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Facts
A batch of four appeals was filed concerning two assessees: Shivkrupa Sahakari Patpedhi Limited and Shivkrupa Nagari Sahakari Pat Limited. The core issue in all these cases was the allowability of the assessees' claim for deduction under Section 80P of the Income Tax Act.
Held
The Tribunal held that the allowability of Section 80P deduction depends on the assessee's registration under cooperative law, as established by the Supreme Court in Mavilayi Service Co-operative Bank Ltd. vs. CIT. It was also noted that the issue of whether interest income from cooperative banks is eligible for Section 80P deduction is debatable, and the Assessing Officer's assessment could not be termed erroneous.
Key Issues
The primary issue was the allowability of Section 80P deduction for cooperative banks/societies and whether interest income from cooperative banks is eligible for this deduction.
Sections Cited
80P, 143(3), 263, 270A
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Income Tax Appellate Tribunal, MUMBAI “G” BENCH : MUMBAI
Before: SHRI SATBEER SINGH GODARA & SHRI OMKARESHWAR CHIDARA
Sl.No. ITA.No. A.Y. Name of Appellant Name of NFAC, Delhi’s DIN Proceedings Respondent & Order in u/sec. No.ITBA/NFAC /S/250/2023-24 Shivkrupa 143(3) 1056682593(1) r.w.s.263 of Sahakari Patpedhi The Income Tax 1. 4297/MUM./2023 2014-15 the Income dated 30.09.2023 Limited, Kai, Tax Act, Officer, Ward- 1961. Namdevrao Patane 41(2)(5), Room National Faceless Smruti Bhavan, Assessment Centre, No.629, Kautilya 2. 4242/MUM./2023 2017-18 Delhi’s DIN 270A of the Gomsawadi, Bhavan, Bandra- ITBA/PNL/F/270A/ Income Tax Station Road, 2021-22/ Act, 1961. Kurla Complex, 1035916529(1) Vikroli (East), Bandra East, dated 27.09.2021 Mumbai – 400 Mumbai.
PIN – 400 051. 3. 4245/MUM./2023 2017-18 1056686657(1) 143(3) of Maharashtra. Maharashtra. the I.T. Act, dated 30.09.2023 1961. PAN AAAAS3870K Shivkrupa Nagari Sahakari Pat Ltd., Shop No.8, Om PCIT, Shriji Cooperative Thane-1, ITBA/COM/F/17/2 263 of I.T. Hsg. Society, Ashar IT Park, 023- Act, 1961 4. 2407/MUM./2024 2018-19 Shinde Ali, Shivaji Wagale Estate, Chowk, Kulgaon, Thane West, 24/1062386508 Badlapur, Mumbai. dated 11.03.2024 Maharashtra. PIN 400 601 PIN 421 503 Maharashtra. PAN AAGTS3112D
For Revenue : Shri Dr. Kishor Dhule, CIT-DR For Assessees : Ms. Kimaya Kudva (Sl.No.1 to 3) Shri Shekhar Patwardhan (Sl.No.4)
Date of Hearing : 24.07.2024 Date of Pronouncement : 26.07.2024 2 ITA.Nos.4297, 4242 & 4245/Mum./2023 And ITA.No.2407/MUM./2024 ORDER PER SATBEER SINGH GODARA, J.M.
The instant batch of four appeals pertains to twin assessees viz., Shivkrupa Sahakari Patpedhi Limited and Shivkrupa Nagari Sahakari Pat Limited. All other relevant details stands duly tabulated hereinabove.
It emerges during the course of hearing that the sole identical substantive issue in these cases is that of allowability of these twin assessees’ claim(s) of sec.80P deduction in their respective cases.
We note in this factual backdrop that there are three appeals pertaining to the former assessee namely Shivkrupa Sahakari Patpedhi Limited filed by the Revenue i.e., ITA.Nos.4297/MUM./2023 [A.Y.2014-2015] in sec.143(3) r.w.s.263; ITA.No. 4242 & 4245/MUM./2023 [for latter A.Y. 2017-2018] involving sec.270A penalty proceedings 143(3) assessment and the latter assessee Shivkrupa Nagari Sahakari Pat Limited’s appeal
3 ITA.Nos.4297, 4242 & 4245/Mum./2023 And ITA.No.2407/MUM./2024 ITA.No.2407/MUM./2024; involving sec.263 revision proceedings by Pr. CIT, Thane-1, Thane, respectively.
