SHRI SHRIDHARSWAMY CREDIT SOUHARDA SAHAKARI NIYAMIT,BELAGAVI vs. ITO, WARD - 2(1), BELGAVI

The above appeals filed by the Assessee are directed against the separate orders of Ld. CIT(A), Belagavi dated 16.11.2017, 16.11.2017 and 10.01.2018, respectively for Assessment years 2012-13 to 2014-15.

The appeals have been filed late by the assessee for which applications have been filed for condonation of delay. In view of the decision of the Hon'ble’ble Supreme Court in the case Collector Land Acquisition, Anantnag & Anr. vs Mst. Katiji & Ors, dated 19 February, 1987, reported in 1987 AIR 1353, we condone the delay in filing the appeals.

The learned representatives of both the sides agreed to the fact that the facts and circumstances of all three appeals pertaining to the sole issue of claim of deduction u/s 80P(2)(d) of the Income-tax Act, 1961 (for short, ‘the Act’) are quite similar and same. Therefore, the ld. AR as well as learned Sr. DR appearing have agreed to take up 2012-13 as lead case. The learned AR, placing copy of order of the ITAT, Panaji Bench – Virtual Court dated 12.11.2021 in for assessment year 2013-14 in the case of Mahishwadagi Grama Seva Sahakari Sangh Ltd. vs. ITO, submitted that the issue is squarely covered in favour of the assessee and, therefore, the matter may be restored to the file of the Assessing Officer with a direction to allow deduction u/s 80P(2)(d) of the Act after satisfying himself that the interest income is earned on investment from the co-operative societies.

Replying to the above, the learned Sr. DR vehemently supported the assessment as well as the first appellate order. However, he could not controvert that in the similar set of facts and circumstances, ITAT, Panaji Bench in the case of Mahishwadagi Grama Seva Sahakari Sangh Ltd. (supra) has restored the issue to the file of the Assessing Officer with a direction to allow deduction u/s 80P(2)(d) of the Act of the interest income earned on investment from the co-operative societies.

On careful consideration of the above submissions, we observe that the ITAT, Panaji Bench has restored the issue to the file of the Assessing Officer with the following observations and findings:-

Insofar as the reliance of the ld. DR on the case of Pr. CIT and Another Vs. Totagars Cooperative Sales Society (2017) 395 ITR 611 (Kar.) is concerned, we find that the issue in that case was the eligibility of deduction u/s.80P(2)(d) of the Act on interest earned by the assessee co-operative society on investments made in co-operative banks. In that case, the assessee was engaged in the activity of marketing agricultural produce by its members; accepting deposits from its members and providing credit facility to its members; running stores, rice mills, live stocks, van section, medical shops, lodging, plying and hiring of goods and carriage etc. It was in that background of the facts that the Hon'ble High Court held that the assessee could not claim deduction u/s.80P(2)(d) of the Act. When we consider the impact of this decision, it turns out that the same is not germane to case under consideration in view of the position that the claim of the instant assessee is directly about the eligibility of deduction u/s.80P(2)(a)(i) of the Act and not u/s.80P(2)(d). Moreover, so many decisions relied on by the ld. AR amply go to prove that the view taken by the AO, cannot by any standard, be construed as not a possible view. We, therefore, hold that the ld. Pr. CIT was not justified in exercising the revisional power anent to interest income of Rs.22,34,270/- earned on investments made with co-operative banks.”

In view of the above, we observe that learned AR has also given the details regarding claim of the assessee u/s 80P(2(d) of the Act by giving segregation of total claim amount. At the cost of repetition, we may also point out that the learned CIT(A) as per para 11(c) & (d), has allowed claim of deduction u/s 80P(2)(a)(i) of the Act and directed the Assessing Officer to allow the same. There is no challenge by the Revenue against this allowance made by the learned CIT(A). However, agreeing to the submissions of the assessee, the learned CIT(A) in para 11 (b) has agreed that the assessee is eligible for deduction u/s 80P(2)(d) of the Act on the interest received from cooperative societies and directed the Assessing Officer to allow the same after satisfying himself about the correctness and calculation of claim of the assessee. Similar directions have been given by the ITAT Panaji Bench in the case of Mahishwadagi Grama Seva Sahakari Sangh Ltd. (supra). In view of the above, respectfully following the order of the ITAT, Panaji Bench (supra), the issue of allowability of deduction u/s 80P(2)(d) of the Act to the assessee for assessment year 2012- 13 is restored to the file of the Assessing Officer with a direction to allow the said deduction after satisfying himself that the interest income is earned on the investment from the cooperative societies. Thus, the grounds of appeal raised by the assessee are partly allowed for statistical purposes.

Since the facts and circumstances of assessment years 2013-14 and 2014-15 are quite same and similar to the facts and circumstances of assessment year 2012-13, our conclusion recorded for assessment year 2012-13 would apply mutatis mutandis to the other two appeals related to assessment year 2013-14 and 2014-15. Accordingly, the other two appeals of the assessee for assessment years 2013-14 and 2014-15 are also partly allowed with the similar directions to the Assessing Officer as has been given for assessment year 2012-13.

In the result, all the three appeals of the assessee are partly allowed for statistical purposes. Order pronounced in the open court on 15th June, 2022.