UDAIPUR SAHAKARI UPBHOKTA THOK BHANDAR LTD, UDAIPUR V. DCIT , NATIONAL FACELESS ASSESSMENT CENTRE , DELHI

ITA 249/JODH/2023

• Counselvise Citation: [2024] 100 COUNSELVISE.COM (IT) 3808 (ITAT-JODHPUR)
• Duration Of Justice: 7 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-02-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 31-01-2024
• Assessment Year: 2018-2019
• Appeal Filed On: 13-07-2023
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Capital asset; Revision of order; Depreciation; Search and seizure; Principle of natural justice; Additional depreciation; Question of law; Tangible material; Difference of opinion; Capital receipt; Reason to believe; Change of opinion; Revenue expenditure; Set aside
• Section: 147; 148; 56; 263; 154; 143(3); 115JB; 143(1); 80P; 250; 80HH; 207; 208; 264; 192; 194A; 13; 119; 22; 2(19)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL JODHPUR BENCH, JODHPUR. BEFORE: DR. S. SEETHALAKSHMI, JJUDICIAL MEMBER & SHRI RATHOD KAMLESH JAYANTBHAI, ACCOUNTANT MEMBER ITA Nos. 247/Jodh/2023 Assessment Years: 2015-16 Udaipur Sahakari Upbhokta Thok Bhandar Ltd., 1 st Floor Shastri Circle, Udaipur [PAN: AAAAU 0159 K] (Appellant) Vs. DCIT, Circle-02, Udaipur (Respondent) ITA Nos. 248, 249, 250, 252, 253/Jodh/2023 Assessment Year: 2013-14, 2018-19, 2020-21, 2017-18, 2016-17 Udaipur Sahakari Upbhokta Thok Bhandar Ltd., 1 st Floor Shastri Circle, Udaipur [PAN: AAAAU 0159 K] (Appellant) Vs. DCIT, National Faceless Assessment Centre, Delhi (Respondent) Appellant by Sh. Amit Kothari, CA Respondent by Ms. Nidhi Nair, Sr. DR Date of Hearing 01.02.2024 Date of Pronouncement 20.02.2024 ORDER PER BENCH These six appeals filed by assessee are arising out of the order of the National Faceless Appeal Centre, Delhi dated 08.06.2023, I.T.A. Nos. 247 to 250 & 252 to 253/Jodh/2023 Udaipur Sahakari Upbhokta Thok Bhandar Ltd. 2 09.06.2023, 12.06.2023 & 13.06.2023 [here in after ‘NFAC’ ] for assessment years 2015-16, 2013-14, 2018-19, 2020-21, 2017-18 & 2016-17 2. Since the issues involved in these appeals are almost identical on facts and are almost common, except the difference in figure, therefore, these appeals were heard together with the agreement of both the parties and are being disposed off by this consolidated order. 3. At the outset, the ld. AR has submitted that the matter in ITA No. 247/Jodh/2023 may be taken as a lead case for discussions as the issues involved in the lead case are common and inextricably interlinked or in fact interwoven and the facts and circumstances of other cases are identical except the difference in the amount disputed in other cases. The ld. DR did not raise any specific objection against taking that case as a lead case. Therefore, for the purpose of the present discussions, the case of ITA No. 247/Jodh/2023 is taken as a lead case. Based on the above arguments we have also seen that for these appeals grounds are similar, facts are similar, and arguments were similar and therefore, were heard together and are disposed by taking lead case facts, grounds, and arguments from the folder in ITA No. 247/Jodh/2023. I.T.A. Nos. 247 to 250 & 252 to 253/Jodh/2023 Udaipur Sahakari Upbhokta Thok Bhandar Ltd. 3 4. Before moving towards the facts of the case we would like to mention that the assessee has assailed the appeal in ITA No. 247/Jodh/2023 on the following grounds; “1. That on the facts and in the circumstances of the case the proceedings initiated for rectification u/s 154 of the IT Act by the learned AO is bad in law and bad on facts. 2. That the Appellate Authority was wrong in holding the initiation of proceedings u/s 154 of The IT Act as proper particularly when the deduction claimed by the appellant u/s 80 P(2) (d) was claimed in the original return of income and the same was duly allowed by the CIT(A) in his order dated 26/07/2018 and thus the rectification has been made merely on change of opinion. 3. That on the facts and in the circumstances of the case rectification order passed by the learned AO for not allowing deduction of Rs.22601978/- claimed u/s 80 P (2) (d) of the IT Act is bad in law and without jurisdiction and without proper authority. 4. That the appellant reserves its right to add, amend, alter or substitute any of the grounds of appeal on or before the date of hearing. 5. That the relief be allowed as per grounds of appeal.” 5. Succinctly, the fact as culled out from the records is that the assessee is a consumer co-operative society engaged in the retail and wholesale business through its various co-operative stores and assessed to income tax for the past several years. The assessee is also having income from interest on its investment of surplus funds with co- operative banks which though engaged in banking business but also registered under the Rajasthan Co-operative Societies Act and such interest received from co-operative banks has been claimed as exempt I.T.A. Nos. 247 to 250 & 252 to 253/Jodh/2023 Udaipur Sahakari Upbhokta Thok Bhandar Ltd. 4 u/s 80 P (2) (d) of the IT Act. The deduction of such interest u/s 80 P (2) (d) has been allowed to the assessee in the preceding years as well as in the subsequent years. The deduction claimed u/s 80P(2)(d) has been disallowed in the intimation issued u/s 143(1) of the IT Act. The assessee filed a rectification application u/s 154 of the IT Act to allow the deduction u/s 80P(2)(d) but the department has passed the order u/s 154 rejecting the rectification application for allowing deduction u/s 80P(2)(d). The assessee filed an appeal against the order passed u/s 154 of the IT Act and the deduction claimed has been allowed by the CIT (A) in his order dated 26/07/2018. 5.1 Subsequently the assessee has been again issued notice u/s 154 of the IT Act on 15.09.2021 by the ld. AO for disallowing deduction claimed u/s 80P (2)(d) of the IT Act. In response to which the assessee has filed its reply objecting to the initiation of proceedings u/s 154 of the IT Act as the deduction had been already allowed by the Appellate Authority and as such the learned AO was not having proper jurisdiction to rectify the order u/s 154 of the IT Act. However, the learned AO has passed order u/s 154 of the IT Act by disallowing the deduction claimed u/s 80P (2)(d) of the IT Act. I.T.A. Nos. 247 to 250 & 252 to 253/Jodh/2023 Udaipur Sahakari Upbhokta Thok Bhandar Ltd. 5 6. Aggrieved from the order of Assessing Officer, the assessee preferred an appeal before the ld. CIT(A). Apropos to the grounds so raised the relevant finding of the ld. CIT(A) is reiterated here in below: 7. I have carefully examined the submission of the appellant as reproduced in the preceding paragraph and the facts emanating from the A.O's order, wherein various disallowances and additions have been made. 7.1 In the Ground No.1, 5 & 6 of the appeal are general in nature not requiring any adjudication. Ground No.2 is on the issue relating to regarding the treatment of interest income earned by the appellant. The AO has disallowed the claim of exemption u/s.80P by the appellant in respect of interest income earned from banks. At the outset it may be mentioned that this issue has now been finally settled as has been discussed in the succeeding paragraphs of this order. 7.1.1 The issue to be decided is with regard to the interest income earned on account of investments made with Banks, whether it is entitled to deduction either u/s 80P(2)(d) or u/s 80P(2)(a)(i) of the I.T.Act. The Bangalore Bench of the Tribunal in the case of M/s. Vasavamba Co-operative Society Ltd. had held that the assessee is not entitled to deduction u/s 80P(2)(d) nor u/s 80P(2)(a)(i) of the I. T. Act with regard to the interest income earned from investments made with cooperative banks. The Bangalore Bench of the Tribunal in the case of M/s. Vasavamba Co-operative Society Ltd. (supra) had followed the judgment of the Hon'ble High Court in the case of Pr. Commissioner of Income-tax & Anr. v.Totagars Co-operative Sale Society 395 ITR 611 (Kar.). The relevant finding Bangalore Bench of the Tribunal, reads as follow: - "8. We have carefully considered the rival submissions. An order passed contrary to a decision of the Hon'ble Jurisdiction High Court would be in the nature of an order prejudicial to the interest of the revenue being an order passed on an incorrect application of law. In the case of Malabar Industrial Co. Ltd. vs. CIT[2000] 243 ITR 83(SC), the Supreme Court held that there must be two conditions namely that the order of assessment is erroneous and that the order is prejudicial to the interests of the Revenue which must be satisfied before the Commissioner may invoke his powers under Section 263 of the Act. The Court held that every loss of tax cannot be said to be prejudicial to the interests of the Revenue. If two views are possible, and the AO has adopted one of those views, the order of assessment cannot be prejudicial to the interests of the Revenue. However, when the Assessing Officer does not apply his mind to the issue at hand or violates any of the principles of natural justice, the order shall be prejudicial to the interests of the Revenue. Also, an incorrect I.T.A. Nos. 247 to 250 & 252 to 253/Jodh/2023 Udaipur Sahakari Upbhokta Thok Bhandar Ltd. 6 assumption offacts or incorrect application of law by the AO would make the order of assessment erroneous and prejudicial to the interests of the Revenue. 9. The Hon'ble Supreme Court in the case of the The Totgars Cooperative Sale Society Ltd. Vs. ITO 322 ITR 283 (SC) held that Income from utilization of surplus funds was taxable under the head income from other sources, and therefore not eligible for deduction u/s 80P. The Hon'ble Kamataka High Court in case of Tumkur Merchants Souharda Credit Cooperative Ltd. vs. ITO (230 Taxman 309), was dealing with a case where deduction u/s. 80P(2)(a) (i) of the Act was claimed on interest from the deposits made in a nationalized bank out of the amounts which was used by the assessee for providing credit facilities to its members. The Assessee claimed that the said interest amount is attributable to the business of providing credit facilities by the assessee and forms part of profits and gains of business. The Hon'ble Karnataka High Court after considering SC judgment in case of Totgars(supra) held that since the word income is qualified by the expression "attributable" to the business of Banking is used in Sec. 80P(2)(a)(i) of the Act, it has to receive a wider meaning and should be interpreted as covering receipts from sources other than the actual conduct of business. The Court held a Cooperative Society which is carrying on the business of providing credit facilities to its members, earns profits and gains of business by providing credit facilities to its members. The interest income so derived or the capital, if not immediately required to be lent to the members, they cannot keep the said amount idle. If they deposit this amount in bank so as to earn interest, the said interest income is attributable to the profits and gains of the business of providing credit facilities to its members only. The society is not carrying on any separate business for earning such interest income. The income so derived is the amount of profits and gains of business attributable to the activity of carrying on the business of banking or providing credit facilities to its members by a co-operative society and is liable to be deducted from the gross total income under Section 80P of the Act. The Hon'ble Court also distinguished the decision of the Hon'ble Supreme Court in the case of Totgars (supra) by observing that the Supreme Court was