduction under section 80P(2)(a)(i) of the Act. 3. The brief facts of the case is that the appellant is a Cooperative Credit Society, it had deployed its fund available with District Co.Op. Bank as per the requirement of RBI and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dered by Co-ordinate Bench of this Tribunal and passed the following order after considering the Karnataka High Court judgment in the case of Totagar s Co-operative Sale Society Ltd. and State Bank of India vs. CIT of our Jurisdictional High Court. The relevant portion of the order is reproduced as follows: 5. We have given our thoughtful consideration and perused the materials available on record including the Paper Book filed by the assessee. As rightly argued by the Ld. Representative of the assessee, this issue is being dealt by the Co-ordinate Bench of the Tribunal in its decision in the case of The Sardar Patel Co-operative Credit Society Ltd (cited supra), wherein its held as follows: 4. We have heard the arguments of both the sides and also perused the relevant material available on record. As submitted by the learned Counsel for the assessee, the assessment completed by the Assessing Officer under Section 143(3) of the Act allowing the similar claim of the assessee for deduction under Section 80P(2) of the Act in respect of interest income earned on the deposits with Mehsana Urban Co-operative Bank was set aside by the same learned PCIT vide his order passed under Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om its deposits with the Banas Co-operative Bank. Both the lower authorities quote the legislative amendment vide Finance Act, 2006 w.e.f. 01.04.2007 inserting subsection 4 in Section 80P as well as CBDT's explanatory notes to the above Finance Act dated 28.122006 in holding that the impugned interest income derived from co-operative bank is not eligible for deduction. Learned Departmental Representative vehemently contends that hon'ble Karnataka high court's recent decision in (2017) 83 taxmann.com 140 (Karnataka) PCIT vs. Totagars Co-operative Sale Society has settled the law that such an income is not allowable as Section 80P deduction in view of the legislative amendment hereinabove. Mr. Kabra thereafter files hon'ble apex court's judgment in (2017) 397 ITR 1 (SC). The Citizen Co-operative Society Ltd. vs. ACIT settling Section 80P deduction issue in respect of ordinary and nominal members. We however find that the above former decision goes contrary to hon'ble jurisdictional high court's judgment in Tax Appeal No. 473 of 2014 CIT vs. Sabarkantha District Cooperative Milk Producers Union Ltd. declining Revenue's identical question of law challeng ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he case of Laxmi Bachat Sharafi Sahkari Mandali Ltd. (cited supra) held as follows: 9. The next contention that the order of the Ld.PCIT needs to set aside being passed without giving opportunity of hearing to the assessee, we find, merits consideration. The contention of the Ld.Counsel for the assessee in this regard was that the specific ground on which the assesses claim of deduction u/s 80P of interest income earned from FD s etc in Banks was found incorrect, being not allowable as per section 80P(2)(a)(i) of the Act, was never confronted to the assessee. 10. A perusal of the order of the ld.Pr.CIT does not reveal any such opportunity being given to the assessee. The show cause notice issued by the Ld.PCIT to the assessee while assuming jurisdiction u/s 263 of the Act mentions the disallowability of the claim of deduction as per a different provision i.e 80P(2)(d) of the Act. The ld.DR was unable to demonstrate that the assessee was issued notice prior to holding the assessment order being erroneous on account of allowing deduction of interest income u/s 80P(2)(a)(i) of the Act. We have noted that the assessee in his reply filed to the Ld.PCIT in response to notice issued under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the fixed deposit with Cooperative Bank and the Societies and it has been found that as such the income was received from the investment in Cooperative Societies and Cooperative Bank. Considering Section 80(P)(2)(d) of the Act when the only requirement was that the income should be received from investment in Cooperative Societies and the Cooperative Bank which in the present case has been fulfilled, it cannot be said that the learned Tribunal has committed any error in deleting disallowance of Rs. 1,42,19,515/- under Section 80(P)(2)(d) of the Act. We are in complete agreement with the view taken by the learned Tribunal. Under the circumstances, proposed question B is also answered against the revenue. 5.0. In view of the above and for the reasons stated above, present Tax Appeal fail and same deserve to be dismissed and is accordingly dismissed. 9. Respectfully following the above decisions, we hereby allow the grounds of the assessee and delete the addition made by the Assessing Officer. 10. In the result, the appeal filed by the Assessee is hereby allowed. Order pronounced in the open court on 27-10-2023. CORRIGENDUM ORDER ITAT AHMEDABAD Assessment Year : 2017-18 ITA No. 49 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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