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Before: Shri V. Durga Rao & Shri G. Manjunatha
आयकर अपीलीय अिधकरण, ’बी’ "ायपीठ, चे"ई IN THE INCOME-TAX APPELLATE TRIBUNAL ‘B’ BENCH, CHENNAI "ी वी दुगा" राव "ाियक सद" एवं "ी जी. मंजुनाथा, लेखा सद" के सम" Before Shri V. Durga Rao, Judicial Member & Shri G. Manjunatha, Accountant Member आयकर अपील सं./I.T.A. No.546/Chny/2022 िनधा"रण वष"/Assessment Year: 2017-18 The Erode Agricultural Producers Co- Vs. The Principal Commissioner of operative Marketing Society Limited, Income Tax – Coimbatore 1, No. 293, Cauvery Road, 67-A, Race Course Road, Karungalpalayam, Erode 638 003. Coimbatore 641 018. [PAN:AAAAT8556D] (अपीलाथ"/Appellant) (""थ"/Respondent) अपीलाथ" की ओर से / Appellant by : Shri S. Sridhar, Advocate [Erode] ""थ" की ओर से/Respondent by : Shri S. Senthil Kumaran, CIT सुनवाई की तारीख/ Date of hearing : 08.02.2023 घोषणा की तारीख /Date of Pronouncement : 17.02.2023 आदेश /O R D E R PER V. DURGA RAO, JUDICIAL MEMBER: This appeal filed by the assessee is directed against the order of the ld. Principal Commissioner of Income Tax – Coimbatore 1, Coimbatore, dated 23.03.2022 relevant to the assessment year 2017-18 passed under section 263 of the Income Tax Act, 1961 [“Act” in short].
The appeal filed by the assessee is delayed by 38 days in filing the appeal, for which, the assessee has filed a petition for condonation of the delay in the form of an affidavit, to which; the ld. DR has not raised any 2 I.T.A. No.546/Chny/22
serious objection. Consequently, since the assessee was prevented by sufficient cause, the delay of 38 days in filing of the appeal stands condoned and the appeal is admitted for adjudication.
Facts are, in brief, that the assessee is a cooperative society, involved in marketing the agriculture produce of its members. It has filed the return of income for the assessment year 2017-18 admitting total income of ₹.47,48,800/- after claiming deduction under Chapter VI-A of ₹.1,22,81,725/-. The return filed by the assessee was taken up for Limited Scrutiny and notice under section 143(2) of the Act was served on the assessee on 13.08.2018. After following due procedure, the assessment was completed under section 143(3) of the Act dated 19.10.2019 by determining the total income of the assessee at ₹.48,67,313/-.
Subsequently, the ld. PCIT issued a show-cause notice on 04.03.2022 calling for explanation from the assessee that the Assessing Officer has not examined the deduction claimed under section 80P(2)(d) of the Act while completing the assessment and as to why the order passed by the Assessing Officer cannot be reviewed. The assessee has submitted in its reply that the Assessing Officer has already examined the issue and also submitted that the order passed by the Assessing Officer is not erroneous and prejudicial to the interest of Revenue. The ld. PCIT
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not agreed with the submissions of the assessee and passed revision order under section 263 of the Act dated 23.03.2022 by directing the Assessing Officer to re-examine the claim of the assessee under section 80P(2)(d) of the Act and re-do the assessment afresh.
On being aggrieved, the assessee carried the matter in appeal before the Tribunal. The ld. Counsel for the assessee has submitted that the case of the assessee was selected for Limited Scrutiny in respect of claim made by the assessee under section 80P(2)(d) of the Act and same was examined by the Assessing Officer. Therefore, the order passed by the Assessing Officer under section 143(3) of the Act cannot be said the same is erroneous and prejudicial to the interest of Revenue. So far as merits of the case is concerned, the ld. Counsel for the assessee has submitted that the issue is covered in favour of the assessee by the decision of the Hon’ble Madras High Court in the case of The Salem Agricultural Producers Co-operative Marketing Society Ltd. v. ITO in TCA No. 5 of 2015 dated 10.08.2016 and the same has been considered by the Coordinate Benches of the Tribunal in the case of Varathappam Palayam Primary Agricultural Co-op. Credit Society v. ITO in I.T.A. No. 282/Chny/2021 dated 29.06.2022 and decided the issue in favour of the assessee by considering that the interest income earned on the deposits
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made by the cooperative society in a District Central Co-operative Bank is eligible for claiming deduction under section 80P(2)(d) of the Act.
On the other hand, the ld. DR strongly supported the order passed by the ld. PCIT.
