Loading judgment…
No AI summary yet for this case.
Detected automatically from the text. The count shows how many other judgments on BharatTax rely on the same authority.
Income Tax Appellate Tribunal, INDORE BENCH, INDORE
Before: SHRI VIJAY PAL RAO & SHRI MANISH BORAD
आदेश/O R D E R
Per Manish Borad, A.M.:
This appeal at the instance of assessee is directed against the appeal-order dated 23.12.2022 passed by learned Commissioner of Income-Tax(A), N.F.A.C.,Delhi [“Ld. CIT(A)”], which in turn arises out of assessment-order dated 11.02.2021 passed by Income-tax Department, N.F.A.C.,Delhi, u/s 143(3) of Income-tax Act, 1961 [“the Act”] for Assessment-Year [“AY”] 2018- 19.
The Registry has informed that there is a delay of 181 days in filing this appeal. The affidavit in support of request for condonation of delay is filed and the contents of the same are as follows :-
Indore Pragtishil Sahakari Sakh Sanstha Mydt, Indore. Vs. I.T.Department, NFAC, Delhi - Assessment year 2018-19 “Nitin S/o Shri Madan Lal Kushwaha aged 41 years resident of Chhoti Bhamori, Indore, state on oath as under :-
That I am a Chairman Director of the Co-operative Society, M/s. Indore Pragatisheel Sahakari Sanstha Maryadit, (Hereinafter called Society).
2. M/s. Indore Pragatisheel Sahakari Sanstha Maryadit is assessed to income tax under the PAN AAAAI3124L. The assessment of the Society was framed against which the appeal was preferred before the Ld. CIT(A). The Income Tax work and the appellate work was look after by M/s. Yogesh Agrawal & Assciates, C. A., Indore.
The appellate order was by the NFAC Delhi on 23.12.2022 and was uploaded on E-mail address of M/s. Yogesh Agarwal & Associates.
4. M/s. Yogesh Agrawal & Associates were discontinued after the submissions before the Ld. CIT(A). They did not inform the Society about the order passed by the Ld. CIT(A).
5. The Society received the notice on 17th August, 2023, from the Income Tax Department about the payment of taxes. After the receipt of notice, the Society learned that the appeal has been dismissed by the Ld. CIT(A).
Now, the Society is filing the Tribunal appeal which is delayed.”
Indore Pragtishil Sahakari Sakh Sanstha Mydt, Indore. Vs. I.T.Department, NFAC, Delhi - Assessment year 2018-19 3. Referring to the above affidavit, the Ld. Counsel for the assessee prayed for condoning the delay. On the other hand, the Ld. Departmental Representative opposed for the condonation of delay. We, however, on perusal of the reasons mentioned in the affidavit find force in the arguments of the Ld. Counsel for the assessee and notice that there was a reasonable cause, which prevented the assessee from filing the appeal during the statutory time limit. We, therefore, condone the delay and admit the appeal for adjudication on merit.
The assessee has filed this appeal on following grounds:
“(1) The Ld. CIT(A) NFAC has erred in upholding the addition of Rs. 10,38,997/- being interest received on fixed deposit on the bank as income from other sources.
(2) It was proved before the Ld. CIT(A) NFAC and the ld. AO that the judgment of Totgars Co-operative Society is not applicable in the instant case. Still the Ld. CIT(A) has erred in upholding the order of the Ld. AO.
(3) The interest on fixed deposit earned by the assessee Society is a business income and not the income from the other sources.
(4) Without prejudice from the above contention, the amount deposite3d in the fixed deposit was out of the borrowed funds/customer’s deposits and the interest paid on the same should have been allowed.
Brief facts of the case are that the assessee is a registered Credit Cooperative Society governed under Madhya Pradesh Cooperative Societies Act. The revised return of income for assessment year 2018-19 filed on 29.10.2018 declaring total income of Rs. 18,920/-. Case selected for limited Indore Pragtishil Sahakari Sakh Sanstha Mydt, Indore. Vs. I.T.Department, NFAC, Delhi - Assessment year 2018-19 scrutiny for the reasons, “deduction from total income under Chapter VIA”.
