SHUBHAM NAGRI SAHAKARI PATSANSTHA MARYADIT, MUMBAI V. PR.CIT-29, MUMBAI

ITA 1038/MUM/2019

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 7855 (ITAT-MUMBAI)
• Duration Of Justice: 4 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-07-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Assessment Year: 2014-2015
• Appeal Filed On: 25-02-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: RAVINDRA NAIK
• Keywords: Business income; Revision of order; Search and seizure; Set aside
• Section: 80P; 201; 6; 56; 12; 2; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES G , MUMBAI BEFORE S HRI RAJESH KUMAR (AM) AND SHRI RAM LAL NEGI (JM) ITA NO. 7431/MUM/2018 ASSESSMENT Y EAR: 2013 - 2014 SHUBHAM NAGRI SAHAKARI PATSANSTHA MARYADIT, 997, 2/2, AADARSH HOUSING SOCIETY, PARK SITE, VIKHROLI (WEST), MUMBAI PAN: AAGTS9805F VS. THE INCOME TAX OFFICER - 29(3)(4 ), ROOM NO. 308, 3 RD FLOOR, PRATYAKSHA KAR BHAVAN, BKC, MUMBAI - 400051 MUMBAI (APPELLANT) (RESPONDENT) & ITA NO. 1038/MUM/2019 ASSESSMENT Y EAR: 2014 - 2015 SHUBHAM N AGRI SAHAKARI PATSANSTHA MARYADIT, 997, 2/2, AADARSH HOUSING SOCIETY, PARKSITE, VIKHROLI (WEST), MUMBAI PAN: AAGTS9805F VS. THE PR. COMMISSIONER OF INCOME TAX - 29, C - 10, 3 RD FLOOR, PRATYAKSHA KAR BHAVAN, BKC, MUMBAI (APPELLANT) (RESPONDENT) ASSESS EE BY : SHRI RAVINDRA NAIK (AR) REVENUE BY : SHRI RAHUL RAMAN (CIT D R ) DATE OF HEARING: 01/05 /201 9 DATE OF PRONOUNCEMENT: 18 / 07 /201 9 O R D E R PER RAM LAL NEGI, JM THESE APPEAL S HAVE BEEN FILED BY THE ASSESSEE AGAINST THE TWO ORDER S DATED 26. 10 .2018 AND 02.01.2019 PASSED BY THE INCOME TAX OFFICER - 29 (3) (4), MUMBAI AND PR. COMMISSIONER OF INCOME TAX - 29 (FOR SHORT THE PR. CIT, MUMBAI, FOR THE ASSESSMENT YEAR 2013 - 14 AND 2014 - 15 RESPECTIVE LY . 2 ITA NO S . 7431/MUM/ 2018 & 1038 / MUM/2019 ASSESSMENT YEAR S : 2013 - 14 AND 2014 - 15 IT A NO. 7431/MUM/2018 (ASSESSMENT YEAR: 2013 - 2014 ) THE ASSESSEE HAS CHALLENGED THE ORDER PASSED BY THE ITO U/S 143 (3) R.W.S. 263 OF THE ACT ON THE FOLLOWING EFFECTIVE GROUNDS : - 1. THE LD. ASSESSING OFFICER HAS ERRED IN NOT CONSIDERING INTEREST FROM C O - OPERATIVE BANKS AS INCOME FROM BUSINESS AND P ROFESSIONS AND HENCE ALLOWABLE AS DEDUCTION U/S 80P(2)(A)(I). 2. THE LD. ASSESSING OFFICER HAS ERRED IN NOT CONSIDERING INCOME EARNED FROM MEMBERS AS SERVICE CHARGES AS INCOME FROM BUSINESS AND PROFESSION AND HE NCE ALLOWABLE AS DEDUCTION U/S 80P(2)(A)(I). 2. THE ASSESSEE HAS FILED THE PRESENT APPEAL AGAINST THE ASSESSMENT ORDER PASSED U/S 143 (3) DATED 26.10.2018. SINCE, THE PRESENT APPEAL DOES NOT ARISE OUT OF THE FIRST APPELLATE AUTHORITY, THE SAME IS NOT MAI NTAINABLE. HENCE, WE DISMISS THIS APPEAL IN LIMINE . ITA NO. 1038/MUM/2019 (ASSESSMENT YEAR: 2014 - 2015 ) IN THIS CASE, THE ASSESSEE FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR UNDER CONSIDERATION DECLARING NIL INCOME AFTER CLAIMING DEDUCTION OF RS. 47,84,337/ - UNDER SECTION 80P OF THE ACT WHICH WAS PROCESSED U/S 143 (1) OF THE ACT. SINCE, THE CASE WAS SELECTED FOR SCRUTINY, THE AO ISSUED NOTICE U/S 143 (2) AND 142 (1) OF THE ACT. IN RESPONSE THEREOF THE AUTHORIZED REPRESENTATIVE APPEARED BEFORE THE AO AND SUBMITTED THE DETAILS. THE ASSESSMENT WAS ACCORDINGLY COMPLETED U/S 143 (3) OF THE ACT ACCEPTING THE RETURN OF INCOME. 