M/S JAL RATAN DEEP CO-OPERATIVE HOUSING SOCIETY,MUMBAI vs. ITO WARD 31(2)(1), MUMBAI

ORDER Aforesaid inter-connected appeals bearing common questions of law and facts are taken up for disposal by way composite order in order to avoid the multiplicity of discussion.

2. The Appellant, M/s Jal Ratan Deep Co-operative Housing Society Ltd (hereinafter referred to as the ‘assessee society’) by filing the present appeals, sought to set aside the impugned orders dated 16/07/2022, 15/07/2022, 15/07/2022, 07/07/2022 & 07/07/2022, 2 Jal Ratan Deep Co-op Hsg Society Ltd passed by National Faceless Appeal Centre(NFAC), Delhi [hereinafter referred to as the ‘CIT(A)’] qua the assessment orders for Assessment Years 2011-12, 2014-15, 2016-17, 2017-18 & 2020-21, respectively on the identically worded grounds except difference in figure of deduction / disallowance (Grounds of appeal

of A.Y 2011-12 are taken) interalia that :- “1. Attracted Section - Section 250 Issue - Not granted the opportunity to counter the assertion taken by the CIT- APPEALS/NFAC for the first and only time during the entire History of the case. On the facts and circumstances of the case CIT- APPEALS/NFAC stated in its order that "As there is clear evidence in the 105th & 114th Annual Reports of M/s. Shamrao Vithal cooperative Bank limited , Mumbai, that it was no more a cooperative society, further as it has more than 105 branches in seven states and further as it has RBI licence w.e.f.24.08.1984, M/s. Shamrao Vithal Multi state scheduled cooperative Bank limited, is clearly a Bank and not a society." The CIT- APPEALS/NFAC has neither granted any opportunity to counter the above theory which it has taken up in an arbitrate manner nor it heeded any of the judicial pronouncements by ITAT- Mumbai and various other High courts in similar issue duly submitted within the written submission.

2. Attracted Section-Section 250 Issue - Not granted the opportunity of being heard through virtual or personal mode despite same has been requested categorically in the written submission by the appellant. On the facts and the circumstances of the case the CIT- APPEALS/NFAC has not granted any opportunity to be heard in personal either through virtual mode or otherwise despite same was urged in the last paragraph of the written submission. Not granting such an opportunity is violation of the Faceless Appeal Assessment Scheme and provisions thereof.

3. Attracted Section - Section 250 Issue - Order of the CIT- APPEALS/NFAC is not a speaking order On the facts and the circumstances of the case CIT - APPEAL/NFAC has not passed a speaking order as it is well postulated from the order that not a single iota has been mentioned against the arguments, assertions, legal provisions and various case laws quoted in the written submission.

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5. Attracted Section - Section 80(P)(2)(d) Issue - CPC erred in Disallowing the deduction claimed under section 80(P)(2)(d) without giving any valid reason. On the facts and in the circumstances of the case and in law, the CPC erred in disallowing claim of deduction of Rs. 17,57,654/- u/s 80P(2)(d) of the Income Tax Act, 1961 in respect of interest income earned on investment in Fixed Deposit with other Co-operative Bank namely SVC Co-operative Bank Ltd without mentioning any iota of reasons behind such a take. As no reason for disallowance has been given therefore the Intimation Order is not a speaking order and does not qualify the law of natural justice. 6. Attracted Section-Section 115JC Issue - Addition made on account of disallowance of Section SOP deduction is void as the assessee qualifies all prerequisites to claim Section 80P(2)(d) deduction. On the facts and in the circumstances of the case, as a matter of fact Rs. 17,57,654/- has been earned as Interest from the fixed deposits maintained by the assessee (which is a Co-operative society) with SVC Bank which is also a co-operative society, hence the assessee is eligible to claim the deduction under section 80P(2)(d) of the Income Tax Act, 1961. Despite of the fact that all conditions which are sine qua non for availing the deduction under section 80P(2)(d) has been complied with, yet disallowing the same by way of adjustment under an intimation order u/s 143(l)is bad in law. 7. Attracted Section-143(1) Issue- Determination of Tax Liability is bad in law. On the facts and in the circumstances of the case and in law Income tax of Rs. 5,45,267/- is wrong and contrary to the facts and circumstances of the case, provisions of the Act and the Rules made thereunder. 8. Attracted Section-Section 234B&234C Issue - Levying Interest under section 234B & 234C is void ab initio. On the facts and in the circumstances of the case and in law, the CPC erred in charging interest u/s 234B of Rs. 1,09,0407- AND u/s 234C of Rs. 27,533/- which is wrong and contrary to the facts and circumstances of the case, provisions of the Act and the Rules made thereunder.”

