SHRI SARASWATI SARVAVYAVASAIK NAGARI SAHAKARI PATSANSTHA MARYADIT,SOLAPUR vs. PRINCIPAL COMMISSIONER OF INCOME-TAX -4, PUNE

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ITA 357/PUN/2022Status: DisposedITAT Pune21 December 2022AY 2017-188 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the grant of deduction under Section 80P(2)(a)(i) on interest income is not an exception. It also clarified that Section 80P(4) does not affect the eligibility for deduction under Section 80P(2)(d) on interest income earned from investments/deposits parked with a registered cooperative bank.

What were the facts?

The assessees claimed deduction under Section 80P on interest income, which was allowed by the Assessing Officer. The Principal Commissioner of Income-tax invoked Section 263, holding these assessment orders to be erroneous and prejudicial to the revenue.

What were the issues?

Whether deduction under Section 80P is allowable on interest income earned from other credit cooperative societies or nationalised banks, and whether Section 80P(4) restricts deduction under Section 80P(2)(d) for cooperative societies.

Which sections of the Income-tax Act were involved?

Section 80P,Section 263,Section 80P(2)(a)(i),Section 80P(2)(d),Section 80P(4)

AI-generated summary — verify with the full judgment below

Cases cited in this judgment(5)Show list

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Income Tax Appellate Tribunal, PUNE BENCH “A”, PUNE

Before: SHRI R.S. SYAL & SHRI PARTHA SARATHI CHAUDHURY

For Respondent: Shri Keyur Patel, CIT-DR

agitating the passing of the order by the ld. Principal Commissioner of Income-tax (PCIT) u/s.263 of the Income-tax Act, 1961 holding that the grant of deduction u/s.80P by the Assessing Officer (AO) in respect of interest income earned from other credit cooperative societies or Nationalised banks led to the passing of erroneous

4 Marathwada Krishi Vidyapeeth Karmachari Sahkari Patsanstha Ltd. and others assessment orders prejudicial to the interest of the Revenue.

Because of the commonness of the issue, we are proceeding to dispose of all the appeals by the consolidated order for the sake of convenience.

2.

There is a delay in presenting the appeals of 237 days (ITA No. 102/PUN/2020), 04 days (ITA No. 431 & 432/PUN/2022), 36 days (ITA No.460/PUN/2022), 05 days (ITA No.504/PUN/2022) and 49 days (ITA No.522/PUN/2022). In some of the appeals, the respective assessees have filed affidavits; whilst in others, prima- facie, the delay pertains to the covid-19 pandemic period. We are satisfied with the reasons so stated for the delay by the respective assessees. Hence, the delay in filing the appeals is condoned by virtue of the affidavits and the judgment of the Hon’ble Supreme Court in Cognizance for Extension of Limitation, In re 438 ITR 296 (SC) read with judgment in Cognizance for Extension of Limitation, In re 432 ITR 206 (SC) dated 08-03-2021 and 421 ITR 314.

3.

Further, there is no appearance from the side of the assessees in ITA No.460/PUN/2022, ITA No.492/PUN/2022 and ITA No.522/PUN/2022 despite notice. We are, therefore, proceeding with these appeals ex parte qua the assessee after hearing the ld. DR.

5 Marathwada Krishi Vidyapeeth Karmachari Sahkari Patsanstha Ltd. and others

4.

Succinctly, the facts common in all these cases are that the assesses filed returns claiming deduction u/s.80P in respect of interest income which was allowed by the respective AOs. The ld. PCIT(s) invoked the jurisdiction u/s 263 of the Act and disputed the allowability of the claim of deduction u/s.80P(2)(a)(i) in some cases and under 80P(2)(d) in others, thereby holding the assessment orders to be erroneous and prejudicial to the interest of the Revenue.

Aggrieved thereby, the assessees have approached the Tribunal.

5.

We have heard the rival submissions and gone through the relevant material on record. It is seen that all the cases are based on the ld. PCIT(s)’ understanding that the allowing of the deduction by the AO(s) u/s 80P is contrary to law. Insofar as the allowability of deduction u/s.8P(2)(a)(i) is concerned, we find that the Pune Tribunal in Sureshdada Jain Nagari Sahakari Patsanstha Maryadit Vs. The Pr.CIT (ITA No.713/PUN/2016) has decided the question of availability of deduction u/s 80P on interest income by noticing that the Pune Bench in an earlier case of Shri Laxmi Narayan Nagari Sahakari Pat Sanstha Maryadit Vs. ITO (ITA No.604/PN/2014) has allowed similar deduction. In the said case, the Tribunal discussed the contrary views expressed by the Hon’ble Karnataka High Court in Tumkur Merchants Souharda Credit Cooperative Ltd. Vs. ITO

6 Marathwada Krishi Vidyapeeth Karmachari Sahkari Patsanstha Ltd. and others (2015) 230 Taxman 309 (Kar.) allowing deduction u/s. 80P on interest income and that of the Hon’ble Delhi High Court in Mantola Cooperative Thrift Credit Society Ltd. Vs. CIT (2014) 110 DTR 89 (Delhi) not allowing deduction u/s.80P on interest income earned from banks. Both the Hon’ble High Courts took into consideration the ratio laid down in the case of Totgar’s Cooperative Sale Society Ltd. (supra). No direct judgment from the Hon’ble jurisdictional High Court on the point having been pointed out, the Tribunal in Shri Laxmi Narayan Nagari Sahakari Pat Sanstha Maryadit (supra) preferred to go with the view in favour of the assessee by the Hon’ble Karnataka High Court in the (supra). The position continues to remain the same before this Tribunal also. We thus hold that no exception can be taken to the granting of deduction on interest income by the AO u/s 80P(2)(a)(i) of the Act.

6.

Coming to the other cases involving deduction u/s.80P(2)(d) of the Act, it is crystal clear from the language of the provision that though co-operative banks, other than primary agricultural credit society or a primary co-operative agricultural and rural development bank, are not eligible for deduction pursuant to insertion of section 7 Marathwada Krishi Vidyapeeth Karmachari Sahkari Patsanstha Ltd. and others 80P(4) w.e.f. 1.4.2007, but this provision does not dent the otherwise eligibility u/s 80P(2)(d) of the Act of a co-operative society on interest income on investments/deposits parked with a co-operative bank, which is a registered co-operative society as per section 2(19) of the Act, defining co-operative society to mean a co- operative society registered under the Co-operative Societies Act, 1912 or under any law for the time being in force. The assessees are also Co-operative society registered under the Act and hence qualify for the grant of the deduction. Similar view has been taken by the Pune Tribunal in several cases including The Sesa Goa Employees Coop. Credit Society Ltd. Vs. ACIT (ITA No.203/PUN/2019) vide order dated 16-11-2022).

7.

In view of the foregoing, we hold that the impugned orders questioning the deduction u/s.80P(2)(a)(i)/80P(2)(d) in respect of interest income, cannot be sustained.

8.

In the result, all the appeals are allowed. Order pronounced in the Open Court on 21st December, 2022.

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