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Income Tax Appellate Tribunal, PUNE BENCH “B”, PUNE
Before: SHRI INTURI RAMA RAO & SHRI SONJOY SARMA
IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH “B”, PUNE BEFORE SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER AND SHRI SONJOY SARMA, JUDICIAL MEMBER आयकर अपील सं. / ITA Nos.2254, 2255 & 2277/PUN/2017 िनधा�रण वष� / Assessment Years: 2012-13, 2013-14 & 2014-15 Sahyadri Sahakari Sakhar Vs. ITO, Ward- 1(4), Karkhana Ltd., Kolhapur / C/o S.V. Phadnis C.A., ACIT, Circle-2, 613, E Ward, Phadnis Kolhapur. Chambers, Shahupuri, 1st Lane, Kolhapur. PAN : AAAAS9803L Appellant Respondent Assessee by : None Revenue by Shri M. Jasnani : Date of hearing : 25.03.2022 Date of pronouncement : 29.03.2022 आदेश / ORDER PER INTURI RAMA RAO, AM : These are the appeals filed by the assessee directed against the different orders of ld. Commissioner of Income Tax (Appeals)-1, Kolhapur [(‘CIT(A)’ for short] commonly dated 09.08.2017 for the assessment years 2012-13, 2013-14 and 2014-15 respectively. 2. Since the identical facts and issues are involved in all above three appeals, we proceed to dispose of the same by this common order.
2 ITA Nos.2254, 2255 & 2277/PUN/2017 3. For the sake of convenience and clarity, the facts relevant to the appeal in ITA No.2254/PUN/2017 for the assessment year 2012-13 are stated herein. ITA No.2254/PUN/2017, A.Y. 2012-13 : 4. The assessee raised the following grounds of appeal :- “1) On facts and in circumstances of the case the Learned CIT (A) has erred in law and on merit in upholding the disallowance u/s 80P(2)(d) of Rs. 1,71,51,013/- on account of interest received from Saraswat co-op bank. 2) On facts and in circumstances of the case the Learned A.O. has erred in law and on merit in holding that a Co-op Bank does not fall under the purview of coop society referred to in section 80P(2)(d) of The Act. 3) On facts and in circumstances of the case the Learned A.O. has erred in law and on merit in levying interest under section 234A, 234B & 234C of the Act. 4) The appellant craves for leave to amend, modify or add to any of the above grounds of appeal and / or take any additional ground of appeal, if necessary.” 5. Briefly, the facts of the case are that the appellant is a cooperative society formed for the purpose of setting up of sugar factories. The return of income for the assessment year 2012-13 was filed on 18.12.2012 declaring Rs.Nil income. Against the said return of income, the assessment was completed by the Income Tax Officer, Ward-1 (4), Kolhapur (‘the Assessing Officer’) at total income of Rs.1,71,51,013/-. While doing so, the Assessing Officer denied the claim of exemption u/s 80P of the Income Tax Act, 1961 (‘the Act’) in respect of interest of Rs.1,71,51,013/- derived from
3 ITA Nos.2254, 2255 & 2277/PUN/2017 Saraswat Cooperative Bank Ltd. The brief facts of the said denial of exemption u/s 80P of the Act are as under : The assessee is a cooperative society established for the purpose of setting up a sugar factory. The appellant made a deposit with Saraswat Cooperative Bank Ltd. out of the funds which are not immediately required and earned interest of Rs.1,75,51,013/- after claiming the expenses net income of Rs.1,71,51,013/- was shown, which was claimed as exemption from the tax under the provisions of section 80P(2)(d) of the Act. The said claim was rejected by the Assessing Officer by holding that the cooperative bank itself is not eligible for exemption of its income u/s 80P of the Act. 6. Being aggrieved by the order of assessment, an appeal was preferred before the ld. CIT(A), who vide impugned order confirmed the action of the Assessing Officer. 7. Being aggrieved by the decision of the ld. CIT(A), the appellant is in appeal before us. 8. When the appeal was called on for hearing, none appeared on behalf of the appellant despite due service of notice of hearing. 9. On the other hand, ld. CIT-DR placing reliance on the orders of the lower authorities submitted that the appellant is not entitled for exemption u/s 80P(2)(d) of the Act as the appellant society
4 ITA Nos.2254, 2255 & 2277/PUN/2017 received interest from another cooperative bank and also placed reliance on the decision of the Co-ordinate Bench of this Tribunal in the case of Vikas Sahakari Sakhar Karkhana Ltd. vs. PCIT in ITA No.1911/PUN/2018 for A.Y. 2013-14, order dated 24.09.2020. 10. We heard the rival submissions and perused the material on record. The issue in the present appeal relates to the allowability of deduction under the provisions of section 80P(2)(d) of the Act. On mere reading of the provisions of section 80P(2)(d), it would be clear that income derived by a cooperative society from investments held with other cooperative society shall be exempt from the total income earned from the cooperative society. Therefore, what is relevant for claiming of deduction u/s 80P(2)(d) is that interest income should have been derived from the investment made by the assessee cooperative society with any other cooperative society. In the present case, the reasoning given by the lower authorities for denial of exemption u/s 80P(2)(d) of the Act is that interest was received from cooperative bank not from cooperative society has no legs to stand as a cooperative bank is also a cooperative society as held by the Karnataka High Court in the case of CIT vs. Sri Biluru Gurubasava Pattina Sahakari Sangha Niyamitha Bagalkot, 369 ITR 86 (Karnataka – HC).
