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Income Tax Appellate Tribunal, ‘A’ BENCH, CHENNAI
Before: SHRI MAHAVIR SINGHAND SHRI MANOJ KUMAR AGGARWAL
आदेश /O R D E R
PER MAHAVIR SINGH, VP: These two appeals by the Revenue and one appeal by assessee are arising out of the common order of Commissioner of Income Tax (Appeals), Puducherry in 330 & 333/CIT(A)-PDY/2018-19, dated 19.02.2020. The assessments were framed by the ACIT, Circle 1, Cuddalore u/s.143(3) r.w.s.144 of the Income Tax Act, 1961 (hereinafter the ‘Act’) vide orders of even date 29.12.2018 for the assessment years 2011-12 & 2012-13 & u/s.143(3) of the Act, vide order dated 29.12.2019 for the assessment year 2016-17. The assessee has also filed cross objections for the assessment years 2011-12 & 2012-13.
& 02/Chny/2021 2. It is noticed that these appeals of Revenue are time barred by 248 days and Revenue has filed condonation petition. It is stated that the order of CIT(A) is dated 19.02.2020, which was received only
01 & 02/Chny/2021 & C.O Nos.04 & 05/Chny/2022 on 28.02.2020 but the appeal was filed only on 01.01.2021. It means that there is a delay of 247 days. The Revenue has stated that this delay has occurred only due to Covid-19 pandemic restrictions. The Hon’ble Supreme Court in Miscellaneous Application No.665 of 2021 vide order dated 23.03.2020 has given directions that the delay are to be condoned during this period 15.03.2020 to 14.03.2021 and they have condoned the delay up to 28.02.2022 in Miscellaneous Application No.21 of 2022 vide order dated 10.01.2022. In term of the directions of Hon’ble Supreme Court, we condone the delay in filing of these appeals by Revenue and admit the appeals for adjudication.
During the course of hearing before us, the learned AR for the assessee pointed out that the tax effect in these appeals is below Rs.50.00 lakhs. The learned AR for the assessee further submitted that in view of the CBDT Circular No.17/2019, dated 08.08.2019 brought out by the Central Board of Direct Taxes, Department of Revenue, Ministry of Finance, Government of India, the appeals were not maintainable and be dismissed. The Ld. Senior DR also agreed to the facts stated by the Ld.AR for the assessee.
We have heard the rival submissions and perused the material on record. We find from the Form 36 filed by the Revenue
01 & 02/Chny/2021 & C.O Nos.04 & 05/Chny/2022 that for the assessment years 2011-12 & 2012-13, the amount under dispute were Rs.23,55,920/- & Rs.39,97,709/- and the disputed amount of tax were Rs.8,16,388/- & Rs.8,27,882/- respectively. Therefore, in view of the CBDT Circular No. 17/2019 dated 08.08.2019 no appeal should be filed by the Revenue before the Tribunal which has tax effect of Rs. 50.00 lakhs or less and this circular is also applicable retrospectively to all pending appeals. Therefore, the appeals filed by the Revenue are dismissed.
C.O Nos.04 & 05/Chny/2022 5. Since we have dismissed the appeals filed by the Revenue on monetary limits, the cross objections filed by the assessee have become infructuous and hence, dismissed.
ITA 667/Chny/2020 6. We noted that this appeal by assessee is time barred by 73 days. It is noticed that the order of CIT(A) is dated 19.02.2020, which was received by assessee only on 03.03.2020 but the appeal was filed only on 14.07.2020. It means that there is a delay of 73 days but assessee has not filed any condonation petition. The ld.AR stated at bar that this delay has occurred only during Covid-19 pandemic and the Hon’ble Supreme Court in Miscellaneous Application No.665 of 01 & 02/Chny/2021 & C.O Nos.04 & 05/Chny/2022 2021 vide order dated 23.03.2020 has given directions that the delay are to be condoned during this period 15.03.2020 to 14.03.2021 and they have condoned the delay up to 28.02.2022 in Miscellaneous Application No.21 of 2022 vide order dated 10.01.2022. In term of the directions of Hon’ble Supreme Court, we condone the delay in filing of this appeal by assessee and admit the appeal for adjudication.
7. The only issue in this appeal of assessee is as regards to the order of CIT(A) confirming the action of AO in disallowing the claim of exemption u/s.80P(2) of the Act on interest earned from Villupuram District Co-operative Bank. For this, assessee has raised following 8 grounds:- 1. The learned CIT (Appeals) is not justified in upholding the view that the interest earned from Villupuram State Co-operative Bank is not covered by exemption under section 80 (P)(2) of the Act.
The learned CIT (Appeals) is not justified in ignoring the definition of Co- operative Societies within the meaning of section 2 (19) to include a State Co-operative Bank as a Co- operative Society when no judicial dictum is available to assail the said definition.
3. The learned CIT (Appeals) is not justified in isolating State Co-operative Banks in respect of definition of Co- operative Societies when section 2 (19) defining the same has not distinguished Co- operative Societies of various nomenclatures so as to exclude banking operations qua such societies.
4. The learned CIT (Appeals) is not justified in isolating State Co-operative Banks as de-hors the definition under section 2(19) when all entities
01 & 02/Chny/2021 & C.O Nos.04 & 05/Chny/2022 registered under relevant state enactments as co-operative societies need to be treated as Co- operative Societies per-se in accordance with purposive construction of section 80 P read with section 2(19) of the Act.
