Shree Madhi Surag Staff Co-op. Credit Society Ltd., Surat V. Dy. Commissioner of Income Tax, CPC, Bengaluru

ITA 220/SRT/2021

• Counselvise Citation: [2022] 104 COUNSELVISE.COM (IT) 1858 (ITAT-SURAT)
• Duration Of Justice: 7 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-07-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 17-07-2022
• Assessment Year: 2017-2018
• Appeal Filed On: 21-11-2021
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 263; 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, SURAT BENCH, SURAT BEFORE SHRI PAWAN SINGH, JM & DR. A. L. SAINI, AM आयकर अपील सं./ITA No.220/SRT/2021 Assessment Years: (2017-18) (Virtual Court Hear ing) Shree Madhi Sugar Staff Co-Op Credit Society Ltd. Madhi Ta: Bardoli, Surat-394340. Vs. Dy. Commissioner of Income Tax, Central Processing Centre (CPC), Bengaluru-560500 èथायीलेखासं./जीआइआरसं./PAN/GIR No.: AAAAS 3360 C अपीलाथȸ /Appellant Ĥ×यथȸ /Respondent Ǔनधा[ǐरती कȧ ओर से /Assessee by Shri Mehul Shah, CA राजèव कȧ ओर से /Respondent by Shri Anurag Dubey, Sr. DR सुनवाई की तारीख /Date of Hearing 18/07/2022 उɮघोषणा कȧ तारȣख Date of Pronouncement 19/ 07/2022 आदेश / O R D E R PER DR. A. L. SAINI, AM: Captioned appeal filed by the assessee, pertaining to Assessment Years (AY) 2017-18 is directed against the order passed by the Learned National Faceless Appeal Centre (NFAC)/ ld. CIT(A) dated 01.10.2021 which in turn arises out of an assessment order passed by the Assessing Officer under section 143(3) of the Income Tax Act, 1961 (hereinafter referred to as “the Act”), dated 20.12.2019. 2. Grounds of appeal raised by the assessee are as follows:- “1. On the facts and circumstances of the case as well as law on the subject, the learned CIT(A) has erred in confirming the action of assessing officer in making addition of Rs.19,95,497/- on account of disallowance of interest (Rs.19,94,744/-) and dividend (Rs.753/-) income received from co-operative bank u/s 80P(2)(d) of the Act. 2. Without prejudice to the ground no.1 the ld. CIT(A) in making addition of entire amount of interest from banks and dividend in aggregate without granting proportionate deduction of interest expenses and overheads. 3. It is therefore prayed that addition made by the assessing officer and confirmed by CIT(A) may please be deleted.” Page | 2 220/SRT/2021 AY 17-18 Shree Madhi Sugar Staff Co-Op Credit Society Ltd. 3. When this appeal was called out for hearing, learned counsel for the assessee invited our attention to the order dated 12.05.2021, passed by the Division Bench of this Tribunal in the case of Bardoli Vibhag Gram Vikas Co.Op. Credit Society Ltd. vs. Principal Commissioner of Income Tax-2, Surat in ITA No.283/SRT/2019 for the Assessment Year 2014-15 whereby the issue relating to deduction u/s 80P(2)(d) of the Act has been adjudicated in favour of assessee that is, interest received from co-operative bank is eligible for deduction u/s 80P(2)(d) of the Act. Learned counsel for the assessee submitted that the present appeal is squarely covered by the aforesaid order of the Tribunal (supra), a copy of which was also placed before the Bench. 4. Learned Departmental Representative but he nevertheless relied upon the orders of the authorities below. 5. We see no reasons to take any other view of the matter than the view so taken by the same combination of this co-ordinate Bench of this Tribunal in the case of Bardoli Vibhag GramVikas Co.Op. Credit Society Ltd. (supra). In this order, the Tribunal has inter alia observed as follows: “11. We have considered the rival submission of both the parties. We have also deliberated on the written submission filed by learned AR of the assessee and various case laws relied by him during his submiss We have also gone through the various documentary evidences filed in the form of paper book (PB learned AR of the assessee. We have noted that during the assessment the Assessing Officer vide notice in section 143(2)7142(1) of the Act dated 31-8-2015 and 13-4-2016. The assessee filed its reply through its (AR) and furnished required details and. after examining the issue allowed the deductions under sec 80P(2)(o f ) as discussed in para 4 of the assessment order. The Assessing Officer passed assessment order 18- 10-2016. 12. The Id. PCIT before passing under section 263 of the Act. identified the issue regarding the claim of deduction under section 80P(2)(d) in its show cause notice dated 6-3-2019. The assessee in its reply date 3-2019 clearly explained that the issue was examined by Assessing Officer and that the assessment order not erroneous. The assessee also explained that similar disallowances/issues was subject matter in the appeal filed by the revenue before Tribunal in A.Y. 2009-10, 2010-11 and 2012-13 and the assessee was allo 1 similar deductions. 