We have heard both the sides, perused the materials available on record and gone through the orders of authorities below including case law filed by the assessee. The assessee’s case was selected for limited scrutiny to examine the claim of the assessee made under section 80P(2)(d) of the Act and the Assessing Officer, during the course of assessment proceedings has examined the claim of the assessee under section 80P(2)(d) of the Act and passed the assessment order under section 143(3) of the Act. Therefore, in our opinion, the assessment order cannot be said that it is erroneous and prejudicial to the interest of Revenue. So far as merits of the case is concerned, by considering the judgement of the Hon’ble Jurisdictional High Court in the case of The Salem Agricultural Producers Co-operative Marketing Society Ltd. v. ITO in TCA No. 5 of 2015 dated 10.08.2016, the Coordinate Benches of the Tribunal, in the case of Varathappam Palayam Primary Agricultural Co- op. Credit Society v. ITO in I.T.A. No. 282/Chny/2021 dated 29.06.2022, has held that the assessee is eligible for claiming deduction under section 5 I.T.A. No.546/Chny/22
80P(2)(d) of the Act. The relevant portion of the decision is reproduced as under: 6.3 We have heard the rival contentions. The assessee has claimed deduction of interest income received under section 80P of the Act. However, the Assessing Officer has denied the same and held that the interest income falls in the category of “Other Income” and brought to tax, which was confirmed by the ld. CIT(A). Similar issue on identical facts was subject matter in appeal before the Tribunal in the case of The Salem Agricultural Producers Co-operative Marketing Society Ltd. v. ITO (supra), wherein, the Tribunal has observed and held as under: “8. We have heard both sides, perused the materials on record and gone through the orders of authorities below. The case of the assessee is that the income by way of interest and dividend earned by the assessee society are from investments made in Salem District Central Cooperative Bank, which is also admittedly, a co-operative society and are allowable deduction. The Assessing Officer has held that the assessee has made only with Salem District Central Cooperative Bank and therefore, the income from investment with the Bank is not entitled for deduction under section 80P(2)(d) of the Act. On appeal, the ld. CIT(Appeals confirmed the order passed by the ld. CIT(Appeals). We find that in the case of CIT v. Kangra Co-operative Bank Ltd. [2009] 309 ITR 106 (HP), the Hon’ble Himachal Pradesh High Court has considered section 80P(2)(d) of the Act. The interest earned by the assessee co-operative bank on fixed deposits with Himachal Pradesh State Co-operative Bank in compliance with the provisions of section 57 of the Himachal Pradesh Co-operative Societies Act, 1968, the income derived from banking business is eligible for deduction under section 80P(2)(a)(i) of the Act. Exemption is also available under section 80P(2)(d) of the Act. In the present case, the assessee is an Agricultural Producers Co-operative Marketing Society Ltd., registered under Tamilnadu Co-operative Societies Act and established for the benefit of the agricultural producers and the interest or dividend earned by the assessee will be beneficial to the members alone. Therefore, keeping in view of the decision in the case of CIT v. Kangra Co-operative Bank Ltd. (supra), we hold that the assessee is eligible for benefit under section 80P(2)(d) of the Act and also this being a beneficial section to the co-operative societies. 6.4 On further appeal, while dismissing the appeal of the Department, the Hon’ble Jurisdictional High Court has confirmed the order of the Tribunal and the relevant portion of the order of the Hon’ble High Court is extracted as under: “9. Though Mr.J. Narayanasamy, learned Senior Standing Counsel for Income Tax Department submitted that the Tribunal was not right in holding that the interest earned from the Salem Agricultural Producers
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Co-operative Marketing Society Ltd., for reduction under Section 80 P (2(a) (i) of the Income Tax Act, we are not inclined to accept the said contentions. For the reason that a District Central Co-operative Bank, is also a Society, in which event, the income by way of interest and dividend earned by the assessee/respondent Society from the investments made in Salem District Central Co-operative Bank, which is also a Co-operative Society is entitled for deduction under Section 80 P (2) (a) (i) of the Income Tax Act. Decision relied on by the assessee and considered by the Tribunal squarely applies to the facts on hand. Question of law, figuring as 4, is negatived as against the appellant. 6.5 Respectfully following the decision of the Tribunal as well as the judgement of the Hon’ble Jurisdictional High Court, we hold that the assessee is eligible for claiming deduction under section 80P(2)(d) of the Act. Thus, the ground raised by the assessee is allowed. 8. Therefore, by respectfully following the judgement of the Hon’ble Jurisdictional High Court in the case of The Salem Agricultural Producers Co-operative Marketing Society Ltd. v. ITO (supra), it cannot be said that the assessment order passed by the Assessing Officer is erroneous and prejudicial to the interest of Revenue. In view of the above, the revision order passed under section 263 of the Act by the ld. PCIT is quashed and allowed the appeal filed by the assessee.
In the result, the appeal filed by the assessee is allowed. Order pronounced on 17th February, 2023 at Chennai. (G. MANJUNATHA) JUDICIAL MEMBER Chennai, Dated, 17.02.2023 Vm/-
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आदेश की "ितिलिप अ"ेिषत/Copy to: 1. अपीलाथ"/Appellant, 2.""थ"/ Respondent, 3. आयकर आयु" (अपील)/CIT(A), 4. आयकर आयु"/CIT, 5. िवभागीय "ितिनिध/DR & 6. गाड" फाईल/GF.