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Income Tax Appellate Tribunal, DELHI BENCH: ‘B NEW DELHI
Before: SHRI SATBEER SINGH GODARA & SHRI S. RIFAUR RAHMAN
Assessee by Sh. Ibad Mushtaq, Adv. Sh. Fuzail Ahmad Ayyubi, Adv. Department by Sh. Rajesh Kumar Dhanesta, Sr. DR Date of hearing 03.07.2025 Date of pronouncement 03.07.2025 ORDER PER SATBEER SINGH GODARA, JM These assessee’s eight appeals to 4089/Del/2024 and 4068/Del/2024 for assessment years 2010- 11, 2011-12, 2012-13, 2014-15 and 2015-16 are directed against the Commissioner of Income Tax (Appeals) [in short, the “CIT(A)”], Ghaziabad’s orders dated 28.09.2018, 13.06.2019, 28.09.2018, 12.06.2019, 31.10.2018, 30.09.2019, 02.01.2018 and 30.04.2019 passed in case nos. 321492801301117, 621293481190518, 343204521221217, 621296921190518, 321848991011217, 621261061190518, 603394541270117 and 356620121050118 2 | P a g e involving proceedings under sections 144/147, 271(1)(c) and 143(3) of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’), respectively. Heard both the parties. Case files perused.
In view of larger interest of justice and in light of Collector, Land & Acquisition vs. Mst. Katiji & Others (1987) 167 ITR 471 (SC), following delay(s) in filing the respective appeals are condoned: Sl. No. Delay in filing the appeal Appeal number 1. 1894 days 4068/Del/2024 2. 2108 days 4083/Del/2024 3. 1850 days 4084/Del/2024 4. 2108 days 4085/Del/2024 5. 1851 days 4086/Del/2024 6. 2075 days 4087/Del/2024 7. 1741 days 4088/Del/2024 8. 2377 days 4089/Del/2024
Both the learned representatives fairly state during the course of hearing that the assessee’s identical sole substantive grievance on merits herein seeks to reverse both learned lower authorities’ action disallowing its section 80P deduction claim(s) involving varying sums, assessment year-wise; respectively. That being the case, we hereby treat the assessee’s 2015-16 as the “lead” case.
A perusal of the assessee’s instant “lead” appeal file indicates that both the learned lower authorities, and more particularly, the Assessing Officer framed his regular assessment on 04.12.2017, inter alia, adding difference in commission of Rs.77,60,738/- going by Form 26AS; interest received from M/s. Modi Industries amounting to Rs.26,76,932/- and that derived from deposits in other banks to the tune of Rs.26,36,932/-, respectively, as not entitled for section 80P deduction going by Totgars Co-operative Sale Society Ltd. Vs. ITO, Karnataka [2010] 188 Taxman 282 (SC).
Learned departmental representative accordingly reiterates before us that all these three heads of the assessee’s receipts could be held to have been derived from the eligible undertaking and business activities; as the case may be, which has been rightly treated as an income from “other” sources.
