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Income Tax Appellate Tribunal, MUMBAI BENCH “G”, MUMBAI
Before: SHRI PAVAN KUMAR GADALE & SHRI GAGAN GOYAL
PER GAGAN GOYAL, A.M: This appeal by assessee is directed against the order of National Faceless Appeal Centre (NFAC), Delhi dated 28.04.2023 u/s. 250 of the Income Tax Act, 1961 (in short ‘the Act’) for A.Y. 2021-22. The assessee has raised the following grounds of appeal:-
Sterling Co. Operative Housing Society Limited 1. On the Facts and Circumstances of the case and in Law, the Lower Authorities have erred in making an Adjustment u/s. 143(1)(a) of the Act in respect of Appellants' claim for Deduction u/s. 80P(2)(d) of the Act amounting to 45 ,53,032/-. The said deduction was in respect of Interest Income earned on the Fixed Deposits with the Co-operative Banks.
2. On the Facts and Circumstances of the case and in Law, the Lower Authorities have erred in not providing any reasons for rejecting appellants' explanation nor for rejecting appellants' request for the Rectification u/s. 154 of the Act.
3. On the Facts and Circumstances of the case and in Law, Hon NFAC, Delhi erred in rejecting appellants' claim for the Deduction u/s. 80P (2) (d) of the Act of Rs.45, 53,032/-.
On the Facts and Circumstances of the case and in law, the lower authorities have erred in not giving any decision on appellants' Ground against the levy of Interest u/s. 234 B and 234 C of the Act.
5. Appellants crave leave to add, alter, amend, modify, withdraws the Grounds of Appeal.
Brief facts of the case are that assessee is Cooperative Housing Society, filed its return of income on 02.03.2022 as AOP, declaring total income at Rs. 7, 66,030/- after claiming deduction under chapter VI-A (under the provisions of Section 80P of the Act) amounting to Rs. 45, 33,032/- on account of interest earned from fixed deposits it had with various Cooperative Banks. Return of the assessee was processed u/s. 143(1) of the Act vide intimation Dated: 02.11.2022 and deduction claimed u/s. 80P of the Act was denied. Against this denial, assessee society filed an application u/s. 154 of the Act before the CPC,
Sterling Co. Operative Housing Society Limited Bengaluru. This application filed u/s. 154 of the Act was dismissed by the CPC, Bengaluru vide its order Dated: 24.02.2023.
Assessee being aggrieved with the action of CPC; Bengaluru filed an appeal before the Ld. CIT (A), who in turn confirmed the order of CPC, Bengaluru and dismissed the appeal of the assessee. Assessee being further aggrieved preferred this appeal before us for adjudication by raising the grounds as per grounds of appeal
in Form No.
36. We have gone through the intimation issued u/s. 143(1) and rectification order passed u/s. 154 of the Act along with the appeal order passed by the Ld. CIT (A) u/s. 250 of the Act. We have duly considered the submissions of the assessee alongwith the judicial pronouncements relied upon by the Revenue and Assessee.
4. The issue under consideration has been dealt with so many times in numerous appeals by this Tribunal and other coordinate benches also. It is observed that assessee filed its return of income well within the time as extended by the CBDT, i.e. 15.03.2022 and confirmed by CPC, Bengaluru also on its intimation order. We observed that AO and Ld. CIT(A) has relied on the decision of Totagar Cooperative Sales Society Ltd. vs. ITO, (2010) 322 ITR 283 (SC). Wherein, the Hon'ble Apex Court had dealt with section 80P (2) (a) (i) of the Act and not in the context of claim u/s. 80P (2) (d) of the Act. Time and again it's a consistent view of ITAT that cooperative bank is also a type of cooperative society under the Cooperative Societies Act, 1912 or under any other law for the time being in force in any state for the registration of cooperative societies. Secondly, the decision of Hon'ble Apex Court in the case of Totagar was rendered with reference to business income vs. Income from other sources for the purposes of Sterling Co. Operative Housing Society Limited claiming deduction u/s. 80P (2)(a) (i) vis-a-vis section 80P (2) (d) of the Act. Now we are reproducing the findings of Ld. CIT (A) as under:
21.4 Keeping in view of facts and decisions narrated above, it is concluded that the income earned by way of interest from deposit or investment of idle or surplus funds does not change its character irrespective of the fact whether such income of interest is earned from a schedule bank or a co- operative bank and thus, clause (d) of Section 80P (2) of the Act would not apply in the facts and circumstances of the present case. The person or body corporate from which such interest income is received will not change its character, viz. interest income not arising from its business operations, which made it ineligible for deduction under Section 80P of the Act, as held by the Hon'ble High Court.
