TaxTMI 
TaxTMI 
2023 (9) TMI 777
X X X X Extracts X X X X
X X X X Extracts X X X X
....r of the CIT(Appeals) on the following grounds of appeal: "1. That the learned CIT (Appeals) erred in confirming the addition of Rs. 38,88,571/- which is Gross Profit in PDS a/c made by the learned AO though after considering proportionate expenses of Rs. 36,07,768/-, there is profit of Rs. 2,60,923/-. Prayed that the addition of Rs. 38,88,571/- is unjustified and be deleted. 2. That under the facts and the law, the Ld. CIT (Appeals) erred in treating the dividend income amounting to Rs. 1,30,800/-as ineligible deduction u/s. 80P(2). Prayed that the dividend income is deductible u/s 80P(2)(d) and delete the addition. 3. That under the facts and the law, the Ld. CIT (Appeals) erred in treating the other income amounting to Rs. 9,05,369/- as ineligible deduction u/s. 80P(2). Prayed that the other income is deductible u/s 80P(2) and delete the addition." 3. At the very outset of the hearing of the appeals, it transpires that the captioned appeals are time barred by 10, 35, 37 & 38 days respectively. The assessee society has filed respective condonation applications dated 07.06.2023 stating reasons which are similar in nature except for the days of delay involved in the aforemen....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ertilizer, seeds, manures and pesticides as well as sale of controlled items under the Public Distribution System (PDS), had on 16.04.2013 filed its return of income for the assessment year 2012-13, declaring a total income of Rs. Nil (after claiming entire amount of its income as a deduction u/s 80P of the Act). Subsequently, the case of the assessee was selected for scrutiny assessment u/s. 143(2) of the Act. Assessment was, thereafter, framed by the Assessing Officer vide his order passed u/s. 143(3) of the Act, dated 19.03.2015 wherein the assessee's muti-facet claim for deduction under Sec. 80P of Rs. 53,62,432/- was declined a/w. disallowance of the amount of TDS on commission received on paddy procurement business, as under: Sl. No. Particulars Amount in Rs. 1. Disallowance of the assessee's claim for deduction of interest income u/s. 80P(2)(a)(i) of the Act. Rs. 15,44,096/- 2. Disallowance of the assessee's claim for deduction of profit from paddy procurement business u/s. 80P(2)(a)(iii) of the Act. Rs. 6,81,955/- 3. Disallowance of the assessee's claim for deduction of profit from PDS u/s. 80P(2)(c) of the Act. Rs. 38,88,571/- 5. Disallowance of assessee's cl....
X X X X Extracts X X X X
X X X X Extracts X X X X
....2022 had after necessary deliberations on the issue in hand remanded the matter to the file of the A.O, with a specific direction i.e, to restrict its claim for deduction as regards its profit from PDS only to the extent of its net profit i.e., after considering the proportionate expenses, observing as under : "19. Before us, it is the claim of the assessee that as the profit from PDS activities after considering the proportionate expenses amounted to Rs. 3,08,338/-, therefore, its claim for deduction u/s. 80P(2)(c)(i) of the Act was liable to be restricted only to the said extent. After having given a thoughtful consideration to the claim of the Ld. AR, we though principally concur with his aforesaid claim, but then, the same cannot be accepted on the very face of it and would require factual verification. Therefore, for the said limited purpose, we restore the matter to the file of the Assessing Officer for doing the needful. During the course of the set-aside proceedings, the Assessing Officer is directed to restrict the assessee's claim for deduction as regards its profit from PDS only to the extent of its net profit, i.e., after considering the proportionate expenses. Needle....