2. IT WAS NOTICED FROM THE INCOME AND EXPENDITURE ACCOUNT OF THE ASSESSEE FOR THE ASSESSMENT YEAR 2014 - 15 THAT THE ASSESSEE HAD MADE INVESTMENTS IN VARIOUS BANKS INCLUDING COOPERATIVE BANKS AND EARNED INTEREST INCOME OF RS. 24,51,375/ - ON BANK DEPOSITS AND OTHER INCOME OF RS. 70,103/ - (DAILY SERVICES CHARGES OF RS. 2,30,325, INCOME FROM ADVERTISEMENT OF RS. 8,210/ - AND 3 ITA NO S . 7431/MUM/ 2018 & 1038 / MUM/2019 ASSESSMENT YEAR S : 2013 - 14 AND 2014 - 15 INCOME FROM GODOWN AMOUNTING TO RS. 12,720/ - WHICH WERE NOT OFFERED FOR TAX BY CLAIMI NG EXEMPTION U/S 80P (2)(A), 80P (2)(B) AND 80P (2) (E), THE CLAIM OF DEDUCTION WAS ALLOWED BY THE AO AND NO ADDITION WAS MADE . ACCORDINGLY, THE LD. PR. CIT ISSUED NOTICE U/S 263 OF T HE ACT ON THE GROUND THAT AS PER THE PROVISIONS OF SECTION 80P(2)(D) OF THE ACT IF THERE IS ANY INCOME BY WAY OF INTEREST DERIVED BY THE COOPERATIVE SOCIETY FROM ITS INVESTMENTS WITH ANY OTHER COOPERATIVE SOCIETY, THE WHOLE OF SUCH INCOME IS ELIGIBLE FOR D EDUCTION. HOWEVER, IN THE PRESENT CASE INTEREST INCOME EARN ED FROM COOPERATIVE BANKS DOES NOT FALL UNDER THE PURVIEW OF INCOME FROM COOPERATIVE SOCIETY AS THE COOPERATIVE BANK DOES NOT FALL UNDER THE PURVIEW OF COOPERATIVE SOCIETY REFERRED IN SECTION 80P(2 )(D) OF THE ACT. THE LD. PR. CIT AFTER HEARING THE ASSESSEE HELD THAT THE ASSESSME NT ORDER COMPLETED U/S 143 (3) OF THE ACT IS REQUIRED TO BE REVISED AND SET ASIDE U/S 263 OF THE ACT AS THE SAME IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTEREST O F REVENUE AND DIRECTED THE AO TO FRAME THE ASSESSMENT ORDER DE - NOVO . THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL AGAINST THE SAID ORDER PASSED BY THE LD. PR.CIT. 3. T HE ASSESSEE HAS PREFERRED THIS APPEAL BEFORE THE TRIBUNAL ON THE FOLLOWING EFFECTIVE GR OUNDS : - 1. THE LD. ASSESSING OFFICER HAS ERRED IN NOT CONSIDERING INTEREST FROM CO - OPERATIVE BANKS AS INCOME FROM BUSINESS AND PROFESSIONS AND HENCE ALLOWABLE AS DEDUCTION U/S 80P(2)(A)(I). 2. THE LD. ASSESSING OFFICER HAS ERRED IN NOT CONSIDERING INCOME EARNE D FROM MEMBERS AS SERVICE CHARGES AS INCOME FROM BUSINESS AND PROFESSION AND HENCE ALLOWABLE AS DEDUCTION U/S 80P(2)(A)(I). 3. THE LD. ASSESSING OFFICER HAS ERRED IN NOT ALLOWING DEDUCTION U/S 80P(2)(D) OF THE INCOME TAX ACT, 1961. 4. BEFORE US, THE LD. C OUNSEL FOR THE ASSESSEE SUBMITTED THAT THE LD. PR. CIT HAS WRONGLY EXERCISED THE JURISDICTION U/S 263 OF THE ACT. THE LD. COUNSEL 4 ITA NO S . 7431/MUM/ 2018 & 1038 / MUM/2019 ASSESSMENT YEAR S : 2013 - 14 AND 2014 - 15 FURTHER SUBMITTED THAT THE ASSESSEE IS A COOPERATIVE SOCIETY ENGAGED IN THE ACTIVITY ON CARRYING ON BUSINESS ON PROVIDING CRED IT FACILITIES TO ITS MEMBERS. THE AMOUNT NOT IMMEDIATELY REQUIRED TO BE LENT TO THE MEMBERS WAS INVESTED IN COOPERATIVE BANKS TO EARN INTEREST. THE INTEREST SO EARNED WAS ATTRIBUTABLE TO THE BUSINESS OF BANKING AND THEREFORE ENTITLED TO BE CONSIDERED AS BU SINESS INCOME. DURING THE YEAR RELEVANT TO THE ASSESSMENT YEAR UNDER CONSIDERATION THE SOCIETY EARNED INTEREST INCOME ON DEPOSITS ON VARIOUS COOPERATIVE BANKS AMOUNTING TO RS. 24,51,375/ - AND ANY INTEREST SO EARNED FROM COOPERATIVE BANKS IS CONSIDERED AS A BUSINESS INCOME. THE LD. COUNSEL FURTHER SUBMITTED THAT AS PER THE CBDT CIRCULAR NO. 18 OF 2015 INVESTMENT MADE BY A COOPERATIVE SOCIETY/BANKS ARE PART OF THE BUSINESS OF THE BANKING AND THEREFORE THE INCOME ARISING FROM SUCH INVESTMENTS IS ATTRIBUTABLE TO THE BUSINESS OF THE BANKING FALLING UNDER THE HEAD PROFITS AND GAINS OF BUSINESS AND PROFESSION AND ELIGIBLE TO CLAIM DEDUCTION U/S 80P(2)(A)(I) OF