The Veer Co-operative Group Housing Society Ltd., New Delhi V. ITO, ward- 39(4), New Delhi

ITA 2788/DEL/2018

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 2153 (ITAT-DELHI)
• Duration Of Justice: 4 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-09-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2014-2015
• Appeal Filed On: 20-04-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIJAY KUMAR JIWANI
• Assessee Lawyers: RANO JAIN MR PRANSHY SINGHAL; MANSI JAIN S
• Keywords: Revised return
• Section: 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: C+SMC, NEW DELHI BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER ITA.NOS.2787 & 2788/DEL/2018 ASSESSMENT YEARS 2013-2014 & 2014-2015 M/S. THE VEER COOPERATIVE GROUP HOUSING SOCIETY LIMITED, PLOT NO.28, SECTOR-13, ROHINI, NEW DELHI-110085. PAN AAAAT6615K VS. THE INCOME TAX OFFICER, WARD-39(4), NEW DELHI. APPELLANT RESPONDENT ASSESSEE BY : SHRI RANO JAIN, MR. PRANSHY SINGHAL & MS. MANSI JAIN ADVOCATES REVENUE BY : SHRI VIJAY KUMAR JIWANI, SR. D.R. DATE OF HEARING : 0 9 .08.2018 DATE OF PRONOUNCEMENT : 04 .09.2018 2 ITA.NOS.2787 & 2788/DEL./2018 M/S. THE VEER COOPERATIVE GROUP HOUSING SOCIETY LIMITED, NEW DELHI. ORDER PER BHAVNESH SAINI, JM BOTH THE APPEALS BY ASSESSEE ARE DIRECTED AGAINST THE COMMON ORDER OF THE LD. CIT(A)-13, NEW DELHI, DATED 19.02.2018, FOR THE A.YS. 2013-2014 AND 2014-2015. 2. WE HAVE HEARD THE LEARNED REPRESENTATIVES OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. 3. BOTH THE PARTIES SUBMITTED THAT THE ISSUE IS SAME IN BOTH THE APPEALS. THEY ARGUED IN A.Y. 2013-2014 AND SUBMITTED THAT THE ORDER IN THIS CASE MAY BE FOLLOWED IN A.Y. 2014-2015. THEREFORE, FOR THE PURPOSE OF DISPOSAL OF BOTH THE APPEALS, WE PROCEED TO DECIDE THE APPEAL FOR A.Y. 2013-2014. ITA.NO.2787/DEL//2018 A.Y. 2013-2014 : 4. BRIEFLY THE FACTS OF THE CASE ARE THAT ASSESSEE FILED RETURN OF INCOME DECLARING NIL INCOME. IT IS STATED THAT IT IS THE CASE OF COOPERATIVE GROUP HOUSING BUILDING SOCIETY REGISTERED UNDER COOPERATIVE SOCIETIES ACT, DELHI. IT WAS SUBMITTED THAT SOCIETY WAS FORMED WITH THE OBJECT OF PROVIDING 3 ITA.NOS.2787 & 2788/DEL./2018 M/S. THE VEER COOPERATIVE GROUP HOUSING SOCIETY LIMITED, NEW DELHI. FLATS TO ITS MEMBERS. PRESENTLY, THE ASSESSEE IS LOOKING-AFTER MAINTENANCE OF FLATS. THE SOCIETY IS IN THE RECEIPT OF MAINTENANCE CHARGES. THE CHARGES RECEIVED FROM THE MEMBERS IS DEPOSITED IN THE BANK ACCOUNT. THE SOCIETY EXISTS FOR ITS MEMBERS ON CONCEPT OF MUTUAL BENEFIT OF NO PROFIT AND LOSS BASIS. IT WAS SUBMITTED BY THE ASSESSEE THAT THE SOCIETY HAS NO INCOME AND IT HAD SUFFERED LOSS OF RS.18,02,925/- AS PER ITS INCOME AND EXPENDITURE ACCOUNT. THE ASSESSEE-SOCIETY HAS CLAIMED EXEMPTION ON THE GROUND THAT IT EXISTS FOR MUTUAL BENEFIT OF THE MEMBERS. THE A.O. HOWEVER, OBSERVED THAT ASSESSEE HAS EARNED THE FOLLOWING INCOME BY WAY OF INTEREST. (I) INTEREST ON FDR FROM CANARA BANK RS. 83,687/ - (II) INTEREST ON FDR FROM SARASWAT COOPERATIVE BANK LTD., RS.6,63,611/ - TOTAL RS.7,47,298/ - 4.1. THE ASSESSEE HAS CLAIMED EVEN INTEREST INCOME AS EXEMPT ON THE GROUND OF MUTUALITY. THE INTEREST INCOME RECEIVED BY THE ASSESSEE-SOCIETY, IN THE VIEW OF THE A.O, DOES NOT SATISFY THE TEST OF MUTUALITY FOR THE REASON THAT THE SAME IS 4 ITA.NOS.2787 & 2788/DEL./2018 M/S. THE VEER COOPERATIVE GROUP HOUSING SOCIETY