DANDA CO- OP CREDIT SOCIETY LIMITED, MUMBAI V. ITO, WARD - 22(1)(2), MUMBAI

ITA 3240/MUM/2019

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 1944 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-11-2020
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2012-2013
• Appeal Filed On: 15-05-2019
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: KAVITA P KAUSHIK
• Keywords: Search and seizure; Benefit of exemption; Co-operative Credit Society; Set aside
• Section: 80P; 2(19)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH SMC, MUMBAI , ! BEFORE SHRI VIKAS AWASTHY, JUDICIAL MEMBER . 3240 / / 2019 (%. .2012-13 ) ITA NO. 3240/MUM/2019 (A.Y.2012-13) DANDA CO-OP CREDIT SOCIETY LTD. 239, VALMIKI, KHAR DANDA, KHAR(WEST), MUMBAI 400 052 PAN: AAAAD3039M / VS. : / APPELLANT THE INCOME TAX OFFICER 22(1)(2) MUMBAI 400 007 : / RESPONDENT ASSESSEE BY : NONE REVENUE BY : MS KAVITA P. KA USHIK / DATE OF HEARING : 17/09/2020 / DATE OF PRONOUNCEMENT : 23/11/2020 / ORDER THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-34, MUMBAI ( IN SHORT THE CIT (A)) DATED 22/02/2019 FOR THE ASSESSMENT YEAR 2012-13. 2. THE BRIEF FACTS OF THE CASE AS EMANATING FROM RE CORDS ARE: THE ASSESSEE IS A CO-OPERATIVE CREDIT SOCIETY ENGAGED IN THE BUSINESS OF ACCEPTING DEPOSITS AND LENDING MONEY TO ITS MEMBERS. THE ASSESSEE MADE IN VESTMENTS IN THE CO-OPERATIVE 2 ITA NO. 3240/MUM/2019 (A.Y.2012-13) BANK IN THE FORM OF FIXED DEPOSITS AND EARNED INTER EST INCOME ON THE SAID INVESTMENTS. THE ASSESSEE FILED ITS RETURN OF INCO ME FOR THE IMPUGNED ASSESSMENT YEAR DECLARING TOTAL INCOME OF RS.14,316/- AFTER CL AIMING DEDUCTION OF RS.11,19,367/- UNDER SECTION 80P(2)(A)(I) OF THE INCOME TAX ACT, 1 961 ( IN SHORT THE ACT). IN SCRUTINY ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER DISAL LOWED ASSESSEES CLAIM OF DEDUCTION UNDER SECTION 80P(2)(A)(I) OF THE ACT AND ALSO UNDER SECTION 80P(2)(D) IN RESPECT OF INTEREST INCOME ON FIX DEPOSITS WITH CO- OPERATIVE BANKS. AGGRIEVED BY THE ASSESSMENT ORDER DATED 27/03/2015 PASSED UNDER SECT ION 143(3), THE ASSESSEE FILED APPEAL BEFORE THE CIT(A). THE FIRST APPELLATE AUTH ORITY REJECTED THE CONTENTIONS OF ASSESSEE AND CONFIRMED THE ADDITION. HENCE, THE PR ESENT APPEAL BY THE ASSESSEE. 3. MS. KAVITA P. KAUSHIK, REPRESENTING THE DEPARTME NT VEHEMENTLY DEFENDED THE IMPUGNED ORDER. THE LD.DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THE ASSESSEE HAS WRONGLY CLAIMED DEDUCTION UNDER THE PROVISIONS OF SECTION 80P(2)(A)(I)/80P(2)(D) OF THE ACT IN RESPECT OF INTEREST DERIVED FROM INVE STMENT WITH CO-OPERATIVE BANK. THE LD. DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT AFTER THE INSERTION OF SUB- SECTION (4) TO SECTION 80P BY THE FINANCE ACT 2006 W.E.F. 01/04/2007, THE CO- OPERATIVE BANKS HAVE BEEN TAKEN OUTSIDE THE