dealing with a case where the assessee-Cooperative Society, apart from providing credit facilities to the members, was also in the business of marketing of agricultural produce grown by its members. The sale consideration received from marketing agricultural produce of its members was retained in many cases. The said retained amount which was payable to its members from whom produce was bought, was invested in a short-term deposit/security. Such an amount which was retained by the assessee Society was a liability and it was shown in the balance sheet on the liability side. Therefore, to that extent, such interest income cannot be said to be attributable either to the activity mentioned in Section 80P(2)(a)(i) of the Act or under Section 80P(2)(a)(iii) of the Act. I.T.A. Nos. 247 to 250 & 252 to 253/Jodh/2023 Udaipur Sahakari Upbhokta Thok Bhandar Ltd. 7 Therefore in the facts of the said case, the Apex Court held the assessing officer was right in taxing the interest income indicated above under Section 56 of the Act. The Court also observed that even the Hon'ble Supreme made it clear that they are confining the said judgment to the facts of that case. The Court therefore concluded that Hon'ble Supreme Court was not laying down any law, Similar view taken in Guttigedarara Credit Co-operative Society Ltd. VS. ITO (2015) 377ITR 464 (Karnataka). In t the case of PRINCIPAL COMMISSIONER OF INCOME TAX AND ANOTHER VS. TOTAGARS CO- OPERATIVE SALE SOCIETY 392 ITR 0074 (Karn) in the context of deduction u/s. 8OP(2)(d) of the Act, it was held that Sec. 80P(2)(d) of the Act allows deduction in respect of any income by way of interest or dividends derived by the co- operative society from its investments with any other cooperative society, the whole of such income. The Hon'ble Court held that that the aforesaid Supreme Court's decision in the case of Totgars (supra), was not applicable to deduction u/ 8OP(2)(d) of the Act, because the said decision was rendered with regard to deduction under Section 8OP(2)(a)(i) of the Act and not under Section 8OP(2)(d) of the Act. 10. However, the Hon'ble Karnataka High Court in the case of PRINCIPAL COMMISSIONER OF INCOME TAX AND ANOTHER vs. TOTAGARS CO- OPERATIVE SALE SOCIETY 395 ITR 0611 (Karn) took a different view and held that interest income earned on deposits whether with any other bank will be in the nature of income from other sources and not income from business and therefore the deduction u / s_{r} 80P(2)(d) of the Act cannot be allowed to the Assessee. The Hon'ble Court followed decision of Hon'ble Gujarat High Court in the case of SBI Vs. CIT 389 ITR 578(Guj.) in which the Hon'ble Gujarat High Court dissented from the view taken by the Hon'ble Karnataka High Court in the case of Tumkur Merchants case (supra) The Hon'ble Court had to deal with the following substantial question of law: "(I) Whether the assessee, Totagar Co-operative Sale Society, Sirsi, is entitled to 100% deduction under Section 80P(2)(d) of the Income Tax Act, 1961 (for short 'the Act') in respect of whole of its income by way of interest earned by it during the relevant Assessment Years from 2007-2008 to 2011-2012 on the deposits or investments made by it during these years with a Cooperative Bank, M/s. Kanara District Central Co-operative Bank Limited? (II) Whether the Supreme Court decision in the case of the present respondent assessee, Totgar Co-operative Sale Society Limited itself rendered on 08th February 2010, in Totgar's Cooperative Sale Society Limited v. Income Tax Officer, reported in (2010) 322 ITR 283 SC. (2010) 3 SCC 223 for the preceding years, namely Assessment Years 1991-1992 to 1999-2000 (except Assessment Year 1995-1996) holding that such Interest income earned by the assessee I.T.A. Nos. 247 to 250 & 252 to 253/Jodh/2023 Udaipur Sahakari Upbhokta Thok Bhandar Ltd. 8 was taxable under the head 'Income from Other Sources' under Section 56 of the Act and was not 100% deductible from the Gross Total Income under Section 80P(2)(a)(i) of the Act is not applicable to the present Assessment Years 2007 neg2008 to 2011-2012 involved in the present appeals and therefore, whether TAX DET the Income Tax Appellate Tribunal as well as CIT (Appeals) were justified in holding that such interest income was 100% deductible under Section 80P(2)(d) of the Act?" 11. The Hon'ble Court held that such interest income is not income from business but was income chargeable to tax under the head income from other sources and therefore there was no question of allowing deduction u / s 8OP(2)(d) of the Act. The following points can be culled out from the aforesaid decision: 1. What Section 8OP(2)(d) of the Act, which was though not specifically argued and canvassed before the Hon'ble Supreme Court, envisages is that such interest or dividend earned by an assessee co- operative society should be out of the investments with any other co- operative society. The words 'Co-operative Banks' are missing in clause (d) of subsection (2) of Section 80P of the Act. Even though a co- operative bank may have the corporate body or skeleton of a cooperative society but its business is entirely different and that is the banking business, which is governed and regulated by the provisions of the Banking Regulation Act, 1949. Only the Primary Agricultural Credit Societies with their limited work of providing credit facility to its members continued to be governed by the ambit and scope of deduction under Section 80P of the Act. (Paragraph 13 of the Judgment). 2. The banking business, even though run by a Co-operative bank is sought to be excluded from the beneficial provisions of exemption or deduction under Section 80P of the Act. The purpose of bringing on the statute book sub-section (4) in Section 80P of the Act was to exclude the applicability of Section 80P of the Act altogether to any co-operative bank and to exclude the normal banking business Income from such exemption/deduction category. The words used in Section 80P(4) are significant. They are: "The provisions of this section shall not apply in operative bank other than a primary agricultural credit society". relation to any co The words "in relation to can include within its ambit and scope even the interest income earned by the respondent-assessee, a cooperative Society from a Co-operative Bank. This exclusion by Section 80P(4) of the Act even though without any amendment in Section 8OP(2)(d) of the Act is sufficient to deny the claim of the respondent assessee for deduction under Section 80P(2)(d) of the Act. The only exception is I.T.A. Nos. 247 to 250 & 252 to 253/Jodh/2023 Udaipur Sahakari Upbhokta Thok Bhandar Ltd. 9 that of a primary agricultural credit society. (Paragraph-14 of the judgment) 3. The amendment of Section 194A(3)(v) of the Act excluding the Cooperative Banks from the definition of "Co-operative Society" by Finance Act, 2015 and requiring them to deduct income tax at source under Section 194A of the Act also makes the legislative intent clear that the Co-operative Banks are not that specie of genus co-operative society, which would be entitled to exemption or deduction under the special provisions of Chapter VIA in the form of Section 80P of the Act. (Paragarph 15 of the Judgment) 4. If the legislative intent is so clear, then it cannot contended that the omission to amend Clause (d) of Section 80P(2) of the Act at the same time is fatal to the contention raised by the Revenue before this Court and sub silentio, the deduction should continue in respect of interest income earned from the co-operative bank, even though the Hon'ble Supreme Court's decision in the case of Respondent assessee itself is otherwise. (Paragraph 16 of the Judgment) 5. On the decision of the earlier decision of the Hon'ble Karnataka High Court referred to in the earlier part of this order, the Court held that it did not find any detailed discussion of the facts and law pronounced by the Hon'ble Supreme Court in the case of the respondent assessee (Totagars Sales Co-operative society) and hence unable to follow the same in the face of the binding precedent laid by the Hon'ble Supreme Court. The Hon'ble Court observed that in paragraph 8 lof the said order passed by a coordinate bench that the learned Judges have observed that chithat INCOME ARTMEN "the issue whether a co-operative bank is considered to be a co- operative society is no longer res integra, for the said issue has been decided by the Income Tax Appellate Tribunal itself in different cases". No other binding precedent was discussed in the said judgment. Of course, the Bench has observed that a Co-operative Bank is a specie of the genus co- operative Society, with which we agree, but as far as applicability of Section 80P(2) of the Act is concerned, the applicability of the Supreme Court's decision cannot be restricted only if the income was to fall under Section 80P(2)(a) of the Act and not under Section 8OP(2)(d) of the Act. (Paragraph-18 of the Judgment) 6. The Court finally concluded that it would not make a difference, whether the interest income is earned from investments/deposits made in a Scheduled Bank or in a Co-operative Bank. Therefore, the said decision of the Co-ordinate Bench is distinguishable and cannot be applied in the present appeals, in view of the binding precedent from the Hon'ble Supreme Court." (Paragraph 19 of the Judgment) I.T.A. Nos. 247 to 250 & 252 to 253/Jodh/2023 Udaipur Sahakari Upbhokta Thok Bhandar Ltd. 10 12 The Hon'ble Karnataka High Court in the aforesaid decision also placed reliance on a decision of the Hon'ble Gujarat High Court in the case of STATE BANK OF INDIA (SBI) vs. COMMISSIONER OF INCOME TAX 389 ITR 0578 (Guj) did not agree with the view taken by the Kamataka High Court in Tumkur Merchants Souharda Credit Cooperative Ltd. (supra) that the decision of the Supreme Court in Totgars Co-operative Sale Society (supra) is restricted to the sale consideration received from marketing agricultural produce of its members which was retained in many cases and invested in short term deposit/security and that the said decision was confined to the facts of the said case and did not lay down any law. The Hon'ble Gujarat High Court held that in the case of Totgars Cooperative Sale Society (supra) decided by Hon'ble Supreme Court, the court was dealing with two kinds of ds of activities st interest income earned from the amount retained from the amount payable to the members from whom produce was bought and which was invested in short-term deposits/securities; and the interest derived from the surplus funds that the assessee therein invested in short term deposits with the Government securities. The Hon'ble Gujarat High Court in this regard referred to the decision of the Kamataka High Court from which the matter travelled to the Supreme Court wherein it was the case of the assessee that it was carrying on the business of providing credit facilities to its members and therefore, the appellant-society being an assessee engaged in providing credit facilities to its members, the interest received on deposits in business and securities is attributable to the business of the assessee as its job is to provide credit facilities to its members and marketing the agricultural products of its members. The Hon'ble Gujarat High Court therefore held that decision in the case of Totagar Co- operative Sales Society rendered by the Hon'ble Supreme Court is not restricted only to the investments made by the assessee therein from the retained amount which was payable to its members but also in respect of funds not immediately required for business purposes. The