M/S. RATNATRAY GRAMIN BIGAR SHETI SAH. PAT. SANSTHA MARYADIT,SOLAPUR vs. INCOME-TAX OFFICER, WARD - 2, PANDHARPUR

PER R.S.SYAL, VP : These two appeals by the assessee relate to the assessment years 2012-13 & 2014-15. Since some common issue is raised in these appeals, I am, therefore, proceeding to dispose them off by this consolidated order for the sake of convenience.

ITA No. 559/PUN/2018 – A.Y. 2012-13 :

2 ITA Nos.559 & 560/PUN/2018 M/s. Ratnatray Gramin Bigar Sheti Sah. Pat Sanstha Maryadit

Rs.5,33,321/- received by the assessee from Nationalised

Banks.

Co-operative Society engaged in providing credit facilities to

its members. During the course of assessment proceedings,

the AO observed that the assessee earned interest income of

Rs.4,28,999/- on FDRs placed with IDBI Bank and Axis Bank,

on which deduction was claimed u/s.80P of the Income-tax

Act, 1961 (hereinafter also called `the Act’). The AO

negatived the assessee’s claim of deduction on such interest

income, which action came to be echoed in the first appeal.

material on record. The only issue in this appeal is whether

interest income earned from FDRs with the nationalized banks

is eligible for deduction u/s 80P of the Act? The Pune Bench

of the Tribunal in the case of Shri Laxmi Narayan Nagari

Sahakari Pat Sanstha Maryadit Vs. ITO (ITA

No.604/PN/2014) has allowed deduction u/s 80P of the Act in

similar circumstances vide its order dated 19-08-2015. In that

case, the Pune Bench discussed the contrary views expressed

3 ITA Nos.559 & 560/PUN/2018 M/s. Ratnatray Gramin Bigar Sheti Sah. Pat Sanstha Maryadit

by the Hon’ble Karnataka High Court in Tumkur Merchants

Souharda Credit Cooperative Ltd. Vs. ITO (2015) 230

taxmann 309 (Kar.) allowing the deduction u/s. 80P on interest

income and 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 under similar circumstances. Both

the Hon’ble High Courts have taken into consideration the

ratio laid down in the case of Totgar’s Cooperative Sale

Society Ltd. 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

taken in favour of the assessee by the Hon’ble Karnataka High

Court in the case of Tumkur Merchants Souharda Credit

Cooperative Ltd. (supra). In the absence of their being any

change in the legal position prevailing on this issue after the

passing of the order by the Pune Bench of the Tribunal in Shri

Laxmi Narayan Nagari Sahakari Pat Sanstha Maryadit

(supra) and a host of other orders reiterating the similar view,

respectfully following the precedent, I overturn the impugned

4 ITA Nos.559 & 560/PUN/2018 M/s. Ratnatray Gramin Bigar Sheti Sah. Pat Sanstha Maryadit

order in not allowing deduction u/s.80P on the interest income

and direct to grant deduction on such interest income.

ITA No. 560/PUN/2018 – A.Y. 2014-15 :

of deduction u/s. 80P of the Act in respect of interest

amounting to Rs.5,33,321/- earned from fixed deposit receipts

kept with banks.

circumstances of the instant ground are mutatis mutandis

similar to those of the assessment year 2012-13. Following

the view taken hereinabove, I order to grant deduction u/s.80P

on such interest income.

against making disallowance of Rs.2,70,834/- u/s. 40(a)(ia) of

the Act.

commission to Pigmy agents. On being called upon to explain

as to whether any deduction of tax at source was made, the

assessee furnished a copy of certificate issued by ITO (TDS)

5 ITA Nos.559 & 560/PUN/2018 M/s. Ratnatray Gramin Bigar Sheti Sah. Pat Sanstha Maryadit

permitting non-deduction of tax at source on such commission

payment to the extent of Rs.5,80,000/-. The AO found that

small amounts totalling to Rs.28,405/- were paid as

commission to six persons, which did not attract tax

withholding. Out of the total commission payment by the

assessee to the tune of Rs.8,79,239/-, the AO reduced the

amount covered under TDS certificate at Rs.5,80,000/- and the

amount paid to six commission agents Rs.28,405/-. The

remaining amount of Rs.2,70,834/- was disallowed u/s.

40(a)(ia) of the Act. The assessee did not challenge this issue

before the ld. CIT(A). However, an additional ground has

been raised before the Tribunal urging it to delete the

disallowance which was made by the AO and inadvertently

not challenged before the ld. CIT(A).

relevant material on record, I find that there can be no reason

to stop the assessee from taking a fresh legal plea before the

Tribunal which was inadvertently not taken up before the ld.

CIT(A). Since this matter has not been examined by the ld.

CIT(A) on merits, I am of the considered opinion that it would

6 ITA Nos.559 & 560/PUN/2018 M/s. Ratnatray Gramin Bigar Sheti Sah. Pat Sanstha Maryadit

be in the fitness of things if the ld. CIT(A) is directed to

examine the assessee’s case on this issue. Needless to say, the

assessee will be allowed reasonable opportunity of hearing.

that for the A.Y.2014-15 is partly allowed.

Order pronounced in the Open Court on 11th December, 2018.

Sd/- (R.S.SYAL) उपा�य�/ VICE PRESIDENT उपा�य� उपा�य� उपा�य�

पुणे Pune; �दनांक Dated : 11th December, 2018 सतीश

आदेश क� क� �ितिलिप �ितिलिप अ�ेिषत अ�ेिषत / Copy of the Order is forwarded to : क� क� �ितिलिप �ितिलिप अ�ेिषत अ�ेिषत आदेश आदेश आदेश अपीलाथ� / The Appellant; 1. ��यथ� / The Respondent; 2. आयकर आयु�(अपील) / 3. The CIT (Appeals-7, Pune आयकर आयु� / The Pr. CIT-6, Pune 4. िवभागीय �ितिनिध, आयकर अपीलीय अिधकरण, पुणे “SMC” / 5. DR ‘SMC’, ITAT, Pune; गाड� फाईल / Guard file. 6. // True copy // आदेशानुसार आदेशानुसार आदेशानुसार/ BY ORDER, आदेशानुसार

// True Copy // Senior Private Secretary आयकर अपीलीय अिधकरण ,पुणे / ITAT, Pune

ITA Nos.559 & 560/PUN/2018 M/s. Ratnatray Gramin Bigar Sheti Sah. Pat Sanstha Maryadit

Date 1. Draft dictated on 11-12-18 Sr.PS 2. Draft placed before author 11-12-18 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. *