The learned CIT (Appeals) is ought to have relied upon the judicial aictum rendered in [2017] 392 ITR 74 (Kar) as well as [2020] 421 ITR 670 (Kar).
The learned CIT (Appeals) failed to notice that the restrictions imposed under section 80(P)(4) affects only the receipts or income of the Co- operative Bank per se and not the interest expended by such bank in favour of the appellant herein as a Co- operative Society.
The learned CIT (Appeals) is not justified in approving the linkage effect of mutuality theory of income from Co- operative Societies which is conceptually divorced under the exemption provision of section 80 P o the Act.
8. The learned CIT (Appeals) is not justified in sustaining the addition o Rs.33,12,720/- as not confirming to the provision of sec 80 P of the Act.
Brief facts are that the assessee during the assessment year 2015-16 relevant to the assessment year 2016-17, the assessee co- operative society engaged in public distribution and running of wholesale stores in the district of Villupuram earned interest income from deposits made with Villupuram District Co-operative Bank amounting to Rs.33,12,720/-. The assessee while filing return of income claimed this amount of Rs.33,12,720/- i.e., interest income as deduction u/s.80P(2)(d) of the Act. The AO noted that the assessee has earned interest income from Villupuram District Co-
01 & 02/Chny/2021 & C.O Nos.04 & 05/Chny/2022 operative Bank as per provisions of section 80P(4) of the Act, the deduction can be claimed by a Primary Agricultural Credit Society or Primary Co-operative Agricultural and Rural Agricultural Bank or any Co-operative Societies except any Co-operative Bank. As per explanation to section 80P(4) of the Act, Co-operative Bank and Primary Agricultural Credit Society is defined. According to AO, the Villupuram District Co-operative Bank is a bank in term of above definition as the same is having license from the Reserve Bank of India and is regulated by the Banking Regulation Act, 1949. Therefore, the AO disallowed the claim of deduction of interest income u/s.80P(2)(d) of the Act amounting to Rs.33,12,720/- and made addition to the returned income of the assessee. Aggrieved, assessee preferred appeal before the CIT(A). The CIT(A) also confirmed the action of the AO by observing in para 6.3.1 as under:- 6.3.1 The Hon’ble Karnataka High Court, as seen from the above order had extensively discussed the matter in depth. At para 14 of the order, the Hon’ble Court the held that the exclusion provided in section 80P(4) is enough to deny the claim of exemption u/s 80P(2)(d) of the Act. The Hon’ble Court dealt with decision of the Co-ordinate bench in the case of same assessee wherein it was earlier held that deduction u/s 80P was allowable from on the interest receipt from Co-operative Banks and had arrived at different judgment. It had also referred to a number of judgments of other Hon’ble High Courts. The Court was also of the view that decision of Hon’ble Apex Court in the case of Totgar Co-operative Sale Society Ltd vs ITO (2010) 322 ITR 283 (SC) has binding precedent on the subject. I
01 & 02/Chny/2021 & C.O Nos.04 & 05/Chny/2022 have not seen any subsequent judgment of any other High Court in which contrary view has been taken. I also have not seen decision of Hon’ble Jurisdictional Tribunal favouring appellant on the subject. The case laws relied upon by the A/R are not applicable to the case of the present assessee. The Hon’ble Apex Court, in the case of Commissioner of Customs (Import) vs Dilip Kumar and Sons (Civil Appeal No. 3327 of 2007, decided on 30.07.2018) had held that exemption provisions in tax laws are to be interpreted strictly. Section 80P(2)(d) provides for 100% exemption of interest and dividend receipts from other Co-operative societies. This section also has to be interpreted in the strictest of manners. Following the judgment of Hon’ble Karnataka High Court cited above, it is held that appellant’s receipts from Villupuram Central District Co-operative Bank is not eligible for deduction u/s.80P(2)(d).
Aggrieved now assessee is in appeal before the Tribunal.
Before us, ld. counsel for the assessee could not deny that the assessee has earned interest from Villupuram District Co-operative Bank and Villupuram District Co-operative Bank is not a bank and co-operative society. He admitted that the Villupuram District Co- operative Bank is holding the license from RBI and is governed by Banking Regulation Act, 1949.
We noted that once the assessee has deposited amount with Villupuram District Co-operative Bank, which is a bank regulated by RBI and Banking Regulation Act, 1949, the interest earned from the deposits made with the same cannot be claimed as deduction u/s.80P(2)(d) of the Act, because it does not fulfill the condition as 01 & 02/Chny/2021 & C.O Nos.04 & 05/Chny/2022 prescribed under clause (d), which says that the deduction can be claimed in respect of any income by way of interest or dividend derived by co-operative society from its investment with any other co-operative society and not with the bank or co-operative bank governed by the regulation of RBI and the Banking Regulation Act, 1949. In view of the above, we dismiss the appeal of assessee.
In the result, the appeals filed by the Revenue & Assessee in & 02/Chny/2021 & Assessee in CO Nos.04 & 05/Chny/2022 are dismissed.
Order pronounced in the court on 8th June, 2022 at Chennai.