PURVIEW OF BENEFIT OF EXEMPTION PROVIDED TO THE CO-OPERATIVE SOCIETIES. THE LD. DE PARTMENTAL REPRESENTATIVE SUBMITTED THAT ASSESSEE HAS EARNED INTEREST INCOME FROM INVESTMENTS WITH CO- OPERATIVE BANKS, THE SAID INCOME IS NOT ELIGIBLE FO R DEDUCTION UNDER THE PROVISIONS OF SECTION 80P OF THE ACT. 4. SUBMISSIONS MADE BY LD. DEPARTMENTAL REPRESENTAT IVE HEARD. ORDERS OF THE AUTHORITIES BELOW EXAMINED. THE SOLITARY ISSUE RAI SED IN APPEAL IS AGAINST DISALLOWANCE OF DEDUCTION RS.4,72,960/- UNDER SECTI ON 80P(2)(A)(I)/80P(2)(D) OF THE ACT. THE ASSESSEE HAS MADE INVESTMENT IN CO-OPERAT IVE BANK IN THE FORM OF FIXED DEPOSITS AND HAS EARNED INTEREST INCOME OF RS.4,72, 960/-. WHETHER INTEREST INCOME DERIVED BY A CO-OPERATIVE SOCIETY FROM DEPOSITS WIT H COOPERATIVE BANKS IS ELIGIBLE FOR DEDUCTION UNDER SECTION 80P(2)(D) OF THE ACT OR NOT IS STILL A SUBJECT OF DEBATE. THE 3 ITA NO. 3240/MUM/2019 (A.Y.2012-13) TRIBUNAL IN THE CASE OF KALIANDAS UDYOG BHAVAN PREM ISES CO-OP SOCIETY LTD. VS. ITO, 94 TAXMANN.COM 15 (MUMBAI) AFTER EXAMINING THE PRO VISIONS OF SECTION AND THE DECISION OF HONBLE KARNATAKA HIGH COURT IN THE C ASE OF TOTAGARS CO-OPERATIVE SALE SOCIETY, 392 ITR 74 HELD THAT INTEREST INCOME DERI VED BY A CO-OPERATIVE SOCIETY FROM INVESTMENTS WITH A CO-OPERATIVE BANK, WOULD BE ENTI TLED FOR DEDUCTION UNDER SECTION 80P(2)(D) OF THE ACT. THE RELEVANT EXTRACT OF THE O RDER READS AS UNDER: - 7. WE HAVE DELIBERATED AT LENGTH ON THE ISSUE UND ER CONSIDERATION AND ARE UNABLE TO PERSUADE OURSELVES TO BE IN AGREEMENT WITH THE VIEW TAKEN BY THE LOWER AUTHORITIES. BEFORE PROCEEDING FURTHER, WE MAY HEREIN REPRODUCE THE RELEVANT EXTRACT OF THE SAID STATUTORY PROVISION, VIZ. SEC. 80P(2)(D), AS THE SA ME WOULD HAVE A STRONG BEARING ON THE ADJUDICATION OF THE ISSUE BEFORE US: '80P(2)(D) (1) WHERE IN THE CASE OF AN ASSESSEE BEING A CO-OPE RATIVE SOCIETY, THE GROSS TOTAL INCOME INCLUDES ANY INCOME REFERRED TO IN SUB-SECTION (2), THERE SHALL BE DEDUCTED, IN ACCORDANCE WITH AND SUBJECT TO THE PROVISIONS OF THIS SECTION, THE SUM SPECIFIED IN SUB-SECTION (2), IN COMPUTING THE TOTAL INCOME OF THE ASSESSEE. (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 INVESTMENTS WITH ANY OTHER CO-OPER ATIVE SOCIETY, THE WHOLE OF SUCH INCOME; THUS, FROM A PERUSAL OF THE AFORESAID SEC. 80P(2)(D ) IT CAN SAFELY BE GATHERED THAT INCOME BY WAY OF INTEREST INCOME DERIVED BY AN ASSESSEE CO -OPERATIVE SOCIETY FROM ITS INVESTMENTS HELD WITH ANY OTHER COOPERATIVE SOCIETY , SHALL BE DEDUCTED IN COMPUTING THE TOTAL INCOME OF THE ASSESSEE. WE MAY HEREIN OBSERVE , THAT WHAT IS RELEVANT FOR CLAIM OF DEDUCTION UNDER SEC. 80P(2)(D) IS THAT THE INTEREST INCOME SHOULD HAVE BEEN DERIVED FROM THE INVESTMENTS MADE BY THE ASSESSEE CO-OPERATIVE S OCIETY WITH ANY OTHER COOPERATIVE SOCIETY. WE THOUGH ARE IN