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5 Jal Ratan Deep Co-op Hsg Society Ltd 4. Notices for appearance of the assessee society in these appeals were sent which were duly served, but none appeared on behalf of them. Consequently, the Bench decided to dispose of these appeals on the basis of material available on file with the assistance of the Ld.Departmental Representative for the Revenue.

From the grounds of appeal raised by the assessee, assessment orders and impugned orders passed by the Ld.CIT(A), the sole question arises for determination in this case is 6. Jal Ratan Deep Co-op Hsg Society Ltd “As to whether Assessee Society is entitled for deduction qua the interest income received from parking its surplus funds with Co-operative Bank under section 80P(2)(d) of the I.T. Act, 1961?”.

7. Assessing Officer as well as Ld.CIT(A) have denied the deduction claimed by the assessee under section 80P(2)(d) of the Act qua its interest income from investment made in fixed deposit with SVC Co- operative Bank Ltd under section 80P(2)(d) of the Act on the ground that since SVC Co-operative Bank Ltd is no more a co-operative society as it has more than 105 branches in 7 states operating on the basis of licence issued by Reserve Bank of India and the interest income earned by assessee is clearly in the nature of “Income from other sources” it does not qualify for deduction under section 80P(2)(d) of the Act.

7. This issue has been considered and decided in favour of the assessee by the co-ordinate bench of Tribunal in M/s Petit Towers Co- operative Housing Society Ltd vs ITO (ITA No.549/Mum/2021) by returning findings as under:-

'8. We have given a thoughtful consideration to the contentions advanced by the Id. Authorized representatives for both the parties in context of the aforesaid issue under consideration. As stated by the Id. A.R, and rightly so, the issue that interest received by a co-operative society on its deposits with co-operative banks would be eligible for deduction u/s 80P(2)(d) of the Act is covered in assessee's favour by orders of the various coordinate benches of the Tribunal in the following cases :

(i). M/s Solitaire CHS Ltd. Vs. Pr.CIT-26, Mumbai, dated 29.11.2019 (ii). Land and Cooperative Housing Society Ltd. Vs. ITO (2017) 46 CCH 52 (Mum.)

7 Jal Ratan Deep Co-op Hsg Society Ltd (ill). M/s C. Green Cooperative Housing and Society Ltd. Vs. ITO-21(3)(2), Mumbai (ITA No. 1343/Mum/2017, dated 31.03.2017. (iv). Marvwanjee Coma Park Cooperative Housing Society Ltd. Vs. ITO-Range 20(2)(2), Mumbai (ITA NO. 6139/Mum/2014, dated 27.09.2017. (v). Kaliandas Udyog Bhavan Pemises Co-op. Society Ltd. Vs. ITO, 21(2)(1), Mumbai. In the aforesaid orders, it has been held by the Tribunal that though the cooperative banks pursuant to the insertion of sub-section (4) to Sec. SOP of the Act would no more be entitled for claim of deduction u/s SOP of the Act, but as a co-operative bank continues to be a co-operative society registered under the Co-operative Societies Act, 1912 (2 of 1912) or under any other law for the time being in force in any State for the registration of co-operative societies, therefore, the interest income derived by a cooperative society from its investments held with a co-operative bank would be entitled for claim of deduction u/s 80P(2)(d) of the Act. We find that the aforesaid issue had exhaustively been looked into by the ITAT, ,,G" bench, Mumbai in the case of M/s Solitaire CHS Ltd, Vs. Pr.CIT- 26, Mumbai dated 29.11.2019, wherein the Tribunal had observed as under:

