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Income Tax Appellate Tribunal, “SMC” Bench, Mumbai
Before: Shri Shamim Yahya (AM)
This appeal by the assessee is directed against order of learned CIT-A dated 23.10.2017 and pertains to assessment year 2012-13.
The grounds of appeal
read as under :- On the facts and circumstances of the case and in law the assessing officer has erred in disallowing the Deduction u/s 80P(2)(d) to the Appellant. On appeal to CIT(A), he also rejected the claim of the deduction u/s 80P(2)(d) amounting to Rs. 14,17,4217-.
1. The Appellant prays that the said deduction u/s 80P(2)(d) be allowed.
2. The CIT(A) and the assessing officer is of the view that the above deduction is not available to a Co-operative Society for investments made in Co-operative Banks because the said deduction is withdrawn for co-operative Banks under section 80P(4). They erred in not considering that in spite of section 80P(4), the deduction is still available to a co-operative society.
3. Brief facts of the case are as under :-
Assessee is a flat/industrial gala ownership cooperative society registered under the Maharashtra Cooperative Societies Act 1960 and had derived income by way of interest totaling Rs. 14,17,421/- from Cooperative
2 Ansa AB Industrial Premises Co-operative Society Ltd. Banks during previous year relevant to AY 2012-13 and had claimed deduction of Rs. 14,17,421/- u/s. 80P(2)(d) of the IT Act, 1961 of Rs.14,17,421/-. AO examined the claim u/s. SOP of the IT Act, 1961 and rejected the claim for deduction on the ground that as per the amendment brought about by Finance Act 2006 with effect from 01/04/2007, that is, AY 2007-08, provisions of section 80P shall not apply in relation to any "cooperative bank other than a primary agricultural credit society or a primary cooperative agricultural and rural development bank" and hence disallowed the claim for deduction of Rs.14,17,421/- u/s. 80P(2)(d) of the IT Act, 1961
Upon assessee's appeal learned CIT(appeals) confirmed the assessing officers as order.
Against this order assessee is in appeal before the ITAT. I have heard both the Counsel and perused the records.
It transpires that identical issue has been elaborated considered by this Tribunal in in A.Y. 2014-15 vide order dated 6.3.2019 as under :-
We have deliberated at length on the issue under consideration and are unable to persuade ourselves to be in agreement with the view taken by the lower authorities. Before proceeding further, we may herein reproduce the relevant extract of the said statutory provision, viz. Sec. 80P(2)(d), as the same would have a strong bearing on the adjudication of the issue before us. "80P(2)(d) (1). Where in the case of an assessee being a co-operative society, the gross total income includes any income referred to in sub-section (2), there shall be deducted, in accordance with and subject to the provisions of this section, the sums specified in sub-section (2), in computing the total income of the assessee. (2). The sums referred to in sub-section (1) shall be the following, namely :- (a)............................................................................................ (b)............................................................................................ (c)............................................................................................ (d). in respect of any income by way of interest or dividends derived by the co-operative society from its investments with any other co-operative society, the whole of such income;"
3 Ansa AB Industrial Premises Co-operative Society Ltd. Thus, from a perusal of the aforesaid Sec. 80P(2)(d) it stands gathered that income by way of interest derived by an assessee cooperative society from its investments held with any other cooperative society, shall be deducted in computing the total income of the assessee. 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 cooperative society with any other cooperative society. We though are in agreement with the observations of the lower authorities that with the insertion of Sub-section (4) of Sec. 80P, vide the Finance Act, 2006, with effect from 01.04.2007, the provisions of Sec. 80P would not apply in relation to any co-operative bank other than a primary agricultural credit society or a primary co-operative agricultural and rural development bank, but however, are unable to subscribe to their view that the same shall also jeopardise the claim of deduction of a co-operative society under Sec. 80P(2)(d) in respect of the interest income on their investments parked with a co-operative bank. We have given a thoughtful consideration to the issue before us and are of the considered view that as long as it is proved that the interest income is being derived by a cooperative 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 may herein observe that the term co-operative society had been defined under Sec. 2(19) of the Act, as under:-
"(19) "Co-operative society" means a cooperative 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;"
We are of the considered view, that though the co-operative bank pursuant to the insertion of Sub-section (4) of Sec. 80P would no more be entitled for claim of deduction under Sec. 80P of the Act, but however, 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 enforced in any state for the registration of cooperative societies, therefore, the interest income derived by a co-operative society from its investments held with a co- operative bank, would duly be entitled for claim of deduction under Sec.80P(2)(d) of the Act.