Statutory notices u/s 143(2) and 142(1) of the Act were issued and duly served upon the assessee. During the course of assessment proceedings, the ld. AO noticed that the assessee had claimed deduction u/s 57 of the Act at Rs. 10,38,991 against the income from interest on FDR of Rs. 10,77,910/- and deduction of Rs. 20,000/- u/s 80P(2(f) of the Act. During the course of assessment proceedings, the assessee stated that the interest income on FDR is part of business income and should not be treated as income from other sources. However, the ld. AO noticed that the assessee has itself declared the interest income on FDR at Rs. 10,77,910/- as income from other sources and has claimed the deduction towards interest paid to members and commission paid to Agents and certain incidental charges.
The ld. AO came to the conclusion that the expenditure claimed by the assessee u/s 57 are part and parcel of the business expenditure, which needs to be set off against the business receipts and the interest income on FDR is liable to be taxed as income from other sources and accordingly completed the assessment by disallowing the claim made u/s 57 and u/s 80P(2)(f) of the Act, thereby assessing the income at Rs. 10,77,819/-.
6. Aggrieved the assessee preferred an appeal before the Ld. CIT(A) and made detailed submission stating that the assessee society also deals with daily deposit account and these deposits normally get matured in one year and in order to maintain the liquidity and solvency, the fund received on account of daily deposit from the members are deposited in the form of fixed deposit. The assessee also made alternate contention before the Ld. Indore Pragtishil Sahakari Sakh Sanstha Mydt, Indore. Vs. I.T.Department, NFAC, Delhi - Assessment year 2018-19 CIT(A) that the assessee is eligible to claim deduction u/s 57 of the Act against the interest on FDRs. However, the Ld. CIT(A) confirmed the view taken by the AO noting that the appellant’s contention that the FDRs kept in Bank and to maintain solvency and liquidity as per Banking Regulations is not supported by any such guidelines. The Ld. CIT(A) also held that the appellant is not banking entity and not governed by the Banking Regulations Act. Aggrieved, the assessee is now in appeal before the Tribunal.
7. The Ld. Counsel for the assessee apart referring to the detailed written submissions filed before us as well as Ld. CIT(A) further stated that the judgement of the Hon'ble Apex Court in the case of Totgar’s Co-operative Sale Society Limited vs. ITO, (2010) 322 ITR 283 (S. C.) is not applicable in the case of assessee. Further placing reliance on the decision of this Tribunal in the case of ACIT vs. M.P. State Coop. Housing Federation Limited, Bhopal, I.T.A.No. 54/Ind/2011 dated 03.11.2011, stated that the fixed deposits were made in order to comply with the statutory provisions to enable the assessee bank to carry on banking business out of reserved funds and, therefore, the FDR interest is Business Receipt eligible for deduction u/s 80P of the Act. Alternate contention also made that expenditure incurred for earning alleged FDR interest needs to be allowed u/s 57 of the Act.
On the other hand, the Ld. Departmental Representative vehemently argued supporting the orders of both the authorities below Indore Pragtishil Sahakari Sakh Sanstha Mydt, Indore. Vs. I.T.Department, NFAC, Delhi - Assessment year 2018-19 9. We have considered the facts, rival submissions and perused the record placed before us. The assessee is a Credit Cooperative Society and during the year under consideration, it has earned interest income of Rs. 10,77,910/- on FDRs. The assessee has shown the interest income on FDR under the head “income from other sources” and against such interest income has claimed incidental expenses including interest paid to depositors at Rs. 5,38,955/-, commissioner paid to Collection Agent at Rs. 4,71,586/- and stationery and printing expenses at Rs. 28,450/-. Both the lower authorities have held that the incidental expenses claimed are in the nature of business expenditure and needs to be allowed against business receipts and have also observed that FDR interest being income from other sources is not eligible for deduction u/s 80-P of the Act.
