RAPTAKOS BRETT & COMAPANY,THANE vs. ITO 15(1)(4), MUMBAI

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ITA 5358/MUM/2014Status: DisposedITAT Mumbai04 March 2016AY 2010-114 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the issue was directly covered by the decision of the Pune Bench of the Tribunal in the case of M/s. Bajaj Auto Ltd. Employees Co-op. Credit Society Ltd. (supra), which dealt with identical circumstances concerning exemption under Section 80P(2)(d) for interest earned on fixed deposits with a District Central Co-operative Bank. The Tribunal in that case had allowed the claim, reasoning that while Section 80P(4) withdraws deductions for co-operative banks other than primary agricultural credit societies or primary co-operative agricultural and rural development banks, this withdrawal does not alter the 'status' of a District Central Co-operative Bank as a co-operative society contemplated in Section 80P(1). Therefore, interest received on deposits with such a bank is squarely covered under Section 80P(2)(d). The Tribunal set aside the order of the CIT(Appeals) and directed the Assessing Officer to allow the exemption of Rs. 3,55,732/- to the assessee.

What were the facts?

The assessee, Raptakos Brett & Co. Employees Co-op Credit Soc. Ltd., filed an appeal against the order of CIT(A)-26, Mumbai, for Assessment Year 2010-11. The Assessing Officer had passed an order under section 143(3) on 14/02/2013. The assessee is a Co-operative Society engaged in providing credit facilities to its members. The dispute concerns the denial of exemption under section 80P(2)(d) of the Income Tax Act, 1961, on interest income of Rs. 3,55,732/- earned on fixed deposits with the Mumbai District Central Co-operative Bank. The lower authorities denied this exemption, holding that the interest income was not earned from a co-operative society.

What were the issues?

1. Whether the interest income earned by the assessee, a co-operative society, on fixed deposits with the Mumbai District Central Co-operative Bank is eligible for exemption under Section 80P(2)(d) of the Income Tax Act, 1961, as income derived from investments with another co-operative society. Assessee's contention: The assessee argued that the Mumbai District Central Co-operative Bank is a co-operative society engaged in the business of banking, and therefore, interest earned from it is eligible for exemption under Section 80P(2)(d). Reliance was placed on the decision of the Pune Bench of the Tribunal in M/s. Bajaj Auto Ltd. Employees Co-op. Credit Society Ltd. (ITA No. 1047/PN/2012). Revenue's contention: The Revenue reiterated the stand of the lower authorities, arguing that for exemption under Section 80P(2)(d), the interest income must be earned from a Credit Society.

Which sections of the Income-tax Act were involved?

Section 80P(2)(d),Section 80P(1),Section 80P(4),Section 143(3)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, MUMBAI BENCH “SMC”, MUMBAI

For Appellant: Ms. Krupa Toprani
For Respondent: Shri Vishwas Jadhav
Hearing: 17/12/2015Pronounced: 04/03/2016

The captioned appeal is preferred by the assessee and is directed against the impugned order dated 12/06/2014 of CIT(A)-26, Mumbai, pertaining to the assessment year 2010-11, which in turn has arisen from an order passed by the Assessing Officer dated 14/02/2013 under section 143(3) of the Income Tax Act, 1961( in short “the Act”).

2.

In this appeal the only grievance of the assessee is against the action of the lower authorities in denying exemption under (Assessment Year : 2010-11) section80P(2)(d) of the Act in respect of interest income of Rs.3,555,732/- earned on fixed deposits with other co-operative bank.

3.

In brief, the relevant facts are that the appellant is a Co-operative Society registered with Registrar of Co-operative Societies under Maharashtra Co-operative Society Act, 1960 and is, inter-alia, engaged in the activity of providing credit facilities to its members. The dispute before me relates to interest income earned on fixed deposits to the tune of Rs.3,55,732/-, which has been held not eligible for exemption under section 80P of the Act. The only plea of the assessee before me is that such interest has been earned from the investment made with Mumbai District Central Co-operative Bank and, therefore, it is eligible for exemption under section 80P(2)(d) of the Act.

4.

The said claim of the appellant has been denied by the CIT(Appeals) on the ground that the provisions of section 80P(2)(d) of the Act are not applicable because such interest income is not earned from a Co-operative Society.

5.

The Ld. Representative for the assessee pointed out that the CIT(Appeals) has erred in denying the exemption in as much as the Mumbai District Central Co-operative Bank was a Co-operative Society, which was otherwise engaged in the business of banking. In this context, reliance has been placed on the decision of the Pune Bench of the Tribunal in the case of M/s. Bajaj Auto Ltd. Employees Co-op. Credit Society Ltd., in dated 26/08/2013.

(Assessment Year : 2010-11) 6. The Ld. Departmental Representative on the other hand, reiterated the stand of the Revenue authorities by pointing out that interest income has to be earned from Credit Society for the purposes of claiming exemption under section 80P(2)(d) of the Act.

7.

Having considered the rival stands, I find that the issue is directly covered by the decision of the Pune Bench of the Tribunal in the case of M/s. Bajaj Auto Ltd. Employees Co-op. Credit Society Ltd. (supra), wherein also the issue related to exemption under section 80P(2)(d) of the Act in respect to interest earned from fixed deposits with a District Central Co-operative Bank. The Tribunal allowed the claim of the assessee by making the following discussion:- 4. We have heard the Ld. DR. None was present for the assessee. We have also perused the order of the authorities below. In our opinion so far as the amount of interest received on the deposit with Aurangabad District Central Co-operative Bank is concerned the Assessing Officer has not properly appreciated the provisions of law. Sec. 80P(2)(d) reads as under: 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 subsection (2), in computing the total income of the assessee. 80P(2): The sums referred to in sub-section (1) shall be the following, namely: (a) .......... (b) ………. (c) ………. 2(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; 5. Sub-sec. (4) of Sec. 80P has withdrawn the deduction to the cooperative bank other than primary agricultural credit society or a primary co-operative agricultural and rural development bank w.e.f. the A.Y. 2007-08. The said provision is applicable to the Aurangabad District Central Co-operative Bank (ADCCB) in which the assessee society has kept deposit. The withdrawal of deduction by insertion of Sub-section (4) of Sec. 80P does not change “status” of Aurangabad District Central Co-operative Bank “as a co-operative society which is contemplated in Sec. 80P(1) of the Act. We, therefore, hold

(Assessment Year : 2010-11) that the interest received on the deposit with the Aurangabad District Central Cooperative Bank by the assessee on the deposits are squarely covered u/s. 80P(1)(d) and the interest received on deposit kept with the Aurangabad District Central Co-operative Bank is an allowable deduction. So far as the finding of the Ld. CIT(A) that the provisions of Sec. 80P(2)(a)(i), in our opinion the decision of the Hon'ble Supreme Court in the case of 4 Bajaj Auto Ltd,. Aurangabad Totagars Cooperative Vs. ITO (supra) is against the assessee as interest received on deposits with Aurangabad District Central Co-operative Bank cannot be said to be the income derived from providing credit facilities to its members. We, accordingly, answer the ground taken by the revenue. But, finally we have confirmed order of Ld. CIT(A) giving relief to the assessee under section. 80P(2)(d).

Following the aforesaid decision, which has been rendered in identical circumstances, I set-aside the order of the CIT(Appeals) and direct the Assessing Officer to allow the claim of the assessee in respect of exemption under section 80P(2)(d) of the Act of Rs.3,55,732/-. 8. In the result, the appeal of the assessee is allowed.

Order pronounced in the open court on 04/03/2016.

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