AGREEMENT WITH THE OBSERV ATIONS OF THE LOWER AUTHORITIES THAT WITH THE INSERTION OF SUB-SECTION (4) OF SEC. 80P, VIDE THE FINANCE ACT, 2006, WITH EFFECT FROM 01.04.2007, THE PROVISIONS OF SEC. 80P WOULD N O MORE BE APPLICABLE IN RELATION TO ANY CO-OPERATIVE BANK, OTHER THAN A PRIMARY AGRICUL TURAL CREDIT SOCIETY OR A PRIMARY CO- OPERATIVE AGRICULTURAL AND RURAL DEVELOPMENT BANK, BUT HOWEVER, ARE UNABLE TO SUBSCRIBE TO THEIR VIEW THAT THE SAME SHALL ALSO JEOPARDISE TH E CLAIM OF DEDUCTION OF A CO-OPERATIVE SOCIETY UNDER SEC. 80P(2)(D) IN RESPECT OF THE INTE REST INCOME ON THEIR INVESTMENTS PARKED WITH A CO-OPERATIVE BANK. WE HAVE GIVEN A THOUGHTFU L CONSIDERATION TO THE ISSUE BEFORE US AND ARE OF THE CONSIDERED VIEW THAT AS LONG AS I T IS PROVED THAT THE INTEREST INCOME IS BEING DERIVED BY A CO-OPERATIVE SOCIETY FROM ITS IN VESTMENTS MADE WITH ANY OTHER CO- OPERATIVE SOCIETY, THE CLAIM OF DEDUCTION UNDER THE AFORESAID STATUTORY PROVISION, VIZ. SEC. 80P(2)(D) WOULD BE DULY AVAILABLE. WE MAY HEREIN OB SERVE THAT THE TERM 'CO-OPERATIVE SOCIETY' HAD BEEN DEFINED UNDER SEC. 2(19) OF THE A CT, AS UNDER: 4 ITA NO. 3240/MUM/2019 (A.Y.2012-13) '(19) 'CO-OPERATIVE SOCIETY' MEANS A COOPERATIVE S OCIETY 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-OPERA TIVE SOCIETIES;' WE ARE OF THE CONSIDERED VIEW, THAT THOUGH THE COOPE RATIVE BANK PURSUANT TO THE INSERTION OF SUBSECTION (4) OF SEC. 80P WOULD NO MO RE BE ENTITLED FOR CLAIM OF DEDUCTION UNDER SEC. 80P OF THE ACT, BUT HOWEVER, AS A CO-OPE RATIVE BANK CONTINUES TO BE A COOPERATIVE SOCIETY REGISTERED UNDER THE CO-OPERATI VE SOCIETIES ACT, 1912 (2 OF 1912), OR UNDER ANY OTHER LAW FOR THE TIME BEING ENFORCED IN ANY STATE FOR THE REGISTRATION OF CO-OPERATIVE SOCIETIES, THEREFORE, THE INTEREST INC OME DERIVED BY A CO-OPERATIVE SOCIETY FROM ITS INVESTMENTS HELD WITH A CO-OPERATIVE BANK, WOULD BE ENTITLED FOR CLAIM OF DEDUCTION UNDER SEC.80P(2)(D) OF THE ACT. 8. WE SHALL NOW ADVERT TO THE JUDICIAL PRONOUNCEMENT S THAT HAD BEEN RELIED UPON BY THE AUTHORIZED REPRESENTATIVES FOR BOTH THE PARTIES AND THE LOWER AUTHORITIES. WE FIND THAT THE ISSUE THAT A CO-OPERATIVE SOCIETY WOULD BE ENTI TLED FOR CLAIM OF DEDUCTION UNDER SEC. 80P(2)(D) FOR THE INTEREST INCOME DERIVED FROM ITS INVESTMENTS HELD WITH A COOPERATIVE BANK IS COVERED IN FAVOUR OF THE ASSESSEE IN THE FO LLOWING CASES: (I) LAND AND COOPERATIVE HOUSING SOCIETY LTD. (SUPR A) (II) SEA GREEN COOPERATIVE HOUSING AND SOCIETY LTD . (SUPRA) (III) MARWANJEE CAMA PARK COOPERATIVE HOUSING SOCIET Y LTD. (SUPRA). WE FURTHER FIND THAT THE HON'BLE HIGH COURT OF KARN ATAKA IN THE CASE OF TOTAGARS COOPERATIVE SALE SOCIETY (SUPRA) AND HON'BLE HIGH C OURT OF GUJARAT IN THE CASE OF STATE BANK OF INDIA (SUPRA), HAD ALSO HELD THAT THE INTER EST INCOME EARNED BY THE ASSESSEE ON ITS