THE ACT. THE SOCIETY DID NOT CARRY OUT ANY ACTIVITY EXCEPT PROVIDING CREDIT FACILITY TO ITS MEMBER S. T H E LD. COUNSEL FOR THE ASSESSEE PLACING RELIANCE ON THE DECISION S OF THE MUMBAI TRIBUNAL IN THE CASE OF SHRI MAHADESHWAR SAHAKARI PAPEDHI MARYADIT LTD. VS. ITO, ITA NO. 374/MUM/2018 , IN THE CASE OF KALIANDAS UDYOG BHAVAN PREMISES CO - OPERATIVE SOCIETY LTD. V S. ITO ITA NO. 6547/MUM/2017, IN THE CASE OF ASST. COMMISSIONER OF INCOME TAX VS. M/S SHIVKRUPA SAHAKARI PATPEDHI LTD., ITA NO. 922/MUM/2012 AND THE DECISION OF ITAT, PUNE, IN THE CASE OF SURESHDADA JAIN NAGARI SAHAKARI PATSANSTHA MARYADIT VS. PR. CIT - 2, ITA NO. 713/PUN/2016 SUBMITTED , THAT SINCE THE ASSESSEE IS ENTITLED FOR THE BENEFIT OF SECTION 80P(2) OF THE ACT, NEITHER THE ASSESSMENT ORDER PASSED BY THE AO IS ERRONEOUS NOR PREJUDICIAL TO THE INTEREST OF THE REVENUE. HENCE, THE LD. CIT (A) HAS WRONGLY EXERCISED THE JURISDICTION U/S 263 OF THE ACT , THEREFORE, THE IMPUGNED ORDER IS LIABLE TO BE SET ASIDE. 5. ON THE OTHER HAND, THE LD. DEPARTMENTAL REPRESENTATIVE (DR) SUPPORTING THE ORDER PASSED BY THE LD. PR. CIT SUBMITTED THAT SINCE THE ASSESSEE HAS NOT OFFERED THE INTEREST INCOME OF RS. 24,51,375/ - ON BANK DEPOSITS AND OTHER 5 ITA NO S . 7431/MUM/ 2018 & 1038 / MUM/2019 ASSESSMENT YEAR S : 2013 - 14 AND 2014 - 15 INCOME OF RS. 70,103/ - , WHICH WAS NOT ELIGIBLE FOR DEDUCTION U/S 80P(2)(A), THE LD. PR. CIT HAS RIGHTLY REVISED THE ASSESSMENT ORDER U/S 263 OF THE ACT. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND ALSO GONE THROUGH THE RELEVANT MATERIAL ON RECORD IN THE LIGHT OF THE RIVAL CONTENTIONS OF THE PARTIES. THE GRIEVANCE OF THE ASSESSEE IS THAT THE LD. PR. CIT HAS WRONGLY EXERCISED REVISIONAL JURISDICTIONAL U/S 263 OF THE ACT IGNORING THAT T HE ASSESSEES CLAIM IS COVERED BY THE DECISION OF THE ITAT, MUMBAI. AS POINTED OUT BY THE LD. COUNSEL FOR THE ASSESSEE, THE COORDINATE BENCH OF THE TRIBUNAL HAS DECIDED THE ISSUE PERTAINING TO THE DEDUCTION U/S 80P(2)(A)(I) OF THE ACT IN FAVOUR OF THE ASSE SSEE IN THE CASE OF SHRI MAHADESHWAR SAHAKARI PATPEDHI MARYADIT VS. ITO ITA NO. 374/MUM/2018 FOR THE AY 2014 - 15. THE OBSERVATIONS OF THE COORDINATE BENCH ARE AS UNDER: - 7. WE HAVE HEARD THE AUTHORIZED REPRESENTATIVES FOR BOTH THE PARTIES, PERUSED THE ORD ERS OF THE LOWER AUTHORITIES AND THE MATERIAL AVAILABLE ON RECORD. AS OBSERVED BY US HEREINABOVE, THE LOWER AUTHORITIES HAD DECLINED TO ALLOW THE CLAIM OF DEDUCTION OF RS. 44,13,761/ - RAISED BY THE ASSESSEE PRIMARILY ON TWO GROUNDS VIZ. (I). THE ASSESSEE W AS A PRIMARY CO - OPERATIVE BANK; AND (II). THE INTEREST INCOME EARNED BY A CO - OPERATIVE SOCIETY ON ITS INVESTMENTS HELD WITH A CO - OPERATIVE BANK WOULD NOT BE ELIGIBLE FOR CLAIM OF DEDUCTION U/S. 80P(2)(D) OF THE I.T ACT. INSOFAR THE CHARACTERIZATION OF THE ASSESSEE WHICH IS A CO - OPERATIVE CREDIT SOCIETY AS A PRIMARY CO - OPERATIVE BANK IS CONCERNED, WE ARE UNABLE TO PERSUADE OURSELVES TO ACCEPT THE SAID OBSERVATION OF THE A.O. ADMITTEDLY, AS PER THE EXPLANATION TO SEC. 80P(4) THE TERM CO - OPERATIVE BANK HAS T O BE CONSTRUED AS PER THE MEANING GIVEN TO IT IN PART V OF THE BANKING REGULATION ACT, 1949 (10 OF 1949). AS IS DISCERNIBLE FROM SEC. 56 (CCI) OF PART V OF THE BANKING REGULATION ACT, 1949, A CO - OPERATIVE BANK MEANS A STATE COOPERATIVE BANK, A CENTRAL CO - OPERATIVE BANK AND A PRIMARY COOPERATIVE BANK. IT IS THE CASE OF THE A.O THAT THE ASSESSEE IS A PRIMARY CO - OPERATIVE BANK. AS PER THE BANKING REGULATION ACT, 1949 A PRIMARY CO - OPERATIVE SOCIETY AS DEFINED IN SEC. 56(CCV) OF PART V, READS AS UNDER : 6 ITA NO S . 