LIMITED, NEW DELHI. EARNED FROM THIRD PARTY I.E, FROM BANK ON DEPOSITS OF FDRS. THE A.O. REFERRED TO JUDGMENT OF THE HONBLE SUPREME COURT IN THE CASE OF BANGALORE CLUB VS. CIT (2013) 212 TAXMAN 566 IN WHICH IT WAS HELD THAT INTEREST INCOME EARNED BY THE CLUB FROM THE BANK HAS A TAINT OF COMMERCIALITY AND FATAL TO THE PRINCIPAL OF MUTUALITY. IN THIS VIEW OF THE MATTER, THE INTEREST INCOME OF RS.7,47,298/- EARNED BY THE ASSESSEE-SOCIETY WAS CHARGEABLE TO TAX UNDER THE HEAD INCOME FROM OTHER SOURCES. THE A.O. ACCORDINGLY ASSESSED THE INCOME OF THE ASSESSEE AT RS.7,47,298/-. 5. THE ASSESSEE-SOCIETY CHALLENGED THE ADDITION BEFORE LD. CIT(A). WRITTEN SUBMISSIONS OF THE ASSESSEE-SOCIETY IS REPRODUCED IN THE APPELLATE ORDER IN WHICH THE ASSESSEE- SOCIETY REITERATED THE SAME FACTS AS WAS SUBMITTED BEFORE A.O. IT WAS SUBMITTED THAT THE INTEREST INCOME ARISING FROM INVESTMENT WITH SARASWAT COOPERATIVE BANK IS EXEMPT IN VIEW OF SECTION 80P(2)(D) OF THE I.T. ACT. THE A.O. MADE BOTH THE ADDITIONS WITHOUT GIVING SHOW CAUSE NOTICE TO THE ASSESSEE- 5 ITA.NOS.2787 & 2788/DEL./2018 M/S. THE VEER COOPERATIVE GROUP HOUSING SOCIETY LIMITED, NEW DELHI. SOCIETY. FURTHER, DEDUCTION OF RS.50,000/- SHOULD BE ALLOWED TO THE COOPERATIVE SOCIETY UNDER SECTION 80P(2)(C)(II) OF THE I.T. ACT. THE ASSESSEE-SOCIETY RELIED UPON SECTION 80P(2)(D) OF THE I.T. ACT, 1961 WHICH PROVIDES DEDUCTION IN RESPECT OF INCOME OF COOPERATIVE SOCIETIES I.E., IN RESPECT OF ANY INCOME BY WAY OF INTEREST OR DIVIDEND DERIVED BY THE COOPERATIVE SOCIETY FROM ITS INVESTMENTS WITH ANY OTHER COOPERATIVE SOCIETY, WHOLE OF SUCH INCOME. ON PERUSAL OF THE ABOVE PROVISION OF SECTION 80P(2)(D) OF THE I.T. ACT, IT IS CLEAR THAT A COOPERATIVE SOCIETY SHALL BE ALLOWED DEDUCTION ON INTEREST RECEIVED ON INVESTMENTS IN ANOTHER COOPERATIVE SOCIETY, IRRESPECTIVE OF THE AMOUNT OF INCOME. IN THE INSTANT CASE, ASSESSEE-SOCIETY IS IN RECEIPT OF INTEREST ON FDR FOR RS.6,63,611/- FROM A COOPERATIVE BANK NAMELY SARASWAT COOPERATIVE BANK LTD., AND THUS, THE ISSUE UNDER DISPUTE IS, WHETHER THE INTEREST INCOME RECEIVED FROM COOPERATIVE BANK SHOULD BE CHARGED TO TAX OR NOT ? THE LAW PROVIDES FOR EXEMPTION OF INTEREST INCOME RECEIVED FROM COOPERATIVE SOCIETY. IN GENERAL SENSE, BANKS WHICH ARE REGISTERED AS SCHEDULED COOPERATIVE BANK AND NOT AS 6 ITA.NOS.2787 & 2788/DEL./2018 M/S. THE VEER COOPERATIVE GROUP HOUSING SOCIETY LIMITED, NEW DELHI. SCHEDULED COMMERCIAL BANK ARE TO BE TREATED AS A COOPERATIVE SOCIETY ONLY. IT IS LAW THAT COOPERATIVE BANKS ARE COOPERATIVE SOCIETIES FORMED FOR THE BENEFIT OF THEIR OWN MEMBERS. THE ONLY DIFFERENCE IS THE NATURE OF BUSINESS I.E., BANKING ACTIVITIES. THE A.O. FAILED TO APPRECIATE THE LEGAL PROVISION. FURTHER, AS PER SECTION 2(19) OF THE ACT, THE COOPERATIVE SOCIETY MEANS, A COOPERATIVE SOCIETY REGISTERED UNDER THE COOPERATIVE SOCIETIES ACT OR UNDER ANY LAW FOR THE TIME BEING IN FORCE. THE PROVISIONS OF I.T. ACT EITHER IN SECTION 2(19) OR IN SECTION 80P DO NOT MAKE ANY DISCRIMINATION BETWEEN THE COOPERATIVE SOCIETY CARRYING ON BANKING BUSINESS AND OTHER COOPERATIVE SOCIETIES. COOPERATIVE BANKS ARE PRIMARILY COOPERATIVE SOCIETIES BY CONSTITUTION AND BANK BY NATURE OF THE BUSINESS. COOPERATIVE SOCIETY BANKS ARE MERELY A VARIETY OF COOPERATIVE SOCIETY. THUS, THE COOPERATIVE BANKS WOULD NECESSARILY BE COVERED UNDER THE SCOPE