It emerges during the course of hearing that the Revenue’s appeal ITA.No.4297/MUM./2023 in former assessee’s case pleads that the CIT(A)-NFAC’s lower appellate findings have erred in law and on facts in reversing Assessing Officer’s assessment disallowing sec.80P deduction claim involving interest income on cooperative bank(s) deposits etc., amounting to Rs.24,75,98,759/- and other income of Rs.13,78,137/-; respectively. We find that the Assessing Officer had framed his impugned assessment in pursuance to the PCIT’s sec.263 revision directions terming the said former round of assessment as an erroneous one causing prejudice to the interest of Revenue for the reason that he had not disallowed the assessee’s above stated sec.80P claim. And that this tribunal in assessee’s appeal ITA.No.1692/MUM./ 2019 decided on 12.07.2021 has already reversed the said revision directions as discussed in para-4 of the CIT(A)- NFAC’s detailed discussion. That being the case, we are of 4 ITA.Nos.4297, 4242 & 4245/Mum./2023 And ITA.No.2407/MUM./2024 the considered opinion that once the impugned assessment herein framed as per the PCIT’s sec.263 revision directions itself stands annulled; this consequential assessment framed by the Assessing Officer forming subject matter of Revenue’s appeal herein has no legs to stand going by ‘sublato fundamento cadit opus’ i.e., when the foundation itself does not exist, the superstructure raised thereupon also follows the suit. We thus decline the Revenue’s instant first and foremost appeal in former assessee’s case ITA.No.4297/MUM./2023 in very terms.
The Revenue’s twin appeals ITA.Nos.4245 & 4242/MUM./2023 in former assessee’s case in assessment year 2017-2018 involving sec.143(3) assessment and sec.270A proceedings.
Suffice to say, the Revenue’s above quantum appeal seeks to disallow the assessee’s sec.80P deduction claim of Rs.37,78,74,035/- thereby treating it as a cooperative bank than a cooperative society so as to be eligible for the impugned deduction. It’s vehement argument
5 ITA.Nos.4297, 4242 & 4245/Mum./2023 And ITA.No.2407/MUM./2024 during the course of hearing before us is that this assessee deserves to be treated as a cooperative bank only since carrying out regular banking business and therefore, the CIT(A)-NFAC has erred in law and on facts in treating it as a cooperative society for the purpose of allowability of sec.80P deduction. We find no merit in the Revenue’s instant sole substantive ground for the precise reason once the assessee is admittedly a cooperative society registered under such cooperative law which has been held to be a decisive factor in Mavilayi Service Co-operative Bank Ltd., vs., CIT [2021] 431 ITR 1 (SC). Their lordships’ have settled the law that it is the assessee’s corresponding registration under the cooperative law which only deserves to be considered in sec.80P deduction issue. We thus reject the Revenue’s instant quantum appeal ITA.No.4245/MUM./2023 for latter assessment year 2017-2018 in very terms.
The Revenue’s penalty appeal ITA.No.4242/ MUM/2023 also follows the suit being consequential in nature.
6 ITA.Nos.4297, 4242 & 4245/Mum./2023 And ITA.No.2407/MUM./2024 8. Lastly comes the latter assessee M/s. Shivkrupa Nagari Sahakari Pat Limited’s appeal ITA.No.2407/MUM./ 2024 for assessment year 2018-2019 which is directed against the learned PCIT’s sec.263 revision directions holding the Assessing Officer’s corresponding assessment dated 20.05.2021 as an erroneous one causing prejudice to interest of Revenue. We observe at the cost of repetition that the former assessee hereinabove has already succeeded in such an instance wherein the learned CIT(A)-NFAC/PCIT’s as the case may be; had sought to disallow the corresponding interest income derived from deposits in cooperative bank(s) as not eligible for sec.80P deduction in assessment year 2014-2015 (supra).
Faced with this situation, learned CIT-DR vehemently contended that case law Totagars Co-operative Sales Society Ltd. vs. ITO, 188 taxmann.com 282 (SC) and Katlary Kariyana Merchant Sahkari Sarafi Mandali Ltd., vs. ACIT [2022] 140 taxman 602 (Guj.) (HC) against the assessee. We note that The Vaveru Co-operative Rural Bank Ltd., vs. CCIT [2017] 396 ITR 371 (AP) has treated the 7 ITA.Nos.4297, 4242 & 4245/Mum./2023 And ITA.No.2407/MUM./2024 interest income from nationalized banks as well as eligible for sec.80P deduction. All these divergent judicial opinions from various hon’ble non-jurisdictional high courts and absence of the issue being decided in hon’ble jurisdictional high court; make it clear that the instant issue of interest income from cooperative banks as eligible for sec.80P deduction is indeed a debatable one and therefore, the Assessing Officer’s regular assessment dated 20.05.2021 herein could not be termed as an erroneous one causing prejudice to the interest of Revenue in light of Malabar Industrial Co. Ltd. vs. CIT [2000] 243 ITR 83 (SC). We thus accept the latter assessee’s instant appeal ITA.No.2407/MUM./2024 in very terms. Ordered accordingly.
To sum-up, the Revenue’s three appeals ITA.Nos.4297, 4242 & 4245/Mum./2023 in case of the former assessee [Shivkrupa Sahakari Patpedhi Limited] are dismissed and the latter assessee’s appeal ITA.No.2407/MUM./2024 [Shivkrupa Nagari Sahakari Pat
8 ITA.Nos.4297, 4242 & 4245/Mum./2023 And ITA.No.2407/MUM./2024 Ltd.] is allowed in above terms. A copy of this common order be placed in the respective case files.
Order pronounced in the open Court on 26.07.2024