Supreme Court has held that interest on such investments, cannot fall within the meaning of the expression "profits and gains of business" and that such interest income cannot be said to be attributable to the activities of the society, namely, carrying on the business of providing credit facilities to its members or marketing of agricultural produce of its members. The court has held that when the assessee society provides credit facilities to its members, it earns interest income. The interest which accrues on funds not immediately required by the assessee for its business purposes and which been invested in specified securities as "investment" are ineligible for under section 8OP(2)(a)(i) of the Act. (Paragraph-13 of the Judgment) 13. It can thus be seen that the ratio laid down by the Hon'ble Karnataka High Court in the case of Totagars Cooperative Sales Society in 395/TR 611 (Karn) is that in the light of the principles enunciated by the Supreme Court in Totgars Co- operative Sale I.T.A. Nos. 247 to 250 & 252 to 253/Jodh/2023 Udaipur Sahakari Upbhokta Thok Bhandar Ltd. 11 Society (supra), in case of a society engaged in providing credit facilities to its members, income from investments made in banks does not fall within any of the categories mentioned in section 8OP(2)(a) of the Act. However, section 80P(2)(d) of the Act specifically exempts interest earned from funds invested in cooperative societies. Therefore, to the extent of the interest earned from investments made by it with any co-operative society, a co-operative society is entitled to deduction of the whole of such income under section 80P(2)(d) of the Act. However, interest earned from investments made in any bank, not being a co- operative society, is not deductible under section 80P(2)(d) of the Act. 14. The CIT was therefore justified in exercising his powers of revision u/s.263 of the Act and directing the AO to tax interest income in question as it is neither of the nature specified in Sec. 80P(2)(a) (i) or 80P(2)(d) of the Act. 15. The argument of the le Lfor the see Assessee has been that the AO has applied his mind and allowed the deduction and therefore the jurisdiction u/s.263 of the Act cannot be exercised. On this argument, the learned DR pointed out that the jurisdiction u/s 263 of the Act was exercised by the CIT not for the reason that the AO failed to make proper enquiries before concluding the Assessment but on the ground that his decision was contrary to decision of Hon'ble Jurisdictional High Court and therefore this argument of the learned counsel for the Assessee cannot be accepted. The argument that the view taken by the AO was a possible view and hence revision u/s.263 of the Act is bad is again not acceptable because, the view that ought to have been adopted was the later binding decision of the High Court in the case of Totagar co-operative sales society 395 ITR 611 (Karn.). 16. The argument that co-operative Banks are also co-operative societies is again without any basis in the light of the law explained in the case of Totagar co-operative sales society 395 ITR 611 (Kam.). The reliance placed by the learned counsel for the Assessee on the earlier decisions of the Hon'ble Karnataka High Court in the case of Tumkur Merchants Souharda Credit Cooperative Ltd. (supra) that the decision in Totgars Co-operative Sale Society (supra) stands explained by the later decision in the case of Totagar co-opeartive sales society 395 ITR 611 (Karm.). 7.1.2 In the light of the above order of the Bangalore Bench of the Tribunal, which has analyzed the judicial precedents on the subject, it is clear that the assessee is not entitled to deduction u/s 80P(2)(d) nor u/s 8OP(2)(a)(i) of the I.T. Act in respect of interest income earned from investments with banks. Accordingly, Ground No.2 of the appeal is dismissed.” I.T.A. Nos. 247 to 250 & 252 to 253/Jodh/2023 Udaipur Sahakari Upbhokta Thok Bhandar Ltd. 12 7. As the assessee did not find any relief from the order of the ld. CIT(A) and feeling dissatisfied with the order of the ld. CIT(A) the present appeal has been preferred on the grounds as raised by the assessee as reiterated here in above solely challenging the deduction denied claimed u/s. 80P(2)(d) of the Act. To support the various grounds so raised by the assessee, the ld. AR appearing on behalf of the assessee submitted that the assessee is a co-operative society registered under the Societies Act and he has placed his fund under the another co-operative societies. Therefore, since the assessee is not engaged or directly or indirectly in the banking services, the interest received by the assessee being the credit co-operative society invested their ideal fund into another co- operative society clearly covered under the provisions of section 80P(2)(d) of the Act and therefore, the denial of said exemption is on wrong appreciation of facts and therefore, the appeal of the assessee having similar set of facts on various assessment years wherein even the ld. CIT(A) has allowed the said claim earlier year and in some of the cases action u/s 154 of the Act has been done and any other years action of section 147 has been initiated and thereby in all these appeals challenging the same issue of deduction u/s. 80P(2)(d) of the Act. The issue is squarely covered by the various decisions of the Jodhpur Bench as well as Jaipur Benches of ITAT and therefore, the denial of exemption I.T.A. Nos. 247 to 250 & 252 to 253/Jodh/2023 Udaipur Sahakari Upbhokta Thok Bhandar Ltd. 13 to the assessee u/s 80P(2)(d) of the Act is required to be allowed. In support of the grounds so raised in these appeal the ld. AR of the assessee has filed the following submission: Appellant is Co-Operative Society engaged in Consumer Co-Operative Store and registered under the Rajasthan Co-Operative Societies Act, 1953. • During the year certain interest was received from deposit with Co-Operative Bank, on which the deduction was originally allowed in 143(3) assessment under section 80P. In all earlier years also, such claim was always allowed. In A.Y. 2014-15 and 2015-16 where such disallowance was made was allowed in appeal by CIT(A) and no further appeal filed by the department in appeal on such issue. • On the same issue the proceedings u/s 148 was initiated on the ground that such deduction u/s 80P on such interest was not rightly allowed. • Section 80P(2)(d) provides for deduction in respect of whole of such income by way of interest or dividend received by the Co-Operative Society . • Earlier assessment completed u/s 143(3) after detailed examination of the case, and the reopening of completed assessment not valid. Reliance is placed on following decisions : Citiustech Healthcare Technology P. Ltd. Vs. DCIT (2023) 7 NYP CTR 1433 (Bom) Reassessment—Full a true disclosure—Change of opinion—Reasons to believe itself shows that there was no non disclosure of material facts—Assessee has furnished all the details and relevant documents itself as also those required to be furnished by the AO from time to time during the assessment proceedings—AO has perused the documents and thereafter passed the original order—There is, thus, no failure on the part of assessee to make a full and true disclosure during the assessment proceedings to justify reopening of the proceedings on this account—Reopening of assessment is merely based on a change of opinion on the same set of facts and material before the AO which was available to him at the time of original assessment. Troikaa Pharmaceuticals Ltd. Vs. ACIT (2023) 7 NYP CTR 1472 (Guj) Reassessment—Full and true disclosure—Validity vis-a-vis opportunity of being heard—Reopening was based on the very same records I.T.A. Nos. 247 to 250 & 252 to 253/Jodh/2023 Udaipur Sahakari Upbhokta Thok Bhandar Ltd. 14 which were placed at the time of the original assessment—Details regarding the issue under consideration was already examined by the then AO for which a specific query was raised and therefore it was not open for the AO to reopen the same or revisit his opinion because of a ‘change of opinion’—Objections were disposed of after over a year by an order passed on 31st Aug., 2021 which indicates that there was a clear case of procedural violations—It is not the case of the authority that there was a failure to fully and truly disclose all facts that led to the escapement of income so as to warrant an exercise of reassessment under s. 148—Further, the order was passed in gross violation of principles of natural justice—Reopening was not therefore sustainable Sun Pharmaceutical Industries Ltd. Vs. DCIT (2023) 7 NYPCTR 1267 (Guj) Reassessment—Full and true disclosure—Reason to believe—Not based on new fresh tangible material—Perusal of reasons to believe indicate that on verification of Annex. "F" of the Tax Audit Report and the notes thereto, it was found that the assessee had not quantified the amount of additional depreciation @10 per cent on the eligible assets purchased in the preceding year and had made passing remarks without substantiating its claim—Reopening the assessment has been based on the very annexure of the audit report which was available to the Revenue in the exercise that was carried out during the scrutiny assessment—Reason to believe therefore cannot be said to be based on any new of fresh tangible material and cannot therefore be used as a tool to reopen the assessment proceedings—Assessee has been claiming additional depreciation at the rate of 20 per cent on the eligible plant and machinery by virtue of the provisions of s. 32(1)(iia)— Assessment has been reopened beyond a period of four years and it is not a case where it can be said that the assessee has failed to disclose fully and truly all material facts necessary for his assessment—Thus during the course of original proceedings, the claim of the depreciation allowance as made by the AO was examined and after considering the ROI, Tax Audit Report and other submissions to the questionnaire that the AO had restricted his exercise only to the issue of allowability of higher depreciation on motor vehicle—Moreover, if in the perception of the AO, the report was wanting for details then information could have been called for but couldn't have been taken as a cue for exercise of jurisdiction under s. 148—Therefore the notice issued by the respondent under s. 148 dt. 30th March, 2018 and the consequential order disposing off objections are quashed and set aside. I.T.A. Nos. 247 to 250 & 252 to 253/Jodh/2023 Udaipur Sahakari Upbhokta Thok Bhandar Ltd. 15 CIT vs. Kelvinator of India Ltd. (2010) 320 ITR 561 (SC) On going through the changes, quoted above, made to s. 147 of the Act, we find that, prior to the Direct Tax Laws (Amendment) Act, 1987, reopening could be done under the above two conditions and fulfilment of the said conditions alone conferred jurisdiction on the AO to make a back assessment, but in s. 147 of the Act (with effect from 1st April 1989), they are given a go-by and only one condition has remained, viz., that where the AO has reason to believe that income has escaped assessment, confers jurisdiction to reopen the assessment. Therefore, post-1st April 1989, power to reopen is much wider. However, one needs to give a schematic interpretation to the words " reason to believe" failing which, we are afraid, s. 147 would give arbitrary powers to the AO to reopen assessments on the basis of " mere change of opinion", which cannot be per se reason to reopen. We must also keep in mind the conceptual difference between power to review and power to reassess. The AO has no power to review ; he has the power to