OF COOPERATIVE SOCIETIES AND DEDUCTION UNDER SECTION 80P(2)(D) BE ALLOWED. THE ASSESSEE-SOCIETY RELIED UPON THE DECISION OF HONBLE KARNATAKA HIGH COURT IN THE CASE OF PR. CIT VS. TOTAGARS 7 ITA.NOS.2787 & 2788/DEL./2018 M/S. THE VEER COOPERATIVE GROUP HOUSING SOCIETY LIMITED, NEW DELHI. COOPERATIVE SALE SOCIETY (2017) 392 ITR 74 IN WHICH IT WAS HELD THAT THUS THE COOPERATIVE BANK WHICH IS A SPECIES OF THE GENUS WOULD NECESSARILY BE COVERED BY THE WORD COOPERATIVE SOCIETY . THE ASSESSEE-SOCIETY RELIED UPON THE ORDER OF ITAT, MUMBAI BENCH IN THE CASE OF INCOME TAX OFFICER, WARD- 21(1)91), MUMBAI VS. M/S. ABHAYLAXMI CO-OP. SOCIETY LTD., IN ITA.NO.1525/ MUM/2017 AND ITA.NO.1614/MUM./2017, DATED 31.07.2017, IN WHICH THE TRIBUNAL FOLLOWING THE DECISION OF HONBLE KARNATAKA HIGH COURT IN THE CASE OF PR. CIT VS. TOTAGARS COOPERATIVE SALE SOCIETY (SUPRA) HELD THAT AMOUNT OF INTEREST EARNED BY THE ASSESSEE FROM DEPOSITS WITH OTHER COOPERATIVE BANKS IS ELIGIBLE FOR EXEMPTION UNDER SECTION 80P(2)(D) OF THE I.T. ACT. THE ASSESSEE-SOCIETY ON THE SAME PROPOSITION RELIED UPON THE ORDER OF ITAT, DELHI BENCH IN THE CASE OF ACIT VS. JAWALA COOPERATIVE URBAN THRIFT AND CREDIT SOCIETY LTD., NEW DELHI IN ITA.NO.2607/DEL./2012, DATED 19.12.2014 AND ORDER OF ITAT, BANGALORE BENCH IN THE CASE OF MENASI SEEMEYA GROUP GRAMAGALA SEVA SAHAKARI SANGA NIYAMITHA VS. CIT ITA.NO.609 & 610/BANG/2014, DATED 8 ITA.NOS.2787 & 2788/DEL./2018 M/S. THE VEER COOPERATIVE GROUP HOUSING SOCIETY LIMITED, NEW DELHI. 05.02.2015 REPORTED IN 2015-(2) TMI-1094-ITAT-BANGALORE. THE ASSESSEE, THEREFORE, PRAYED THAT ASSESSEE IS ELIGIBLE FOR DEDUCTION UNDER SECTION 80P(2)(D) OF THE I.T. ACT. 5.1. THE ASSESSEE FURTHER SUBMITTED THAT ON MAKING THE ABOVE ADDITIONS, A.O. HAS NOT ALLOWED DEDUCTION OF RS.50,000/- IN ACCORDANCE WITH THE PROVISIONS OF SECTION 80P(2)(C)(II) OF THE I.T. ACT. ACCORDING TO THE ABOVE PROVISION, ANY COOPERATIVE SOCIETY, WHICH IS NOT ENGAGED IN THE BUSINESS AS SPECIFIED IN ANY OF THE CLAUSES TO THIS SECTION, SHALL BE ALLOWED DEDUCTION TO THE TUNE OF RS.50,000/- FROM TOTAL INCOME SO COMPUTED. THE A.O. HOWEVER, DID NOT ALLOW EVEN THE SAME BENEFIT. THE ASSESSEE-SOCIETY RELIED UPON THE JUDGMENT OF HONBLE SUPREME COURT IN THE CASE OF CIT VS. MAHALAKSHMI SUGAR MILLS CO., LTD., (1986) 160 ITR 920 (SC) IN WHICH IT WAS HELD THAT THAT IT IS THE DUTY OF THE A.O. TO APPLY THE RELEVANT PROVISIONS OF THE ACT FOR THE PURPOSE OF DETERMINING THE TRUE FIGURE OF ASSESSEES TOTAL INCOME AND CONSEQUENTIAL TAX LIABILITY. THE ASSESSEE ALSO RELIED UPON BOARD CIRCULAR 9 ITA.NOS.2787 & 2788/DEL./2018 M/S. THE VEER COOPERATIVE GROUP HOUSING SOCIETY LIMITED, NEW DELHI. NO.14(XL-35), DATED 11.04.1955 IN WHICH IT WAS DIRECTED THAT RESPONSIBILITY IS UPON THE A.O. TO DRAW ATTENTION OF THE ASSESSEE TO ALL THE CLAIMS/DEDUCTIONS FOR WHICH THEY ARE ENTITLED. THE ASSESSEE-SOCIETY ALSO RELIED UPON THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT, CENTRAL-1 VS. M/S. PRUTHVI BROKERS & SHAREHOLDERS PRIVATE LIMITED (2011) 349 ITR 336 (BOM.) IN WHICH IT WAS HELD THAT THE APPELLATE AUTHORITIES ARE ENTITLED TO CONSIDER THE CLAIM AND TO ADJUDICATE THE SAME EVEN IF CLAIM MADE WITHOUT FILING THE REVISED RETURN. THE ASSESSEE, THEREFORE, SUBMITTED THAT DEDUCTION OF RS.50,000/- MAY ALSO BE ALLOWED SEPARATELY. 