7431/MUM/ 2018 & 1038 / MUM/2019 ASSESSMENT YEAR S : 2013 - 14 AND 2014 - 15 S ECTION 56(CCV): PRIMARY CO - OPERATIVE BANK MEANS A CO - OPERATIVE SOCIETY, OTHER THAN A PRIMARY AGRICULTURAL CREDIT SOCIETY (1) THE PRIMARY OBJECT OR PRINCIPAL BUSINESS OF WHICH IS TRANSACTION OF BANKING BUSINESS : (2) THE PAID - UP SHARE CAPITAL AND RESE RVES OF WHICH ARE NOT LESS THAN ONE LAKH OF RUPEES : AND (3) THE BYE - LAWS OF WHICH DO NOT PERMIT ADMISSION OF ANY OTHER CO - OPERATIVE SOCIETY AS A MEMBER : PROVIDED THAT THIS SUB - CLAUSE SHALL NOT APPLY TO THE ADMISSION OF A COOPERATIVE BANK AS A MEMBER BY REASON OF SUCH CO - OPERATIVE BANK SUBSCRIBING TO THE SHARE CAPITAL OF SUCH CO - OPERATIVE SOCIETY OUT OF FINDS PROVIDED BY THE STATE GOVERNMENT FOR THE PURPOSE. ADMITTEDLY, THE ASSESSEE IN THE CASE BEFORE US IS A CO - OPERATIVE SOCIETY REGISTERED UNDER THE MAHARASHTRA CO - OPERATIVE SOCIETY ACT, 1960. INSOFAR THE SATISFACTION OF THE FIRST CONDITION BY THE ASSESSEE I.E AS TO WHETHER THE PRIMARY OBJECT OR THE PRINCIPAL BUSINESS OF THE ASSESSEE IS THAT OF TRANSACTION OF BANKING BUSINESS IS CONCERNED, WE ARE UNAB LE TO SUBSCRIBE TO THE VIEW TAKEN BY THE LOWER AUTHORITIES. AS PER THE DEFINITION OF 'BANKING BUSINESS' IN SECTION 5B OF THE BANKING REGULATION ACT, 1949, THE SAME MEANS THE ACCEPTING, FOR THE PURPOSE OF LENDING OR INVESTMENT OF DEPOSITS OF MONEY FROM THE PUBLIC, REPAYABLE ON DEMAND OR OTHERWISE AND WITHDRAWABLE BY CHEQUE, DRAFT, ORDER OR OTHERWISE. IN OUR CONSIDERED VIEW, AS NEITHER OF THE LOWER AUTHORITIES HAVE RECORDED ANY FINDING THAT THE ASSESSEE WAS ALSO ACCEPTING DEPOSITS OR LENDING MONEY FROM/TO THE NON - MEMBERS, THEREFORE, THE 1ST CONDITION ENVISAGED IN SEC. 56(CCV) OF THE BANKING REGULATION ACT, 1949 WOULD NOT BE SATISFIED, AS IT CANNOT BE HELD THAT THE PRIMARY OBJECT OR PRINCIPAL BUSINESS OF THE ASSESSEE WAS AS THAT OF TRANSACTING BANKING BUSINESS. APART THERE FROM, AS PER SEC. 56(4) OF THE BANKING REGULATION ACT, 1949 EVERY CO - OPERATIVE SOCIETY SHALL BEFORE COMMENCING BANKING BUSINESS IN INDIA APPLY IN WRITING TO THE RESERVE BANK FOR A LICENSE UNDER THE SAID SECTION. IN FACT, A COOPERATIVE CREDIT S OCIETY CANNOT BE HELD TO HAVE AS ITS PRINCIPAL BUSINESS AS BANKING BUSINESS IN THE ABSENCE OF A BANKING LICENSE ISSUED BY 7 ITA NO S . 7431/MUM/ 2018 & 1038 / MUM/2019 ASSESSMENT YEAR S : 2013 - 14 AND 2014 - 15 THE RESERVE BANK OF INDIA UNDER THE BANKING REGULATION ACT, 1949. RATHER, THE ISSUE THAT A CO - OPERATIVE SOCIETY CANNOT BE HELD TO BE A CO - OPERATIVE BANK IN THE ABSENCE OF A LICENSE TO DO BANKING BUSINESS IS COVERED BY THE HONBLE HIGH COURT OF KARNATAKA IN THE CASE OF CIT AND ANOTHER VS. SRI BIURU GURUBASVA PATTINAS AHAKARI SANGHA NIYAMITHA BAGALKOT (2014) 369 ITR 86 (KAR) . THE HON BLE H IGH COURT IN ITS AFORESAID JUDGMENT HAD OBSERVED AS UNDER: THEREFORE, AS THE ASSESSEE IS NOT A COOPERATIVE BANK CARRYING ON EXCLUSIVELY BANKING BUSINESS AND AS IT DOES NOT POSSESS A LICENCE FROM RESERVE BANK OF INDIA TO CARRY ON BUSINESS, IT IS NOT A CO - OPERATIVE BANK. IT IS A CO - OPERATIVE SOCIETY WHICH ALSO CARRIES ON THE BUSINESS OF LENDING MONEY TO ITS MEMBERS WHICH IS COVERED UNDER SECTION 80P(2)(A)(I) I.E. CARRYING ON THE BUSINESS OF BANKING FOR PROVIDING CREDIT FACILITIES TO ITS MEMBERS. THE OBJECT OF THE AFORESAID