reassess. But reassessment has to be based on fulfilment of certain preconditions and if the concept of " change of opinion" is removed, as contended on behalf of the Department, then, in the garb of reopening the assessment, review would take place. One must treat the concept of " change of opinion" as an in-built test to check abuse of power by the AO. Hence, after 1st April 1989, the AO has power to reopen, provided there is " tangible material" to come to the conclusion that there is escapement of income from assessment. Reasons must have a live link with the formation of the belief. Our view gets support from the changes made to s. 147 of the Act, as quoted hereinabove. Under the Direct Tax Laws (Amendment) Act, 1987, Parliament not only deleted the words " reason to believe" but also inserted the word " opinion" in s. 147 of the Act. However, on receipt of representations from the companies against omission of the words " reason to believe", Parliament reintroduced the said expression and deleted the word " opinion" on the ground that it would vest arbitrary powers in the AO. DCIT vs. Cholamandalam Investment & Finance Co. Ltd. (2022) 36 NYPTTJ 319 (Chennai) Reassessment—Change of opinion—Absence of tangible material— Issue of adjustment of security premium by reduction of capital while computation under s. 115JB and on the other hand, the amount was taken in the Revenue account as transferred from securities premium account which was credited in the P&L a/c, so, there is no effect in the net profit already disclosed in tax audit report—During the assessment under s. 143(3), the AO never pointed out the issue as escapement of I.T.A. Nos. 247 to 250 & 252 to 253/Jodh/2023 Udaipur Sahakari Upbhokta Thok Bhandar Ltd. 16 income—Reopening was made as per the report of the CAG. So, there is no tangible material to the AO for permission of reasonable believe for escapement of income—Further, there is no failure on the part of the assessee to disclose fully and truly all material facts necessary for this assessment—There is no reason to believe that the income has escaped assessment during the year—Assessee’s statement that all said withdrawals from security premium account consequent to the aforesaid proposal will be utilised for the adjustments set up prescribed above—Issue was already discussed in the financial statement for the financial year 2008-09 and which was came to the purview of the learned AO—Thus, reopening is nothing but a mere change of opinion of the AO during formation of belief for reopening—Consequently, notice under s. 148 is not sustainable as same is based on change of opinion. • Reliance is placed on decision of Hon’ble Madras High Court in the case of Thorapadi Urban Co-Op Credit Society Limited & Ors. Vs. ITO in WP 11172 of 2023 in order dated 10.10.2023 had quashed proceedings u/s 148 under exactly similar facts and circumstances involving deduction u/s 80P(2)(d). • Action u/s 148 taken beyond four years was invalid and in this regard reliance is placed on following decisions: Shashi Mohan Garg vs. ITO (2023) 7 NYPCTR 1544 (Delhi) Azim Premji Trustee Company P. Ltd. Vs. DCIT (2023) 331 CTR (Kar) 173 Asian Paints Ltd. Vs. DCIT (2019) 261 Taxman 380 (Bom) Navkar Share & Stock Brokers P. Ltd. Vs. ACIT (2017) 393 ITR 362 (Guj) Meghmani Energy LTd. Vs. DCIT (2016) 389 ITR 281 (Guj) Shriram Foundry Ltd vs. DCIT (2012) 250 CTR (Bom) 116 Sound Casting Pvt Ltd vs. DCIT (2012) 250 CTR (Bom) 119 CIT vs. Steel Tubes of India Ltd. (2010) 326 ITR 46 (MP) Prashant Projects Ltd. vs. ACIT (2011) 333 ITR 368 (Bom) • Approval granted by PCIT was in an mechanical manner. Kartik Suresh Chandra Gandhi vs. ACIT (2023) 7 NYPCTR 1115 (Bom) Sagar Bullion P. Ltd vs. UOI (2022) 444 ITR 686 (Bom) • The appellant has received interest from other co-operative banks on which deduction was claimed u/s 80P(2)(d). The appellant had received interest from Udaipur Central Co-Operative Bank, The Rajasamand Urban Co- Operative Bank and Udaipur Mahila Urban Co-Operative Bank. Such interest I.T.A. Nos. 247 to 250 & 252 to 253/Jodh/2023 Udaipur Sahakari Upbhokta Thok Bhandar Ltd. 17 received from other Co-Opperative Societies is exempt u/s 80P(20(d) of the Act. • The appellant had submitted the registration certificate of all the above Banks under the Rajasthan Co-Operative Societies Act during the assessment proceedings to show that the interest income was received from the co- operative society. • Reliance is placed on decision of Hon’ble Madras High Court in the case of Thorapadi Urban Co-Op Credit Society Limited & Ors. Vs. ITO in WP 11172 of 2023 in order dated 10.10.2023 had quashed proceedings u/s 148 under exactly similar facts and circumstances involving deduction u/s 80P(2)(d) and held that such deduction is allowable and the relevant order of the Hon’ble Court is reproduced hereunder : “The issue involved in all these writ petitions are common and hence, they are taken up together, heard and disposed off through this common order. 2. The present writ petitioners challenged the impugned notices issued under Section 148 A(b) for reopening the assessment made u/s.148 of the Income Tax Act, 1961 (in short, 'the Act'). The central issue that arise in the present case is as to whether the petitioners are entitled for deduction under Section 80P(2)(d) of the Act. The petitioners submitted that they have made investments with the Cooperative Bank from which, they received interest and therefore they are entitled to claim deduction under section 80P(2)(d). However, the respondent in the impugned notices, has stated that the petitioners / Society are not entitled for deduction holding that the deduction available in the above provision is only for the income and interest received from the Co-operative Society and not from the Co-operative Bank. 3. The learned counsel appearing for the petitioner submitted that any interest received from any Co-operative Society including the Co-operative Bank are entitled for the deduction under Section 80P(2)(d). In this regard, he referred to the definition to the “Co-operative Societies” as defined under Section 2(19) of the Act and would submit that without taking into consideration of meaning of Co-operative Societies under the wrong impression that the interest received from the Co-operative Bank is not liable for deduction under Section 80P(2)(d), the respondent Department disallowed the deduction and therefore the present writ petitions have been filed challenging the impugned orders. 4.Per contra, Dr.B.Ramaswamy, learned Senior Central Government Standing Counsel, vehemently opposed and referring to the written submissions submitted by him in paragraphs 21 to 26, would state that the petitioner I.T.A. Nos. 247 to 250 & 252 to 253/Jodh/2023 Udaipur Sahakari Upbhokta Thok Bhandar Ltd. 18 received the income from the Co-operative Bank and as per the provisions of the Income Tax Act any income received from the Co-operative Bank is not eligible for deduction under Section 80P(2)(d) of the Act. Further, he contended that the Reserve Bank of India also granted permission to carry on the business of banking activities with the entity wherein a Co-operative Society made an investment and to receive the interest from the investment since the RBI had granted the Banking license to the Co-operative Banks. Thus, according to the respondent, the Co-operative Bank lost the status as an entity of Co-operative Society as it would provide the services not only for the members of a Co-operative society but to other general public as well. So taking into consideration of this aspect, the Assessing Officer passed the impugned notices, stating that any interest amount received from the investment made in a Co-operative Bank by a Co-operative Society, is not entitled for deduction under Section 80P(2)(d) of the Act. 5. In support of his contentions, he referred to a judgment of the Hon'ble Supreme Court in “The Totagars Cooperative Sale Society -Vs- Income Tax Officer, Karnataka” reported in [2010] 188 Taxman 282 SC. 6. In reply, the learned counsel for the petitioner submitted that the law laid down by the Hon'ble Supreme Court in the above said judgment is pertaining to the interpretation and the deduction which would be applicable under Section 80P(2)(a)(i), where it was held, the Co-operative Bank is eligible for deduction if any interest income is received from its own members by providing credit facilities. Therefore, even the said judgment is taken into consideration in the present case, the income was received by the Co- operative Society only and not from the Co-operative Bank, hence the petitioner is eligible for the deduction. 7. I have given due consideration for the submission made by the learned counsel appearing for the petitioner as well as the respondent. 8. The main issue is to decide in the present case is as to whether the petitioner Co-operative Society is entitled for a deduction for the interest income received from the Co-operative Bank? 9. It would be appropriate to extract hereunder the relevant portion of Section 80P(2)(d). “80 P. Deduction in respect of income of cooperative societies: (1) ...... ..... ..... I.T.A. Nos. 247 to 250 & 252 to 253/Jodh/2023 Udaipur Sahakari Upbhokta Thok Bhandar Ltd. 19 (2) The sums referred to in sub-section (1) shall be the following, namely :— (a) to (c) ..... ..... ...... (d) “in respect of any income by way of interest or dividends derived by the co-operative society from its investment with any other co- operative society, the whole of such income” 9. A reading of the above said provision makes it clear that in the event if any Co-operative Society derived income by way of interest from investment made in any other Co-operative Society the whole such interest is eligible for deduction. Now the issue is as to whether the Co-operative Bank would fall within the purview of the term 'Co-operative Society'. In the present case, the petitioner produced a document to show that the Co-operative Bank, where they have made investments was registered under the Tamil Nadu Co- operative Societies Act, 1983 on 20.5.2003. In this regard, he also produced a copy of the Certificate of Incorporation of the said Co-operative Bank. Therefore, it is clear that the investment made by the petitioner is a Co- operative Bank registered under the Co-operative Societies Act. The Income Tax Act, 1961 has also defined 'Co-operative Society' under Section 2(19) as follows: "2(19). “Co-operative society" means 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. 