5 ITA Nos.2254, 2255 & 2277/PUN/2017 11. As regards to the eligibility of exemption u/s 80P(2)(d), this issue was considered by the Hon’ble Karnataka High Court in the case of CIT vs. Totagars Cooperative Sale Society, 392 ITR 74 (Karn) wherein the Hon’ble High Court referring to the Hon’ble Supreme Court in the case of Totgars Co-operative Sales Society Ltd. (supra) held that the ratio of decision of the Hon’ble Supreme Court in the aforesaid case (supra) held not to be applicable in respect of interest income on investment as same falls under the provisions of section 80P(2)(d) and not u/s 80P(2)(a)(i) of the Act. 12. Even the decision of Pune Bench of the Tribunal in the case of Sant Motiram Maharaj Sahakari Pat Sanstha Ltd. vs. ITO, 120 taxmann.com 10 wherein the Tribunal after making reference to the decisions of the Hon’ble Supreme Court in the case of Totgars Co- operative Sales Society Ltd. (supra) and having noticed the divergent views of the Hon’ble Karnataka High Court in the case of Tumkur Merchants Souharda Credit Co-op. Ltd. vs. ITO, 55 taxmann.com 447 and the Hon’ble Delhi High Court in the case of Mantola Cooperative Thrift Credit Society Ltd. vs. CIT, 50 taxmann.com 278, decision of the Hon’ble Delhi High Court in the case of Mantola Cooperative Thrift Credit Society Ltd. (supra) had not been preferred to the view of the Hon’ble Karnataka High Court
6 ITA Nos.2254, 2255 & 2277/PUN/2017 in the case of Tumkur Merchants Souharda Credit Co-op. Ltd. (supra). The relevant observation of the Pune Bench of the Tribunal in the case (supra) is as under :- “9. The Pune Benches of the Tribunal in Sureshdada Jain Nagari Sahakari Patsanstha Maryadit Vs. The Pr.CIT (ITA No.713/PUN/2016, dated 9-4-2019) 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, dated 19-8-2015) 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 (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. (2010) 322 ITR 283 (SC). There being no direct judgment from the Hon'ble jurisdictional High Court on the point, 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 case of Tumkur Merchants Souharda Credit Cooperative Ltd. (supra). 10. Insofar as the reliance of the ld. DR on the case of Pr. CIT and Another Vs. Totagars Cooperative Sales Society (2017) 395 ITR 611 (Kar.) is concerned, we find that the issue in that case was the eligibility of deduction u/s.80P(2)(d) of the Act on interest earned by the assessee co-operative society on investments made in co-operative banks. In that case, the assessee was engaged in the activity of marketing agricultural produce by its members; accepting deposits from its members and providing credit facility to its members; running stores, rice mills, live stocks, van section, medical shops, lodging, plying and hiring of goods and carriage etc. It was in that background of the facts that the Hon'ble High Court held that the assessee could not claim deduction u/s.80P(2)(d) of the Act. When we consider the impact of this decision, it turns out that the same is not germane to case under consideration in view of the position that the claim of the instant assessee is directly about the eligibility of deduction u/s.80P(2)(a)(i) of the Act and not u/s.80P(2)(d). Moreover, so many decisions relied on by the ld. AR amply go to prove that the view taken by the AO, cannot by any standard, be construed as not a possible view. We, therefore, hold that the ld. Pr. CIT was not justified in exercising the revisional
7 ITA Nos.2254, 2255 & 2277/PUN/2017 power anent to interest income of Rs.22,34,270/- earned on investments made with co-operative banks.” 13. In the light of the above legal position of law, the reasoning adopted by the lower authorities cannot be accepted. However, there can be no dispute on facts that the appellant society had received the interest from another cooperative society and, therefore, the income so derived is exempt under the provisions of section 80P(2)(d) of the Act. Thus, the grounds raised by the assessee are allowed. 14. In the result, the appeal filed by the assessee in ITA No.2254/PUN/2017 for the assessment year 2012-13 stands allowed. ITA No.2255/PUN/2017, A.Y. 2013-14 : ITA No.2277/PUN/2017, A.Y. 2014-15 : 15. Since the facts and issues involved in all the above three appeals are identical, therefore, our decision in ITA No.2254/PUN/2017 for the assessment year 2012-13 shall apply mutatis mutandis to the remaining two appeals of the assessee in ITA No.2255/PUN/2017 for A.Y. 2013-14 and ITA No.2277/PUN/2017 for A.Y. 2014-15. Accordingly, the appeals of
8 ITA Nos.2254, 2255 & 2277/PUN/2017 the assessee in ITA No.2255/PUN/2017 A.Y. 2013-14 and ITA No.2277/PUN/2017 for A.Y. 2014-15 are allowed. 16. Resultantly, all the above three appeals of the assessee are allowed. Order pronounced on this 29th day of March, 2022. Sd/- Sd/- (SONJOY SARMA) (INTURI RAMA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER पुणे / Pune; �दनांक / Dated : 29th March, 2022. Sujeet आदेश क� �ितिलिप अ�ेिषत / Copy of the Order forwarded to : अपीलाथ� / The Appellant. 1. ��यथ� / The Respondent. 2. 3. The CIT(A)-1, Kolhapur. 4. The Pr. CIT-1, Kolhapur. िवभागीय �ितिनिध, आयकर अपीलीय अिधकरण, “B” ब�च, 5. पुणे / DR, ITAT, “B” Bench, Pune. गाड� फ़ाइल / Guard File. 6. आदेशानुसार / BY ORDER, // True Copy // Senior Private Secretary आयकर अपीलीय अिधकरण, पुणे / ITAT, Pune.