INVESTMENTS HELD WITH A CO-OPERATIVE BANK WOULD BE ELIGIBLE FOR CLAIM OF DEDUCTION UNDER SEC. 80P(2)(D) OF THE ACT. STILL FURTHER, WE FIND THAT THE CBDT CIRCULAR NO. 14, DATED 28.12.2006, AS HAD BEEN RELIED UPON BY THE LD. A.R, ALSO MAKES IT CLEAR BEYOND ANY SCOPE OF DOUBT, THAT THE PURPOSE BEHIND ENACTMENT OF SUB- SECTION (4) OF SEC. 80P WAS TO PROVIDE THAT THE CO-OPERATIVE BANKS WHICH ARE FUNCT IONING AT PAR WITH OTHER BANKS WOULD NO MORE BE ENTITLED FOR CLAIM OF DEDUCTION UNDER SE C. 80P(4) OF THE ACT. WE ARE OF THE CONSIDERED VIEW THAT THE RELIANCE PLACED BY THE CIT (A) ON THE JUDGMENT OF THE HON'BLE SUPREME COURT IN THE CASE OF TOTGARS CO-OPERATIVE S ALE SOCIETY LTD. (SUPRA) BEING DISTINGUISHABLE ON FACTS, THUS, HAD WRONGLY BEEN RE LIED UPON BY HIM. THE ADJUDICATION BY THE HON'BLE APEX COURT IN THE AFORESAID CASE WAS IN CONTEXT OF SEC. 80P(2)(A)(I), AND NOT ON THE ENTITLEMENT OF A CO-OPERATIVE SOCIETY TOWARD S DEDUCTION UNDER SEC. 80P(2)(D) ON THE INTEREST INCOME ON THE INVESTMENTS PARKED WITH A CO-OPERATIVE BANK. WE FURTHER FIND THAT THE RELIANCE PLACE BY THE LD. D.R ON THE ORDER OF THE ITAT 'F' BENCH, MUMBAI IN THE CASE OF VAIBHAV COOPERATIVE CREDIT SOCIETY (SUPRA) IS ALSO DISTINGUISHABLE ON FACTS. WE FIND THAT THE SAID ORDER WAS PASSED BY THE TRIBUNAL IN CONTEXT OF ADJUDICATION OF THE ENTITLEMENT OF THE ASSESSEE COOPERATIVE BANK TOWARD S CLAIM OF DEDUCTION UNDER SEC.80P(2)(A)(I) OF THE ACT. WE FIND THAT IT WAS IN THE BACKDROP OF THE AFORESAID FACTS THAT THE TRIBUNAL AFTER CARRYING OUT A CONJOINT READING O F SEC. 80P(2)(A)(I) R.W. SEC. 80P(4) HAD ADJUDICATED THE ISSUE BEFORE THEM. WE ARE AFRAID THA T THE RELIANCE PLACED BY THE LD. D.R ON THE AFORESAID ORDER OF THE TRIBUNAL BEING DISTIN GUISHABLE ON FACTS, THUS, WOULD BE OF NO ASSISTANCE FOR ADJUDICATION OF THE ISSUE BEFORE US. STILL FURTHER, THE RELIANCE PLACED BY 5 ITA NO. 3240/MUM/2019 (A.Y.2012-13) THE LD. D.R ON THE ORDER OF THE ITAT 'SMC' BENCH, M UMBAI IN THE CASE OF SHRI SAI DATTA COOPERATIVE CREDIT SOCIETY LTD. (SUPRA), WOULD ALSO NOT BE OF ANY ASSISTANCE, FOR THE REASON THAT IN THE SAID MATTER THE TRIBUNAL HAD SET ASIDE THE ISSUE TO THE FILE OF THE ASSESSING OFFICER FOR FRESH EXAMINATION. THAT AS RE GARDS THE RELIANCE PLACED BY THE LD. D.R ON THE JUDGMENT OF THE HON'BLE HIGH COURT OF KARNATA KA IN THE CASE OF TOTAGARS CO- OPERATIVE SALE SOCIETY (SUPRA), THE HIGH COURT HAD CONCLUDED THAT A COOPERATIVE SOCIETY WOULD NOT BE ENTITLED TO CLAIM OF DEDUCTION UNDER S EC. 80P(2)(D). WE HOWEVER FIND THAT AS HELD BY THE HON'BLE HIGH COURT OF BOMBAY IN THE CASE OF K. SUBRAMANIAN V. SIEMENS INDIA LTD. [1983] 15 TAXMAN 594/[1985] 156 ITR 11 ( BOM), WHERE THERE IS A CONFLICT BETWEEN THE DECISIONS OF NON-JURISDICTIONAL HIGH COU RT'S, THEN A VIEW WHICH IS IN FAVOUR OF THE ASSESSEE IS TO BE PREFERRED AS