2022 (8) TMI 1075

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....as processed u/s 143(1) and then scrutiny assessment was completed by making addition on account of interest receipt of Rs. 15,595/- and addition of interest on refund received u/s 244A of the Act of Rs. 21,980/-. Thus assessed the total income as Rs. 37,575/-. 2.1. It is thereafter a show cause notice u/s 263 dated 22/01/2019 was issued on the ground that the Assessing Officer has allowed interest amounting to Rs. 31,64,097/- earned from Nationalized Bank. However interest from Co-Operative Banks was allowed which was not allowable in the light of principles enunciated by Hon'ble Karnataka High Court in Totgars Co-Operative Sale Society, [2017] 83 taxmann.com 140 (Karnataka). Therefore, interest income earned from Co-Operative Bank is also not entitled for deduction u/s. 80P(2) of the Act, which is required to be disallowed. 2.2. As against this show cause notice, the assessee vide its letter dated 04/02/2019 filed a detailed reply both on the ground of invoking Revision proceedings u/s 263 as well as on merits of the case more particularly that the Karnataka High Court judgment in the case of Totgars Co-Operative Sale Society was not available at the time of passing of the orig....

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....ppeal: 1. The learned Pr. C.I.T. has erred in holding that the assesse is not eligible for deduction of interest income of Rs.30,60,500/- u/s 80P(2)(d) of the Act received from investment made with Co.Op. Bank. The Ld. Pr. CIT has not considered the explanations/submissions furnished by your appellant during the course of assessment proceedings as well as proceedings before him in true perspective. It is submitted that the view so taken of holding the assessment order passed by A.O. as erroneous and prejudicial to the interest of Revenue is incorrect and illegal and accordingly the direction to set aside the original assessment order and passing the fresh assessment order be cancelled. It be so held now. 2. The learned Pr. CIT has erred in relying the decision of Karnataka High Court and giving incorrect direction to the Ld AO to reframe the assessee de-novo. It is submitted the Hon'ble Jurisdictional High Court is in the favour of the assessee on identical issue. The same be held now and order passed by Ld Pr. CIT invoking the provisions of Section 263 of the Act be quashed and set aside. 3. Without prejudice to the above, the learned Pr. CIT has erred in following decis....

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.... wherein its held as follows: 4. We have heard the arguments of both the sides and also perused the relevant material available on record. As submitted by the learned Counsel for the assessee, the assessment completed by the Assessing Officer under Section 143(3) of the Act allowing the similar claim of the assessee for deduction under Section 80P(2) of the Act in respect of interest income earned on the deposits with Mehsana Urban Co-operative Bank was set aside by the same learned PCIT vide his order passed under Section 263 of the Act in the case of the People Coop. Credit Society Ltd by relying on the decision of Hon'ble Karnataka High Court in the case of Totgars Cooperative Sale Society (supra) and, on appeal by the assessee, the Coordinate Bench of this Tribunal vide its order dated 21.02.2022 passed in ITA No.384/Ahd/2020 set aside the order passed by the learned PCIT under Section 263 of the Act restoring that of the Assessing Officer by relying inter alia on the decision of the Hon'ble jurisdictional High Court in the case of State Bank of India (supra). Copy of the said order of the Tribunal is also placed on record and perusal of the same shows that a similar ....

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.... of the legislative amendment hereinabove. Mr. Kabra thereafter files hon'ble apex court's judgment in (2017) 397 ITR 1 (SC). The Citizen Co-operative Society Ltd. vs. ACIT settling Section 80P deduction issue in respect of ordinary and nominal members. We however find that the above former decision goes contrary to hon'ble jurisdictional high court's judgment in Tax Appeal No. 473 of 2014 CIT vs. Sabarkantha District Cooperative Milk Producers Union Ltd. declining Revenue's identical question of law challenging tribunal's decision allowing Section 80P deduction in respect of interest earned on fixed deposits with a cooperative bank in assessment year 2009-10 i.e. post Section 80P(4) amendment w.e.f. 01.04.2007. Their lordships' reasoning to this effect reads as under: "4.0. Now, so far as proposed question no. B i.e. whether the Appellate Tribunal has substantially erred in upholding the order of the CIT(A) in deleting the disallowances of Rs.1,42,19,5157- under Section 80(P)(2)(d) of the Act is concerned, it is required to be noted that the assessee claimed deduction under Section 80(P)(2)(d) of the Act on the interest earned on the fixed deposit wit....