"6. We have heard the authorised representatives for both the parties, perused the orders of the lower authorities and the material available on record, as well as the judicial pronouncements relied upon by them. Our indulgence in the present appeal has been sought, for adjudicating, as to whether the claim of the assessee for deduction under section 80P(2)(d) in respect of interest income earned from the investments/deposits made with the co-operative banks is in order, or not. In our considered view, the issue involved in the present appeal revolves around the adjudication of the scope and gamut of sub-section (4) of Sec. SOP as had been made available on the statute, vide the Finance Act 2006, with effect from 01.04.2007. On a perusal of the order passed by the Pr. CIT under Sec. 263 of the Act, we find, that he was of the view that pursuant to insertion of sub-section (4) of Sec. SOP, the assessee would no more be entitled for claim of deduction under Sec. 80P(2)(d) in respect of the interest income that was earned on the amounts which were parked as investments/deposits with co- operative banks, other than a Primary Agricultural Credit Society or a Primary Co-operative Agricultural and Rural Development Bank. Observing, that the co- operative banks from where the assessee was in receipt of interest income were not co-operative societies, the Pr. CIT was of the view that the interest income earned on such investments/deposits would not be eligible for deduction under Sec. 80P(2)(d)of the Act.

8 Jal Ratan Deep Co-op Hsg Society Ltd On a perusal of Sec. 80P(2)(d), it can safely be gathered that interest income derived by an assessee co-operative society from its investments held with any other co-operative society shall be deducted in computing its total income. We may herein observe, that what is relevant for claim of deduction under Sec. 80P(2)(d) is that the interest income should have been derived from the investments made by the assessee co-operative society with any other co- operative society. We are in agreement with the view taken by the Pr. CIT, that with the insertion of sub-section (4) of Sec. SOP, vide the Finance Act, 2006, with effect from 01.04.2007, the provisions of Sec. SOP would no more be applicable" in relation to any co-operative bank, other than a primary agricultural credit society or a primary co-operative agricultural and rural development bank. However, at the same time, we are unable to subscribe to his view that the aforesaid amendment would jeopardise the claim of deduction of a co-operative society under Sec. 80P(2)(d) in respect of its interest income on investments/deposits parked with a co-operative bank. In our considered view, as long as it is proved that the interest income is being derived by a co-operative society from its investments made with any other co-operative society, the claim of deduction under the aforesaid statutory provision, viz. Sec. 80P(2)(d) would be duly available. We find that the term ,,cooperative society" had been defined under Sec. 2(19) of the Act, as under:- "(19) "Co-operative society" means a cooperative society registered under the Cooperative Societies Act, 1912 (2 of 1912), or under any other law for the time being in force in any state for the registration of co-operative societies;" We are of the considered view, that though the co-operative banks pursuant to the insertion of subsection (4) to Sec. SOP would no more be entitled for claim of deduction under Sec, SOP of the Act, but as a co-operative bank continues to be a co-operative society registered under the Co-operative Societies Act, 1912 (2 of 1912), or under any other law for the time being in force in any State for the registration of co-operative societies, therefore, the interest income derived by a co-operative society from its investments held with a co-operative would be entitled for claim of deduction under Se~c80P{2j(d) of the Act.