AMENDMENT IS NOT TO EXCLUDE THE BENEFIT EXTENDED UNDER SECTION 80P(1) TO SUCH SOCIETY WE THUS IN TERMS OF OUR AFORESAID OBSERVATIONS, IN ABSENCE OF ANY MATERIAL TO THE CONTRARY AVAILABLE ON RECORD, ARE OF THE CONSIDERED VIEW THAT IN CAN SAFELY BE CONCLUDED THAT THE ASSESSEE IS A COOPERATIVE CREDIT SOCIETY AND NOT A CO - OPERATIVE BANK. 8. INSOFAR THE ISSUE THAT A CO - OPERATIVE SOCIETY IS ENTITLED TO CLAIM DEDUCTION UNDER SEC. 80P(2)(D) ON THE INTEREST RECEIVED FROM DEPOSITS WITH A CO - OPERAT IVE BANK IS CONCERNED, THE SAME WE FIND IS COVERED BY THE ORDER OF ITAT, MUMBAI SMC BENCH IN THE CASE OF KALIANDAS UDYOG BHAVAN PREMISES CO - OPERATIVE SOCIETY LTD. VS. ITO - 21(2)(1), MUMBAI [ITA NO. 6547/MUM/2017; DATED 25.04.2018], WHEREIN IT WAS OBSERVED AS UNDER: 6. WE HAVE HEARD THE AUTHORIZED REPRESENTATIVES FOR BOTH THE PARTIES, PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT OUR INDULGENCE IN THE PRESENT APPEAL HAS BEEN SOUGHT TO ADJUDICATE AS TO WHETH ER THE CLAIM OF THE ASSESSEE FOR DEDUCTION UNDER SECTION 80P(2)(D), IN RESPECT OF INTEREST INCOME EARNED FROM THE INVESTMENTS MADE WITH THE CO - OPERATIVE BANKS IS IN ORDER OR NOT. WE FIND THAT THE ISSUE INVOLVED IN THE PRESENT APPEAL HINGES AROUND THE 8 ITA NO S . 7431/MUM/ 2018 & 1038 / MUM/2019 ASSESSMENT YEAR S : 2013 - 14 AND 2014 - 15 ADJUD ICATION OF THE SCOPE AND GAMUT OF SUB - SECTION (4) OF SEC. 80P, AS HAD BEEN MADE AVAILABLE ON THE STATUTE BY THE LEGISLATURE VIDE THE FINANCE ACT 2006, WITH EFFECT FROM 01.04.2007. WE FIND THAT THE LOWER AUTHORITIES HAD TAKEN A VIEW THAT PURSUANT TO INSERTI ON OF SUB - SECTION (4) OF SEC. 80P, THE ASSESSEE WOULD NO MORE BE ENTITLED FOR CLAIM OF DEDUCTION UNDER SEC. 80P(2)(D) OF THE INTEREST INCOME EARNED ON THE AMOUNTS PARKED AS INVESTMENTS WITH COOPERATIVE BANKS, OTHER THAN A PRIMARY AGRICULTURAL CREDIT SOCIET Y OR A PRIMARY COOPERATIVE AGRICULTURAL AND RURAL DEVELOPMENT BANK. WE FIND THAT THE LOWER AUTHORITIES HAD OBSERVED THAT THE CO - OPERATIVE BANK WITH WHICH THE SURPLUS FUNDS OF THE ASSESSEE WERE PARKED AS INVESTMENTS, WERE NEITHER PRIMARY AGRICULTURAL CREDIT SOCIETY NOR A PRIMARY COOPERATIVE AGRICULTURAL AND RURAL DEVELOPMENT BANK, THEREFORE, THE INTEREST INCOME EARNED ON SUCH INVESTMENTS WOULD NOT BE ENTITLED FOR CLAIM OF DEDUCTION UNDER SEC. 80P(2)(D) OF THE ACT. 7. WE HAVE DELIBERATED AT LENGTH ON THE ISS UE UNDER CONSIDERATION AND ARE UNABLE TO PERSUADE OURSELVES TO BE IN AGREEMENT WITH THE VIEW TAKEN BY THE LOWER AUTHORITIES. BEFORE PROCEEDING FURTHER, WE MAY HEREIN REPRODUCE THE RELEVANT EXTRACT OF THE SAID STATUTORY PROVISION, VIZ. SEC. 80P(2)(D), AS TH E SAME WOULD HAVE A STRONG BEARING ON THE ADJUDICATION OF THE ISSUE BEFORE US. 80P(2)(D) (1). WHERE IN THE CASE OF AN ASSESSEE BEING A CO - OPERATIVE SOCIETY, THE GROSS TOTAL INCOME INCLUDES ANY INCOME REFERRED TO IN SUB - SECTION (2), THERE SHALL BE DEDUCT ED, IN ACCORDANCE WITH AND SUBJECT TO THE PROVISIONS OF THIS SECTION, THE SUMS SPECIFIED IN SUB - SECTION (2), IN COMPUTING THE TOTAL INCOME OF THE ASSESSEE. (2). THE SUMS REFERRED TO IN SUB - SECT ION (1) SHALL BE THE FOLLOWING, NAMELY: - : - (A)................ ............................................................................ (B)................................................................................ ............ (C)................................................................................ ............ (D). (D) 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, THE WHOLE OF SUCH INCOME; 9 ITA NO S . 7431/MUM/ 2018 & 1038 / MUM/2019 ASSESSMENT YEAR S : 2013 - 14 AND 2014 - 15 THUS, FROM A PERUSAL OF THE AFORESAID SEC. 80P(2)(D) IT STANDS GATHERED THAT INCOME BY WAY OF INTEREST DERIVED BY AN ASSESSEE COOPERATIVE SOCIETY FROM ITS INVESTMENTS HELD WITH ANY OTHER COOPERATIVE SOCIETY, SHALL BE DEDUCTED IN COMPUTING THE TOTAL INCOME OF THE ASSESSEE. WE MAY HEREIN OBSERVE, THAT WHAT IS RE LEVANT 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 COOPERATIVE SOCIETY WITH ANY OTHER COOPERATIVE SOCIETY. WE THOUGH , ARE IN AGREEMENT WITH THE OBSERVATIONS OF T HE LOWER AUTHORITIES THAT WITH THE INSERTION OF SUBSECTION (4) OF SEC. 80P, VIDE THE FINANCE ACT, 2006, WITH EFFECT FROM 01.04.2007, THE PROVISIONS OF SEC. 80P WOULD NOT APPLY IN RELATION TO ANY CO - OPERATIVE BANK OTHER THAN A PRIMARY AGRICULTURAL CREDIT SO CIETY OR A PRIMARY CO - OPERATIVE AGRICULTURAL AND RURAL DEVELOPMENT BANK, BUT HOWEVER, ARE UNABLE TO SUBSCRIBE TO THEIR VIEW THAT THE SAME SHALL ALSO JEOPARDISE THE CLAIM OF DEDUCTION OF A CO - OPERATIVE SOCIETY UNDER SEC. 80P(2)(D) IN RESPECT OF THE INTEREST INCOME ON THEIR INVESTMENTS PARKED WITH A CO - OPERATIVE BANK. WE HAVE GIVEN A THOUGHTFUL CONSIDERATION TO THE ISSUE BEFORE US AND ARE OF THE CONSIDERED VIEW THAT AS LONG AS IT IS PROVED THAT THE INTEREST INCOME IS BEING DERIVED BY A COOPERATIVE SOCIETY FRO M 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 MAY HEREIN OBSERVE THAT THE TERM CO - OPERATIVE 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 R EGISTRATION OF CO - OPERATIVE SOCIETIES; WE ARE OF THE CONSIDERED VIEW, THAT THOUGH THE CO - OPERATIVE BANK PURSUANT TO THE INSERTION OF SUB - SECTION (4) OF SEC. 80P WOULD NO MORE BE ENTITLED FOR CLAIM OF DEDUCTION UNDER SEC. 80P OF THE ACT, BUT HOWEVER, 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 ENFORCED IN ANY STATE FOR THE REGISTRATION OF COOPERATIVE SOCIETIES, THEREFORE, THE INTER EST INCOME DERIVED BY A 10 ITA NO S . 7431/MUM/ 2018 & 1038 / MUM/2019 ASSESSMENT YEAR S : 2013 - 14 AND 2014 - 15 CO - OPERATIVE SOCIETY FROM ITS INVESTMENTS HELD WITH A COOPERATIVE BANK, WOULD DULY BE ENTITLED FOR CLAIM OF DEDUCTION UNDER SEC.80P(2)(D) OF THE ACT. 8. WE SHALL NOW ADVERT TO THE JUDICIAL PRONOUNCEMENTS THAT HAD BEEN RELIED UPON B Y THE AUTHORIZED REPRESENTATIVES FOR BOTH THE PARTIES AND THE LOWER AUTHORITIES. WE FIND THAT THE ISSUE THAT A CO - OPERATIVE SOCIETY WOULD BE ENTITLED FOR CLAIM OF DEDUCTION UNDER SEC. 80P(2)(D), IN RESPECT OF THE INTEREST INCOME DERIVED FROM ITS INVESTMENT S HELD WITH A COOPERATIVE BANK IS COVERED IN FAVOUR OF THE ASSESSEE IN THE FOLLOWING CASES: (I) LAND AND COOPERATIVE HOUSING SOCIETY LTD. VS. ITO (2017) 46 CCH 52 (MUM) (II) M/S C. GREEN COOPERATIVE HOUSING AND SOCIETY LTD. VS. ITO21(3)(2), MUMBAI (ITA N O. 1343/MUM/2017, DATED 31.03.2017. (III) MARVWANJEE CAMA PARK COOPERATIVE HOUSING SOCIETY LTD. VS. ITO - RANGE - 20(2)(2), MUMBAI (ITA NO. 6139/MUM/2014, DATED 27.09.2017. WE FURTHER FIND THAT THE HON'BLE HIGH COURT OF KARNATAKA IN THE CASE OF PR. COMMISSION ER OF INCOME TAX AND ANR. VS. TOTAGARS COOPERATIVE SALE SOCIETY (2017) 392 ITR 74 (KARN) AND HON BLE HIGH COURT OF GUJARAT IN THE CASE OF STATE BANK OF INDIA VS. CIT (2016) 389 ITR 578 (GUJ), HAD ALSO HELD THAT THE INTEREST INCOME EARNED BY THE ASSESSEE ON ITS INVESTMENTS HELD WITH A CO - OPERATIVE 