ANDHRA PRAGATHI FARMERS SERVICE CO-OP SOCIETY ,RAMADURGAM vs. ITO, WARD-1, ADONI

The appeal filed by the assessee in ITA No.661/Hyd/2022 is barred by limitation by 3 days. It has moved a condonation petition explaining reasons thereof. We have heard both the parties on this preliminary issue. Having regard to the reasons given in the petition, we condone the delay and admit the appeal for hearing. 2.1 The grounds raised by the assessee in both the appeals are same and hence, we are reproducing the grounds of ITA No.660/Hyd/2022 for A.Y. 2016-17 only, for the sake of brevity and the same read as under : “1. The order of the learned First Appellate Authority is not correct either in law or on facts and in both. 2. The learned First Appellate Authority is not justified in confirming the action of the Assessing Officer denying deduction u/s 80P(2) in the proceedings u/s 154. The issue involved is debatable and hence cannot be subject matter of adjustments u/s 154. 3. The learned First Appellate Authority is not justified in confirming the action of the Assessing Officer denying deduction u/s 80P(2) in respect of interest received on deposits made in Nationalised Banks amounting to Rs. 6,77,560/- .”

As the facts and issues in both the appeals are same, we are reproducing the facts of appeal in ITA No.660/Hyd/2022 for the sake of brevity.

The brief facts of the case are that assessee is an Association of Persons (AoP) engaged in carrying on the business of providing credit facilities to its members and earning the interest income on such credit facilities. It has filed its return of income for the Asst.Year 2016-17 on 23-06-2016 by admitting gross total income of Rs. 36,28,799/- and claimed the entire gross total income as deduction u/s. 80P(2)(a)(i) of the Income Tax Act, 1961 and the same was accepted u/s. 143(1) of the Act. Subsequently, the case was selected for scrutiny under CASS.

Feeling aggrieved with the order of Assessing Officer passed u/s 154 of the Act dt.31.03.2021, assessee filed an appeal which was subsequently migrated to the ld.CIT(A), NFAC, Delhi, who dismissed the appeal of assessee

Aggrieved with the order of ld.CIT(A), assessee is now in appeal before us on the grounds mentioned hereinabove.

The primary contention of the learned Authorised Representative before us is that the issue is debatable in nature and cannot be the subject matter of rectification order passed u/s 154 of the Act. It was submitted that jurisdictional High Court in the case of Vavveru Co-operative Rural Bank Limited Vs. CCIT reported in 396 ITR 371 (A.P) had decided the issue in favour of the assessee and therefore, the issue is debatable, and the Assessing Officer cannot relook the issue under the garb of section 154 of the Act. Ld. AR further submitted that the co-ordinate Benches of the Tribunal have decided the issue in favour of the assessee and he has drawn our attention to the recent decision of SMC Bench dt.12.09.2023 in the case of assessee in ITA 432/Hyd/2023 (wherein one of us Judicial Member) has decided the issue vide paras 6 to 8 of the order as under :

On the other hand, Ld. D.R. has drawn our attention to the orders passed by the Assessing Officer u/s 154 of the Act as well as the order of the Ld.CIT(A) and our attention was drawn to Para 8 of the order passed by the Ld.CIT(A) which is to the following effect : “8. The issue under reference has already been adjudicated in the IA Nlo.192273& 192277of 2019 and the Diary No.31268 of 2019 in case of Mavilayi Service Co-operative Bank Limited and other by the Hon'ble Supreme Court. The details of which are as below: The Assessing Officer has to conduct an enquiry into the factual situation as enquiry into the factual situation as to the activities of the assessee society and arrive at a conclusion whether benefits can be extended or not in the light of the provisions under Sub section(4) of 80P. Further, a few lines of the judgement has been reproduced as below: With the insertion of sub-section (4) by the Finance Act, 2006, which is in the nature of a proviso to the aforesaid provision it is made clear that such a deduction shall not be admissible to a co- operative bank. However, if it a primary agricultural credit society or a primary co-operative agricultural and rural development bank, the deduction would still be provided. Thus, co-operative banks are now specifically excluded from the ambit of section 80P of the Act. Further, it is also a matter of common knowledge that in order to do the business of a Co-operative bank It is imperative to have a licence from RBI, which the appellant did not possess. Thus, if the Banking Regulation Act 1949 is now to be seen, what is clear from section 3 r.w.s 56 is that a primary co-operative bank cannot be a primary agricultural credit society must be engaged in the business of banking as defined by section 5(b) of

It was submitted that once the order has been passed by the Hon’ble Supreme Court against the assessee which was not brought to the knowledge of the co-ordinate Bench of the Tribunals, then the order passed by the co-ordinate Bench of the Tribunal cannot be said to be binding on this Tribunal.

It was submitted that the issue has attained finality and therefore, the Assessing Officer was right in its order to decide the issue. It was submitted that if the order is passed contrary to the order of Hon’ble Supreme Court then it is a mistake apparent from the record and therefore, the Assessing Officer was within his right to rectify the original order and deny the deduction claimed by the assessee.

We have heard the rival submissions and perused the material on record. Undoubtedly, the issue has been settled by the Hon’ble Supreme Court in the case of Mavilayi Services Co- operative Bank Limited decided vide 123 taxmann.com 161 (431 ITR 1) and the above said order is now law of land and if any

In view of the above, the Assessing Officer has rightfully denied the deduction to the assessee as the assessee was not eligible for deduction in accordance with the decision of the Hon’ble Supreme Court in the case of Mavilayi Service Cooperative Bank Limited. 13. In view of the above, we are of the opinion that the Assessing Officer was within his right to pass the order u/s 154 of the Act and therefore, the Ld.CIT(A) was correct in dismissing the appeal of the assessee. With respect to the binding nature of the co-ordinate Bench of the Tribunal (SMC), it will be suffice to say that the decision of the SMC is not binding on the Division Bench. Further, as mentioned in para 8 of the order, the Tribunal has categorically noted that “further the said decision has not stayed or over-ruled by any higher authorities”. In our considered opinion, the decision of the Tribunal was based on the decision of the jurisdictional High Court in the case of Vavveru Co-operative Rural Bank Limited Vs. CCIT (supra), which was later overruled by the Hon’ble Supreme Court in the case of Mavilayi Service Co- operative Bank Limited (supra). Therefore, the decision of SMC in the case of assessee was per in-curium and was not a binding precedent, as it was passed by SMC Bench without considering the binding decision of the Hon’ble Supreme Court in the case of Mavilayi Service Co-operative Bank Limited (supra). Therefore, we do not find any reasons to interfere with the order passed by the Ld.CIT(A). Accordingly, the appeal of the assessee is dismissed.

In the result, the appeal of assessee in ITA No.660/Hyd/2022 is dismissed.

As far as the other appeal of assessee i.e., ITA No.661/Hyd/2022 for A.Y. 2018-19 is concerned, in view of the submission of both the parties that the issues raised in A.Y. 2016-17 are identical to the other assessment year, except the amounts involved, we for the reasons stated hereinabove while deciding the appeal in ITA No.660/Hyd/2022 and for similar reasons, dismiss the appeal of assessee. 16. In the result, the appeal of assessee in ITA No.661/Hyd/2022 is dismissed.

To sum up, both the appeals of assessee are dismissed. A copy of the same may be placed in the respective case files.