TaxTMI 
TaxTMI 
2022 (6) TMI 936
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....AICO Bank claimed as deduction u/s. 80P(2)(d) of the Act. 3. For that the Learned Commissioner of Income Tax (Appeals) erred in not considering the provisions of Section 80P(2)(a)vi) of the income Tax Act, 1961 which provides for deduction of the whole amount of profit and gains of business attributable to the collective disposal of the labour of its members 4. For that the Learned Commissioner of Income Tax (Appeals) committed a grave error in not appreciating that the word "attributable" used in Section 80P(2)(a)(vi) has a wider scope than the expression "derived from " and the legislature intended to covers all receipts from sources other than the actual conduct of business as held by the Apex Court in the case of Cambay Electric Supply Vs. CIT 113 ITR 84 and hence the interest received from TAICO Bank was eligible for deduction u/s. 80P(2)(a)(vi). Without Prejudice to the above grounds that the receipts from TAICO Bank is eligible for deduction u/s. 80P(2)(vi), it is submitted that the said receipts are also eligible for deduction u/s. 80P(2)(d) 5. For that the Learned Commissioner of income Tax (Appeals) erred relying on the decision in the ....
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....f conditions and eligibility of deduction claimed u/s. 80P(2)(a)(vi) of the Act. The Ld. AO did not deal anything in respect of claim made by the assessee u/s. 80P(2)(d) of the Act and assessment was completed by disallowing claim of deduction u/s. 80P(2)(a)(vi) of the Act. Aggrieved, assessee went into appeal before the Ld. CIT(A). The Ld. CIT(A) deleted the addition in respect of disallowance made by the Ld. AO u/s. 80P(2)(a)(vi) of the Act. 5. However, in the course of first appellate proceedings, ld. CIT(A) took up the matter relating to claim of deduction made by the assessee u/s. 80P(2)(d) of the Act of Rs. 68,47,885/-, as the eligibility of this claim was not discussed by the Ld. AO in the assessment order. Accordingly, Ld. CIT(A) issued a show cause notice u/s. 250(2) of the Act dated 26.02.2020. The Ld. CIT(A) while issuing this letter was of the view that this deduction pertained to interest received from TAICO Bank which is a Co-operative bank and according to the provisions of section 80P(2)(d) of the Act, dividend or interest received by a Cooperative society from its investment in any other Co-operative society is only exempted from tax. By applying the provisions ....
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....cial, scheduled and Private banks accepted deposits from public as well as from industrial Co-operative Societies, Government Institutions etc. It also has RTGS, core and NEFT facilities. It has 47 branches in different parts of the state of Tamil Nadu. TAICO Bank is included in list of Co-operative banks in Tamil Nadu. Therefore, the contention that TAICO Bank is not a cooperative Bank is not acceptable." Aggrieved, the assessee is in appeal before this Tribunal. 7. At the outset, Ld. CIT(A) allowed the claim of the assessee u/s. 80P(2)(a)(vi) of the Act for which Department came into appeal before the Tribunal. This issue was squarely covered by the decision of this Tribunal in assessee's own case in favour of the assessee in ITA No. 2539/Chny/2017 which has been dealt separately in ITA No. 934/Chny/2020 in respect of which a separate order has been passed. The present appeal before us is only in respect of enhancement made by Ld. CIT(A) in respect of claim made by the assessee u/s. 80P(2)(d) of the Act of Rs. 68,47,885/-. There is a written submissions placed on record by the assessee dated 26.05.2022 wherein it is submitted that TAICO Bank is not a scheduled bank and ....