8. We shall now advert to the judicial pronouncements that have been relied upon by the Id. A.R. We find that the issue that a co-operative society would be entitled for claim of deduction under Sec. 80P(2)(d) on the interest income derived from its investments held with a co-operative bank is covered in favour of the assessee in the following cases:

(i) Land and Cooperative Housing Society Ltd. Vs. ITO (2017) 46 CCH 52 (Mum) (ii) M/s C. Green Cooperative Housing and Society Ltd. Vs. ITO-21(3)(2), Mumbai (ITA No. 1343/Mum/2017, dated 31.03.2017 (Hi) Marvwanjee Cama Park Cooperative Housing Society Ltd. Vs. ITO-Range- 20(2)(2), Mumbai (ITA No. 6139/Mum/2014, dated 27.09.2017. (iv). Kaliandas Udyog Bhavan Pemlses Co-op. Society Ltd. Vs. ITO, 21(2)(1), Mumbai. We further find that the Hon'ble High Court of Karnataka in the case of Pr. Commissioner of Income Tax and Anr. Vs. Totagars Cooperative Sale Society (2017) 392 ITR 74 (Karn) and Hon"ble High Court of Gujarat in the case of State Bank Of India Vs CIT (2016) 389 ITR 578 (Guj), had held, that the interest income earned by the assessee on its investments with a co-operative bank would be eligible for claim of deduction under Sec. 8_(W(2)(d) of the Act. Still further, we find that the CBDT Circular No. 14, dated 28.12.2006, also makes it clear beyond any scope of doubt that the purpose behind enactment of sub- section (4) of Sec. 8OP was that the co-operative banks which were functioning at par with other banks would no more be entitled for claim of deduction under 9 Jal Ratan Deep Co-op Hsg Society Ltd section 80P(4)) of the Act. Insofar the reliance placed by the Pr. CIT on the judgment of the Hon’ble Supreme Court in the case of Totgars Co-operative Sale Society Ltd. vs. ITJD (2010) 322 ITR 283 (SC) is concerned, we are of the considered view that the same being distinguishable on facts had wrongly been relied upon by him. The adjudication by the 'Hon"ble Apex Court in the aforesaid case was in context of Sec. 80P(2)(a)(i), and not on the entitlement of a co- operative society towards deduction under Sec. 80P(2)(d) on the interest income on the investments/deposits parked with a co-operative bank. Although, in all fairness, we may herein observe that the Hon'ble High Court of Karnataka in the case of Pr. CIT Vs. Totagars co-operative Sale Society (2017) 395 ITR 611 (Karn), had concluded that a co-operative society would not be entitled to claim of deduction under Sec. 80P(2)(d). At the same time, we find; that the Hon'ble High Court of Karnataka in the case of Pr. Commissioner of Income Tax and Anr. \{s. Totagars Cooperative Sale Society (2017) 392 ITR 74 (Karn) and Honble High Court of Gujarat in the case of State Bank Of India Vs. CIT (2016) 389 ITR 578 (Guj), had observed that the interest income earned by a co- operative society on its investments held with a cooperative bank would be eligible_for claim of deduction under Sec.80P(2)(d) of the Act. We find that as hield by the Hon'ble High Court of Bombay in the case of K. Subramanian and Anr. Vs. Siemens India Ltd. and Anr (1985) 156 ITR 11 (Bom), where there is a conflict between the decisions of non-jurisdictional High Court's, then a view which is in favour of the assessee is to be preferred as against that taken against him. Accordingly, taking support from the aforesaid Judicial pronouncement of the Hon"ble High Court of jurisdiction, we respectfully follow the view taken by the Honrble High Court of Karnataka in the case of Pr. Commissioner of Income Tax and Anr. Vs. Totagars Cooperative Sale Society (201 7)J$92 ITR 74 (Karn) and Hon"ble High Court of Gujarat in the case of State Bank Of India Vs. CIT (2016) 389 ITR 578 (Guj), wherein it was observed that the interest inicome earned by a cooperative society on its investments held with a cooperative bank would be eligible for claim of deduction~~under Sec.80P(2)(d) of the Act.”