6. THE LD. CIT(A) HOWEVER, DID NOT ALLOW THE CLAIM OF ASSESSEE-SOCIETY AND NOTED THAT PRINCIPLE OF MUTUALITY IS NOT APPLICABLE TO SECTION 80P(2)(D) OF THE I.T. ACT. LD. CIT(A) NOTED THAT SARASWAT COOPERATIVE BANK LTD., WAS CONNECTED INTO A BANK AND IT APPARENTLY IS NO MORE A SOCIETY. THEREFORE, IT WAS HELD THAT ASSESSEE-SOCIETY IS NOT ELIGIBLE FOR DEDUCTION UNDER SECTION 80P(2)(D) OF THE I.T. ACT. FURTHER, ASSESSEE-SOCIETY IS 10 ITA.NOS.2787 & 2788/DEL./2018 M/S. THE VEER COOPERATIVE GROUP HOUSING SOCIETY LIMITED, NEW DELHI. NOT ENTITLED FOR DEDUCTION ON ACCOUNT OF INTEREST RECEIVED FROM CANARA BANK. THE LD. CIT(A) ALSO HELD THAT INTEREST INCOME RECEIVED IS INCOME FROM OTHER SOURCES. 7. THE LD. CIT(A) AS REGARDS DEDUCTION OF RS.50,000/- UNDER SECTION 80P(2)(C)(II) NOTED THAT FOR CLAIMING THE ABOVE DEDUCTION CLAIMANT SHOULD BE A COOPERATIVE SOCIETY AND IT IS AN UNDISPUTED FACT THAT ASSESSEE-SOCIETY IS A COOPERATIVE SOCIETY, THEREFORE, CLAIM OF ASSESSEE IS ALLOWABLE. LD. CIT(A), HOWEVER, NOTED THAT NO SUCH CLAIM WAS MADE BY THE ASSESSEE- SOCIETY AT THE TIME OF FILING THE RETURN OF INCOME AND NO REVISED RETURN HAVE BEEN FILED. HE HAS RELIED UPON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF GOETZE (INDIA) LTD., VS. CIT (2006) 284 ITR 323 (SC) IN WHICH IT WAS HELD THAT A.O. HAS NO POWER TO ENTERTAIN A FRESH CLAIM OTHERWISE THAN BY WAY OF REVISED RETURN. THE LD. CIT(A) DID NOT EXERCISE HIS DISCRETIONARY POWER AND REJECTED THIS CLAIM OF ASSESSEE-SOCIETY AS WELL. ACCORDINGLY, APPEAL OF ASSESSEE HAS BEEN DISMISSED. 11 ITA.NOS.2787 & 2788/DEL./2018 M/S. THE VEER COOPERATIVE GROUP HOUSING SOCIETY LIMITED, NEW DELHI. 8. WE HAVE HEARD THE LEARNED REPRESENTATIVES OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. LEARNED COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW. LEARNED COUNSEL FOR THE ASSESSEE AS REGARDS THE INTEREST INCOME RECEIVED FROM SARASWAT COOPERATIVE BANK LTD., SUBMITTED THAT THE ISSUE UNDER CONSIDERATION IS, WHETHER INTEREST INCOME RECEIVED ON INVESTMENTS IN COOPERATIVE BANK ARE ENTITLED FOR DEDUCTION U/S 80P(2)(D) OF THE ACT I.E. WHETHER COOPERATIVE BANK WOULD COME UNDER THE AMBIT OF COOPERATIVE SOCIETY FOR THE PURPOSE OF CLAIMING DEDUCTION U/S 80P(2)(D) OF THE ACT. THIS ISSUE IS SQUARELY COVERED FROM THE DECISION OF KARNATAKA HIGH COURT IN THE CASE OF THE PR. CIT V. TOTAGARS COOPERATIVE SALE SOCIETY, [2017] 392 ITR 74, WHERE IT WAS SPECIFICALLY HELD AS UNDER:- 8. 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 IT AT ITSELF IN DIFFERENT CASES. MOREOVER THE WORD 12 ITA.NOS.2787 & 2788/DEL./2018 M/S. THE VEER COOPERATIVE GROUP HOUSING SOCIETY LIMITED, NEW DELHI. COOPERATIVE 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 CO - OPERATIVE 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 CO-OPERATIVE SOCIETIES. THUS, THE CO - OPERATIVE BANK WHICH IS A SPECIES OF THE GENUS WOULD NECESSARILY BE COVERED BY THE WORD CO-OPERATIVE SOCIETY. 9. 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 CO-OPERATIVE SOCIETY BANK WOULD BE INCLUDED IN THE WORDS CO-OPERATIVE SOCIETY. 13 ITA.NOS.2787 & 2788/DEL./2018 M/S. THE VEER COOPERATIVE GROUP HOUSING SOCIETY LIMITED, NEW DELHI. 