13. The Hon'ble Jurisdictional High Court m Aryan Arcade Ltd. v. Pr. CIT [2019] 412 ITR 277 (Gujarat) held that merely because Commissioner held a different belief that would not permit him to take the order revision, it if further held that Page | 3 220/SRT/2021 AY 17-18 Shree Madhi Sugar Staff Co-Op Credit Society Ltd. when Assessing Officer made full enquiry, he made up his mind, the notice revision is not valid, (emphasis added by us). Further. Hon'ble Madras High Court in CIT v. Mepco Indiist Ltd. 12007] 163 Taxman 648/294 ITR 121 (Madras) held that when two views are possible on an issue and is not the case of the Commissioner that the view taken by Assessing Officer is not permissible in law, Commissioner cannot invoke his jurisdiction under section 263 of the Act. (emphasis added by us) 14. As we have noted above the assessing officer has made enquiries on the allowability of deduction un section 80(P)(2)(W) and passed the assessment order, thus, the Assessing Officer has taken a reasonable; possible view which cannot be held as erroneous. 15. The Hon'ble Karnataka High Court in Totagars Cooperative Sales Society (supra) held that for purpose of section 80P(2)(d) a Co-operative Bank should be considered by a Co-operative Society and interest earned by Co-operative Society from Cooperative Bank would necessarily be deductible un section 80P(1) of the Act. Further, the Hon'ble Jurisdictional High Court in Surat Vankar Sahakari Sangh Ltd. (supra) held that assessee co-operative society is eligible for deduction under section 80P(2)(d) in respect gross interest received from co-operative bank without adjusting interest paid to said bank. 16. The Co-ordinate Bench of Rajkot Tribunal in Surendarnagar District Co- operative Milk Producer Un Ltd. v. Dy. CIT [2019] 111 taxmann.com 69/179 ITD 690 (Rajkot Tribunal) also held the assessee operative society could not claim benefit under section 80P(2)(d) in respect of interest earned by it from deposits made with nationalized/private banks however, the said earned and on deposits made with co-operative bank. Thus, in view of the aforesaid legal discussion we are the considered view that order passed by Assessing Officer is not erroneous, though it may be prejudicial the interest of the Revenue. Therefore, the twin conditions that orders is erroneous and so far as prejudicial the interest of revenue, as prescribed under section 263 is not fulfilled in the present case. 17. Moreover, we have seen that in assessee's own case for A.V. 2009-10, 2010-11 and 2012-13, the similar disallowance under section 80P(2)(d) was made by the assessing officer while passing assessment order under section 143(3). However on appeal before Ld. CIT(A), the disallowances were deleted and the order the Ld. CIT(A), the disallowance were deleted and the order of the Ld. CIT(A) in all years were confirmed. 18. The Id. DR for the revenue relied on the case law in Totagars Co-operative Society from surplus deposits kept with Co-operative bank, is not eligible for deduction under section 80P(2)(d). Considering the legal position that when there are conflicting decisions of non-jurisdictional High Courts, on similar issue, the decision of jurisdictional High Court is having binding precedent. thus, keeping in view of the decision Hon'ble jurisdictional High Court, in Surat Vankar Sahakari Sangh Ltd. (supra) wherein the assessee-co-operative society is held eligible for deduction under section 80P(2)(d) in respect of gross inters received from co- operative bank without adjusting interest paid to said bank, we conclude that the order passed by assessing office is not erroneous. Hence, the grounds of appeal raised by assessee are allowed.” Page | 4 220/SRT/2021 AY 17-18 Shree Madhi Sugar Staff Co-Op Credit Society Ltd. 6. As the issue is squarely covered in favour of assessee by the decision of co- ordinate Bench (supra) and there is no change in facts and law and Ld.Sr.DR for the Revenue is unable to produce any material to controvert the aforesaid findings of the co-ordinate Bench (supra). Therefore, respectfully following the binding precedent, we delete the addition made by Assessing Officer. 7. In the result, appeal filed by the assessee is allowed. Order is pronounced in the open court on 19 /07/2022 by placing the result on the Notice Board as per Rule 34(5) of the Income Tax (Appellate Tribunal) Rule 1963. Sd/- Sd/- (PAWAN SINGH) (Dr. A.L. SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER lwjr /Surat Ǒदनांक/ Date: 19/07/2022 Dkp, Outsourcing Sr.P.S. Copy of the Order forwarded to 1. The Assessee 2. The Respondent 3. The CIT(A) 4. CIT 5. DR/AR, ITAT, Surat 6. Guard File By Order // True Copy // Assistant Registrar/Sr. PS/PS ITAT, Surat