TaxTMI 
TaxTMI 
2026 (8) TMI 133
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....n under section 80P of Rs. 23,06,672/- w.r.t. interest received from PDCC bank and Rajguru Nagar Sahakari Bank which are the Cooperative bank. 2. The Ld. CIT(A) ought to have appreciated the fact that the similar issue was decided in Favor of assessee by Appellate authority in AY 2015-16 and AY 2016-17. 3. The appellant craves its right to add to or alter the Grounds of Appeal at any time before or during the course of hearing of the case." 5. Facts of the case, in brief, are that the assessee is an Association of Persons (AOP) and a primary credit cooperative society engaged in the activity of providing credit facilities to its members and also accepting deposits from them and has furnished its return of income on 14.10.2018 by declaring income of Rs. Nil after claiming deduction of Rs. 23,06,672/- u/s 80P(2)(a)(i) of the IT Act. The case was selected for scrutiny and notices u/s 143(2) and 142(1) respectively were issued to the assessee. After considering the reply and submissions of the assessee including bank accounts statement, list of members, list of deposits, list of investments made during the year and registration certificate of society, the Assessing....
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....med by the assessee in its return of income. On the other hand, Ld. DR objected & submitted that the assessee in its return of income, has claimed deduction u/s 80P(2)(a)(i) of the IT Act & therefore, deduction u/s 80P(2)(d) of the IT Act cannot be allowed to the assessee. In this regard, we are of the considered opinion that the assessee is entitled to claim alternative deduction u/s 80P(2)(d) of the IT Act in place of section 80P(2)(a)(i) of the IT Act which was already claimed by the assessee in its return of income. Apart from above, we also find that in the case of the assessee in earlier years, the same impugned interest income was allowed by Ld. CIT(A) u/s 80P(2)(d) of the IT Act, therefore, we deem it appropriate to consider the alternative request of the assessee & proceed to decide the issue in the light of impugned order passed by Ld. CIT(A)/NFAC wherein after relying on the decision passed by Hon'ble High Court of Karnataka in the case of PCIT vs. Totagars Co-operative Sale Society [2017] 395 ITR 611, it was held by Ld. CIT(A)/NFAC that the deduction u/s 80P(2)(d) of the IT Act is not allowable to the assessee. However, we do not find favour with the above finding of Ld....
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.... by the Pr. CIT that the assessee had during the year shown interest income from FDs with Cooperative Banks amounting to Rs. 75,38,534/-, against which it had claimed deduction under Sec.80P(2)(d) of the Act. It was observed by the Pr. CIT, that the A.O while framing the assessment had allowed the aforesaid claim of deduction raised by the assessee. Observing, that as cooperative banks were commercial banks and not a cooperative society, therefore, the Pr.CIT was of the view that the assessee was not eligible for claim of deduction under Sec.80P(2)(d). In the backdrop of his aforesaid conviction, the Pr. CIT was of the view that the assessment order passed by the A.O under Sec.143(3), dated 07.03.2016, therein allowing the assesses claim for deduction under Sec. 80P(2)(d), had therein rendered his order as erroneous, insofar it was prejudicial to the interest of the revenue. Accordingly, the Pr.CIT not finding favour with the reply of the assessee, wherein the latter had tried to impress upon him that it was duly eligible for claim of deduction under Sec.80P(2)(d) of the Act, therein "set aside" the order of the A.O with a direction to redecide the issue afresh and reframe the asse....
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....d 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 or not 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. In our considered view, the issue involved in the present appeal hinges around the adjudication of the scope and gamut of sub-section (4) of Sec. 80P as had been made available on the statute, vide the Finance Act 2006, with effect from 01.04.2007. On a perusal of the order passed by the Pr. CIT under Sec. 263 of the Act, we find, that he was of the view that pursuant to insertion of sub-section (4) of Sec. 80P, the assessee would no more be entitled for claim of deduction under Sec. 80P(2)(d) in respect of the interest income that was earned on the amounts which were parked as investments/deposits with the co-operative bank, other than a Primary Agricultural Credit Society or a Primary Co-operative Agricultural and Rural Development Bank. Observing, that the co-operative banks from where the assessee was in receipt of int....
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....opardize the claim of deduction of a cooperative 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 cooperative society from its investments made with any other co-operative society, the claim of deduction under the aforesaid statutory provision, viz. Sec. 80P(2)(d) would be duly available. We find that the term "cooperative society" had been defined under Sec. 2(19) of the Act, as under:- "(19) "Co-operative society" means a cooperative 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;" We are of the considered view, that though the cooperative banks pursuant to the insertion of subsection (4) to Sec. 80P would no more be entitled for claim of deduction under Sec. 80P of the Act, but as a cooperative 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 S....
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....with a co-operative bank would be eligible for claim of deduction under Sec.80P(2)(d) of the Act. Backed by the aforesaid conflicting judicial pronouncements, we may herein observe, that as held by the Hon'ble High Court of Bombay in the case of K. Subramanian and Anr. Vs. Siemens India Ltd. and Anr (1985) 156 ITR 11 (Bom), where there is a conflict between the decisions of non-jurisdictional High Court"s, then a view which is in favour of the assessee is to be preferred as against that taken against him. Accordingly, 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 that of the 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. 10. Be that as it may, in our considered view....