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TMI Blog2024 (8) TMI 275X X X X Extracts X X X X X X X X Extracts X X X X ..... ties below mis-directed itself in applying the ratio in the case of Totgar s Co-operative Sale Society Ltd.[supra] - Therefore, hold that the assessee would be eligible for deduction u/s 80P(2)(d) of the Act. Decided in favour of assessee. - Shri Kul Bharat, Judicial Member For the Appellant : Shri Rajiv Kumar Jain, CA For the Respondent : Shri Om Parkash, Sr.DR ORDER PER KUL BHARAT, JM : These two appeals filed by the assessee are directed against separate orders passed by Ld.CIT(A), National Faceless Appeal Centre ( NFAC ), Delhi, both dated 20.10.20239 for the assessment years 2018-19 2020-21 respectively. Since the similar grounds have been raised except figures, both the appeals of the assessee are taken up together for hearing and are being decided by way of this consolidated order for the sake of brevity. ITA No.3692/Del/2023 [Assessment Year : 2018-19] 2. First, I take up the appeal of the assessee for the Assessment Year 2018- 19 i.e. ITA No.3692/Del/2023. The assessee has raised following grounds of appeal:- 1. That on the facts and in the circumstances of the case the learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi (hereinafter refe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f M/s. Totgar's Co-operative Sales Society (2017). 7. That, without prejudice to ground No. 1 to 3, on the facts the case the Ld. CIT(A), NFAC has grossly erred on facts and in law in confirming the addition Rs. 7,60,197/- by not allowing deduction u/s. 80P(2)(d) of the Act by not following the 'principle of judicial precedence' as the jurisdictional judicial pronouncements are in favour of the appellant. 8. That on the facts and in the circumstances of the case the Ld. CIT(A), NFAC has erred in law in allowing Ground No. 10 pertaining to charging of Interest Rs. 85,766/- u/s 234B of the Act without any direction. 9. That on the facts and in the circumstances of the case the Ld. CIT(A), NFAC has erred in law in allowing Ground No. 11 pertaining to charging of Interest Rs. 67,408/- u/s 234C of the Act without any direction. 10. That the appellant craves leave to add, amend or alter any of the grounds of appeal. 3. Facts giving rise to the present appeal are that the case of the assessee was selected for limited scrutiny under E-assessment Scheme, 2019 on the following issues:- [i]. Deductions from income from other sources; [ii]. Investments/Advances/Loans; and [iii]. De ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rom The Delhi State Co-operative Bank Ltd, Delhi is attributable to the activity of carrying on business of providing credit facilities to its members. SN Nature of Income Amount (Rs.) Amount of Fixed Deposits on which Interest has been earned Amount of Reserve Fund as on 01.04.2017, which was not available for distribution to members % of Fund Interest income in relation to surplus fund, which is not allowable under section 80P(2)(a)(i) Interest income which is allowable under section 80P(2)(a)(i) 1. Interest on Fixed deposits 6,05,897 1,05,00,000 27,08,502 25.79 1,56,260 4,49,637 2. Interest in saving bank 1,52,274 - - - - 1,52,274 3. Dividend 2,026 - - - - 2,026 Total 7,60,197 1,56,260 6,03,937 Ground No. 4, 5, 6, 7 and 8 pertains to following issue 3. Alternatively, deduction of Rs. 7,60,197/- u/s 80P(2)(d), being interest and dividend income derived by co-operative society from its investments with any other co-operative society (The Delhi State Co-operative Bank Ltd, Delhi). Ground No. 9 10 pertains to interest u/s 234B 234C 4. Allowing Ground No. 10 pertaining to charging of Interest Rs. 85,766/- u/s 234B of the Act without any direction. 5. Allowing Ground No. 11 pertaining ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... its was received by the assessee from Delhi State Co-operative Bank Ltd, Janpath Branch and interest from Saving Bank was also received from Delhi State Co-operative Bank Ltd, Janpath Branch. The AO taxed this amount on the basis that the amount was not out of business income whereas this income was derived from other sources. Ld.CIT(A) sustained the findings of the AO. He relied upon the judgement of Hon ble Supreme Court rendered in the case of Totgar s Cooperative Sale Society Ltd. vs ITO (supra). 