TaxTMI 
TaxTMI 
2024 (12) TMI 703
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..... under dispute, assessee has filed its return of income on 30.10.2017, declaring Nil income after claiming deduction of Rs. 80,53,524/- u/s. 80P of the Act. In course of assessment proceedings, while examining, assessee's claim of deduction u/s. 80P of the Act, the Assessing Officer was of the view that the assessee, being similar to a cooperative bank, is not entitled for deduction, either u/s. 80P(2)(a)(i) or 80P(2)(d) of the Act. Accordingly, he completed the assessment u/s. 143(3) of the Act, disallowing assessee's claim of deduction. Assessee contested the said disallowance by filing an appeal before ld. First Appellate Authority. 4. After considering the submissions of the assessee in the context of facts and material on record, ld. First Appellate Authority, though, accepted assessee's claim of deduction u/s. 80P(2)(a)(i) in respect of profit and gains from the eligible activities of the cooperative society, however he disallowed assessee's claim of deduction u/s. 80P(2)(d) of the Act in respect of interest income earned on investments parked in cooperative banks / scheduled banks and financial institutions. While doing so, ld. First Appellate Authority primarily relied ....
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....cieties Act and that the assessee has earned interest income of Rs. 12,90,210/- which was claimed as deduction under section 80P(2)(d). It is observed that the assessee has invested the surplus funds with cooperative banks and non co-operative banks for which the assessee has received interest income of Rs. 10,39,909/- from non co-operative banks and Rs. 12,90,210/- from co-operative banks, respectively. The Ld. PCIT revised the assessment ordet passed under section 143(3) of the 1.T. Act dated 15-12-2017 on the ground that interest income received by the assessee by way of investment in co-operative banks is not eligible for deduction under section 80P(2)(d) on the ground that the co-operative banks will not be classified under "Co-operative Societies and that the interest earned from co-operative banks are not eligible for deduction under the provisions of section 80P(2)(d). The Ld. PCIT placed his reliance on the decision of Totagars Co-operative Sale Society's case (supro) wherein the Hon'ble High Court held that the amendment to section 194A(3)(v) of the Act excludes co-operative banks from the definition of co-operative society by Finance Act, 2015 thereby intending t....
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.... v. ITO-21(3)(2), Mumbai (ITA No. 1343/Mum/2017, dated 31-3-2017. (iv) Marvwanjee Cama Park Cooperative Housing Society Ltd. v. ITO-Range 20(2)(2), Mumbai (ITA NO. 6139/Mum/2014, dated 27-9-2017. (v) Kaliandas Udyog Bhavan Pemises Co-op. Society Ltd. v. ITO, 21(2)(1), Mumbai. In the aforesaid orders, it has been held by the Tribunal that though the cooperative banks pursuant to the insertion of sub-section (4) to Sec. 80P of the Act would no more be entitled for claim of deduction u/s 80P of the Act, but as a co-operative bank continues to be 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, therefore, the interest income derived by a co-operative society from its investments held with a co-operative bank would be entitled for claim of deduction u/s 80P(2)(d) of the Act. We find that the aforesaid issue had exhaustively been looked into by the ITAT, „G? bench, Mumbai in the case of M/s Solitaire CHS Ltd. v. Pr. CIT-26, Mumbai ITA No. 3155/Mum/2019, dated 29-11-2019, wherein the Tribunal had observed ....
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....by the co-operative society from its investments with any other co-operative society, the whole of such income;" On a perusal of sec. 80P(2)(d), it can safely be gathered that interest income derived by an assessee co- operative society from its investments held with any other co-operative society shall be deducted 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 cooperative 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 1-4-2007, 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 inves....
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.... v. CIT (2016) 389 ITR 578 (Guj), had held, that the interest income eamed by the assessee on its investments 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, also makes it clear beyond any scope of doubt that the purpose behind enactment of sub-section (4) of Sec. 80P was that the co-operative 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 Lat. v. ITO (20101 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)(4)(1), 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....
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....the part of the Pr. CIT, who in exercise of his powers under sec. 263, had dislodged the view that was taken by the A.O as regards the eligibility of the assessee towards claim of deduction under sec. 80P(2)(d), we "set aside" his order and restore the order passed by the A.O under sec. 143(3), date 14- 9-2016." As the facts and the issue involved in the present case before us remains the same as were there before the Tribunal in the case of M/s Solitaire CHS Ltd. (supra), wherein the order passed by the Pr. CIT u/s 263 of the Act was quashed, we, thus, respectfully follow the same. Backed by our aforesaid deliberations, we are unable to uphold the view taken by the Pr. CIT that the failure on the part of the A.O to be disallow the assessee's claim for deduction u/s 80P(2)(d) had rendered the assessment order passed by him u/s 143(3) of the Act, dated 31-8- 2017 as erroneous in so far it was prejudicial to the interest of the revenue. 9. Accordingly, on the basis of our aforesaid observations, we herein not finding favor with the view taken by the Pr. CIT that the order passed by the A.O u/s 143(3), dated 31-8-2017 was erroneous in so far it was prejudicial to....