In view of the above, I agree with the order of the AO. As it is clear that the appellant has earned interest income from such co-operative bank of Rs. 45, 53,032/-. The same has been claimed as deduction u/s 80P (2) (d) of the Act which does not fall under principal of mutuality. In view of the above discussion, the deduction u/s. 80P(2)(d) of the Act, of Rs. 45,53,032/- claimed by the appellant has rightly been disallowed by the AO as the provisions relating to concessions are ordinarily expected to be rigidly interpreted and therefore addition made by the A.O. is upheld and the grounds of appellant is hereby dismissed.
The issue involved under consideration is purely a legal issue and no substantial question of fact is involved into it. Further it is also observed that the objections raised by the Revenue on the case are not acceptable and tenable in purview of judgments of various authorities wherein it has been held that interest received from the Co-op. banks by the Coop. Credit Societies partakes the character of the "interest received from a Credit Co-op. Society" and the Courts have allowed the deduction of 80P (2) (d) of the Act. Similar view has also been taken by the Hon'ble ITAT Mumbai 'SMC' Bench in the case of Kaliandas Udyog Bhavan Premises Co-Op. Society Ltd. Vs. Income Tax Officer- 21(2)(1), Mumbai (2018) 94 taxmann.com 15 (Mumbai-Trib.). The decision of Hon'ble Supreme Court in the case of Totgar's Co-op, Sales Society Ltd. Vs. ITO (210) 322 ITR 283
Sterling Co. Operative Housing Society Limited (SC) relied/quoted by the Revenue is having distinguishable facts, thus, it has been wrongly been relied upon. The adjudication by the Hon'ble Apex Court in the aforesaid case was in the context of section 80P (2) (a) (i) of the Act and not on the entitlement of a co-operative societies towards deduction u/s. 80(P) (2)(d) of the Act. Further in the judgment of State Bank of India vs. CIT (2016) 309 ITR 578 (Guj.), it has been held that the interest income earned by co- operative society on its investment with co-op., banks would be eligible for claim of deduction u/s. 80P (2) (d) of the Act. In a recent judgment in the case of Rena Sahakari Sakhar Karkhana Ltd. vs. Pr. Commissioner of Income Tax-2, Aurangabad being Hon'ble ITAT Pune vide its order pronounced on 07.01.2022 has decided the identical issue in the favour of the assessee and against the Department. In that case, the Ld. PCIT-2, Aurangabad vide order dated 27.03.2018 u/s. 263 of the Act set aside the order of AO dated 07.03.2016 wherein the AO had allowed the interest income amounting to Rs. 75,38,534/- received from FDs with Co-operative Banks which was claimed by the assessee as deduction u/s. 80P(2)(d) of the Act. The Hon'ble Tribunal relying on the judgment of Hon'ble High Court of Gujarat in the case of State Bank of India Vs. CIT (2016) 389 ITR 578 (Guj.) wherein the Hon'ble High Court observed that the interest income earned by a co- operative society on its investment held with a co- operative bank would be eligible for claim of deduction u/s. 80P (2) (d) of the Act.
In conclusion, we hold that the judgment of the Hon’ble Supreme Court in the case of Totgar’s Cooperative Sale Society Ltd. vs. ITO (2010) 322 ITR 283 (SC), rendered in the context of Section 80P(2)(a)(i) of the Act (wherein expression “”profits and gains of business” has been used), is distinguishable on facts. The Sterling Co. Operative Housing Society Limited aforesaid judgment is not applicable to the facts of the present case as deduction has been claimed under Section 80P (2) (d) of the Act (wherein expression “any income” has been used). Impact of insertion of Section 80P (4) of the Act is that a co-operative bank would no more be entitled for claim of deduction under Sec. 80P of the Act, however, the interest income derived by a co-operative society from a co-operative bank would continue to be eligible for deduction under Sec.80P(2)(d) of the Act irrespective of the fact that such interest income is in the nature of “profits and gains of business” or “income from other sources” as Section 80P(2)(d) uses the expression “any income” and not “profits & gains of business”.
Accordingly, the Appellant is entitled to claim deduction under Section 80P (2)(d) of the Act in respect of interest received from co-operative banks amounting to Rs. 45,33,032/- derived from a co-operative bank. In view of above orders of authorities below are set aside and directed to allow the claim u/s. 80P of the Act to the assessee on interest earned on deposits with cooperative banks.
In the result, appeal of the assessee is allowed.