11. During the course of hearing, Ld. Sr. DR for the Revenue submitted that section 80P(2)(d) of the Act would not be applicable in view of the provision of section 80P(4) of the Act. He submitted that section 80P(4) specifically prohibits application of section 80P(4) qua the Co-operative Banks. 12. On the other hand, Ld. Counsel for the assessee heavily relied upon the decision of the Co-ordinate Bench of the Tribunal in the case of The Mantola Cooperative Thrift Credit Society Ltd. vs ITO (supra). For the sake of clarity, the relevant contents of the decision of Division Bench of the Tribunal are reproduced as under:- 16. We have given a thought to consider whether the cooperative b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... High Court and Supreme Court in the case of Totgars Co-operative Sale Society Ltd., we hereby hold that the assessee is eligible for deduction u/s 80P(2)(d) on the income earned by the way of interest from the co-operative societies. Expenditure - u/s 57: 21. The assessee has taken a plea that the expenditure incurred in earning of interest from the commercial banks be allowed while computing the taxable income . The provision of Section 57 reads as under: Section 57: The income chargeable under the head Income from other sources shall be computed after making the following deductions, namely: (i) in the case of [dividends, 94[other than dividends referred to in section 115-O ,]] [or interest on securities], any reasonable sum paid by way o f commission o r remuneration to a banker o r any other person for the purpose of realising such dividend [or interest] on behalf of the assessee; [(ia) in the case of income of the nature referred to in sub-clause (x) o f clause (24) o f section 2 which is chargeable to income-tax under the head Income from other sources , deductions , so far as may be, in accordance with the provisions o f clause (va) o f sub-section (1) of section 36 ;] (ii) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on u/s 80P(2)(d) of the Act. In the light of the decision of the Co-ordinate Bench of the Tribunal wherein it has been held that the Co-operative Bank is a society. Therefore, the deduction would be allowable u/s 80P(2)(d) of the Act. The judgement of Hon ble Supreme Court rendered in the case of Totgar s Co-operative Sale Society Ltd. vs ITO (supra), would not be applicable since the facts are clearly distinguishable wherein surplus of the funds was not deposited with any Cooperative Society but were deposited to the Commercial banks. Therefore, authorities below mis-directed itself in applying the ratio of the Hon ble Supreme Court in the case of Totgar s Co-operative Sale Society Ltd. vs ITO (supra). I therefore, hold that the assessee would be eligible for deduction u/s 80P(2)(d) of the Act. The grounds raised are allowed in terms indicated herein above. 14. Now, coming to Ground Nos. 8 9 raised by the assessee which relate to levy of interest u/s 234B 234C of the Act. The levy of interest is consequential in nature hence, I hold accordingly. 15. Ground No.10 raised by the assessee is general in nature, needs no separate adjudication hence, dismissed. 16. In the result, the app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tive Thrift Credit Society Ltd. vs. CIT (2014), which are very clearly distinguishable. 6. That, without prejudice to ground No. 1 to 3, on the facts and in the circumstances of the case the case the Ld. CIT(A), NFAC has grossly erred on facts and in law in confirming the addition Rs. 5,42,880/- by not allowing deduction u/s. 80P(2)(d) of the Act, by erroneously relying upon the decision of Hon'ble Karnatka High Court in the case of Pr. CIT, Hubballi vs. M/s. Totgar's Co-operative Sales Society (2017). 7. That, without prejudice to ground No. 1 to 3, on the facts the case the Ld. CIT(A), NFAC has grossly erred on facts and in law in confirming the addition Rs. 5,42,880/- by not allowing deduction u/s. 80P(2)(d) of the Act by not following the 'principle of judicial precedence' as the jurisdictional judicial pronouncements are in favour of the appellant. 8. That, without prejudice to ground No. 1 to 3, on the facts, the case the Ld. CIT(A), NFAC has grossly erred in law in not disposing of following Ground No. 7: That on the facts and in the circumstances of the case the AU has grossly erred in determining Rs. 25,28,856/- the sum payable u/s 156 of the Act in consequ ..... X X X X Extracts X X X X X X X X Extracts X X X X
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