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Income Tax Appellate Tribunal, PANAJI BENCH, PANAJI
Before: SHRI C.M. GARG & SHRI GIRISH AGRAWAL
IN THE INCOME TAX APPELLATE TRIBUNAL, PANAJI BENCH, PANAJI BEFORE SHRI C.M. GARG, JUDICIAL MEMBER AND SHRI GIRISH AGRAWAL, ACCOUNTANT MEMBER I.T.A. Nos. 136 to 138/PAN/2018 Assessment Years: 2012-13 to 2014-15 Shri Shridharswamy Credit Vs. ITO, Souharda Sahakari Niyamit Ward 2(1), 1338, Gururaj Anugrah, Ground Belagavi. Floor, Ramalingkhind Galli, Belagavi – 590001. (PAN: AAABS1646E) Appellant Respondent Date of Hearing 13.06.2022 Date of Pronouncement 15.06.2022 Assessee by Shri U.G. Ammangi, CA Department by Shri Mayur Kamble, Sr. DR ORDER Per C.M. Garg, JM: 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.
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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 ITA No.136/PAN/2018 for assessment year 2012-13 as lead case. The learned AR, placing copy of order of the ITAT, Panaji Bench – Virtual Court dated 12.11.2021 in ITA No.65/PAN/2018 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:-
“7. We heard the rival submissions and perused the material on record. The issue in the present appeal relates to the exemption of interest income on investment from other
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hanks of Rs.3,27,868/- u/s 80P(2)(d) of the Act. Admittedly, the interest income of Rs.3,27,868/- was received from the following :-
S. No. Income from other sources Amount 1 BDCC Bank Dividend Rs.52,471 2 AXIS Bank Interest received Rs.28,768 3 BDCC Bank Interest on FD deposits Rs.1,74,039 4 Interest on other Deposits Rs.72,590 Total Rs.3,27,868
From the above details, it is clear that in respect of income received from Axis Bank of Rs.28,768/-, the balance of interest income was received from other cooperative banks. Then the issue that comes up for consideration is that whether the cooperative banks is the cooperative society or not?. This issue was considered by the Hon’ble Karnataka High Court in the case of CIT vs. Totagars Cooperative Sale Society, 392 ITR 74 (Karn) wherein the Hon’ble High Court referring to the Hon’ble Supreme Court in the case of Totgars Cooperative Sales Society Ltd. (supra) held that the exemption is not to be denied in respect of interest income on investment as same falls under the provisions of section 80P(2)(d) and not u/s 80P(2)(a)(i) of the Act. Even on going through the decision of Pune Bench of the Tribunal in the case of Sant Motiram Maharaj Sahakari Pat Sanstha Ltd. vs. ITO, 120 taxmann.com 10 wherein the Tribunal after making reference to the decisions of the Hon’ble Supreme Court in the case of Totgars Co-operative Sales Society Ltd. (supra) had noticed that the divergent views of the Hon’ble Karnataka High Court in the case of Tumkur Merchants Souharda Credit Co-op. Ltd. vs. ITO, 55 taxmann.com 447 and the Hon’ble Delhi High Court in the case of Mantola Cooperative Thrift Credit Society Ltd. vs. CIT, 50 taxmann.com 278. The Hon’ble Delhi High Court in the case of Mantola Cooperative Thrift Credit Society Ltd. (supra) had referred the view of the Hon’ble Karnataka High Court in the case of Tumkur Merchants Souharda Credit Co-op. Ltd. (supra). The Pune Bench of the Tribunal in the case of Sant Motiram Maharaj Sahakari Pat Sanstha Ltd. (supra) after referring to the decision of the Hon’ble Karnataka High Court in the case of Pr.CIT vs. Totagars Co-operative Sales Society Ltd., 395 ITR 661 held that no application exemption under the provisions of section 80P(2)(d) of the Act by observing as under :- “9. The Pune Benches of the Tribunal in Sureshdada Jain Nagari Sahakari Patsanstha Maryadit Vs. The Pr.CIT (ITA No.713/PUN/2016, dated 9-4- 2019) decided the question of availability of deduction u/s 80P on interest income by noticing that the Pune Bench in an earlier case of Shri Laxmi Narayan Nagari Sahakari Pat Sanstha Maryadit Vs. ITO (ITA No.604/PN/2014, dated 19-8-2015) has allowed similar deduction. In the said case, the Tribunal discussed the contrary views expressed by the Hon'ble Karnataka High Court in Tumkur Merchants Souharda Credit Cooperative Ltd. Vs. ITO (2015) 230 Taxman 309 (Kar.) allowing deduction u/s. 80P on interest income and that of the Hon'ble Delhi High Court in Mantola Cooperative Thrift Credit Society Ltd. Vs. CIT (2014) 110 DTR 89 (Delhi) not allowing deduction u/s.80P on interest income earned from
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banks. Both the Hon'ble High Courts took into consideration the ratio laid down in the case of Totgar's Cooperative Sale Society Ltd. (2010) 322 ITR 283 (SC). There being no direct judgment from the Hon'ble jurisdictional High Court on the point, the Tribunal in Shri Laxmi Narayan Nagari Sahakari Pat Sanstha Maryadit (supra) preferred to go with the view in favour of the assessee by the Hon'ble Karnataka High Court in the case of Tumkur Merchants Souharda Credit Cooperative Ltd. (supra). 10. 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.” 9. In the light of the above legal position, we hold that the interest income earned by the appellant society on investment made with the cooperative bank which are cooperative societies is also exempt from the Income Tax Act. Therefore, we remand the matter back to the file of the Assessing Officer with a direction to allow the deduction u/s 80P(2)(d) of the Act after satisfying himself that the interest income is earned on investment from the cooperative societies. Thus, the grounds of appeal raised by the assessee are partly allowed for statistical purposes.”
From the relevant operative part i.e., from para 11 of the first appellate order of learned CIT(A), we observe that the learned CIT(A) has also directed the Assessing Officer to allow deduction u/s 80P(2) to the appellant with certain observations. For the sake of completeness of this order, the para 11 of the first appellate order is being reproduced below:-
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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
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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.
Sd/- Sd/- (Girish Agrawal) (C.M. Garg) Accountant Member Judicial Member Dated: 15.06.2022
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dk Copy of the order forwarded to: 1. Appellant- Shri Shridharswamy Credit Souharda Sahakari Niyamit 1338, Gururaj Anugrah, Ground Floor, Ramalingkhind Galli, Belagavi – 590001. 2. Respondent – ITO, Ward 2(1), Belagavi 3. CIT(A), Belagavi 4. Pr. CIT, Belagavi 5. DR, ITAT, Panaji, Goa. 6. Guard File True Copy By Order
Sr. Private Secretary, ITAT Panaji Bench, Panaji (On Tour)