We, however, on perusal of computation of income filed in the paper book at page no.11 noticed that the alleged FDR interest income has been received by the assessee from deposits made with Indore Premier Cooperative Bank Limited. Though during the course of hearing, the Ld. Counsel for the assessee has not made any specific contention regarding the eligibility of the deduction u/s 80P(2)(d) in respect of any income by way of interest or dividend derived by the Cooperative Society from its investment with any other Cooperative Society. However, since we have come across this fact which are discernible from the paper book filed before us, it remains undisputed fact that the alleged FDR interest income of Rs. 1077,910/- has been received from FD held with Cooperative Bank. Before Indore Pragtishil Sahakari Sakh Sanstha Mydt, Indore. Vs. I.T.Department, NFAC, Delhi - Assessment year 2018-19 moving further, we would like to go through the provisions of Section 80P of the Act, which reads as under :-
“ Deduction in respect of income of co-operative societies 80P. (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) in the case of a co-operative society engaged in— (i) carrying on the business of banking or providing credit facilities to its members, or (ii) a cottage industry, or (iii) the marketing of the agricultural produce of its members, or (iv) the purchase of agricultural implements, seeds, livestock or other articles intended for agriculture for the purpose of supplying them to its members, or (v) the processing, without the aid of power, of the agricultural produce of its members, the whole of the amount of profits and gains of business attributable to any one or more of such activities ; (b) in the case of co-operative society, being a primary society engaged in supplying milk raised by its members to a federal milk co-operative society, the whole of the amount of profits and gains of such business; (c) in the case of a co-operative society engaged in activities other than those specified in clause (a) or clause(b) [either independently of, or in addition to, all or any of the activities so specified], so much of its profits and gains attributable to such activities as does not exceed 1[fifteen thousand rupees]; (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; (e) in respect of any income derived by the co-operative society from the letting of godowns or warehouses for storage, processing or facilitating the marketing of commodities, the whole of such income; (f) in the case of a co-operative society, not being a housing society or an urban consumers' society, or a society carrying on transport business or a society engaged in the performance of any manufacturing operations with the aid of power, where the gross total income does not exceed twenty thousand rupees, the amount of any income by way of interest on securities chargeable under section 18 or any income from house property chargeable under section 22. Explanation.—For the purposes of this section, an urban consumers' co- operative society means a society for the benefit of the consumers within the Indore Pragtishil Sahakari Sakh Sanstha Mydt, Indore. Vs. I.T.Department, NFAC, Delhi - Assessment year 2018-19 limits of a municipal corporation, municipality, municipal committee, notified area committee, town area, or cantonment. (3) In a case where the assessee is entitled also to the deduction under section 80H or section 80J, the deduction under sub-section (1) of this section, in relation to the sums specified in clause (a) or clause (b) or clause (c) of sub-section (2), shall be allowed with reference to the income, if any, as referred to in those clauses included in the gross total income, as reduced by the deductions under section 80H and section 80J. [(4) Nothing contained in this section shall apply to a co-operative society carrying on insurance business in respect of the profits and gains of that business computed in accordance with section 44.]”
From specifically going through the provisions of Section 80P(2)(d) of the Act, we find that the assessee is eligible for deduction u/s 80P(1) in respect of the income derived by way of interest or dividend from its investment with any cooperative bank society. In the instant case, though the interest has been received from Cooperative Bank, but basically it is a Cooperative Society, which has taken a banking license. Recently in Coordinate Bench of Mumbai in the case of Amore Commercial Premises Co- Op. Society Limited vs. Central Processing Centre, I.T.A.Nos. 2873 & 2874/M/2022 dated 17.01.2023 has dealt with the similar issue and after placing reliance on the judgement of Hon'ble High Court of Karnataka in the case of Pr. CIT and Others vs. Totgars Co-operative Society Limited, (2017)