10. A reading of the above definition would make it clear that 'Co-operative Society' means a Co-operative Society registered under Co-operative Societies Act, 1912. Thus, a Co-operative Society referred therein is only a co- operative society as defined under the Act, be it a Co-operative Society carrying on banking business or Co-operative Society carrying on the other businesses or a Co-operative bank. 11. The learned counsel for the respondent referred to the judgment of the Hon'ble Supreme Court rendered in Totgars Cooperative Sale Society Ltd., v. Income-tax Officer, Karnataka”, wherein the issue came up for consideration as to whether the interest income received by a Co-operative Bank from its members by way of providing the credit facilities to its members is eligible for deduction or not. Ultimately the Hon'ble Surpeme Court found that under Section 80P(2)(a)(i), the same is eligible for deduction. Therefore, the law laid down by the Hon'ble Supreme Court is not applicable for in the present case as the eligibility of deduction of interest has to be decided under Section I.T.A. Nos. 247 to 250 & 252 to 253/Jodh/2023 Udaipur Sahakari Upbhokta Thok Bhandar Ltd. 20 80P(2)(d) and not under Section 80P(2)(a)(i). The learned counsel has also relied upon other judgments which are not applicable for the present facts of the present case 12. At this juncture, it would be appropriate to refer a judgment passed by a Division Bench of this Court in “Commissioner of Income Tax Salem v. The Salem Agricultural Producers Co-operative Marketing Society Ltd” in Tax Case Appeal No.5 of 2015, wherein, apart from other substantial issues, the following issue has been framed for consideration, which reads as under: “Whether on the facts and in the circumstances of the case, the Tribunal was right in holding that the assessee is to be treated as primary agricultural society and is carrying on the business of banking or providing credit facilities to its members and is entitled for deduction under Section 80P(2)(a)(i) of the Income Tax Act, 1961 with respect to the interest received from Class B members who were involved in non-agricultural society?”. While answering to the above, the Division Bench held that the respondent therein, which is a Co-operative society, is entitled to avail the benefit under 80P(2)(d) of the Act. The judgment was rendered on 10.08.2016, where the judgement rendered by the Hon'ble Supreme Court in 2010 was considered. 13. In such view of the matter, since the impugned orders are passed without considering all these aspects, this Court is of the view that the same are liable to be set aside. Accordingly, the Writ Petitions are allowed and all the impugned notices are set aside. No costs. Consequently, all the connected miscellaneous petitions are closed.” • With regard to claim for deduction u/s 80 P(2)(d) decision of ITAT Amritsar Bench in the case of Dhamai Cooperative Agriculture Service society ltd, vs. ITO (2023) 37 NYPTTJ 1328 (Asr) is also in favour of the assessee by considering the various decisions including the Supreme Court decision in the case of Totagars. Deduction under s. 80P(2)(a)(i)—Allowability—Interest form investment made in bank—Co-operative societies invested their surplus fund in Co-operative Bank and accordingly the interest was earned—Disallowance of claim of deduction for violation of s. 80P(2)(d)—Addition as income from other sources by placing restriction under s. 80P(4)—Not correct—Co-operative Bank wherein the assessee deposited out of its surplus funds for earning interest— Then, the only interest was earned by the assessee on the deposit would be eligible for deduction under s. 80P(2)(d)—Interest of investment related to co- I.T.A. Nos. 247 to 250 & 252 to 253/Jodh/2023 Udaipur Sahakari Upbhokta Thok Bhandar Ltd. 21 operative society, the assessee is eligible for deduction under s. 80P(2)(a)(i)— Kot Ram Dass Coop. Thrift & Credit Society Ltd. vs. ITO (ITA No. 86/Asr/2021, dt. 13th June, 2023) followed. • The Kot Ram Dass Co Operative Thirft & Credit Society Ltd. vs. ITO (2023) 37 NYPTTJ 864 (Asr) Deduction under s. 80P(2)(d)—Allowability—Interest earned from deposits in co-operative banks—Sec. 80P(2)(d) allows whole deduction of income by way of interest or dividend derived by a Co-operative Society from its investments with any other co-operative society—This provision does not make any distinction with regard to the source of investment because this section envisages deduction in respect of any income derived by co-operative society from in its investment with a co-operative society—Therefore, the investment of the assessee in cooperative bank is eligible investment under s. 80P(2)(d)—Interest of the said investment related to Co-operative Society— Hence, assessee is eligible for deduction under s. 80P(2)(a)(i)—Principal CIT vs. Totgars Coop Sale Society (2017) 392 ITR 74 (Kar), Tumukur Merchants Souhard Credit Coop. Ltd. vs. ITO (2015) 55 taxmann.com 447 (Kar), CIT vs. Gulshan Mercantile Urban Co-operative Bank Ltd. (2013) 29 taxmann.com 8 (All), Kaliandas Udyog Bhavan Memises Co-operative Society Ltd. vs. ITO (ITA No. 6547/Mum/2017, dt. 25th April, 2018) and Tirupati Campus Ph. II Co- Op. Housing Society Maryadit vs. ITO (ITA No. 1429/Pune/2018, dt. 28th Feb., 2019) followed; Totgar Cooperative Sales Society Ltd. vs. ITO (2010) 229 CTR (SC) 209 : (2010) 35 DTR (SC) 25 : (2010) 188 Taxman 282 (SC) distinguished • ITO V/s The Totagars Co-operative Sale Society, ITA No 100069/2016. Reported in (2017) 392 ITR 74 (Kar) In the above case honorable Karnataka High Court has considered following facts before passing an order. a) "The word “Co-operative Society” are the words of a large extent, and denotes a genus, whereas the word “Co-operative Bank” is a word of limited extent, which merely demarcates and identifies a particular species of the genus Cooperative Societies. Co-Operative Society can be of different nature, and can be involved in different activities; the Co- operative Society Bank is merely a variety of the Cooperative Societies. Thus the Cooperative Bank which is a species of the genus would necessarily be covered by the word “Co-operative Society. b) Furthermore, even according to Section 56(i)(ccv) of the Banking Regulations Act, 1949, defines a primary Co-Operative Society bank as the meaning of Co-Operative Society. Therefore, a Cooperative Society Bank would be included in the words ‘Co-operative Society.” Further I.T.A. Nos. 247 to 250 & 252 to 253/Jodh/2023 Udaipur Sahakari Upbhokta Thok Bhandar Ltd. 22 more Honorable High Court has also held that the Judgment passed by Honorable Supreme Court in Civil Appeal No. 1622 of 2010 in the same case is not considered as that case was related to issue in respect of deduction claimed under section 80P(2)(a)(i) and not in respect to 80P(2)(d) hence the interest received by a co-operative society from a co- operative bank is allowed as deduction u/s 80P(2)(d). The Mavilayi Service Co Operative Bank Ltd. & Ors. Vs. CIT (2021) 318 CTR (SC) 609 Deduction under s. 80P(2)(a)(i)—Providing credit facilities to members— Applicability of s. 80P(4)—AO cannot be said to be going behind any registration certificate when he engages in a fact-finding enquiry as to whether the co-operative society concerned is in fact providing credit facilities to its members—Such fact finding enquiry would entail examining all relevant facts of the co-operative society in question to find out whether it is, as a matter of fact, providing credit facilities to its members, whatever be its nomenclature— Expression "providing credit facilities to its members" does not necessarily mean agricultural credit alone—Sec. 80P(2)(a)(i) must be contrasted with s. 80P(2)(a)(iii) to (v), which expressly speak of agriculture—Once the co- operative society is providing credit facilities to its members, the fact that it is also providing credit facilities to non-members does not disentitle the society from availing of the deduction—However, since profits and gains from credit facilities given to non-members cannot be said to be attributable to the activity of providing credit facilities to its members, such amount cannot be deducted—Limited object of s. 80P(4) is to exclude co-operative banks that function at par with other commercial banks i.e., which lend money to members of the public—Sec. 80P being a benevolent provision must be read liberally and reasonably, and if there is ambiguity, in favour of the assessee— Further, s. 80P(4) is to be read as a proviso, which specifically excludes co- operative banks which are co-operative societies engaged in banking business i.e. engaged in lending money to members of the public, which have a licence in this behalf from the RBI—Therefore, once s. 80P(4) is not applicable to the facts of the case, all the assessees in the present case are entitled to the benefit of the deduction under s. 80P(2)(a)(i), notwithstanding that they may also be giving loans to their members which are not related to agriculture—‘Nominal members’ are ‘members’ as defined under the Kerala Co-operative Societies Act, 1969—Thus, loans given to such nominal members would qualify for the purpose of deduction under s. 80P(2)(a)(i). Rena Sahakari Sakhar Karkhana Ltd V/s PCIT. In the above judgment it was held that while allowing deduction u/s 80P(2)(d) co-operative banks are considered as Co-operative Society as the word Co-operative society has wider meaning which also includes cooperative banks and it was further held I.T.A. Nos. 247 to 250 & 252 to 253/Jodh/2023 Udaipur Sahakari Upbhokta Thok Bhandar Ltd. 23 that the amendment u/s 80P(4) has been made to introduce parity in working of Co-operative banks with other banks as the co-operative society works at par with other banks and also enjoy additional benefit u/s 80P so to curb such practice an amendment has been made for not allowing such benefits to cooperative banks. Further Honorable ITAT has also considered following Judgments. a) Pr. Commissioner of Income Tax and Anr. Vs. Totagars Cooperative Sale Society (2017) 392 ITR 74 (Karn) Deduction under s. 80P(2)(d)—Interest earned by co-operative society from investment with another co-operative society—Allowability of deduction in respect of interest from investment in co-operative bank— Co-operative society is a genus of which co-operative bank is a specie— Therefore, for purposes of s. 80P(2)(d), interest earned by assessee co- operative society from investment in co-operative bank amounted to interest earned from investment in another co-operative society hence eligible for deduction • CIT v/s Doaba Co-operative Sugar Mills Ltd (1998) 144 CTR 0147 (P & H) Deduction under s. 80P(2)(d)—Income from investment with other societies—Computation—Gross or net interest income—Sec. 80P(2)(d) allows whole deduction of an income by way of interest or dividends derived by the co-operative society from its investment with any other co- operative society—It is immaterial whether any interest paid to the co- operative society exceeds the interest received from the bank on investments—The Revenue is not required to look to the nature of investment whether it was from its surplus funds or otherwise—The Act does not speak of any adjustment as sought to be made out by the counsel for the Revenue—Tribunal was right in law in allowing deduction under s. 80P(2)(d) in respect of interest of Rs. 4,90,919 on account of interest received from N Central Co-operative Bank without adjusting interest paid to the bank. • CIT v/s UP Co-operative Sugar Factories (2013) 219 TAXMAN 0033 (Allahabad) Deduction under s. 80P(2)(d)—Computation—Gross income or net income—Deduction under s. 80P(2)(d) is allowable to assessee co- operative society only on net income by way of interest received from co- operative societies/banks after deducting expenditure debited to P&L a/c relatable to earning of such income—CIT vs. Rajasthan Rajya Sahkari Upbhokta Sangh Ltd. (1995) 127 CTR (Raj) 401 : (1995) 215 ITR 448 I.T.A. Nos. 247 to 250 & 252 to 253/Jodh/2023 Udaipur Sahakari Upbhokta Thok Bhandar Ltd. 24 (Raj) and CIT vs. Dugdh Utpadak Sahkari Sangh Ltd. (2005) 277 ITR 35 (All) followed. • Jansevak Co operative society ltd v/s ITO order dated 26.05.2023 reported in (2023) 37 NYPTTJ 739 (Mumbai). In this case the Hon’ble Tribunal has also explained about the decision of Karnataka High Court in the case of Principal CIT and Anr. vs. Totgar’s Co-Operative Sale Society Ltd (2017) 292 ITR 74 (KAR) and various other cases wherefrom your honorably please observe that the decision of Hon’ble Supreme Court in the case of Totgar’s co-operative sale society is not relevant for deduction allowable u/s 80 (P)(2) (d) of