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Income Tax Appellate Tribunal, PUNE BENCH “A”, PUNE
Before: SHRI R. K. PANDA & SHRI VINAY BHAMORE
Assessment Year: 2013-14 Armed Forces Ex-Officers Vs. ITO, NFAC, Pune. Multiservices Co-operative Society Ltd., 364, Lokmanya Tilak Sabha Griha, Pune- 411016. PAN : AAAAA1185H Appellant Respondent Assessee by : CA Shweta Joshi Revenue by : Shri Ramnath P. Murkunde Date of hearing : 23.07.2024 Date of pronouncement : 27.09.2024 आदेश / ORDER
PER VINAY BHAMORE, JM:
This appeal filed by the assessee is directed against the order dated 22.02.2024 passed by LD CIT(A)/NFAC for the assessment year 2013-14.
The appellant has raised the following grounds of appeal :- “1) The Learned Assessing Officer erred in disallowing the claim of deduction made under section 80P(2)(d) of INR 1,65,02,105. The Learned Assessing Officer erred in not considering the Co-operative Banks as Co-operative Societies for the purpose of this section. The learned assessing officer erred in not taking cognisance of clarification published by CBDT vide circular no. 133 of 2007 dated
09. May 2007 wherein it was stated that provision of section 80P(4) are not applicable to the co-operative societies which are not co-operative banks. The learned assessing officer erred in not taking cognisance of various case laws cited in the submission including the Pune ITAT dated 07 January 2022 The learned assessing officer while relying on the decision of the Honourable High Court of Karnataka erred in not considering the decisions passed by other Honourable High Courts which were in favour of the Appellant Society. The learned Assessing Officer erred in not considering the precedent set by the Honourable Supreme Court, that when decisions of non-jurisdictional high courts contradict, the decision favourable to the Assessee should be considered. The learned assessing officer erred in applying the logic of the concept of mutuality while disallowing the deduction under section 80P Whereas deduction under section 80P is allowed on the Interest earned from the fixed deposits and savings bank accounts with the other cooperative society even if it is not a member of the other cooperative society. 2) The learned Officer erred in considering the income from house property and income from capital gains amounting to INR 20,17,659/- twice while computing the income as per the assessment order under section 147 rws 144 rws 1448 dated 26 March 2022. Also, Tax credits such as TDS Advance and self- assessment tax paid for the has not been given while computing final tax liability. 3) The appellant craves leave to add, alter, amend, modify and or delete any or all of the grounds of appeal mentioned herein above.”
3. The facts of the case, in brief, are that the assessee is a multi services cooperative society registered under Maharashtra Co-operative Societies Act. The assessee derives income under the head “Income from other sources” mainly from interest income from other cooperative society. The return of income was filed on 21.09.2013 declaring total income of Rs.3,02,59,276/- after claiming deduction of Rs.1,65,02,105/- u/s 80P(2)(d) of the IT Act regarding interest income from other cooperative societies. The case was selected for scrutiny and notice u/s 143(2) was issued and served upon the assessee. The assessment was completed u/s 143(3) of the IT Act on 05.01.2016 accepting the returned income declared by the assessee. Thereafter, a notice u/s 148 was issued on 28.03.2021 and served upon the assessee. The reason for reopening the assessment was that the assessee has claimed deduction u/s 80P2(d) of Rs.1,65,02,105/- on account of interest income earned on its investments with other cooperative banks in the light of judgement of the Hon’ble High Court of Karnataka in the case of PCIT, Hubballi vs. Totagars Co-operative Sale Society, 395 ITR 611 order dated 16.06.2017, wherein, it was held that the interest earned by a cooperative society from surplus, deposits, cash with a cooperative bank was not eligible for deduction u/s 80P(2)(d) of the IT Act. The notice u/s 142(1) was issued along with questionnaire. The Assessing Officer was of the view that the assessee society has to invest funds with cooperative society and not with cooperative banks. Therefore, the Assessing Officer disallowed the deduction of Rs.1,65,02,105/- claimed by the assessee society u/s 80P(2)(d) of the IT Act & vide order dated 26.03.2022 the assessment order was passed u/s 147 r.w.s. 144 r.w.s. 144B of the IT Act determining the taxable at Rs.4,67,61,380/- as against the income of Rs.3,02,59,276/- declared by the assessee in his original return of income.