292/ITR 74 (Karnataka) and judgement of Hon'ble Gujarat High Court in the case of State Bank of India vs. CIT, (2016) 389 ITR 578 (Guj) has held that interest income earned by Cooperative Society on its investment held with Cooperative Bank would be eligible for claim of deduction u/s 80P(2)(d). Relevant portion of the decision of the Coordinate Bench, Mumbai in the case of Amore Commercial Premises Co-Op. Society Limited vs. Central Processing Centre, (supra) reads as follows :-
Indore Pragtishil Sahakari Sakh Sanstha Mydt, Indore. Vs. I.T.Department, NFAC, Delhi - Assessment year 2018-19 “7. Issue as to the allowability of the deduction claimed by the Assessee u/s. 80P (2)(d) of the Act, is no longer Res-Integra having being decided by the co-ordinate Bench of the Tribunal in case of Palm Court M Premises Co-operative Society Ltd. in order dated 09.09.2022 by settling the issue in favour of the assessee by distinguishing the judgment rendered by Hon’ble Supreme Court in case of Totgar’s Co-operative Sale Society Ltd. Vs. Income Tax Officer, 188 Taxman 282(SC) and by discussing the decision rendered by Hon’ble Bombay High and Hon’ble Gujarat High Court wherein it is held that interest income earned by the Co-operative Society on its investment made with co-operative bank would be eligible for claim of deduction under section 80P(2)(d) of the Act by returning following findings:
“8. We have given a thoughtful consideration to the contentions advanced by the Id. Authorized representatives for both the parties in context of the aforesaid issue under consideration. As stated by the ld. A.R, and rightly so, the issue that interest received by a co-operative society on its deposits with co-operative banks would be eligible for deduction w/s 80P(2)(d) of the Act is covered in assessee’s favour by orders of the various coordinate benches of the Tribunal in the following cases: (i). M/s Solitaire CHS Ltd. Vs. Pr.CIT-26, Mumbai, dated 29.11.2019 (ii) Land and Cooperative Housing Society Ltd. Vs. ITO (2017) 46 CCH 52 (Mum.) (iii) M/s C. Green Cooperative Housing and Society Ltd. Vs. ITO-21(3)(2), Mumbai (ITA No. 1343/Mum/2017, dated 31.03.2017. (iv) Marvwanjee Cama Park Cooperative Housing Society Ltd. V’s. ITO-Range 20(2)(2), Mumbai (ITA NO. 6139/Mum/2014, dated 27.09.2017. (v)Kaliandas Udyog Bhavan Pemises Co-op. Society Ltd. Vs. ITO, 21(2)(1), Mumbai. In the aforesaid orders, it has been held by the Tribunal that though the cooperative banks pursuant to the insertion of sub-section (4) to Sec. 80P of the Act would no more be entitled for claim of deduction u/s 80P of the Act, but 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 in force in any State for the Indore Pragtishil Sahakari Sakh Sanstha Mydt, Indore. Vs. I.T.Department, NFAC, Delhi - Assessment year 2018-19 registration of co-operative societies, therefore, the interest income derived by a cooperative society from its investments held with a co- operative bank would be entitled for claim of deduction w/s 80P(2)(d) of the Act. We find that the aforesaid issue had exhaustively been looked into by the ITAT, “G” bench, Mumbai in the case of M/s Solitaire CHS Ltd, Vs. Pr.CIT-26, Mumbai dated 29.11.2019, wherein the Tribunal had observed as under: “6. We have heard the authorized representatives for both the parties, perused the orders of the lower authorities and the material available on record, as well as the judicial pronouncements relied upon by them. Our indulgence in the present appeal has been sought, for adjudicating, as to whether the claim of the assessee for deduction under section. 80P(2)(d) in respect of interest income earned from the investments/deposits made with the co-operative banks is in order, or not. In our considered view, the issue involved in the present appeal revolves around the adjudication of the scope and gamut of sub-section (4) of Sec. 80P as had been made available on the statute, vide the Finance Act 2006, with effect from 01.04.2007. On a perusal of the order passed by the Pr.CIT under Sec. 263 of the Act, we find, that he was of the view that pursuant to insertion of sub-section (4) of Sec. 80P, the assessee would no more be entitled for claim of deduction under Sec. 80P(2) (d) in respect of the interest income that was earned on the amounts which were parked as investments/deposits with cooperative banks, other than a Primary Agricultural Credit Society or a Primary Co- operative Agricultural and Rural Development Bank. Observing, that the co-operative banks from where the assessee was in receipt of interest income were not co-operative societies, the Pr. CIT was of the view that the interest income earned on such investments/deposits would not be eligible for deduction under Sec. 80P(2)(d) of the Act.