the I T Act. Deduction under s. 80P(2)(d)—Providing credit facilities to members— Applicability of s. 80P(4)—Assessee is a co-operative society, which is engaged in providing credit facilities to its members—Thus, if any income as referred to in sub-s. (2) to s. 80P is included in the gross total income of the assessee, the same shall be allowed as a deduction—It is pertinent to note that since the assessee is registered under the Maharashtra Co-operative Societies Act, 1960, it is required to invest or deposit its funds in one of the modes provided in s. 70 of the aforesaid Act, which includes investment or deposit of funds in the District Central Co-operative Bank or the State Co- operative Bank—Accordingly, the assessee kept the deposits in District Central Co-operative Bank and earned interest, which was claimed as a deduction under s. 80P—CIT(A) denied the deduction under s. 80P(2)(d) on the basis that the co-operative bank is covered under the provisions of s. 80P(4)—Not correct—Sec. 80P(4) is of relevance only in a case where the assessee, who is a co-operative bank, claims a deduction under s. 80P— Therefore, there is no merits in the reasoning adopted by the CIT(A) in denying deduction under s. 80P(2)(d)—In view of judicial precedent the AO is directed to grant deduction under s. 80P(2)(d) to the assessee in respect of interest income earned from investment with co-operative bank—Mavilayi Service Co-operative Bank Ltd. & Ors. vs. CIT (2021) 318 CTR (SC) 609 : (2021) 197 DTR (SC) 361 : (2021) 431 ITR 1 (SC), Principal CIT vs. Annasaheb Patil Mathadi Kamgar Sahakari Pathpedi Ltd. (2023) 332 CTR (SC) 486 : (2023) 225 DTR (SC) 209 and Jansevak Co-operative Society Ltd. vs. ITO (ITA Nos. 3229 & 3230/Mum/2022, dt. 23rd Feb., 2023) followed • Merwanjee Cama Park Co Operative Housing Society Ltd. vs. ITO (2018) 62 ITR_Trib 770 (Mumbai) Deduction under s. 80P(2)(d)—Assessee a cooperative society—Applicability of sub-s. (4) to s. 80P inserted by the Finance Act, 2006—By sub-s. (4) of s. 80P, deduction had been withdrawn in the case of co-operative banks and not I.T.A. Nos. 247 to 250 & 252 to 253/Jodh/2023 Udaipur Sahakari Upbhokta Thok Bhandar Ltd. 25 co-operative societies—Assessee being a cooperative society and not a cooperative bank, was entitled to deduction under s. 80P(2)(d) with respect to the income earned on the deposits made with other co-operative banks. • ITO vs. Bhilwara Zila Dugdh Utpadak Sahkari Sang Ltd. (2023) 37 NYPTTJ 1453 (Jodh) Deduction under s. 80P(2)(d)—Interest income—Interest received from regional rural bank and Central cooperative bank—CBDT Circular No. 61201 F. No. 273(3) 144/2009-IT(A-1), dt. 20th Sept., 2010, has clarified that regional rural banks (RRB) are not eligible for deduction under s. 80P from asst. yr. 2007-08 onwards—Circular No. 319, dt. 11th Jan., 1982 which says that an RRB is a co-operative society stands withdrawn w.e.f. asst. yr. 2007-08— Further, s. 80P has been amended and a new sub-s. (4) has been inserted to provide that the provisions of the said section shall not apply in relation to any co-operative bank other than a primary agricultural credit society or a primary co-operative society for agricultural land and rural development bank—In the present case, the assessee is a co-operative society whose primary object is to provide financial accommodation to its members who are other co-operative societies and not members of the public—Thus, the interest received by the assessee from Baroda Rajasthan Gramin Bank Ltd., which is a Regional Rural Bank and not a co-operative bank is not allowable as deduction under s. 80P(2)(d) as this entity is not a co-operative society—However, interest received by the assessee from Central Co-operative Bank is allowable as deduction under s. 80P(2)(d)—Kerala State Co-operative Agricultural & Rural Development Bank Ltd. (KSCARDB) vs. AO & Ors. (2023) 334 CTR (SC) 601 : (2023) 230 DTR (SC) 1 followed • Palm Court M Premises cooperative society Ltd V/s PCIT (2022) 145 Taxmann.com 415 (ITAT Mumbai) In this case the Honorable ITAT has taken support from the judicial pronouncement of honorable Karnataka High Court in the case of PCIT V/s Totagars cooperative sale society (2017) 392 ITR 74 (Karn.) which clearly states that interest derived by cooperative society from investments held with cooperative banks is entitled to section 80P(2)(d) deduction. • We further submit that the decision of Karnataka high court is binding in the present case as there is an absence of a jurisdictional high court rulings on any similar case for this purpose. Kind attention is also invited towards judgment of Honorable Supreme Court in the case of CIT vs. Vegetables Products Ltd (1973) 88 ITR 192 (SC) which states that if there is no ruling of jurisdictional High Court I.T.A. Nos. 247 to 250 & 252 to 253/Jodh/2023 Udaipur Sahakari Upbhokta Thok Bhandar Ltd. 26 then the ruling of any High Court put in favor of assessee shall be adopted. We further submit that the assessee has not claimed interest as exempt from banks other than Co-operative banks. 1. This ground of appeal is only in A.Y. 2015-16 wherein by an order u/s 154 the disallowance of deduction u/s 80P was made. 2. Following well settled judicial decisions which have a binding force, and no rectification can be validly justified on such highly disputed points and further when such issue is allowed in other years of the same assessessee and had always been allowed consistently in the past. • Volkart Brothers 82 ITR (SC) 50 is the landmark decision on the scope of section 154 which says that where any decision is to be drawn on the basis of long drawn reasoning the same would not be subject matter of 154 proceedings. • A decision on a debatable point of law is not a mistake apparent from the record. A look at the records must show that there has been an error and that error may be rectified; Reference to documents outside the records and the law is impermissible when applying the provisions of section 154. CIT v Keshri Metal Pvt. Ltd. (1999) 237 ITR 165 (SC)]. • Mistake means commission that is not designed and which is obvious and something which has no two opinions or which is debatable. CIT V Lakshmi Prasad Lahkar (1996) 220 ITR 100 (GAU) • Master Construction Private Limited v. State of Orissa AIR 1966 SC 1047 (SC) In this case , The Hon’ble Supreme Court in context of Rule 83 of the Orissa Sales Tax Act (similar to section 154 of the ITA) had held that arithmetical mistake was a mistake of calculation; a clerical mistake was a mistake in typing or writing. Further, an error apparent on the face of record does not include an error which depends for its discovery, on elaborate arguments on questions of fact or law. • MEPCO Industries Ltd. vs. CIT (2009) 319 ITR 208 (SC) : (2009) 227 CTR (SC) 313 Rectification—Debatable issue or debatable—Issue of power subsidy granted by the Government—In each case, one has to examine I.T.A. Nos. 247 to 250 & 252 to 253/Jodh/2023 Udaipur Sahakari Upbhokta Thok Bhandar Ltd. 27 the nature of subsidy and this exercise cannot be taken under s. 154—As the CIT has already in its order under s. 264 had taken the view that the subsidy in question was a capital receipt not taxable under the Act, therefore, he alter the judgment of the Supreme Court cannot charge his opinion taking view that subsidy in question was revenue receipt—hence Dy. CIT erred in passing order under s. 154 Held : The short point involved in these appeals is, whether there existed a " rectifiable mistake" enabling the Department to invoke s. 154 of the Act ? If one examines the scheme of the Income-tax Act, as it stood at the material time, one finds a clear dichotomy between s. 154 and s. 147 of the Act. Sec. 154 deals with rectification of mistake. Sec. 154(1), inter alia, states that, with a view to rectify any mistake apparent from the record, an Income-tax authority may amend any order passed by it under the provisions of the Act, whereas s. 147, inter alia, states that if the AO has reason to believe that any income chargeable to tax has escaped assessment for any assessment year, he may subject to the provisions of sections 148 to 153, assess or reassess such income which has escaped assessment and which comes to the notice of the AO subsequently in the course of proceedings under the said section. In the present case, the Department did not invoke s. 147 of the Act even when the matter was within the time limit prescribed. Be that as it may in these appeals, we are concerned with the meaning of the words " rectifiable mistake" . On the facts of the present case, we are of the view that the present case involves change of opinion. In this connection, it must be noted that Government grants different types of subsidies to the entrepreneurs. The subsidy in Sahney Steel & Press Works Ltd. (supra) was an incentive subsidy linked to production. In fact, in Sahney Steel & Press Works Ltd. (supra), this Court categorically stated that the scheme in hand was an incentive scheme and it was not a scheme for setting up the industries. In the said case, the salient features of the scheme were examined and it was noticed that the scheme formulated by the Government of Andhra Pradesh was admissible only after the commencement of production. In Income-tax matters, one has to examine the nature of the item in question, which would depend on the facts of each case. In the present case, we are concerned with power subsidy whereas in the case of CIT vs. Ponni Sugars & Chemicals Ltd. & Ors. (2008) 219 CTR (SC) 105 : (2008) 13 DTR (SC) 1 : (2008) 306 ITR 392 (SC), the subsidy given by the I.T.A. Nos. 247 to 250 & 252 to 253/Jodh/2023 Udaipur Sahakari Upbhokta Thok Bhandar Ltd. 28 Government was for repaying loans. Therefore, in each case, one has to examine the nature of subsidy. This exercise cannot be undertaken under s. 154 of the Act. There is one more reason why s. 154 in the present case was not invokable by the Department. Originally, the Commissioner of Income-tax, while passing orders under s. 264 of the Act on 30th April, 1997, had taken the view that the subsidy in question was a capital receipt not taxable under the Act. After the judgment of this Court in Sahney Steel & Press Works Ltd. (supra), the Commissioner of Income-tax has taken the view that the subsidy in question was a revenue receipt. Therefore, in our view, the present case is a classic illustration of change of opinion. In Kil Kotagiri Tea & Coffee Estates Co. Ltd. vs. ITAT & Ors. (1989) 75 CTR (Ker) 115 : (1988) 174 ITR 579 (Ker), the facts were as follows : the assessee claimed interest on advance tax paid by it in excess but beyond the due dates. The Income-tax Officer disallowed the claim of the assessee. The Commissioner of Income-tax upheld the claim of the assessee. Following the decision of a learned single judge of the Kerala High Court in A. Sethumadhavan vs. CIT & Anr. (1980) 16 CTR (Ker) 376 : (1980) 122 ITR 587 (Ker), the Tribunal held that belated payments were not to be taken into account as advance tax for the purpose of s. 214 of the Income-tax Act, and, therefore, interest was not admissible for such belated payments. However, subsequently, a Division Bench of the same High Court in Santha S. Shenoy & Ors. vs. Union of India & Ors. (1982) 29 CTR (Ker) 127 : (1982) 135 ITR 39 (Ker) reversed the decision of the learned single judge in A. Sethumadhavan (supra) and held that payment of tax made within the financial year, though not within specified dates, should be treated as advance tax and, consequently, the assessee was entitled to interest on excess tax paid. The