TaxTMI 
TaxTMI 
2024 (9) TMI 1897
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.... 3. That the Ld.CIT (A) has not followed the detailed recent judgment of Chandigarh Bench of the ITAT in the case of "Jagadhari Cooperative Marketing cum Processing Society Ltd. Vs. PCIT" reported in (2024), 125 TLC 103, in which, it has been held that any interest received by the Cooperative Society from the 'Cooperative Bank' is eligible for deduction u/s(80P (2) (d) of the Income Tax Act and that being the judgment of Jurisdictional Bench of the ITAT, the Ld. CIT (A) was supposed to follow and hence the confirmation of addition by the CIT (A) is bad in law. 4. That the appellant craves leave to add or amend the grounds of appeal before the appeal is finally heard or disposed off. 3. During the course of hearing the Ld. AR submitted that the assessee is a co-operative society registered with the Registrar of Societies since 1955 vide Registration No. 155 dated 19.12.1955 as placed at Page No. 1 of the Paper Book. The assessee society is engaged in marketing of agriculture produce grown by its members, purchase of agriculture implements, seeds, livestock etc. for supplying the same to its members, letting out of godowns/warehouses etc. for sto....
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....t of the interest earned from the same. 5.3 It was further submitted that the Worthy CIT (A) has wrongly linked the provisions of section 80P(2)(d) with the provisions of Section 80P(4) of the Act, for the sake of brevity of the matter, both the provisions are reproduced hereunder: "80P - Deduction in respect of income of co-operative societies. (2) The sums referred to in sub-section (1) shall be the following, namely :- (d) in respect of any income by way of interest or dividends derived by the cooperative society from its investments with any other co-operative society, the whole of such income; (4) The provisions of this section shall not apply in relation to any co-operative bank other than a primary agricultural credit society or a primary co-operative agricultural and rural development bank. Explanation.-For the purposes of this sub-section,- (a) "co-operative bank" and "primary agricultural credit society" shall have the meanings respectively assigned to them in Part V of the Banking Regulation Act, 1949 (10 of 1949); b) "primary co-operative agricultural and rural development bank" means a society having its....
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....that the same are the interpretation of Co-operative Banks referred in Section 80P(4) and not the cooperative societies as referred in section 80P(2)(d) of the Act. It is also clear that 80P(4) refers to the assessee who is a co-operative bank, so the assessee being a cooperative society is outside the ambit of the provisions of this section. 5.7 It was further submitted that in Para 5.3.5 of the Appellate Order, Worthy CIT (A) has also relied upon the judgment of Karnataka High Court in the case of Totgar Society (2017) 395 ITR 0611, which is not applicable in the case of the Assessee. The gist of discussion in the said judgment was the interest received from Nationalized Banks, disallowance of has been made for the interest income earned from the deposits made by the appellant with nationalized banks which is not the case of the Assessee. 5.8 Now, coming back to the application provision of Section 80P(2)(d) Interest/Dividend from Investment in other co-operative society, it was submitted that the Worthy CIT (A) has rightly quoted in Para 5.3.3 at Page No. 3 of the Appellate Order, wherein CIT (A) has stated that every co-operative bank is a co-operative society, havin....
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....mplication, as is sought to be done by the Revenue in the present case by adding the word "agriculture" into section 80P(2)(a)(i) when it is not there" 5.12 It was submitted that the Apex Court has off-set all the ambiguity in the cases of co-operative societies by passing the above conclusion. Therefore, when the law states that deduction in respect of the interest/dividend earned from the investment made in the Co-operative societies is allowed as a whole, and, all the co-operative banks are first the registered co-operative societies, then the disallowance of interest earned by the Assessee from the Ludhiana Central Cooperative bank is bad in law and baseless. 5.13 It has been held in various judicial pronouncements including the judgment of Hon'ble Chandigarh Bench that the interest earned by a cooperative society from a co-operative bank is allowed as deduction under section 80P(2)(d) of the Act. Reliance in this regard is placed on the following judgments: * Mullanpur Garibdas Co-operative Multipurpose Society vs. PCIT [2024] 163 Taxmann.Com 50 (Chandigarh - Trib.) "Assessee-society, being a cooperative society, is entitled to exemption under section 80P(2)....