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....means a society having its area of operation confined to a taluk and the principal object of which is to provide for long-term credit for agricultural and rural development activities." 9.2. Further, the term Co-operative society is defined u/s. 2(19) of the Act which is as under: "(19) "Co-operative society" means 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;" 10. We note that Ld. CIT(A) has passed his decision of making enhancement in respect of claim made u/s. 80P(2)(d) of the Act by placing reliance on the decision of Hon'ble Karnataka High Court in the case of PCIT vs Totgars Co-operative Sale Society (supra). The jurisprudence available on the issue in hand is available from various Hon'ble courts and coordinate benches of ITAT which are discussed to arrive at a judicious conclusion. 11. The coordinate bench of Mumbai ITAT in the case of Lands End Co-operative Housing Society Ltd. vs ITO, in ITA No. 3566/Mum/2014 dated 15.01.2016 held as under: ""8.3. We have heard............. xx....
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....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)......................................................................... (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" Thus, from a perusal of the aforesaid Sec. 80P(2)(d) it can safely be gathered that income by way of interest income derived by an assessee cooperative society from its investments held with any other cooperative society, shall be deducted in computing the total income of the assessee. 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 cooperative society. ....
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....of the assessee in the following cases: (i) Land and Cooperative Housing Society Ltd. Vs. ITO (2017) 46 CCH 32 (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. 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 also held that the interest income earned by the assessee on its investments held with a cooperative 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, as had been relied upon by the ld. A.R, also makes it clear beyond any scope of doubt, that the purpose behind enactment of sub-section (4) of Sec. 80P was to provide that the cooperative banks which are functioning at par with other banks would no m....
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....al High Court's, then a view which is in favour of the assessee is to be preferred as against that taken against him. Thus, 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 co-operative society on its investments held with a co operative bank would be eligible for claim of deduction under Sec. 80P(2)(d) of the Act. 9. We thus in the backdrop of our aforesaid observations are unable to persuade ourselves to be in agreement with the view taken by the lower authorities that the assessee would not be entitled for claim of deduction under Sec. 80P(2)(d), in respect of the interest income on the investments made with the co-operative bank. We thus set aside the order of the lower authorities and conclude that the interest income of Rs. 27,48,553/- earned by the....
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....The judgment of Hon'ble Supreme Court in the case of Totgars Co-operative Sale Society vs ITO (2010) 322 ITR 283 (SC) was rendered in the context of section 80P(2)(a)(vi) of the Act, wherein expression "profit and gain of business" has been used is distinguishable on facts. The aforesaid judgment is not applicable to the facts of the present case as deduction has been claimed u/s. 80P(2)(d) of the Act, wherein expression "any income" has been used. 12. Importantly, there is a decision of the Hon'ble Jurisdictional High Court of Madras which carries a force of binding nature in Tax Case Appeal no. 05/2015 in CIT vs The Salem Agricultural Producers Cooperative Marketing Society Ltd. dated 10.08.2016. The substantial question of law dealt by the Hon'ble High Court of Madras in respect of deduction u/s. 80P(2)(d) of the Act is reproduced as under: 4. Whether on the facts and in the circumstances of the case, the Tribunal was right in holding that the interest earned from the Salem District Central Co-operative Bank is entitled for deduction under Section 80P(2) (d)? 12.1. While answering the substantial question of law, Hon'ble High Court of Madras referr....
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....e Co-operative Bank in compliance with the provisions of section 57 of the Himachal Pradesh Co-operative Societies Act, 1968, the income derived from banking business is eligible for deduction under section 80P(2)(a)(i) of the Act. Exemption is also available under section 80P(2)(d) of the Act. In the present case, the assessee is an Agricultural Producers Co-operative Marketing Society Ltd., registered under Tamilnadu Co-operative Societies Act and established for the benefit of the agricultural producers and the interest or dividend earned by the assessee will be beneficial to the members alone. Therefore, keeping in view of the decision in the case of CIT v. Kangra Co-operative Bank Ltd. (supra), we hold that the assessee is eligible for benefit under section 80P(2)(d) of the Act and also this being a beneficial section to the cooperative societies." 12.2. While adverting on the substantial question of law, Hon'ble High Court of Madras referred to Para 12 of the judgment of Division bench of Hon'ble Himachal Pradesh in the case of CIT vs Kangra Co-operative Bank Ltd. (2009) 309 ITR 106 (HP) which is reproduced as under: "At para 12 of the judgment, further re....