10. ADMITTEDLY, THE INTEREST WHICH THE ASSESSEE RESPONDENT HAD EARNED WAS FROM A CO-OPERATIVE SOCIETY BANK. THEREFORE, ACCORDING TO SEC. 80P(2)(D) OF THE IT. ACT, THE SAID AMOUNT OF INTEREST EARNED FROM A COOPERATIVE SOCIETY BANK WOULD BE DEDUCTABLE FROM THE GROSS INCOME OF THE CO-OPERATIVE SOCIETY IN ORDER TO ASSESS ITS TOTAL INCOME. THEREFORE, THE ASSESSING OFFICER WAS NOT JUSTIFIED IN DENYING THE SAID DEDUCTION TO THE ASSESSEE RESPONDENT. 8.1. IN THE ABOVE DECISION, HONBLE KARNATAKA HIGH COURT HAS CLEARLY PROVIDED THAT THE CO-OPERATIVE SOCIETY BANKS ARE MERELY A VARIETY OF CO-OPERATIVE SOCIETIES AND ARE COVERED UNDER THE TERM COOPERATIVE SOCIETY. THIS FURTHER CLARIFIES THE PROVISION AS LAID DOWN IN SECTION 80P(2)(D) THAT ANY INTEREST INCOME EARNED FROM THE INVESTMENTS MADE IN CO- OPERATIVE BANK SHALL BE ALLOWED AS DEDUCTION ON ACCOUNT OF INTEREST INCOME RECEIVED FROM COOPERATIVE SOCIETIES. THE LD. CIT(A) IN HIS DECISION HAS RELIED UPON THE JUDGMENT OF APEX 14 ITA.NOS.2787 & 2788/DEL./2018 M/S. THE VEER COOPERATIVE GROUP HOUSING SOCIETY LIMITED, NEW DELHI. COURT IN THE CASE OF M/S. THE TOTGARS' COOPERATIVE SALE SOCIETY LIMITED VS., INCOME TAX OFFICER. KARNATAKA, [2010] 322 ITR 283 (SC) WHICH DEALS WITH THE INTERPRETATION OF THE DEDUCTION UNDER SECTION 80P(2)(A)(I) OF THE I.T. ACT, 1961. HOWEVER, LD. CIT(A) HAS ERRED IN APPLYING THE PROVISIONS, ON THE DECISION BY APEX COURT, AS THE FACTS OF SUCH CASE AND THE DECISION GIVEN BY KARNATAKA HIGH COURT RELIED UPON BY THE ASSESSEE-SOCIETY ARE ON TOTALLY DIFFERENT PARAMETERS AND INVOLVE DIFFERENT QUESTIONS OF LAW. 8.2. IN ORDER TO AVOID ANY CONFUSION BETWEEN THE SAID TWO JUDGMENTS OF HONBLE KARNATAKA HIGH COURT AND HONBLE APEX COURT, THE KARNATAKA HIGH COURT IN THE CASE OF THE PR. CIT V. TOTAGARS COOPERATIVE SALE SOCIETY (SUPRA) MADE CLEAR DISTINCTION BETWEEN THE TWO JUDGMENTS AS UNDER : 11. THE LEARNED COUNSEL HAS RELIED ON THE CASE OF THE TOTGARS CO-OPERATIVE SALE SOCIETY LTD. VS. INCOME TAX OFFICER, (SUPRA). HOWEVER, THE SAID CASE DEALT WITH THE INTERPRETATION, AND THE DEDUCTION, WHICH WOULD BE 15 ITA.NOS.2787 & 2788/DEL./2018 M/S. THE VEER COOPERATIVE GROUP HOUSING SOCIETY LIMITED, NEW DELHI. APPLICABLE UNDER SECTION 80P(2)(A)(I) OF THE I. T. ACT. FOR, IN THE PRESENT CASE THE INTERPRETATION THAT IS REQUIRED IS OF SECTION 80P(2)(D) OF THE I.T. ACT AND NOT SECTION 80P(2)(A)(I) OF THE I.T. ACT. THEREFORE, THE SAID JUDGMENT IS INAPPLICABLE TO THE PRESENT CASE. THUS, NEITHER OF THE TWO SUBSTANTIAL QUESTIONS OF LAW CANVASSED BY THE LEARNED COUNSEL FOR THE REVENUE EVEN ARISE IN THE PRESENT CASE. 8.3. THUS, FROM THE ABOVE POSITION, IT IS CLEAR THAT THE PRESENT CASE OF THE ASSESSEE-SOCIETY RELATES TO THE PROVISIONS AS LAID DOWN UNDER SECTION 80P(2)(D) AND NOT UNDER 80P(2)(A)(I) AND THE ISSUE UNDER CONSIDERATION HAS BEEN WRONGLY DEALT BY LD. CIT(A). THE LEARNED COUNSEL FOR THE ASSESSEE PLACED FURTHER RELIANCE ON THE FOLLOWING CASES I. ITO-21 (1) (1) , MUMBAI VS., M/S. ABHAYLAXMI CO-OP. CREDIT SOCIETY LTD. AND VICE-VERSA, ITA NO. 1525/MUM/2017 AND ITA NO. 1614/MUM/2017, DT. 31.07.2017 16 ITA.NOS.2787 & 2788/DEL./2018 M/S. THE VEER COOPERATIVE GROUP HOUSING SOCIETY LIMITED, NEW DELHI. II. MERWANJEE CAMA PARK CO-OP HOUSING SOCIETY LTD. VS., INCOME TAX OFFICER- RANGE, MUMBAI, ITA NO. 6139/MUM/2014, DT. 27.09.2017 III. ACIT, CIRCLE 38(1), NEW DELHI VS. JAWALA COOPERATIVE URBAN THRIFT & CREDIT SOCIETY LTD., NEW DELHI, ITA NO. 2607/DEL/2012, DT. 19.12.2014 IV. MENASI SEEMEYA GROUP GRAMAGALA SEVA SAHAKARI SANGA NIYAMITHA VS., CIT, ITA NO. 609 AND 610/BANG/2014, DT. 06.02.2015 9. ON THE OTHER HAND, LD. D.R. RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW. 10. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. SECTION 80P(2)(D) OF THE I.T. ACT PROVIDES DEDUCTION IN RESPECT OF INCOME OF A COOPERATIVE SOCIETY I.E., IN RESPECT OF ANY INCOME BY WAY OF INTEREST OR DIVIDENDS DERIVED BY THE COOPERATIVE SOCIETIES FROM ITS INVESTMENTS WITH OTHER COOPERATIVE SOCIETIES, WHOLE OF SUCH INCOME. THE ASSESSEE-SOCIETY HAS RECEIVED INTEREST FROM SARASWAT COOPERATIVE BANK LTD., ON MAKING INVESTMENT IN FDR. THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF THE PR. 17 ITA.NOS.2787 & 2788/DEL./2018 M/S. THE VEER COOPERATIVE GROUP HOUSING SOCIETY LIMITED, NEW DELHI. CIT VS. TOTAGARS COOPERATIVE SALE SOCIETY (SUPRA) HELD THAT THE COOPERATIVE BANK WHICH IS A SPECIES OF GENESIS WOULD NECESSARILY BE COVERED BY THE WORD COOPERATIVE SOCIETY . THE ITAT, MUMBAI BENCH IN THE CASE OF ITO-21(1)(1), MUMBAI VS., M/S. ABHAYLAXMI CO-OP. CREDIT SOCIETY LTD. & VICE-VERSA (SUPRA) HELD AS UNDER : CLAIM FOR EXEMPTION U/S 80P(2)(D) WITH RESPECT TO INTEREST ON DEPOSITS WITH OTHER CO-OPERATIVE BANKS - HELD THAT:- IN VIEW OF THE CLEAR PHRASEOLOGY OF SEC. 80P(2)(D) OF THE ACT AND THE JUDGMENT OF THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF M/S. THE TOTGARS' COOPERATIVE SALE SOCIETY LIMITED (2017)-(1)-TMI-1100-KARNATAKA-HIGH COURT, THE AMOUNT OF INTEREST EARNED BY THE ASSESSEE FROM DEPOSITS WITH OTHER CO-OPERATIVE BANKS IS ELIGIBLE FOR EXEMPTION. ACCORDINGLY, ON THIS ASPECT ALSO, ORDER OF CIT(A) IS SET-ASIDE AND THE ASSESSING OFFICER IS DIRECTED TO ALLOW THE CLAIM OF THE ASSESSEE. 18 ITA.NOS.2787 & 2788/DEL./2018 M/S. THE VEER COOPERATIVE GROUP HOUSING SOCIETY LIMITED, NEW DELHI. 10.1. THE ITAT, DELHI BENCH IN THE CASE OF ACIT, CIRCLE 38(1), NEW DELHI VS. JAWALA COOPERATIVE URBAN THRIFT & CREDIT SOCIETY LTD., NEW DELHI, (SUPRA) HELD AS UNDER : THEREFORE IT IS HELD THAT FIXED DEPOSITS PLACED WITH BOMBAY MERCANTILE BANK FALLS WITHIN THE EXEMPTION GRANTED BY SECTION 80P(2)(D) OF THE ACT. THE ASSESSEE WAS ALSO ELIGIBLE UNDER THE PROVISIONS OF SECTION 80P(2)A(I) AS THE FUNDS PLACED BY ASSESSEE IN THE FORM OF FIXED DEPOSITS CAN BE SAID TO BE KEPT FOR THE PURPOSE OF BUSINESS OF THE ASSESSEE AS THE ASSESSEE HAD AVAILED CREDIT FACILITIES ALSO AGAINST SUCH FIXED DEPOSITS WHICH WERE AGAIN USED FOR THE PURPOSE OF BUSINESS OF ASSESSEE - DECIDED AGAINST REVENUE. 10.2. THE ITAT, BANGALORE BENCH IN THE CASE OF MENASI SEEMEYA GROUP GRAMAGALA SEVA SAHAKARI SANGA NIYAMITHA VS., CIT (SUPRA) IN REFERENCE PROCEEDINGS UNDER SECTION 263 OF THE I.T. ACT HELD AS UNDER : 19 ITA.NOS.2787 & 2788/DEL./2018 M/S. THE VEER COOPERATIVE GROUP HOUSING SOCIETY LIMITED, NEW DELHI. NOW COMING TO THE QUESTION AS TO WHETHER THE INTEREST ON DEPOSITS EARNED BY A CO-OPERATIVE SOCIETY, WHERE SUCH DEPOSITS WERE WITH A CO-OPERATIVE BANK, WE ARE OF THE OPINION THAT RESTRICTIVE INTERPRETATION GIVEN BY THE LEARNED CIT(A) TO SECTION 80P(2)(D) WAS NOT WARRANTED BY IT WORDINGS. THIS TRIBUNAL IN THE CASE OF BAGALKOT DISTRICT CENTRAL CO-OPERATIVE BANK [2015 (1) TMI 1005 - ITAT BANGALORE] HAD HELD THAT A CO- OPERATIVE BANK WHICH IS ALSO A CO-OPERATIVE SOCIETY CANNOT BE EXCLUDED FROM THE PURVIEW OF BENEFITS AVAILABLE TO A COOPERATIVE SOCIETY, UNLESS THE PROVISIONS OF THE ACT SO STIPULATE. NO DOUBT IN THE SAID DECISION, THE TRIBUNAL WAS CONSIDERING THE APPLICATION OF SECTION 194A(3)(V) OF THE ACT, WHEREIN IT WAS MANDATED THAT A COOPERATIVE SOCIETY WAS NOT REQUIRED TO DEDUCT TAX AT SOURCE IF THE INTEREST CREDIT WERE PAID TO ANY CO-OPERATIVE SOCIETY. IT HAD UNEQUIVOCALLY HELD THAT THE SAID PROVISION APPLIED TO ALL COOPERATIVE SOCIETY INCLUDING A COOPERATIVE SOCIETY ENGAGED IN THE 20 ITA.NOS.2787 & 2788/DEL./2018 M/S. THE VEER COOPERATIVE GROUP HOUSING SOCIETY LIMITED, NEW DELHI. BUSINESS OF THE BANK OR IN OTHER WORDS, A CO-OPERATIVE BANK. THEREFORE, THE VIEW TAKEN BY THE AO THAT INCOME BY WAY OF INTEREST OR DIVIDENDS EARNED BY THE ASSESSEE SOCIETY FROM THE COOPERATIVE BANK NAMELY KANARA DIST. CENTRAL CO-OPERATIVE BANK WHICH WAS ALSO A CO-OPERATIVE SOCIETY WAS ELIGIBLE FOR DEDUCTION CANNOT BE FAULTED. WE CANNOT SAY THAT THE ORDER OF THE AO WAS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE - DECIDED IN FAVOUR OF ASSESSEE. 11. CONSIDERING THE FACTS OF THE CASE IN THE LIGHT OF ABOVE DECISIONS, IT IS CLEAR THAT SARASWAT COOPERATIVE BANK LTD., IS A COOPERATIVE SOCIETY. THEREFORE, THE INTEREST EARNED ON BY THE ASSESSEE-SOCIETY FROM ITS INVESTMENT WITH THE OTHER COOPERATIVE SOCIETY WOULD BE ENTITLED FOR DEDUCTION UNDER SECTION 80P(2)(D) OF THE I.T. ACT. THE ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE-SOCIETY BY THE JUDGMENT OF THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF M/S. TOTAGARS COOPERATIVE SALE SOCIETY (SUPRA) AND OTHER DECISIONS OF VARIOUS 21 ITA.NOS.2787 & 2788/DEL./2018 M/S. THE VEER COOPERATIVE GROUP HOUSING SOCIETY LIMITED, NEW DELHI. BENCHES OF THE TRIBUNAL REFERRED TO ABOVE. IN THIS VIEW OF THE MATTER, WE SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND DELETE THE ADDITION OF RS.6,63,611/-. 12. THE ASSESSEE-SOCIETY MADE FURTHER CLAIM OF DEDUCTION UNDER SECTION 80P(2)(C)(II) FOR A SUM OF RS.50,000/-. THE ABOVE PROVISION PROVIDES DEDUCTION IN RESPECT OF INCOME OF COOPERATIVE SOCIETIES. IN THE CASE OF COOPERATIVE SOCIETY ENGAGED IN ACTIVITIES OTHER THAN THOSE SPECIFIED IN CLAUSE (A) OR (B) (EITHER INDEPENDENTLY OR IN ADDITION TO OR ANY OF THE ACTIVITIES SO SPECIFIED) SO MUCH OF ITS PROFITS AND GAINS ATTRIBUTABLE TO SUCH ACTIVITIES AS (DOES NOT EXCEED) (II) IN ANY OTHER CASE RS.50,000/-. THE ASSESSEE-SOCIETY DID NOT MAKE CLAIM OF DEDUCTION OF RS.50,000/- IN THE RETURN OF INCOME. THE LD. CIT(A) NOTED THAT ASSESSEE-SOCIETY IS ENTITLED TO CLAIM UNDER THE ABOVE PROVISION BECAUSE ASSESSEE IS A COOPERATIVE SOCIETY. THE LD. CIT(A), HOWEVER, REJECTED THE CLAIM OF ASSESSEE-SOCIETY BECAUSE ASSESSEE DID NOT FILE REVISED RETURN OF INCOME OR NO CLAIM IS MADE BEFORE THE AUTHORITIES BELOW. LEARNED COUNSEL 22 ITA.NOS.2787 & 2788/DEL./2018 M/S. THE VEER COOPERATIVE GROUP HOUSING SOCIETY LIMITED, NEW DELHI. FOR THE ASSESSEE, HOWEVER, SUBMITTED THAT ASSESSEE-SOCIETY IS ENTITLED FOR SUCH DEDUCTION AND THAT THERE IS NO BAR ON THE POWERS OF THE APPELLATE AUTHORITIES TO ALLOW SUCH CLAIM. LEARNED COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE LD. CIT(A). 13. ON THE OTHER HAND, LD. D.R. RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW. 14. AFTER CONSIDERING THE RIVAL SUBMISSIONS, WE ARE OF THE VIEW THAT ASSESSEE-SOCIETY IS ENTITLED FOR CLAIM OF DEDUCTION OF RS.50,000/-. THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. JAI PARABOLIC SPRINGS LTD., 306 ITR 42 (DEL.) (HC) CONSIDERING THE JUDGMENT OF THE HONBLE SUPREME COURT IN THE CASE OF NTPC 229 ITR 383 AND GOETZ (INDIA) LTD., 284 ITR 323 (SC) HELD THAT THERE IS NO PROHIBITION ON THE POWER OF THE TRIBUNAL TO ENTERTAIN AN ADDITIONAL GROUND WHICH ACCORDING TO THE TRIBUNAL AROSE IN THE MATTER AND FOR THE JUST DECISION OF THE CASE. IN THIS CASE, THE ASSESSEE-SOCIETY PLEADED THAT WHEN THE INTEREST HAS BEEN DISALLOWED BY THE A.O. FOR EXEMPTION, 23 ITA.NOS.2787 & 2788/DEL./2018 M/S. THE VEER COOPERATIVE GROUP HOUSING SOCIETY LIMITED, NEW DELHI. ONLY THEN, ASSESSEE MADE AN ALTERNATIVE CLAIM BEFORE LD. CIT(A). THE LD. CIT(A) ACCEPTED THE CLAIM OF ASSESSEE-SOCIETY IN PRINCIPLE, BUT, DENIED THE CLAIM BECAUSE NO SUCH CLAIM WAS MADE IN THE RETURN OF INCOME OR NO CLAIM WAS RAISED IN THE REVISED RETURN. HOWEVER, THERE IS NO PROHIBITION ON THE POWERS OF THE APPELLATE AUTHORITY TO CONSIDER THE CLAIM OF ASSESSEE, IF ASSESSEE IS ENTITLED FOR SUCH RELIEF IN ACCORDANCE WITH LAW. THE ASSESSEE-SOCIETY RELIED UPON DECISION OF HONBLE SUPREME COURT IN THE CASE OF CIT MAHALAXMI SUGAR MILLS CO. LTD., (1986) 160 ITR 920 AND CBDT CIRCULAR NO.14(XL-35) DATED 11.04.1995 ABOVE, WHICH PROVIDES THAT IT IS THE DUTY OF THE A.O. TO APPLY RELEVANT PROVISION OF THE ACT FOR THE PURPOSE OF DETERMINING THE TRUE FIGURE OF ASSESSEES TOTAL INCOME AND CONSEQUENTLY, TAX LIABILITY. THEREFORE, LD. CIT(A) SHOULD NOT HAVE REFUSE TO EXERCISE HIS DISCRETIONARY POWER IN THE MATTER. THE ASSESSEE-SOCIETY IS ENTITLED FOR DEDUCTION OF RS.50,000/-. WE, ACCORDINGLY, SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND DIRECT THE A.O. TO ALLOW DEDUCTION OF RS.50,000/- OUT OF 24 ITA.NOS.2787 & 2788/DEL./2018 M/S. THE VEER COOPERATIVE GROUP HOUSING SOCIETY LIMITED, NEW DELHI. INTEREST INCOME IN FAVOUR OF THE ASSESSEE-SOCIETY. THIS GROUND OF APPEAL OF ASSESSEE IS ALLOWED. 15. IN THE RESULT, ITA.NO.2787/DEL./2018 OF THE ASSESSEE IS ALLOWED. ITA.NO.2788/DEL./2018 - A.Y. 2014-2015 : 16. IN THE INSTANT APPEAL, ASSESSEE-SOCIETY MADE A CLAIM OF DEDUCTION OF RS.5,84,067/- MADE UNDER SECTION 80P(2)(D) OF THE I.T. ACT ON ACCOUNT OF INTEREST RECEIVED FROM SARASWAT COOPERATIVE BANK LTD., AND ALSO MADE A CLAIM OF DEDUCTION OF RS.50,000/- UNDER SECTION 80P(2)(C)(II) OF THE I.T. ACT. 17. THE ISSUES ARE SAME AS HAS BEEN CONSIDERED IN A.Y. 2013-2014. THE LD. CIT(A) PASSED COMMON ORDER IN BOTH THE ASSESSMENT YEARS. IN A.Y. 2013-2014, WE HAVE ALLOWED THE CLAIM OF ASSESSEE-SOCIETY ON BOTH THE ABOVE ISSUES. FOLLOWING THE REASONS FOR DECISION FOR A.Y. 2013-2014, WE SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND DIRECT THE A.O. TO ALLOW 25 ITA.NOS.2787 & 2788/DEL./2018 M/S. THE VEER COOPERATIVE GROUP HOUSING SOCIETY LIMITED, NEW DELHI. BOTH THE CLAIMS OF THE ASSESSEE-SOCIETY AS IS DIRECTED IN A.Y. 2013-2014. 18. IN THE RESULT, ITA.NO.2788/DEL./2018 OF THE OF ASSESSEE IS ALLOWED. 19. TO SUM-UP, BOTH THE APPEALS OF THE ASSESSEE ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (PRASHANT MAHARISHI) (BHAVNESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER DELHI, DATED 04 TH SEPTEMBER, 2018 VBP/- COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT SMC+C BENCH, DELHI 6. GUARD FILE 26 ITA.NOS.2787 & 2788/DEL./2018 M/S. THE VEER COOPERATIVE GROUP HOUSING SOCIETY LIMITED, NEW DELHI. //BY ORDER// ASSISTANT REGISTRAR ITAT : NEW DELHI.