After necessary deliberations, we are unable to persuade ourselves to be in agreement with the view taken by the Pr. CIT. Before proceeding any further, we may herein reproduce the relevant extract of the aforesaid 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 Indore Pragtishil Sahakari Sakh Sanstha Mydt, Indore. Vs. I.T.Department, NFAC, Delhi - Assessment year 2018-19 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 subsection (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;” On a perusal of Sec. 80P(2)(d), it can safely be gathered that interest income derived by an assessee co-operative society from its investments held with any other cooperative society shall be deducted in computing its total income. 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 co- operative society with any other co-operative society. We are in agreement with the view taken by the Pr. CIT, 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 no more be applicable in relation to any co-operative bank, other than a primary agricultural credit society or a primary co-operative agricultural and rural development bank. However, at the same time, we are unable to subscribe to his view that the aforesaid amendment would jeopardise the claim of deduction of a co-operative society under Sec. 80P(2)(d) in respect of its interest income investments/deposits parked with a co- operative bank. In our considered view, 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 find that the term cooperative society” had been defined under Sec. 2(19) of the Act, as under:- “(19) “Co-operative society” means a cooperative society registered under the Cooperative Indore Pragtishil Sahakari Sakh Sanstha Mydt, Indore. Vs. I.T.Department, NFAC, Delhi - Assessment year 2018-19 Societies Act, 1912 (2 of 1912), or under any other law for the time being in force in any state for the registration of cooperative societies;” We are of the considered view, that though the cooperative banks pursuant to the insertion of subsection (4) to Sec. 80P would no more be entitled for claim of deduction under Sec. 80P of the Act, but 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 in force in any State for the registration of co- operative societies, therefore, the interest income derived by a co- operative society from its investments held with a cooperative bank would be entitled for claim of deduction under Sec.80P(2) (d) of the Act.
8. We shall now advert to the judicial pronouncements that have been relied upon by the Id. A.R. We find that the issue that a co-operative society would be entitled for claim of deduction under Sec. 80P(2)(d) on 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 $2 (Mum) (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 (iii) Marvwanjee Cama Park Cooperative Housing Society Ltd. Vs. ITO- Range-20(2)(2). Mumbai (ITA No. 6139/Mum/2014, dated 27.09.2017. (iv). Kaliandas Udyog Bhavan Pemises Co-op. Society Ltd. Vs. ITO, 21(2)(1), Mumbai. 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 held, that the interest income earned by the assessee on its investments 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, also makes it clear beyond any scope of doubt that the purpose behind enactment of sub-section (4) of Sec. 80P was that the co-operative banks which were functioning at par with other banks would no more be entitled for claim of deduction under Sec. 80P(4) of the Act. Insofar Indore Pragtishil Sahakari Sakh Sanstha Mydt, Indore. Vs. I.T.Department, NFAC, Delhi - Assessment year 2018-19 the reliance placed by the Pr. CIT 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 (SC) is concerned, we are of the considered view that the being distinguishable on facts had wrongly been relied upon by him. 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 cooperative society towards deduction under Sec. 80P(2) (d) on the interest income on the investments/deposits parked with a co-operative bank. Although, in all fairness, we may observe that the Hon’ble High Court of Karnataka in the case of Pr. CIT Vs. Totagars cooperative Sale Society (2017) 395 ITR 611 (Karn), had concluded that a co-operative society would not be entitled to claim of deduction under Sec. 80P(2) (d). At the same time, we 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 observed, that the interest income earned by a co-operative society on its investments held with a cooperative bank would be eligible for claim of deduction under Sec. 80P(2) (d) of the Act. We find that 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), where there is a conflict between the decisions of non-jurisdictional High Court’s, then a view which is in favour of the assessee is to be preferred as against that taken against him. Accordingly, taking support from the aforesaid judicial pronouncement of the Hon’ble High Court of jurisdiction, we 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 was observed that the interest income earned by a cooperative society on its investments held with a cooperative bank would be eligible for claim of deduction under Sec.80P(2)(d) of the Act.