8. We shall now advert to the judicial pronouncements that had been relied upon by the authorized representatives for both the parties and the lower authorities. We find that the issue that a co-operative society would be entitled for claim of deduction under Sec. 80P(2)(d), in respect of the interest income derived from its investments held with a cooperative 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)
4 Ansa AB Industrial Premises Co-operative Society Ltd. (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 2018.
(iii) Marvwanjee Cama Park Cooperative Housing Society Ltd. Vs. ITO-Range- 20(2)(2), Mumbai (ITA No. 6139/Mum/2014, dated 27.09.2017.
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 also held that the interest income earned by the assessee on its investments held with a co- operative bank would be eligible for claim of deduction under Sec. 80P(2)(d) of the Act. Still further, we find that the CBDT Circular No. 14, dated 28.12.2006, as had been relied upon by the ld. A.R, also makes it clear beyond any scope of doubt, that the purpose behind enactment of sub- section (4) of Sec. 80P was to provide that the co-operative banks which are functioning at par with other banks would no more be entitled for claim of deduction under Sec. 80P(4) of the Act. We are of the considered view that the reliance placed by the CIT(A) on the judgment of the Hon’ble Supreme Court in the case of Totgars Co-operative Sale Society Ltd. vs. ITO (2010) 322 ITR 283(S.C) being distinguishable on facts, thus, had wrongly been relied upon by the CIT(A). 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 parked with co- operative bank. We further find that the reliance place by the ld. D.R on the order of the ITAT "F" bench, Mumbai in the case of M/s Vaibhav Cooperative Credit Society Vs. ITO-15(3)(4) (ITA No. 5819/Mum/2014, dated 17.03.2017 is distinguishable on facts. We find that the said order was passed by the Tribunal in context of adjudication of the entitlement of the assessee co-operative bank towards claim of deduction under Sec.80P(2)(a)(i) of the Act. We find that it was in the backdrop of the aforesaid facts that the Tribunal after carrying out a conjoint reading of Sec. 80P(2)(a)(i) r.w. Sec. 80P(4) had adjudicated the issue before them. We are afraid that the reliance placed by the ld. D.R on the aforesaid order of the Tribunal being distinguishable on facts, thus, would be of no assistance for adjudication of the issue before us. Still further, the reliance placed by the Ld. D.R on the order of the ITAT „SMC‟ Bench, Mumbai in the case of Shri Sai Datta Co-operative Credit Society Ltd. Vs. ITO (ITA No. 2379/Mum/2015, dated 15.01.2016, would also not be of any assistance, for the reason that in the said matter the Tribunal had set aside the issue to the file of the assessing officer for fresh examination. That as regards the reliance placed by the ld. D.R on the judgment of the Hon'ble High Court of Karnataka in the case of Pr. CIT Vs. Totagars co-operative Sale Society (2017) 395 ITR 611 (Karn), the High Court had concluded that a co-operative society would not be entitled to claim of deduction under Sec. 80P(2)(d). However, as held 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), that where there is a conflict between decisions of non- jurisdictional High Court’s, then a view which is in favour of the assessee is to be preferred as 5 Ansa AB Industrial Premises Co-operative Society Ltd. against that taken against him. Thus, taking support from the aforesaid judicial pronouncement of the Hon’ble High Court of jurisdiction, we thus respectfully follow the view taken by 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), wherein it has observed that the interest income earned by a co-operative society on its investments held with a co-operative bank would be eligible for claim of deduction under Sec.80P(2)(d) of the Act.
We thus in the backdrop of our aforesaid observations are unable to persuade ourselves to be in agreement with the view taken by the lower authorities that the assessee would not be entitled for claim of deduction under Sec. 80P(2)(d), in respect of the interest income on the investments made with the co-operative bank. We thus set aside the order of the lower authorities and conclude that the interest income of Rs.27,48,553/- earned by the assessee on the investments held with the co-operative bank would be entitled for claim of deduction under Sec. 80P(2)(d).
The appeal of the assessee is allowed in terms of our aforesaid observations."
On the basis of our aforesaid observations, it can safely be concluded that the assessee which is a co-operative credit society was duly entitled to claim deduction u/s 80P(2)(d) on the interest income on its investments held with the co-operative banks.
7. I find that the aforesaid decision is squarely applicable on the facts of the present case. Hence respectfully following the precedent as above I set aside the orders of authorities below and delete the disallowance. Accordingly, the issue raised by the assessee is decided in assessee's favour.
In the result assessee's appeal stands allowed Order has been pronounced in the Court on 1.10.2019.