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TMI Blog2024 (9) TMI 84X X X X Extracts X X X X X X X X Extracts X X X X ..... nable in law - Decided in favour of assessee. - Shri Duvvuru Rl Reddy, Hon ble Judicial Member And Shri S Balakrishnan, Hon ble Accountant Member For the Appellant : Sri I. Kama Sastry, AR For the Respondent : Dr. Aparna Villuri, Sr. AR ORDER PER DUVVURU RL REDDY, JUDICIAL MEMBER : This appeal filed by the assessee is against the order of the Ld. Commissioner of Income Tax, National Faceless Appeal Centre, Delhi [Ld. CIT(A)-NFAC] in DIN Order No. ITBA/NFAC/S/250/2023-24/1057250448(1), dated 20/10/2023 arising out of the order passed u/s. 143(3) of the Income Tax Act, 1961 [the Act] for the AY 2018-19. 2. At the outset, it is noticed that there is a delay of 122 days in filing this appeal before the Tribunal. With respect to belated filing of the appeal, the assessee filed petition for condonation of delay along with the affidavit and the relevant paras of the affidavit is extracted herein below for reference: 1 . 2 .. 3. The in the computation sheet accompanying the order the business income of the assessee is taken at Rs. 48,34,258/- as against the income from business before deduction under 80P returned by the assessee of Rs. 48,16,187/-. 4. That we are not able to file a recti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessment proceedings, the assessee was asked to furnish the documentary evidence along with explanations on deductions claimed by the assessee u/s. 80P of the Act vide notices issued u/s. 142(1) from time to time. In response, the assessee has furnished the information as well as the documentary evidence as called for by the Ld. AO. Thereafter, the Ld. AO issued a show cause notice dated 09/12/2020 wherein the assessee was directed to show cause as to why the deduction claimed by the assessee on interest income earned from Nationalized Bank u/s. 80P should not be disallowed. In response, the assessee had filed a reply refuting Ld. AO s proposal for making addition which is mentioned in the show cause notice and relied on the decision of the Ld. CIT(A) in the appellant s own case for the AY 2014-15. However, the Ld. AO did not consider the submissions of the assessee and passed the assessment order u/s. 143(3) of the Act on 15/02/2021 wherein the Ld. AO disallowed the assessee s claim of deduction u/s. 80P of the Act amounting to Rs. 22,64,026/- against the interest income received on deposits made with Andhra Bank and assessed the total income at Rs. 31,04,866/-. Aggrieved by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2 ITR 283 are entirely different from that of the instant case. The Ld. AR also submitted that as per Para-11 of the judgment in the case of M/s. Totgars Cooperative Sale Society Ltd (supra) it is clearly mentioned that this judgment is confined to the facts of the present case and therefore it cannot be applied in the assessee s case, hence, eligible for deduction u/s 80P of the Act. He, therefore, pleaded to quash the order passed by the Ld.CIT(A)NFAC and allow deduction u/s 80P of the Act. The Ld. AR also heavily relied on the decision of this Bench in the assessee s own case in ITA No. 310/Viz/2023 (AY: 2020-21), dated 29/02/2024 wherein the Hon ble Tribunal, under similar set of facts and circumstances, granted relief to the assessee. Therefore, the Ld. AR pleaded the Hon ble Tribunal may take the same view in the assessee s case for the AY 2018-19 also, which is under consideration. 6. Per contra, the Ld. DR argued that the Ld.CIT(A)-NFAC has rightly upheld the addition made by the Ld. AO as the assessee is not eligible to claim deduction u/s 80P of the Act. The Ld. DR, therefore, pleaded to uphold the order passed by the Ld. CIT(A) -NFAC and dismiss the appeal of the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction u/s. 80P(2)(a)(i) of the Act on the interest accrued and received by the assessee u/s. 80P(2)(a)(i) of the Act. The contention of the Ld. AO is that as per section 80P(2)(d), the assessee is eligible to claim deduction u/s. 80P(2)(a)(i) of the Act only when it is invested with any other cooperative society. The Ld. AO also placed heavy reliance in the case of M/s. Totgars Cooperative Sale Society Ltd (supra) while disallowing the claim made by the assessee u/s. 80P(2)(a)(i) of the Act. We have perused the ratio laid down by the Hon ble Apex Court in the case of M/s. Totgars Cooperative Sale Society Ltd (supra) and found that in that case the society is engaged in marketing of the agricultural produce by its members as per section 80P(2)(a)(iii) while carrying on the business of banking or providing credit facilities to its members u/s. 80P(2)(a)(i) of the Act. In that case, the Society retained the sale proceeds which was otherwise payable to its members from whom the produce was bought which was invested in short term deposits / securities. It is also found that the amount payable to its members realized from sale proceeds of the agricultural produce of its members was retai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imilar deductions. It is clear that the deductions available under clauses (a) to (e) of section 80P(2) are activity based whereas clauses (d) and (e) are investment based. The distinction between clauses (a) and clauses (d) (e) on the other hand is that the benefit under clause (a) is restricted to only into those activities of a cooperative society enlisted in sub-clause (a) whereas the benefit of clauses (d) (e) are available to all cooperative societies without any restriction on the activities carried on by them. In simple terms, the benefit under clause (a) will be limited only to the profits gains of the business attributable to any one or more of such activities. But in case, if the cooperative society has an income not attributable to any one or more of such activities listed in sub-clauses (i) to (vii) of clause-(a), the same may go out of the purview of clause (a) but still the cooperative society may claim the benefit of clause (d) or (e) as per the conditions laid down therein. In the instant case, the original source of investments made by the assessee in Nationalized Banks is admittedly the income of the assessee derived from the activities listed in sub-clauses (i) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om investment in banks. The Hon ble High Court in paras 35 to 37 of its judgment held as under: 35. But, as rightly contended by the learned senior counsel for the petitioners, the investment made by the petitioners in fixed deposits in nationalized banks, were of their own monies. If the petitioners had invested those amounts in fixed deposits in other co-operative societies or in the construction of godowns and warehouses, the respondents would have granted the benefit of deduction under clause (d) or (e), as the case may be. 36. The original source of the investments made by the petitioners in nationalised banks is admittedly the income that the petitioners derived from the activities listed in sub-clauses (i) to (vii) of clause (a). The character of such income may not be lost, especially when the statute uses the expression attributable to and not any one of the two expressions, namely, derived from or directly attributable to . 37. Therefore, we are of the considered view that the petitioners are entitled to succeed. Hence, the writ petitions are allowed, and the order of the Assessing Officer, in so far as it relates to treating the interest income as something not allowable ..... X X X X Extracts X X X X X X X X Extracts X X X X
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