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, AS HAD BEEN RELIED UPON BY THE LD. A.R, ALSO MAKES IT CLEAR BEY OND ANY SCOPE OF DOUBT, THAT THE PURPOSE BEHIND ENACTMENT OF SUB - SECTION (4) OF SEC. 80P WAS TO PROVIDE THAT THE CO - OPERATIVE BANKS WHICH ARE FUNCTIONING AT PAR WITH OTHER BANKS WOULD NO MORE BE ENTITLED FOR CLAIM OF DEDUCTION UNDER SEC. 80P(4) OF THE ACT. WE ARE OF THE CONSIDERED VIEW THAT THE RELIANCE PLACED BY THE CIT(A) 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(S.C) BEING DISTINGUISHABLE ON FACTS, THUS, HAD WRONGLY BEEN RELIED UPON BY THE CIT(A). 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 11 ITA NO S . 7431/MUM/ 2018 & 1038 / MUM/2019 ASSESSMENT YEAR S : 2013 - 14 AND 2014 - 15 DEDUCTION UNDER SEC. 80P(2)(D) ON THE INTEREST INCOME ON THE INVES TMENTS PARKED WITH COOPERATIVE BANK. WE FURTHER FIND THAT THE RELIANCE PLACE BY THE LD. D.R ON THE ORDER OF THE ITAT F BENCH, MUMBAI IN THE CASE OF M/S VAIBHAV COOPERATIVE CREDIT SOCIETY VS. ITO - 15(3)(4) (ITA NO. 5819/MUM/2014, DATED 17.03.2017 IS DISTIN GUISHABLE ON FACTS. WE FIND THAT THE SAID ORDER WAS PASSED BY THE TRIBUNAL IN CONTEXT OF ADJUDICATION OF THE ENTITLEMENT OF THE ASSESSEE CO - OPERATIVE BANK TOWARDS CLAIM OF DEDUCTION UNDER SEC.80P(2)(A)(I) OF THE ACT. WE FIND THAT IT WAS IN THE BACKDROP OF THE AFORESAID FACTS THAT THE TRIBUNAL AFTER CARRYING OUT A CONJOINT READING OF SEC. 80P(2)(A)(I) R.W. SEC. 80P(4) HAD ADJUDICATED THE ISSUE BEFORE THEM. WE ARE AFRAID THAT THE RELIANCE PLACED BY THE LD. D.R ON THE AFORESAID ORDER OF THE TRIBUNAL BEING DIST INGUISHABLE ON FACTS, THUS, WOULD BE OF NO ASSISTANCE FOR ADJUDICATION OF THE ISSUE BEFORE US. STILL FURTHER, THE RELIANCE PLACED BY THE LD. D.R ON THE ORDER OF THE ITAT SMC BENCH, MUMBAI IN THE CASE OF SHRI SAI DATTA CO - OPERATIVE CREDIT SOCIETY LTD. VS. ITO (ITA NO. 2379/MUM/2015, DATED 15.01.2016, WOULD ALSO NOT BE OF ANY ASSISTANCE, FOR THE REASON THAT IN THE SAID MATTER THE TRIBUNAL HAD SET ASIDE THE ISSUE TO THE FILE OF THE ASSESSING OFFICER FOR FRESH EXAMINATION. THAT AS REGARDS THE RELIANCE PLACED BY THE LD. D.R ON THE JUDGMENT OF THE HON'BLE HIGH COURT OF KARNATAKA IN THE CASE OF PR. CIT VS. TOTAGARS CO - OPERATIVE SALE SOCIETY (2017) 395 ITR 611 (KARN), THE HIGH COURT HAD CONCLUDED THAT A CO - OPERATIVE SOCIETY WOULD NOT BE ENTITLED TO CLAIM OF DEDUCTION UNDER SEC. 80P(2)(D). HOWEVER, 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), THAT WHERE THERE IS A CONFLICT BETWEEN DECISIONS OF NONJURISDICTIONAL HIGH COURT S, THEN A VIEW WHICH IS IN FAVOUR OF THE ASSESSEE IS TO BE PREFERRED AS AGAINST THAT TAKEN AGAINST HIM. THUS, TAKING SUPPORT FROM THE AFORESAID JUDICIAL PRONOUNCEMENT OF THE H ON BLE HIGH COURT OF JURISDICTION, WE THUS 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 HON BLE HIGH COUR T OF GUJARAT IN THE CASE OF STATE BANK OF INDIA VS. CIT (2016) 389 ITR 578 (GUJ), WHEREIN IT HAS OBSERVED THAT THE INTEREST INCOME 12 ITA NO S . 7431/MUM/ 2018 & 1038 / MUM/2019 ASSESSMENT YEAR S : 2013 - 14 AND 2014 - 15 EARNED BY A CO - OPERATIVE SOCIETY ON ITS INVESTMENTS HELD WITH A CO - OPERATIVE BANK WOULD BE ELIGIBLE FOR CLAIM OF DEDUCTION UN DER SEC.80P(2)(D) OF THE ACT. 9. WE THUS IN THE BACKDROP OF OUR AFORESAID OBSERVATIONS ARE UNABLE TO PERSUADE OURSELVES TO BE IN AGREEMENT WITH THE VIEW TAKEN BY THE LOWER AUTHORITIES THAT THE ASSESSEE WOULD NOT BE ENTITLED FOR CLAIM OF DEDUCTION UNDER SE C. 80P(2)(D), IN RESPECT OF THE INTEREST INCOME ON THE INVESTMENTS MADE WITH THE CO - OPERATIVE BANK. WE THUS SET ASIDE THE ORDER OF THE LOWER AUTHORITIES AND CONCLUDE THAT THE INTEREST INCOME OF RS.27,48,553/ - EARNED BY THE ASSESSEE ON THE INVESTMENTS HELD WITH THE CO - OPERATIVE BANK WOULD BE ENTITLED FOR CLAIM OF DEDUCTION UNDER SEC. 80P(2)(D). 