INCOME TAX OFFICER-41(2)(5), MUMBAI, BKC vs. SHIVKRUPA SAHAKARI PATPEDHI LIMITED, MUMBAI

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

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

The Revenue’s penalty appeal ITA.No.4242/ MUM/2023 also follows the suit being consequential in nature.

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