9. Be that as it may, in our considered view, as Indore Pragtishil Sahakari Sakh Sanstha Mydt, Indore. Vs. I.T.Department, NFAC, Delhi - Assessment year 2018-19 the A.O while framing the assessment had taken a possible view, and therein concluded that the assessee would be entitled for claim of deduction under Sec. 80P(2) (d) on the interest income earned on its investments/deposits with cooperative banks, therefore, the Pr. CIT was in error in exercising his revisional jurisdiction u/s 263 for dislodging the same. In fact, as observed by us hereinabove, the aforesaid view taken by the A.O at the time of framing of the assessment was clearly supported by the order of the jurisdictional Tribunal in the case of Land and Cooperative Housing Society Ltd. Vs. ITO (2017) 46 CCH 52 (Mum). Accordingly, finding no justification on the part of the Pr. CIT, who in exercise of his powers under Sec. 263, had dislodged the view that was taken by the A.O as regards the eligibility of the assessee towards claim of deduction under Sec. 80P(2)(d), we “set aside” his order and restore the order passed by the A.O under Sec. 143(3), date 14.09.2016.” As the facts and the issue involved in the present case before us remains the same as were there before the Tribunal in the case of M/s Solitaire CHS Ltd. (supra), wherein the order passed by the Pr. CIT u/s 263 of the Act was quashed, we, thus, respectfully follow the same. Backed by our aforesaid deliberations, we are unable to uphold the view taken by the Pr. CIT that the failure on the part of the A.O to be disallow the assessee’s claim for deduction u/s 80P(2)(d) had rendered the assessment order passed by him u/s 143(3) of the Act, dated 31.08.2017 as erroneous in so far it was prejudicial to the interest of the revenue.
Accordingly, on the basis of our aforesaid observations, we herein not finding favor with the view taken by the Pr. CIT that the order passed by the A.O u/s 143(3), dated 31.08.2017 was erroneous in so far it was prejudicial to the interest of the revenue within the meaning of Sec. 263 of the Act set-aside the same and restore the order passed by the A.O u/s 143(3) of the Act, dated 31.08.2017.”
9. Hon’ble High Court of Karnataka in case of Pr. CIT & Anr.Vs.
Totgar’s Co-operative Sale Society Ltd. (2017) 292 ITR 74 (Kar.) and Hon’ble Gujarat High Court in case of State Bank of India vs. CIT Indore Pragtishil Sahakari Sakh Sanstha Mydt, Indore. Vs. I.T.Department, NFAC, Delhi - Assessment year 2018-19 (2016) 389 ITR 578 (Guj.) had held that interest income earned by a co- operative society on its investment held with cooperative bank would be eligible for claim of deduction under section 80P(2)(d) of the Act.”
10. So following the decision rendered by Hon’ble Karnataka High Court (supra) and Hon’ble Gujarat High Court (supra), we are of the considered view that assessee society who has earned an amount of Rs. 6,96,725/- from its investment of surplus fund with cooperative banks is entitled for deduction under section 80P(2)(d) of the Act. Resultantly, the Ld. CIT(A) has erred in upholding the denial of deduction by the AO to the assessee under section 80P(2)(d) of the Act. 8. In view of but has been discussed above, I am of the consider view that Ld. CIT(A) has erred in upholding the denial of deduction claimed by the Assessee Society u/s. 80P (2)(d) of the Act, hence Assessing Officer is directed to allow the same.”
On examination of facts of the instant case, we find that the above referred decision is squarely applicable and, therefore, respectfully
following the same, we are inclined to hold that the assessee is eligible for deduction u/s 80P(2)(d) of the Act at Rs. 10,77,910/- in respect of FDR interest received from Cooperative Bank. Thus, the finding of the Ld. CIT(A) is set-aside and the impugned addition/disallowance stands deleted. Ground nos. 1, 2 & 3 of the assesse’s appeal stand allowed.
Indore Pragtishil Sahakari Sakh Sanstha Mydt, Indore. Vs. I.T.Department, NFAC, Delhi - Assessment year 2018-19 13. Ground no. 4 is alternative ground, which needs no adjudication, since we have already decided ground nos. 1, 2 & 3 of the appeal. 14. Resultantly, the appeal of the assessee is allowed.
Order pronounced in the open court on 10.01.2024.