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....rely coved by the decision of Coordinate Chandigarh Bench in case of Jagadhri Co-operative Marketing Cum Processing Society Ltd. Vs. PCIT (supra) wherein the relevant findings read as under: "15. We have heard the rival submissions and perused the material available on record. The limited dispute relates to claim of deduction under Section 80P(2)(d) of the Act in respect of interest income of Rs. 13,58,969/- received by the assessee cooperative society on deposits placed with Yamuna Nagar Central Co-op Bank Ltd. 16. As per the provisions of section 80P(1) of the Act, the income referred to in sub-section (2) to section 80P shall be allowed as a deduction to an assessee being a Co-operative Society. Further, Section 80P(2)(d) of the Act provides for deduction 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. Thus, for the purpose of Section 80P(2)(d) of the Act, there are only two conditions which are required to be cumulatively satisfied, i.e., the income should be by way of interest or dividend earned by a Co-operative Society from its investments, and second....
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....e has not been earned from any other Cooperative society but from Scheduled commercial banks and the deduction so claimed from Scheduled commercial banks was denied and while doing so, the AO has allowed the claim of deduction in respect of Yamuna Nagar Central Cooperative Bank Ltd, being the deduction in respect of interest income on deposits with any other Cooperative Society. We therefore find that the AO has duly examined the facts of the present case and has allowed the deduction in respect of interest income received from the Yamuna Nagar Central Co-op Bank Ltd. as being in compliance with the provisions of Section 80P(2)(d) of the Act. Where the facts in the present case and legal position is not in dispute, we therefore don't understand how the ld. PCIT in the same breath hold that the assessee shall not be eligible for claim of deduction under section 80P(2)(d) of the Act. 20. Now, coming to the decision of the Hon'ble Punjab and Haryana High Court in case of Punjab State Cooperative Federation of Housing Building Societies Ltd. (Supra), the question for consideration before the Hon'ble High Court was whether the Tribunal was right in holding that inte....
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....appearing for the revenue, is that the Tribunal was wrong in allowing deduction under section 80P(2)(d) because it is not established that the assessee had derived interest by investing all the amount of surplus funds. It is further contended by Mr. Gupta that the assessee has paid interest to Jalandhar Central Co-operative Bank and has also received interest from the said co-operative bank, thereby showing that the assessee has on the aggregate paid interest to the bank and, therefore, no deduction under section 80P(2)(d) can be allowed. To appreciate this argument, we have to look to the provisions of section 80P(2)(d). For facility of reference, it is reproduced as under: "(d)in respect of any income by way of interest or dividends derived by the cooperative society from its investments with any other co-operative society, the whole of such income;" So far as the principle of interpretation applicable to a taxing statute is concerned, we can do no better than to quote the by now classic words of Rowlatt, J., in Capce Brandy Syndicate v. IRC [1921] 1 KB 64 : "In a taxing Act, one has to look merely at what is clearly said. There is no room for any inten....
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.... and the Revenue is not required to look to the nature of investment whether it was from its surplus funds or otherwise. The Hon'ble High Court thus held that the nature and source of investment is not relevant for claiming deduction under Section 80P(2)(d) of the Act, and what is relevant to examine is whether there is any income derived by a cooperative society from any investment with another co-operative society. In the instant case, we therefore find that it is not relevant to examine whether interest income is earned from any specified co-operative activity or it is a case of deployment of surplus funds by the assessee society so long as the interest income is earned from deposits placed with a co-operative society. Where the AO has allowed the claim of the assessee under section 80P(2)(d) of the Act after due examination of the facts of the case, he has rightly followed the dicta laid down by the Hon'ble Jurisdictional High Court and therefore, the order so passed by the AO cannot be held as erroneous in so far as prejudicial to the interest of Revenue. 23. Now, coming to the decisions of the Hon'ble Karnataka High Court, we find that there are two decis....
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....which is not the facts of the present case. Therefore the said decision of the Hon'ble Karnataka High Court is distinguishable and in any case, the later decision of Hon'ble Supreme Court in case of Mavilayi Service Cooperative Bank Ltd. (Supra) wherein the correct legal preposition has been laid down by the Hon'ble Supreme Court has to be followed. Interestingly, as per the ld. PCIT own findings, section 80P(4) does not jeopardise the claim of deduction of a co-operative society under Section 80P(2)(d) in respect of its interest income on investments/deposits parked with a cooperative bank and at the same time, she has placed reliance on the said decision of Hon'ble Karnataka High Court. As against that, we find that the AO has referred to the said decision in case of Mavilayi Service Cooperative Bank Ltd. (Supra) and has thus followed the dicta laid down by the Hon'ble Supreme Court and thus, the order so passed cannot be held as erroneous in so far as prejudicial to the interest of Revenue. 25. In light of aforesaid discussion and in the entirety of facts and circumstances of the case, we find that there is no legal and justifiable basis to invoke th....