assessee filed an application under s. 154 of the Act for rectification of the order of the Tribunal in view of the later decision in Santha S. Shenoy (supra). On the facts of that case, the Kerala High Court came to the conclusion that the rectification contemplated under s. 154 must be a " rectifiable mistake" which is a mistake in the light of the law in force at the time when the order sought to be rectified was passed. The Kerala High Court also examined the judgment of the Calcutta High Court in Jiyajeerao Cotton Mills Ltd. (supra) and held that the said decision was distinguishable. The High Court laid down a principle of law, which was applicable across the board, namely, payment of advance tax made within the financial year, though not within the specified dates, should be treated as I.T.A. Nos. 247 to 250 & 252 to 253/Jodh/2023 Udaipur Sahakari Upbhokta Thok Bhandar Ltd. 29 advance tax and, therefore, the assessee was entitled to interest on excess tax paid. The judgment in Kil Kotagiri Tea & Coffee Estates Co. Ltd. (supra) is not applicable to the facts of the present case, as stated above. Sahney Steel & Press Works Ltd. Etc. (supra) was a case which dealt with production subsidy, Ponni Sugars & Chemicals Ltd. (supra) dealt with subsidy linked to loan repayment whereas the present case deals with a subsidy for setting up an industry in the backward area. Therefore, in each case, one has to examine the nature of the subsidy. The judgment of this Court in Sahney Steel & Press Works Ltd. (supra) was on its own facts ; so also, the judgment of this Court in Ponni Sugars & Chemicals Ltd. (supra). The nature of the subsidies in each of the three cases is separate and distinct. There is no strait jacket principle of distinguishing a capital receipt from a revenue receipt. It depends upon the circumstances of each case. As stated above, in Sahney Steel & Press Works Ltd. Etc. (supra), this Court has observed that the production incentive scheme is different from the scheme giving subsidy for setting up industries in backward areas. In the circumstances, the present case is an example of change of opinion. Therefore, the Department has erred in invoking s. 154 of the Act. • CIT vs. Keshri Metal (P) Ltd. (1999) 237 ITR 165 (SC) Rectification—Mistake apparent from record from record— Computation of book profits under s. 115J—Current depreciation and unabsorbed depreciation allowed for purposes of computing book profits under s. 115J—No apparent error shown by Department— Rectification not called for. Held: We have heard learned counsel. We do not agree that the question raises a pure question of fact ; to that extent, the High Court was in error. But it was not in error in coming to the conclusion that there was no occasion for rectification. Under the provisions of s. 154 there has to be a mistake apparent from the record. In other words, a look at the record must show that there has been an error and that error may be rectified. Learned counsel for the Revenue has not been able to satisfy us that it shows any apparent error upon the record. Reference to documents outside the record and the law is impermissible when applying the provisions of s. 154. • DINOSAUR STEELS LTD. vs. JCIT (2012) 254 CTR (SC) 640 Rectification—Debatable issue—Deduction under s. 80-IA before setting off earlier years' losses—Provisions of Chapter VI-A, I.T.A. Nos. 247 to 250 & 252 to 253/Jodh/2023 Udaipur Sahakari Upbhokta Thok Bhandar Ltd. 30 particularly those dealing with quantification of deductions have been amended several times—Even s. 80-IA was preceded by ss. 80HH and 80-I which resulted in plethora of case law—Thus, it cannot be said that there was a patent mistake in the assessment order allowing deduction under s. 80-IA before setting off the earlier year’s losses— Moreover, assessee has followed the decision of the Madhya Pradesh High Court in CIT vs. K.N. Oil Industries (1997) 226 ITR 547 (MP)—Hence, the issue involved a moot question of law, particularly at the relevant time—Therefore, s. 154 was not applicable Held : It is important to note that the provisions of Chapter VI-A, particularly those dealing with quantification of deductions have been amended at least eleven times. Moreover, even s. 80-IA was earlier preceded by ss. 80HH and 80-I, which has resulted in plethora of cases. In fact, some of the amendments have been enacted even after the judgment of this Court in the case of CIT vs. Kotagiri Industrial Co- operative Tea Factory Ltd. (1997) 139 CTR (SC) 359 : (1997) 224 ITR 604 (SC) delivered on 5th March, 1997. In the circumstances, one cannot say that this is a case of a patent mistake. The assessee followed the judgment of the Madhya Pradesh High Court in CIT vs. K.N. Oil Industries (1997) 226 ITR 547 (MP). Hence, the assessee is right in submitting that the issue involved a moot question of law, particularly at the relevant time (asst. yr. 1997-98). For the above reasons, on facts and circumstances of this case, s. 154 was not applicable.—Dinosaur Steels Ltd. vs. Jt. CIT [Tax Case (Appeal) No. 1927 of 2006, dt. 18th July, 2006] set aside. • It was observed that the appellant had taken government loans and the same was to be used for the purpose of super market, godown construction, maintenance and Expansion of head office, which was considered to be of enduring nature and therefore the expenditure was treated as capital expenditure not allowable u/s 36(iii) of the Act. • The loans were used for the purpose for the purpose of the working capital and were deposited in the overdraft account of the appellant which reduced the amount of overdraft. The utilization of the funds was for the working capital and therefore the interest paid on such loans was an allowable revenue expenditure. Your kind attention is invited towards page 4 of CIT(A) order in AY 2016-17 in which it was clearly stated that the funds were not used in acquisition of any capital assets but was deposited in the overdraft account. Similar facts are there in AY 2017-18 which is evident from page 2 and page 4 of order of CIT(A). I.T.A. Nos. 247 to 250 & 252 to 253/Jodh/2023 Udaipur Sahakari Upbhokta Thok Bhandar Ltd. 31 • With regards to disallowance of interest please refer to the decision of Hon’ble ITAT Delhi IT Bench in the case of Deputy Commissioner of IT in case of BPTD Ltd. Source (2023) 37 NYPTTJ 1465( Del) • Devi Construction vs. DCIT Pune Bench (2020) 207 TTJ (Pune) 130 Sec. 36(1)(iii) provides for deduction of 'the amount of the interest paid in respect of capital borrowed for the purposes of business or profession'. It is thus overt that so long as the business purpose' test is satisfied, there can be no disallowance of interest. ‘Business purpose' does not encompass only the revenue field, but also covers the capital sphere. If a loan is taken and some capital asset, is purchased, interest on such a loan is also deductible in the same way as a loan is taken for satisfying working capital requirements. It is for the raison d'etre that as such loan for purchasing capital asset satisfies the requirement of business purpose. • The appellant submits that the initiation of penalty proceedings was not justified in the facts of the case. The entire facts were duly and correctly shown and there is neither any concealment of income nor furnishing of any inaccurate particulars of income and therefore the very initiation of the penalty proceedings in the case of the appellant is not justified.” 8. Per contra, the ld. DR relied upon the detailed finding recorded in the order of lower authorities submitted that the since assessee has received interest of co-operative bank and considering amendment in the law the deduction claimed by the assessee u/s 80P(2)(d) of the Act is not in accordance with law and therefore, the appeals of the assessee are required to be dismissed on merits and as regards the re-opening of the assessment the she has supported the order of the ld. CIT(A). As regards the disallowance of interest on capital borrowed she has relied upon the provision of section 36(1)(iii) and considering the bare reading I.T.A. Nos. 247 to 250 & 252 to 253/Jodh/2023 Udaipur Sahakari Upbhokta Thok Bhandar Ltd. 32 of the provision of the Act and facts already on record the claim of interest rightly disallowed by the ld. AO. 9. We have heard both the parties and perused the materials available on record including the case laws cited in the orders. Brief facts of the case are that the Assessee is a Co-Operative Society registered under Rajasthan Cooperative Society Act and engaged in the business of running supermarkets in the city of Udaipur and outside. Except those activities, the society is not carried out any other activities. In this bunch of appeal the appeal are mainly challenged on account of validity of re-opening, claim of deduction u/s. 80P(2)(d) of the Act and disallowance of interest u/s. 36(1)(iii) of the Act. 9.1 For the lead case the fact of the case is that the Assessee filed it return of income on 25.09.2015 declaring a total income of Rs 51,80,877/- after claiming a deduction of Rs 36,46,906/- and making disallowance of Rs. 18,95,50,72/-. The assessee filed filed a rectification application to the CPC for allowing of deduction u/s 80P(2)(d) of Rs. 2,26,01,978/- as claimed in the return but the same was rejected. Thereafter the assessee filed an application u/s 154 of the IT Act to the ld. AO but the same was also rejected by him and the same was allowed I.T.A. Nos. 247 to 250 & 252 to 253/Jodh/2023 Udaipur Sahakari Upbhokta Thok Bhandar Ltd. 33 by the ld. CIT(A) but again the notice of 154 of the Act and the same was not considered by the ld. CIT(A) on the same issue. Thus, it is not imperative repeat the facts but it is notable that the AO did not accept the claim of the assessee and disallowed the claim u/s 80P(2)(d) in respect of the interest derived by the Co-operative society from its investments with any other co-operative society. The issue of allowability of deduction of interest received from other co-operative society (though the said co-operative society is doing banking activities ) is allowable u/s 80P(2)(d) of the Act is already decided by the Jodhpur bench in the case of in the case ITO Vs. Bhilwara Zila Dugdh Utpadak Sahkari Sang Ltd., where in the finding of the co-ordinate bench is as under : 7. We have heard the both parties and perused the materials available on record. The Bench observed that the said appeal was filed on the basis of that addition of Rs. 2,23,46,187/- u/s 80P(2)(d) of the Act. We note that the department has preferred an appeal against the order of ld. CIT(A) for assessment year 2016-17 wherein the disallowance of deduction claimed u/s 80P(2)(d) of the Act amount to Rs. 2,23,46,187/- was deleted. The issue before us is that whether the assessee being co-operative society be denied benefit of section 80P(2)(d) of the Act on interest received from another cooperative society engaged in banking activities. The similar issue has been decided by the Hon’ble Rajasthan High court, Jodhpur has decided in Revenue’s appeal filed for the assessment year 2014-15 in the case of PCIT, Ajmer vs M/s Bhilwara Zila Dugdh Utpadak Sahakari Sangh Ltd. in BD Income Tax Appeal No. 2/2019 vide its order dated 13.08.2019. The relevant observation made in the order by the Jurisdictional High Court has been reproduced as under:- “The revenue cites a CBDT Circular (No. 6/2010 dated 20.09.2010) and contends that the Board categorically stated that interest income derived from deposits, made with non-cooperative institutions and more specifically Regional Rural Banks do not