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Income Tax Appellate Tribunal, PUNE BENCH “B”, PUNE
Before: SHRI S.S. GODARA & DR. DIPAK P. RIPOTE
Assessee by Shri Abhay Avachat Revenue by Shri Rajarshi Dwivedy Date of hearing 04-07-2022 Date of pronouncement 14-07-2022 आदेश / ORDER
PER S.S. GODARA, JM :
This assessee‟s appeal for AY 2014-15 arises against the Pr.CIT-1, Nashik‟s order dated 11-06-2018 involving proceedings under Section 263 of the Income Tax Act, 1961, in short „the Act‟.
Heard both the parties. Case file perused. 2. It emerges at the outset that the learned PCIT‟s impugned revision directions hold the Assessing Officer‟s corresponding section 143(3) regular assessment dated 14.06.2016 as an Anand Nagari Sah Patsanshta Maryadit erroneous one causing prejudice to the interest of the Revenue so far as the latter had accepted section 80P(2) deduction claim of Rs.17,89,671/- representing interest income derived from deposits kept with M/s. Yes Bank, Bank of Baroda and UCO Bank to the tune of Rs.1,27,960/-, Rs.11,76,964/- and Rs.4,84,747/-; respectively. The PCIT‟s revision directions to this effect read as under:- “04. Decision: I have carefully gone through the submission of the assessee. As clearly brought out in notice u/s 263 reproduced in para 2 (supra), it is undeniable fact that enquiries prima facie- warranted on the facts and circumstances of the case pertaining to the deduction u/s 80P(2) amounting to Rs.17/89,671/- claimed on, interest income earned from the Nationalized Bank were not canted out by the AO. The assessee society 's say that AO has passed the order after due verification and application of mind/ is not acceptable, as the AO has not at all discussed this issue in the assessment order and merely allowed the deduction claimed u/s 80P(2) by the assessee. Thus, it is clear that this is a case of lack of enquiry on the part of the AO with regard to claim of deduction u/s 80P(2) made by the assessee.
It is trite law that in order that the Commissioner may consider an order to be "erroneous" for the purposes of section 263, the error of law may not be apparent on the face of the order. The Commissioner may consider an order of the Assessing Officer to be erroneous not only if it contains some apparent error of reasoning or of law or of fact .on .the face of it but a'so because it is a. stereo-typed order which simply accepts what the assessee has stated in his return and fails to make enquiries which are called for in the circumstances of the case[for illustrations on the point, see Rampyari Devi Saraogi v. CIT, (1968) 67 ITR 849(SC) and Tara Devi Aggarwal v. CIT (1973) 88 ITR 323(SC)].
Anand Nagari Sah Patsanshta Maryadit It is not necessary for the Commissioner to make further enquiries before cancelling the assessment orders of the Assessing Officer. The Commissioner can regard the order an erroneous on the ground that in the circumstances of the case the Assessing Officer should have made further inquiries before accepting the statements made by the assessee in his return.
In view of the above, I am of the considered opinion that the assessment order dated 14/06/2016 passed u/s 143(3) of the Assessing Officer is erroneous in so far as it is prejudicial to the interest of revenue because the assessment is made without conducting enquiry prima facie warranted in respect of above-issue. Therefore, the Assessing Officer is directed to frame the assessment de novo after giving opportunity to the assessee of being heard.”
Both the learned representatives reiterate their respective stands against and in support of the PCIT‟s revision directions. The Revenue more particularly argued that such an interest income (as in the assessee‟s case) derived from parking of surplus funds with nationalized or public sector banks is not eligible for section 80P(2) deduction. It placed strong reliance on State Bank of India vs. CIT 389 ITR 578 (Guj), in support. We find the instant issue to be any more res integra as learned co-ordinate bench‟s order in dated 27.12.2021 in Nashik Road Nagari Sahkari Patsanstha Limited vs. ITO has declined Revenue‟s identical arguments as follows: “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
Anand Nagari Sah Patsanshta Maryadit 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 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.”
Anand Nagari Sah Patsanshta Maryadit
We accordingly hold that the learned PCIT has erred in law and on facts in exercising his section 263 revision jurisdiction in the given facts and circumstances of this case. His order under challenge is reversed accordingly as not sustainable in law.
5. This assessee‟s appeal is allowed in above terms.
Order pronounced in the Open Court on 14th July, 2022.
Sd/- Sd/- (DIPAK P. RIPOTE) (S.S. GODARA) ACCOUNTANT MEMBER JUDICIAL MEMBER पुणे Pune; ददिधांक Dated : 14th July, 2022 GCVSR आदेश की प्रतिलिपि अग्रेपिि/Copy of the Order is forwarded to: अपीऱधर्थी / The Appellant; 1. प्रत्यर्थी / The Respondent; 2. विभागीय प्रविविवि, आयकर अपीलीय अविकरण, पुणे “B” / 3. DR „B‟, ITAT, Pune 4. गार्ड फाईल / Guard file आदेशानुसार/ BY ORDER, // True Copy // Senior Private Secretary आयकर अपीलीय अविकरण ,पुणे / ITAT, Pune
Anand Nagari Sah Patsanshta Maryadit
Date 1. Draft dictated on 05-07-2022 Sr.PS 2. Draft placed before author 06-07-2022 Sr.PS 3. Draft proposed & placed before the JM second member 4. Draft discussed/approved by Second JM Member. 5. Approved Draft comes to the Sr.PS/PS Sr.PS 6. Kept for pronouncement on Sr.PS 7. Date of uploading order Sr.PS 8. File sent to the Bench Clerk Sr.PS 9. Date on which file goes to the Head Clerk 10. Date on which file goes to the A.R. 11. Date of dispatch of Order.