We have given our thoughtful consideration to the assessee’s and the Revenue’s vehement arguments reiterating their respective stands. So far as the assessee’s interest income derived from banks is concerned, we note that the tribunal’s recent coordinate bench’s order in (2024) 164 taxmann.com 382, ITO Vs. Shri Bhairavnath Multistate Cooperative Credit Society Ltd. (Pune Trib.) has already
4 | P a g e considered Totgars Co-operative Sale Society Ltd.(supra) to decide the same against the department, as under:
“5. We heard the rival submissions and perused the material on record. We find this issue is no more res integra by virtue of catena of decisions passed by the Coordinate Benches of this Tribunal. In the present case, we find that admittedly the interest income was earned from the investments out of surplus funds made with cooperative banks/societies, the cooperative bank is also a specie of cooperative society, therefore, the interest income earned by the cooperative society from the cooperative banks qualifies for deduction u/s.80(P)(2)(d) of the Act. Such interest also qualifies for exemption u/s.80P(2)(a)(i) as held by the Co-ordinate Bench of Pune Tribunal in the case of Nashik Road Nagari Sahkari Patsanstha Limited Vs. ITO in wherein the Tribunal held as under :- "9. We heard the rival submissions and perused the material on record. Admittedly, the appellant is a Cooperative society formed under the provisions of Maharashtra Cooperative Societies Act,1960 with the objective of accepting deposits and lending money to its members. The money which is not immediately required for the purpose of lending to the members is deposited with Bank of Baroda in the form of Fixed Deposit. The question is whether the interest so earned qualifies for exemption u/s. 80P(2)(a)(i) of the Act. The AO as well as the CIT(A) were of the opinion that the interest earned from third parties or non- members does not quality for exemption u/s.80P. It is an admitted position that the interest so earned should be taxed as 'income from other sources' There is a cleavage of judicial opinion among several High Courts on the issue of eligibility of this kind of income for exemption u/s. 80P(2)(a)(i) of the Act. The Hon'ble Punjab & Haryana High Court in the case of CIT vs. Punjab State Cooperative Federation of Housing Building Societies Ltd. 11 taxmann.com 448, the Hon'ble Gujarat High Court in the case of State Bank of India Vs. CIT 389 ITR 578 (Guj.), the Hon'ble Delhi High Court in the case of Mantola Co- operative Thrift & Credit Society Ltd. Vs. CIT 50 taxmann.com 278, the Hon'ble Punjab & Haryana High Court in the case of CIT Vs. Punjab State Cooperative Agricultural Development Bank Ltd. 389 ITR 68 and the Hon'ble Kolkata High Court in the case of CIT Vs. Southern Eastern Employees Cooperative Credit Society Ltd. 390 ITR 524 took a view that the income arising on the surplus invested in short term deposits and securities cannot be attributed to the activities of the society and, therefore, not 5 | P a g e eligible for exemption u/s.80P(2)(a)(i) of the Act. However, the Hon'ble Karnataka High Court in the case of Tumkur Merchants Souharda Credit Cooperative Ltd. Vs. ITO (2015) 230 taxmann 309 (Kar.) and the Hon'ble Telangana and Hon'ble Andhra Pradesh High Court in the case of Vaveru Co- operative Rural Bank Ltd. v CIT [(2017) 396 ITR took a view that such interest income is attributable to the activities of the society and, therefore, eligible for exemption u/s.80P(2)(a)(i) of the Act. The Coordinate Bench of Pune Benches in the case of M/s. Ratnatray Gramin Bigar Sheti Sah. Pat Sanstha Maryadit Vs. ITO (ITA Nos.559/560/PUN/2018, dated 11-12- 2018) has taken view in favour of the assessee following the judgment of Hon'ble Karnataka High Court in the case of Tumkur Merchants Souharda Credit Cooperative Ltd. (supra). Respectfully following the decision of the Coordinate Bench, we hold that the interest income earned on the investment of surplus money with banks is also eligible for exemption u/s.80P(2)(a)(i) of the Act. Thus, the grounds of appeal
No. 1 & 2 stands allowed."
6. Thus, the order passed by the ld. CIT(A) is in conformity with the settled position of law by virtue of the above discussion. Therefore, we affirm the impugned order directing the Assessing Officer to allow the claim of exemption u/s.80P(2)(a)(i)/80P(2)(d) on the interest income earned on investments made out of surplus funds made with Cooperative banks, Cooperative Societies and Nationalised banks.”
7. The outcome would be hardly any different regarding the assessee’s commission and interest income derived/received from M/s. Modi Industries. This is for the precise reason that the assessee is a cane cooperative institution which has earned the impugned commission income in its regular business activity and marketing of the cane produce of it’s members only. That being the case, we conclude that both the learned lower authorities have erred in law and on facts in treating the assessee’s above regular business income representing commission in question as not 6 | P a g e eligible for section 80P deduction. The impugned entire disallowance of section 80P deduction in its case comprising of all the three foregoing heads stands deleted therefore. The assessee’s instant “lead” appeal