X X X X Extracts X X X X
X X X X Extracts X X X X
....falls within the realm of the definition of "Co-operative Society" as contemplated in Section 2(19) of the Act, therefore, the view taken by the lower authorities that dividend income received by the assessee from Jila Sahakari Kendriya Bank, Raipur, i.e a Cooperative Bank, would not eligible for deduction u/s. 80P(2)(d) of the Act cannot be sustained. Our aforesaid view is fortified by the order of the ITAT, Mumbai in the case of M/s Solitaire CHS Ltd Vs. Principal Commissioner of Income Tax-26, ITA No. 3155/Mum/2019, dated 29.11.2019 (wherein one of us, i.e, the JM was a party), had after exhaustive deliberations held as under: "6. We have heard the authorised representatives for both the parties, perused the orders of the lower authorities and the material available on record, as well as the judicial pronouncements relied upon by them. Our indulgence in the present appeal has been sought, for adjudicating, as to whether the claim of the assessee for deduction under section 80P(2)(d) in respect of interest income earned from the investments/deposits made with the co-operative banks is in order, or not. In our considered view, the issue involved in the present appeal revolves ar....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ucted in computing its total income. 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 co-operative society. We are in agreement with the view taken by the Pr. CIT, that with the insertion of sub-section (4) of Sec. 80P, vide the Finance Act, 2006, with effect from 01.04.2007, the provisions of Sec. 80P would no more be applicable in relation to any co-operative bank, other than a primary agricultural credit society or a primary co-operative agricultural and rural development bank. However, at the same time, we are unable to subscribe to his view that the aforesaid amendment would jeopardise the claim of deduction of a co-operative society under Sec. 80P(2)(d) in respect of its interest income on investments/deposits parked with a co-operative bank. In our considered view, as long as it is proved that the interest income is being derived by a co-operative society from its investments made with any other cooperative society, the claim of deduction under the aforesaid statutory provision, viz. Sec. 80P(2)(d) would be....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tion (4) of Sec. 80P was that the cooperative banks which were functioning at par with other banks would no more be entitled for claim of deduction under Sec. 80P(4) of the Act. Insofar the reliance placed by the Pr. CIT on the judgment of the Hon'ble Supreme Court in the case of Totgars Co-operative Sale Society Ltd. vs. ITO (2010) 322 ITR 283 (SC) is concerned, we are of the considered view that the same being distinguishable on facts had wrongly been relied upon by him. The adjudication by the Hon‟ble Apex Court in the aforesaid case was in context of Sec. 80P(2)(a)(i), and not on the entitlement of a co- operative society towards deduction under Sec. 80P(2)(d) on the interest income on the investments/deposits parked with a co-operative bank. Although, in all fairness, we may herein observe that the Hon'ble High Court of Karnataka in the case of Pr. CIT Vs. Totagars co-operative Sale Society (2017) 395 ITR 611 (Karn), had concluded that a co-operative society would not be entitled to claim of deduction under Sec. 80P(2)(d). At the same time, we find, that the Hon'ble High Court of Karnataka in the case of Pr. Commissioner of Income Tax and Anr. Vs. Totagars Cooper....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the assessee is allowed." Backed by our aforesaid observations, we not being able to persuade ourselves to subscribe to the view taken by the lower authorities, therein vacate the disallowance of the assessee's claim for deduction of Rs. 1,16,224/- u/s. 80P(2)(d) of the Act. The Ground of appeal No.4 is allowed in terms of the aforesaid observations." It is evident that as stated by the assessee, and rightly so, as the aforesaid issue in hand i.e, entitlement of a co-operative society for claim of deduction under Sec. 80P(2)(d) qua the dividend received on shares of a co-operative bank is squarely covered by the aforesaid decision of the Tribunal in ITA No.114/RPR/2016 & Ors (supra), dated 23.02.2022, therefore, principally concurring with the claim of the ld. AR, I herein vacate the disallowance of the assessee's claim for deduction of Rs. 1,30,800/- u/s 80P(2)(d) as regards the dividend received on shares of a co-operative bank, viz. Jila Sahakari Bank. Thus, the Ground of appeal No.2 raised in appeal by the assessee is allowed in terms of the aforesaid observations. 14. I shall now take up the grievance of the assessee that both the lower authorities had erred in law and the....
X X X X Extracts X X X X
X X X X Extracts X X X X
....0P(2)(a)(iii) of the Act. However, as per the mandate of Sec. 80P(2)(a)(iii) the deduction therein contemplated was only available qua the marketing of the agricultural produce grown by members of the society, therefore, the Assessing Officer in the course of assessment proceedings had called upon the assessee society to produce the register maintained in respect of its paddy procurement for the year under consideration. As the register produced by the assessee society did not reveal the requisite details which were required to identify the members and non-members, therefore, the Assessing Officer in the backdrop of the said fact had restricted the assessee's claim for deduction u/s. 80P(2)(a)(iii) of the Act on an adhoc basis to 35% (i.e. nearly 1/3rd of the aforesaid gross profit) of the profit that was earned by it from paddy procurement business, and had disallowed assessee's claim for deduction as regards the balance amount of profit. Assailing the restriction of the assessee's claim for deduction u/s 80P(2)(a)(iii) to 35% of its income of Rs. 16,21,218/-, it is the claim of the ld. A.R before us that the same is highly exorbitant, for the reason, that the assessee had mainly ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....essee's claim for deduction u/s. 80P(2)(a)(iii) of the Act only to the extent of the profit relatable thereto. Needless to say, the assessee shall in the course of the set-aside proceedings furnish the requisite details/documents that are called for by the A.O. The Ground of appeal No.2 is allowed for statistical purposes in terms of our aforesaid observations." Considering the parity of the facts involved in the present case as against those which were involved in ITA No.114/RPR/2016 & Ors., dated 23.02.2022, I am of the considered view that as stated by the assessee, and rightly so, the assessee society in the present case was principally entitled for deduction of its income from the business of paddy procurement u/s. 80P(2)(a)(iii) of the Act. However, as observed by me while disposing off the appeals in ITA Nos.114/RPR/2016 & Ors (supra), the claim of deduction of the assessee society would be limited to the extent it had facilitated the marketing of the agricultural produce of its members. I, though concur with the claim of the assessee that the assessee society is entitled for deduction of its income from paddy procurement business u/s. 80P(2)(a)(iii), but restore the matter....