qualify for the benefit under Section 80P(2) of the Act of 1961. Section 22 of the Regional Rural Banks Act, 1976 states as follows” “22. Regional Rural Bank to be deemed to be a co- operative society for purpose of the Income Tax Act, 1961- For the purpose of the Income Tax Act, 1961 (43 of 1961), or any other enactment for the time being in force I.T.A. Nos. 247 to 250 & 252 to 253/Jodh/2023 Udaipur Sahakari Upbhokta Thok Bhandar Ltd. 34 relating to any tax on income, profits, or gains, a Regional Rural Bank shall be deemed to be a cooperative society." The CBDT reasoning appears to be that Section 80P was amended w.e.f. 1.4.2007 introducing specifically that the benefit of exemption would not apply to any cooperative bank other than Primary Agricultural Credit Society or a Primary Cooperative Agricultural and Rural Development Bank. The circular then stated that in the light of this inclusion - to Section 80P by way of introduction of Section 80P(4), the exemption could not be availed of by the banks invested in Regional Rural Banks. This Court is of the opinion that the revenue's contention is unsustainable. Section 22 in uncertain terms categorically deems Regional Rural Banks (of which description Baroda Rajasthan Regional Rural Banks answer to) as Cooperative Societies for the purposes of Income Tax Act. In the absence of non-obstante clause, the mere fact that a restrictive condition was imposed in relation to a Cooperative Bank for regulating the benefit of Section 80P, does not in any manner, alter the pre-existing situation. By virtue of Section 22, Regional Rural Banks continue to be deemed Cooperative Societies and all the contingent consequences that flow from it. For the above reasons, this court is of the opinion that there is no substantial question of law involved in the present appeal. The appeal is, therefore, dismissed.” Taking into consideration the present facts and circumstances of the case, we observed that the ld. CIT(A) has rightly passed the order as the similar written submission filed by the assessee during the appellate proceeding and the identical issue which is in favour of the assessee’s own case of the Coordinate Bench in case by the ITAT, Jodhpur’s order dated 31.10.2018 in ITA No. 437/Jodh/2017, A.Y. 2014-15) which have been confirmed by the Hon’ble Court. The relevant observation of ITAT is as under:- "5. We have considered the rival submission of the parties and have gone through the assessment proceedings the AO noted that assessee has claimed exemption of interest income on FDR with Central Cooperative Bank Ltd., for Rs.76,43.562/- and interest on FDR with Baroda Rajasthan Kshetriya Gramin Bank of Rs.2,09,91,701 The AO allowed the exemption on interest received from Central Co-operative Bank However, the AO disallowed the exemption on account of interest earned from Baroda Rajasthan Kshetriya Gramin Bank on his observation that Baroda Rajasthan Kshetriya Gramin Bank is not a Co- operative Society. The 40 also took the view that Baroda Rajasthan Kshetriya Gramin Bank is neither registered under Co-operative Society Act or under, other law for the time enforce any such state for registration of Co-operative Societies. Therefore, the interest of Rx 2,09,91,701/- received on FDR was not held eligible for deduction w/s 80P(2)(d). The Id. CIT(A) confirmed the action of AO holding that Baroda Rajasthan (supra) is not a Co-operative Society registered under the Co-operative Society Act or under any law for the time enforce in any state for the registration of Co-operative Society, therefore, the interest received by assessee on FDR made with Baroda Rajasthan (supra) is not eligible for deduction w/s 80P(2)(d). 6. The ld. AR of the assessee relied upon the decision of Mumbai Tribunal in I.T.A. Nos. 247 to 250 & 252 to 253/Jodh/2023 Udaipur Sahakari Upbhokta Thok Bhandar Ltd. 35 Presidency Co-operative Society (supra) and in Shree Keshorai Patan Sahakari Sugar Mill. In our considered view the facts narrative is not applicable on the facts of the present case. In both the cases the assessee, (in those cases were held entitled for exemption of interest received on deposit with Co-operative Bank which were held as Co- operative Society. However, in the present case, the assessee has claimed that Rural Bank are also Co-operative We have examined the CBDT circular No. 6/2010 dated 16.09.2010, for appreciation of the contents the circular it is extracted below; CIRCULAR NO. 6/2010 IF NO. 173(3)/44/2009-IT (A-1)] DATED 20-9-2010. 1. Section 80P of the Income-tax Act, 1961 provides for a deduction from the income of cooperative societies referred to in that section. 2. As Regional Rural Banks (RRB) are basically corporate entities (and not cooperative societies), they were considered to be not eligible for deduction under section 80P when the section was originally introduced However, as section 22 of the Regional Rural Bank Act provides that a RRB shall be deemed to be cooperative society for the purposes of the Income-tax Act, 1961, in order to make such banks eligible for deduction under section 80P. CBDT issued a beneficial Circular No. 319 dated 11-1- 1982, which stated that for the purpose of section 80P, a Regional Rural Bank shall be deemed to be a cooperative society. 10 ITA Nos. 163/Jodh/2019 ACIT vs. M/s Bhilwara Zila Dugdh Utpadak Sahakari Sangh Ltd. 3. Section 80P was amended by the Finance Act, 2006, with effect from 1-4-2007 introducing sub-section (4), which laid down specifically that the provisions of section 80P will not apply to any cooperative bank other than a Primary Agricultural Credit Society or a Primary Cooperative Agricultural and Rural Development Bank Accordingly, deduction under section 80P was no more available to any Regional Rural Bank from assessment year 2007-08 onwards. An OM dated 25-8-2006 addressed to RBI was issued by the Board clarifying that Regional Rural Banks would not be eligible for deduction under section 80P of the Income-tax Act, 1961 from the assessment year 2007-08 onwards. 4. It has been bought to the notice of the Board that despite the amended provisions, some Regional Rural Banks continue to claim deduction under section 80P on the ground that they are cooperative societies covered by section 80P(1) read with Boards Circular No. 319 dated 11-1-1982. 5. It is, therefore, reiterated that Regional Rural Banks are not eligible for deduction under section 80P of the Income-tax Act, 1961 from the assessment year 2007-08 onwards. Furthermore, the Circular No. 319 dated 11-1-1982 deeming any Regional Rural Bank to be cooperative society stands withdrawn for application with effect from assessment year 2007-08. The field officers may take note of this position and take remedial action, if required. 7. We have also perused the various provisions of Regiona Rural Bank Act 1976. Baroda Rajasthan Kshetriya Gramina Bank was set up under the provisions of under the provisions of Regional Rural Bank Act. Section 22 of the Regional Rural Bank Act provides that Regional Rural Bank to be deemed to be a co-operative society for I.T.A. Nos. 247 to 250 & 252 to 253/Jodh/2023 Udaipur Sahakari Upbhokta Thok Bhandar Ltd. 36 purpose of the Income-tax Act, 1961. In our considered view the the Circular of CBDT cannot override the provisions of the Act of Parliament. Even the careful reading of the Circular No. 6 of CBDT make it clear that exemption is withdrawn with respect to Regional Rural Banks are not eligible for deduction under section 80P of the Income-tax Act, 1961 from the assessment year 2007-08 onwards, and not the co-operative societies. The assessee before us is the cooperative society and not the Regional Rural Bank. Therefore, considering the provisions of section 22 of Regional Rural Bank Act, wherein the status of the banks established are of the co-operative societ the assessee is entitled for the exemption on the interest earned on the deposits. In the result the ground No. 1 & 2 of the appeal are allowed." As the facts of the A.Y. 2014-15 are similar to the facts of the assessment year under appeal (2016-17), therefore, following the decision of ITAT, Jodhpur referred above, the AO is directed to allow deduction of Rs. 2,23,46,187/- u/s 80P(2)(d). In the result, the appeal is allowed.” As facts of the assessment year 2014-15 are similar of the facts of the assessment year 2016-17 under appeal, therefore, the following decision ITAT Jodhpur referred above which is also confirmed by the Hon’ble High Court. Based on these observations, we do not find any infirmity in the order of the ld. CIT(A) and therefore, the appeal filed by the Revenue stands dismissed. In the result, the appeal of the Revenue is dismissed. Hence, taking the consistent view on the matter, we find that the issue raised by the assessee is squarely covered as per the judicial precedent discussed hereinabove so far as the allowability of deduction of interest u/s. 80P(2)(d) of the Act and thus, based on these observations the ground no. 2 & 3 for A. Y. 2013-14, 2015-16, 2016-17, 2017-18 ground no. 1 & 2 in A. Y. 2018-19 and ground no. 1,2 & 3 for A. Y. 2020-21 is allowed. I.T.A. Nos. 247 to 250 & 252 to 253/Jodh/2023 Udaipur Sahakari Upbhokta Thok Bhandar Ltd. 37 Since we have allowed the appeal of the assessee on merits ground no. 1 raised in the A. Y. 2013-14, 2015-16 2016-17 & 2017-18 challenging the validity of the notice u/s. 148/154 becomes infructuous. In ITA No. 253/Jodh/2023 ground no. 4 is related to initiation of levy of penalty u/s. 271(1)(c). Since the appeal of the assessee in the quantum proceeding is decided in favour of the assessee this ground no. 4 become academic and therefore, the same is not adjudicated. In terms of these observations, the appeal of the assessee in ITA no. 247-Jodh-2023 is allowed. 10. The fact of the case in ITA Nos. 248, 249, 250, 252 & 253-Jodh- 2023 is similar to the case in ITA No. 247-Jodh-2023 and we have heard both the parties and persuaded the materials available on record. The bench has noticed that the issues raised by the assessee in this appeal No. 248, 249, 250, 252 & 253-Jodh-2023 is equally similar on set of facts and grounds. Therefore, it is not imperative to repeat the facts and various grounds raised by both the parties. Hence, the bench feels that the decision taken by us in ITA No. 247-Jodh-2023 for the Assessment Year 2015-16 shall apply mutatis mutandis in the case of Udaipur I.T.A. Nos. 247 to 250 & 252 to 253/Jodh/2023 Udaipur Sahakari Upbhokta Thok Bhandar Ltd. 38 Sahakari Upbhokta Thok Bhandar Ltd. in ITA Nos. 248, 249, 250, 252 & 253-Jodh-2023 for the Assessment Year 2013-14, 2018-19, 2020-21, 2017-18 & 2016-17 In the result, six appeals of the assessee are allowed. Order pronounced under rule 34(4) of the Appellate Tribunal Rules, 1963, by placing the details on the notice board. Sd/- Sd/- (Dr. S. Seethalakshmi) (Rathod Kamlesh Jayantbhai) Judicial Member Accountant Member Ganesh Kumar, PS (On Tour) Copy of the order forwarded to: (1)The Appellant (2) The Respondent (3) The CIT (4) The CIT (Appeals) (5) The DR, I.T.A.T. True Copy By order I.T.A. Nos. 247 to 250 & 252 to 253/Jodh/2023 Udaipur Sahakari Upbhokta Thok Bhandar Ltd. 39 Date Initial 1. Draft dictated on Sr.PS/PS 2. Draft placed before author Sr.PS/PS 3. Draft proposed & placed before the Second Member JM/AM 4. Draft discussed/approved by Second Member JM/AM 5. Approved Draft comes to the Sr. P.S./P.S. Sr.PS/PS 6. Kept for pronouncement on Sr.PS/PS 7. File sent to the Bench Clerk Sr.PS/PS 8. Date on which file goes to the Head Clerk 9. Date on which file goes to the AR 10. Date of dispatch of Order