Being aggrieved with the above assessment order, the assessee preferred first appeal before the ld. CIT(A)/NFAC. After considering the reply of the assessee, the ld. CIT(A)/NFAC confirmed the disallowance of Rs.1,65,02,105/-. However, the ld. CIT(A)/NFAC partly allowed the appeal of the assessee by issuing directions to the Assessing Officer to verify the TDS credit not allowed to the assessee and to rectify the error in computation of income. It is this order against which the assessee is in appeal before this Tribunal.
The ld. AR submitted before us that the order passed by the ld. CIT(A)/NFAC is not correct. As regards to the ground of appeal no.1, it was submitted by ld. AR that the assessee society has deposited amount with other cooperative banks and earned interest of Rs.1,65,02,105/-. This interest income was claimed as deduction u/s 80P(2)(d) of the IT Act. It was submitted that the Assessing Officer committed error in not allowing deduction u/s 80P(2)(d) of the IT Act on the understanding that the cooperative banks are not cooperative societies. It was further submitted that the issue is already settled and decided by the coordinate jurisdictional Benches of this Tribunal in various cases. In this regard, reliance was placed on the following decisions :- (i) Kolhapur District Central Co-op. Bank Kanista Sevakanchi Sahakar Patsanstha Ltd. vs. ITO, A.Y. 2018-19, dated 01.01.2024. (ii) Rena Sahakari Sakhar Karkhana Ltd. vs. PCIT-2, Aurangabad, A.Y. 2013-14, order dated 07.01.2022.
(iii) Hilla Heights Co-operative Vs. ADIT, A.Y. 2020-21, dated 03.04.2023. (iv) Amore Commercial Premises Co-op. Society Ltd. vs. CPC, & 2874/M/2022, A.Y. 2020-21, dated 17.01.2023.
On the basis of all the above decisions, it was requested before the Bench to allow the deduction of Rs.1,65,02,105/- u/s 80P(2)(d) of the IT Act.
The ld. DR supports the orders passed by the subordinate authorities and requested to confirm the same.
We have heard the ld. Counsels from both the sides and perused the material available on record including the case laws furnished by assessee in the paper-book. We find that the ld. CIT(A)/NFAC has confirmed the disallowance made by the Assessing Officer u/s 80P(2)(d) of the IT Act on the basis of judgement of Hon’ble High Court of Karnataka in the case of PCIT, Hubballi vs. Totagars Co-operative Sale Society, 395 ITR 611 order dated 16.06.2017, not being business income of the assessee cooperative society. We find that this issue is squarely covered by various decisions of the Jurisdictional Co-ordinate Benches of this Tribunal, wherein, it has been held that the interest income earned by a co-operative society from any other co-operative society on its investments is eligible for deduction u/s 80P(2)(d) of the IT Act. It is worthwhile to mention here that (4) to section 80P would no more entitle for claim of deduction u/s 80P of the IT Act but as a co-operative bank continues to be a co-operative societies registered under the Co-operative Societies Act in any State, the interest income derived by a co-operative society from its investments held with a co-operative bank would be entitled for claim of deduction u/s 80P(2)(d) of the IT Act. In this regard, we find support from the following decisions passed by the Co-ordinate Benches of this Tribunal :- (i) Kolhapur District Central Co-op. Bank Kanista Sevakanchi Sahakar Patsanstha Ltd. vs. ITO, A.Y. 2018-19, dated 01.01.2024. (ii) Rena Sahakari Sakhar Karkhana Ltd. vs. PCIT-2, Aurangabad, A.Y. 2013-14, order dated 07.01.2022. (iii) Hilla Heights Co-operative Vs. ADIT, ITA No.2850/MUM/2022, A.Y. 2020-21, dated 03.04.2023. (iv) Amore Commercial Premises Co-op. Society Ltd. vs. CPC, ITA Nos.2873 & 2874/M/2022, A.Y. 2020-21, dated 17.01.2023. (v) Dhanshree Multistate Cooperative Society Ltd., ITA No.463/PUN/2024 order dated 13-06-2024. (vi) Karmveer Bhaurao Patil Nagri Sahkari Patsanstha Maryadit, ITA No.1045/PUN/2023 order dated 21-02-2024.
Therefore, respectfully following the above decisions, we find that the interest income earned by the assessee co-operative society on its investments made with other co-operative banks being a co-operative society entitles for deduction u/s 80P(2)(d) of