10. THE APPEAL OF THE ASSESSEE IS ALLOWED IN TERMS OF OUR AFORESAID OBSERVATIONS. ON THE BASIS OF OUR AFORESAID OBSERVATIONS, IT CAN SAFELY BE CONCLUDED THAT THE A SSESSEE WHICH IS A CO - OPERATIVE CREDIT SOCIETY WAS DULY ENTITLED TO CLAIM DEDUCTION U/S 80P(2)(D) ON THE INTEREST INCOME ON ITS INVESTMENTS HELD WITH THE CO - OPERATIVE BANKS. 9. WE THUS BEING OF THE CONSIDERED VIEW THAT THE ASSESSEE WHICH IS A CO - OPERATIV E CREDIT SOCIETY IS ENTITLED TO CLAIM DEDUCTION ON ITS INVESTMENTS HELD WITH THE CO - OPERATIVE BANKS, THEREIN DIRECT THE A.O TO ALLOW THE SAME TO THE SAID EXTENT. THE ORDER OF THE CIT(A) IS SET ASIDE IN TERMS OF OUR AFORESAID OBSERVATIONS. 7. WE NOTICE T HAT THE COORDINATE BENCH HAS RELIED ON THE JUDGMENT OF THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF CIT AND ANOTHER VS. SHRI BIURU GURUBASVA PATTINA SAHAKARI SANGHA NIYAMITHA BAGALKOT , IN WHICH IT HAS BEEN HELD THAT THE ASSESSEE SOCIETY IS NOT A COOPERA TIVE BANK CARRYING ON EXCLUSIVELY BANKING BUSINESS AS IT DOES NOT POSSESS A LICENSE FROM RESERVE BANK OF INDIA TO CARRY THE BUSINESS . THEREFORE, THE ASSESSEE IS A COOPERATIVE SOCIETY WHICH ALSO CARRIES ON THE BUSINESS OF LENDING MONEY TO ITS MEMBERS WHICH IS COVERED U/S 80P(2) (A)(I) OF THE ACT . IN THE PRESENT CASE ALSO, THE ASSESSEE IS A COOPERATIVE SOCIETY WITHOUT HAVING AN Y LICENSE FOR BANKING BUSINESS. SINCE, THE FACTS OF THE PRESENT CASE ARE SIMILAR AND THE ISSUES INVOLVED ARE IDENTICAL, WE 13 ITA NO S . 7431/MUM/ 2018 & 1038 / MUM/2019 ASSESSMENT YEAR S : 2013 - 14 AND 2014 - 15 HOLD THAT I N THE PRESENT CASE THE ASSESSEE SOCIETY IS COVERED U/S 80P(2)(A)(I) OF THE ACT AS THE ASSESSEE SOCIETY IS CARRYING ON THE BUSINESS OF BANKING FOR PROVIDING CREDIT FAC ILITIES TO ITS MEMBER AND THE OBJECT OF THE AMENDMENT IS NOT TO EXCLUDE THE BENEFIT EXTENDED U/S 80P(1) TO SUCH SOCIETY. WE FURTHER NOTICE THAT THE COORDINATE BENCH HAS ALSO DECIDED THE IDENTICAL ISSUE IN FAVOUR OF THE ASSESSEE IN THE CASE OF KALIANDAS UDYOG BHAV AN PREMISES COOPERATIVE SOCIETY LTD. VS. ITO, ITA NO. 6547/MUM/2017 FOR AY 2014 - 15 . HENCE, WE RESPECTFULLY FOLLOWING THE DECISION OF THE COORDINATE BENCH ES DISCUSSED ABOVE HOLD THAT THE ASSESSEE SOCIETY IS ENTITLED FOR DEDUCTION U/S 80P(2)(A)(I) OF THE ACT AND THE LD. PR. CIT HAS WRONGLY EXERCISED THE POWERS OF REVISION U/S 263 OF THE ACT. IN OUR CONSIDERED VIEW, THE ASSESSMENT ORDER PASSED BY THE AO IS NEITHER ERRONEOUS NOR PREJUDICIAL TO THE INTEREST OF THE REVENUE. WE THEREFORE , ALLOW THE APPEAL OF THE ASSESSEE AND SET ASIDE THE IMPUGNED ORDER PASSED BY THE PR. CIT. IN THE RESULT, APPEAL FILED BY THE ASSESSEE FOR AY 2013 - 14 IS DISMISSED AND APPEAL FOR THE AY 2014 - 15 IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 18 TH JULY , 2019 . SD/ - SD/ - ( RAJESH KUMAR ) ( RAM LAL NEGI ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI ; DATED: 18 / 07 / 201 9 ALINDRA, PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . 14 ITA NO S . 7431/MUM/ 2018 & 1038 / MUM/2019 ASSESSMENT YEAR S : 2013 - 14 AND 2014 - 15 / BY ORDER, //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI