The Jindva Seva Sahakari Mandali Ltd., Gandhingara V. The Pr. CIT , Gandhinagar

ITA 281/AHD/2020

AI Insights

The case involves The Jindva Seva Sahakari Mandali Ltd., a cooperative society, which appealed against the revision order passed by the Principal Commissioner of Income Tax, Gandhinagar. The revision order challenged the original assessment that allowed deductions under section 80P(2) for interest income earned from cooperative banks, citing a precedent from the Karnataka High Court in the case of Totgars Co-operative Sales Society. The Tribunal, referencing decisions from the Gujarat High Court and previous Tribunal decisions, found that the interest income from cooperative banks was eligible for deduction under section 80P(2), thus setting aside the revision order and restoring the original assessment.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 114149 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 8 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-02-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 30-01-2023
• Assessment Year: 2015-2016
• Appeal Filed On: 28-05-2020
• Other Referred Cases: SBI Employees Co-operative Credit & Supply Society vs. CIT, Totgars Co-operative Sales Society vs. CIT, State Bank of India vs. CIT
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Co-operative Credit Society; Set aside
• Section: 263; 143(3); 80P; 64; 72

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD “B” BENCH Before: Ms. Annapurna Gupta, Accountant Member And Shri T.R. Senthil Kumar, Judicial Member The Jindva Seva Sahakari Mandali Ltd. At & Post- Jindava, Ta. – Dehgam Dist. – Gandhinagar- 382305 PAN: AABAT5907F (Appellant) Vs The Pr. Commissioner of Income Tax, Gandhinagar (Respondent) Assessee Represented : Shri Jaimin Shah, C.A. Revenue Represented : Shri Sudhendu Das, CIT-DR Date of hearing : 31-01-2023 Date of pronouncement : 17-02-2023 आदेश/ORDER PER : T.R. SENTHIL KUMAR, JUDICIAL MEMBER:- This appeal is filed by the Assessee as against the Revision order dated 09.03.2020 passed by the Principal Commissioner of Income Tax, Gandhinagar under section 263 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) relating to the Assessment Year (A.Y) 2015-16. ITA No. 281/Ahd/2020 Assessment Year 2015-16 I.T.A No. 281/Ahd/2020 A.Y. 2015-16 Page No The Jindva Seva Sahakari Mandali Ltd. vs. Pr.CIT 2 2. The Registry has noted that there is a delay of 16 days in filing the above appeal. The appeal is filed on 29.05.2020. This period falls under COVID-Pandemic situation, thus following Hon’ble Supreme Court judgment dated 23.3.2020 in suo moto Writ Petition (Civil) No.3 of 2020, vide Hon’ble Supreme Court has extended time limit for filing appeals w.e.f. 15.3.2020. Thus, there is no delay in filing the above appeal and we take the appeal of the assessee for adjudication. 2.1. The brief facts of the case is that the assessee is a Cooperative Society carrying on the business of providing credit facilities to its members and the main object of the society is to supply Seeds, Fertilizers and Pesticides, accepting deposits, Savings, etc. from the members and providing loans and advances to its members. For the Assessment year 2015-16, assessment under section 143(3) was completed accepting the returned income of Rs.10,68,617/-. 2.2. Perusal of records shown that the assessee society earned interest income from the following: A) Ahmedabad District Co-Operative Bank FD interest Rs. 8,60,737/- B) Ahmedabad District Co-Operative Bank Saving interest Rs. 49,799/- C) FD interest on Staff Gratuity from ADC Bank Ltd. Rs. 57,009/- D) FD interest on Staff Provident Fund from ADC Bank Ltd. Rs. 2,39,420/- Over all interest received - Rs. 12,06,965/- 2.3. The Assessing Officer allowed the interest income deductible u/s. 80P(2) of the Act which was otherwise not allowable in the light of the principles enunciated by the Hon’ble Karnataka High Court in Totgars Co-operative Sales Society reported in 83 I.T.A No. 281/Ahd/2020 A.Y. 2015-16 Page No The Jindva Seva Sahakari Mandali Ltd. vs. Pr.CIT 3 Taxmann.com 140 (Karnataka). Hence a show cause notice was issued to the assessee calling for its explanation. The assessee filed a detailed reply stating that the Hon’ble Karnataka High Court judgment will not applicable which is being distinguished by the Hon’ble Gujarat High Court in the case of SBI Employees Co- operative Credit & Supply Society vs. CIT reported in (389 ITR 578) (Guj.). However the above objection was overruled by the Ld. PCIT and directed the A.O. to reframe the assessment de-novo in accordance with provisions of the Act and considering the position of law as held by the Hon’ble Karnataka High Court in the case of Totgars Co-operative Sales Society by giving proper opportunity to the assessee. 3. Aggrieved against the same, the assessee is in appeal before us raising the following Grounds of Appeal: 1. The Principal Commissioner of Income Tax, Gandhinagar has erred both in law and on facts while initiating proceedings u/s. 263 of the I.T. Act, 1961 and therefore the order passed u/s. 263 dated 09/03/2020 is requires to be quashed. 2. That the Order passed by Ld. assessing officer, Ward-2, Gandhinagar passed an order dated 31/07/2017 u/s. 143(3) of the I.T. Act, 1961 after considering all the details provided and therefore the order passed is not erroneous as contemplated u/s. 263 of the I.T. Act, 1961 and therefore the proceedings initiated u/s. 263 itself is bad in law and requires to be quashed. 3. The Principal Commissioner of Income Tax Gandhinagar has passed and order without considering the finding of Jurisdictional Gujarat high court case of SBI employees co-op credit and supply society Vs. CIT reported in 389 ITR P. 578 and various ITAT decisions is beyond the power and jurisdiction Therefore the order passed u/s. 263 in bad in law and required to be quashed. 4. The appellant has is a co-operative society has earned interest income from Co-op. Bank registered under co-operative societies Act, which is I.T.A No. 281/Ahd/2020 A.Y. 2015-16 Page No The Jindva Seva Sahakari Mandali Ltd. vs. Pr.CIT 4 exempted u/s. 80P(2)(d) of the Income Tax Act, 1961. Therefore the order passed u/s. 263 of the I.T. Act, 1961 is required to be quashed. 5. The commissioner ought to have considered while framing the order under section 263 that the assessment had been framed by the assessing officer after making all necessary enquiries and after considering the law applicable in the circumstances of the case and therefore, the order of assessment was not passed in undue haste and without proper enquiry and therefore, such order could not be considered as erroneous within the meaning of section 263 of the Income Tax Act 1961, and therefore the order passed u/s. 263 is requires to be quashed. 4. The Ld. A.R. Shri Jaimin Shah appearing for the assessee submitted that this issue is now settled in favour of the assessee following Jurisdictional Gujarat High Court in the case of SBI Vs. Commissioner of Income-tax reported in 72 taxmann.com 64 (2016) where it is held that the interest from the Co-operative Bank is eligible for deduction us 80P(2) of the Act. 4.1. The Ld. AR further submitted that the Co-ordinate Bench decision of the Tribunal in the case of Sardar Patel Co-operative Credit Society Limited bearing ITA no. 575/Ahd/2019 for the Assessment year 2014-15 involving identical facts and circumstances vide order dated 17/06/2022 has decided the issue in favour of the assessee and against the revenue. Thus the Ld. A.R. pleaded to quash the Revision order passed by Ld. PCIT. 5. On the other hand, the Ld. CIT-DR Shri Sudhansu Das appearing for the Revenue vehemently supported the Revision order passed by the ld. PCIT, which does not require any interference and thereby pleaded to dismiss the assessee appeal. I.T.A No. 281/Ahd/2020 A.Y. 2015-16 Page No The Jindva Seva Sahakari Mandali Ltd. vs. Pr.CIT 5 6. We have heard the rival contentions and perused the materials available on record. At the outset we note that this tribunal in the case of Sardar patel Co-operative Credit Society (Supra) involving the identical facts and circumstances has decided the issue in favour of the assessee. The relevant extract of the order is reproduced as under: 4. We have heard the arguments of both the sides and also perused the relevant material available on record. As submitted by the learned Counsel for the assessee, the assessment completed by the Assessing Officer under Section 143(3) of the Act allowing the similar claim of the assessee for deduction under Section 80P(2) of the Act in respect of interest income earned on the deposits with Mehsana Urban Co-operative Bank was set aside by the same learned PCIT vide his order passed under Section 263 of the Act in the case of the People Co-op Credit Society Ltd by relying on the decision of Hon’ble Karnataka High Court in the case of Totgars Cooperative Sale Society (supra) and, on appeal by the assessee, the Coordinate Bench of this Tribunal vide its order dated 21.02.2022 passed in ITA No.394/And/2020 set aside the order passed by the learned PCIT under Section 267 of the Act restoring that of the Assessing Officer by relying inter alia on the decision of the Hon’ble Jurisdictional High Court in the case of State Bank of India (supra) Copy of the said order of the Tribunal is also placed on record and perusal of the same shows that a similar issue was decided by the Tribunal vide paragraph No. 7 of its order as under: “7. We have heard both the parties and perused all the relevant material available on record. It is pertinent to note that the entire details called for during the assessment proceedings were submitted by the assessee at the time of assessment under Section 143(3) of the Act and the Assessing Officer was very well aware that section 80P claim was reflected in the details of the assessee. The assessee vide letter dated 22.05.2017 submitted the details regarding deduction under Section 80P of the Act which was claimed in the return of income which included in the interest income from Mehsann Urban Co-operative Bank. The PCIT has issued the show cause notice under Section 263 on 14.02.2020 on the very same issue which was verified by the Assessing Officer in Section 143(3) proceedings itself. Once the issue verified by the Assessing Officer and the jurisdictional Court has allowed the said claim related to interest income earned from Co-operative Bank, the PCIT cannot exercise Section 263 of the Act. The Ld. AR. aptly relied upon the decision of State Bank of India vs. CIT (2016) 72 Taumann.com 64 dated 25.04.2016 On the basis of Hon’ble Karnataka High Court decision in the case of Totgars Co-operative Sales Society (supra), the PCIT cannot invoke provisions of section 23 or the Act. This Section 263 does not sustain and appeal of the assessee is allowed" 5. The issue involved in the present case a thus squarely covered by the decision rendered by the Tribunal in the case of the People Co-op. Credit Society Ltd. (supra), wherein a similar issue involving identical facts and circumstances has I.T.A No. 281/Ahd/2020 A.Y. 2015-16 Page No The Jindva Seva Sahakari Mandali Ltd. vs. Pr.CIT 6 been decided by the Tribunal in favour of the assessee and even the learned DR has not been able to dispute this position. We, therefore, follow the said decision of the Coordinate Bench of the Tribunal and set aside the impugned order passed by the PCIT under Section 263 of the Act restoring that of the Assessing Officer passed under Section 143(3) of the Act. 6. In the result, the appeal of the assessee is allowed. 6.1 Before us, no material has been placed on record by the Revenue to demonstrate that the decision of Tribunal as discussed above has been set aside/stayed or overruled by the higher Judicial Authorities. Before us, Revenue has not placed any material on record to point out any distinguishing feature in the facts of the case for the year under consideration and that of case referred above nor has placed any contrary binding decision in its support. Thus, respectfully following the above decision of Hon'ble Gujarat High Court and the Co-ordinate Bench, we hold that the order framed under section 263 of the Act is unsustainable. Hence, the ground of appeal of the assessee is allowed. 7. In the result, the appeal of the Assessee is allowed. Order pronounced in the open court on 17-02-2023 Sd/- Sd/- (ANNAPURNA GUPTA) (T.R. SENTHIL KUMAR) ACCOUNTANT MEMBER True Copy JUDICIAL MEMBER Ahmedabad : Dated 17/02/2023 आदेश कȧ ĤǓतͧलͪप अĒेͪषत / Copy of Order Forwarded to:- 1. Assessee 2. Revenue 3. Concerned CIT 4. CIT (A) I.T.A No. 281/Ahd/2020 A.Y. 2015-16 Page No The Jindva Seva Sahakari Mandali Ltd. vs. Pr.CIT 7 5. DR, ITAT, Ahmedabad 6. Guard file. By order/आदेश से, उप/सहायक पंजीकार आयकर अपीलȣय अͬधकरण, अहमदाबाद