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Income Tax Appellate Tribunal, MUMBAI BENCH “B”, MUMBAI
Before: SHRI G.S.PANNU & SHRI SANDEEP GOSAIN
ORDER PER G.S.PANNU,A.M:
These two appeals are filed by the Revenue relating to the same assessee for assessment years 2012-13 and 2013-14 and since they involve common issue, they have been clubbed and heard together and a consolidated order is order is being passed for the sake of convenience and brevity.
(Assessment Year 2013-14) (Assessment Year 2012-13)
In both appeals, the substantive grievance of the Revenue is that CIT(A) has erred in allowing the assessee benefit of exemption under section 80P(2)(d) of the Act despite the provisions of section 80P(4) of the Act. Since the facts and circumstances in both appeals are identical, we may take up the appeal in for assessment year 2012-13 as the lead case which is directed against an order passed by CIT(A)-42, Mumbai dated 28/07/2016, which in turn arises out of an order passed by the Assessing Officer under section 143(3) of the Income Tax Act, 1961 (in short ‘the Act’) dated 23/03/2015. The Grounds of appeal raised by the Revenue read as under:-
1)On the facts and circumstances of the case and in law, Ld.CIT(A) was justified in holding that the assessee was eligible for benefit u/s 80P(2)(d) despite the fact that as per the provisions of Section 80P(4) which stipulate that: “The provision of this section shall 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 and the interest income received by the assessee is from Co-operative bank.”
3. Briefly put, the relevant facts are that the respondent assessee is a Co- operative housing society and for the assessment year 2012-13 it filed a return of income declaring ‘nil’ income. The Assessing Officer noted that assessee had earned an income of Rs.61,80,271/- in the form of interest from the investment made in Co-operative Bank, which was claimed as exempt under section 80P(2)(d) of the Act. The Assessing Officer referred to the provisions of section 80P(4) of the Act and denied the exemption claimed under section 80P(2)(d) of the Act. This aspect of the controversy has been decided by the CIT(A) in favour of the assessee and he has, inter-alia, relied upon the (Assessment Year 2013-14) (Assessment Year 2012-13)
judgments of the Hon’ble Gujarat High Court in the case of CIT vs. Jafari Momin Vikas Co-operative Credit Society Ltd. 362 ITR 331(Guj) and that of the Hon’ble Karnataka High Court in the case of CIT vs Shri Bilur Gurubasava Pattin Sahakari Sangh Niyamit, Bagalkot, 369 ITR 86(Kar). As per the CIT(A) Co- operative Banks are only a species of ‘Co-operative societies’ and, therefore, in view of the specific provisions of section 80P(2)(d) of the Act, interest income earned by the assessee from such entities is eligible for exemption and since assessee was not a Co-operative Bank by itself, restriction contained in section 80P(4) of the Act would not apply. Against such a decision, Revenue is in appeal before us.
At the time of hearing the Ld. Departmental Representative reiterated the stand of the Assessing Officer, while written submissions have been furnished on behalf of the respondent assessee. Section 80P(2)(d) of the Act prescribes complete exemption in respect of any income by way of interest or dividends derived by the co-operative society from its investments with any other cooperative society. Furthermore, section 80P(4) of the Act prescribes that the provisions of this section shall 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. The said restriction enshrined in section 80P(4) of the Act has been invoked by the Assessing Officer in the present case. Ostensibly, so far as the assessee is concerned, it is a Co-operative housing society and is not engaged in the business of banking and, therefore, it does not fall within the scope of the restriction placed by section 80P(4) of the Act. The case of the Assessing Officer is that the income paying entity is a Co-operative Bank and, therefore, interest income paid by it to the assessee society is caught by the mischief of section 80P(4) of the Act.
(Assessment Year 2013-14) (Assessment Year 2012-13)
In our considered opinion, the said stand of the Assessing Officer is grossly erroneous, inasmuch as, the restriction contained in section 80P(4) is in relation to the person claiming exemption under section 80P of the Act, which in the present case is not the payee-Co-operative Bank. Therefore, in our view, the CIT(A) correctly held that “though the banks by themselves are not permitted to claim the benefit of deduction u/s.80P of the Act but the other co- operative societies can claim deduction u/s.80P(2)(d) in respect of the interest or dividend, as the case may be received from the co-operative banks.” The said decision of the CIT(A) is hereby affirmed, therefore, Revenue fails in its Grounds of appeal.
At the time of hearing, it was a common point between the parties that so far as appeal for the assessment year 2013-14 is concerned, the issue raised is similar to the Grounds of appeal dealt with by us in the appeal for assessment year 2012-13. As a consequence, our decision in appeal for assessment year 2012-13 shall apply mutatis mutandis in the appeal for assessment year 2013-14 also.
In the result, both the appeals of the Revenue are dismissed, as above.