AGAINST THAT TAK EN AGAINST HIM. THUS, TAKING SUPPORT FROM THE AFORESAID JUDICIAL PRONOUNCEMENT OF THE HON 'BLE HIGH COURT OF JURISDICTION, WE RESPECTFULLY FOLLOW THE VIEW TAKEN BY THE HON'BLE H IGH COURT OF KARNATAKA IN THE CASE OF TOTAGARS COOPERATIVE SALE SOCIETY (SUPRA) AND HON'B LE HIGH COURT OF GUJARAT IN THE CASE OF STATE BANK OF INDIA (SUPRA), WHEREIN IT WAS OBSE RVED THAT THE INTEREST INCOME EARNED BY A COOPERATIVE SOCIETY ON ITS INVESTMENTS HELD WI TH A CO-OPERATIVE BANK WOULD BE ELIGIBLE FOR CLAIM OF DEDUCTION UNDER SEC.80P(2)(D) OF THE ACT.' [EMPHASIZED BY US] 5. THE HON'BLE KARNATAKA HIGH COURT IN THE CASE OF PCIT VS. TOTAGARS CO- OPERATIVE SALE SOCIETY 392 ITR 74 HAS HELD THAT FOR THE PURPOSE OF SECTION 80P(2)(D) OF THE ACT, CO-OPERATIVE BANK SHOULD BE CONSIDERED AS COOPERATIVE SOCIETY. SIMILAR VIEW HAS BEEN TAKEN BY THE HON'BLE GUJARAT HIGH COU RT IN THE CASE OF SURAT VANKAR SAHAKARI SANGH LTD. VS. ACIT 421 ITR 134. 6. HOWEVER, ON THE SAME ISSUE HON'BLE KARNATAKA HI GH COURT IN THE CASE OF PCIT VS. TOTAGARS CO-OPERATIVE SALE SOCIETY 395 ITR 611 (KARNATAKA) HAS TAKEN A CONTRARY VIEW HOLDING THAT INTEREST INCOME EARNED FROM DEPOS IT WITH THE COOPERATIVE BANK DOES NOT QUALIFY FOR DEDUCTION UNDER SECTION 80P(2) (D) OF THE ACT. IT WOULD BE RELEVANT TO MENTION HERE THAT THE HON'BLE HIGH COUR T WHILE RENDERING THE LATER JUDGEMENT HAS NOT CONSIDERED THE EARLIER DECISION R ENDERED IN THE CASE OF TOTAGARS CO-OPERATIVE SALE SOCIETY (SUPRA). THE CIT(A) HAS REJECTED THE CLAIM OF ASSESSEE BY FOLLOWING LATER JUDGMENT RENDERED IN TOTAGARS CAS E. 7. NO JUDGEMENT FROM HON'BLE JURISDICTIONAL HIGH C OURT ON THE ISSUE OF ELIGIBILITY OF DEDUCTION UNDER SECTION 80P(2)(D) OF THE ACT ON INTEREST INCOME DERIVED BY A CO- 6 ITA NO. 3240/MUM/2019 (A.Y.2012-13) OPERATIVE SOCIETY FROM A COOPERATIVE BANK HAS BEEN BROUGHT TO OUR NOTICE. THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF K. SUBRAMA NIAN VS. SIEMENS INDIA LTD. 156 ITR 11 HAS HELD THAT WHEN TWO CONFLICTING DECISIONS OF NON-JURISDICTIONAL HIGH COURTS ARE AVAILABLE, THE VIEW THAT FAVOURS THE ASSESSEE I S TO BE PREFERRED. ACCORDINGLY, FOLLOWING THE DECISION OF HON'BLE KARNATAKA HIGH CO URT IN THE CASE OF TOTAGARS CO- OPERATIVE SALE SOCIETY (SUPRA) AND THE DECISION IN THE CASE OF HON'BLE GUJARAT HIGH COURT IN THE CASE OF VANKAR SAHAKARI SANGH (SUPRA) THE DEDUCTION CLAIMED BY THE ASSESSEE UNDER SECTION 80P(2)(D) OF THE ACT IN RESP ECT INTEREST DERIVED FROM INVESTMENTS WITH THE COOPERATIVE BANKS IS ALLOWED. I FIND MERIT IN THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE, ERGO THE APPEAL OF ASSESSEE IS ALLOWED. 8, IN THE RESULT, APPEAL BY THE ASSESSEE IS ALLOW ED. ORDER PRONOUNCED ON MONDAY THE 23RD DAY OF NO VEMBER, 2020. SD/- (VIKAS AWASTHY) / JUDICIAL MEMBER / MUMBAI, (%/ DATED: 23/11/2020 VM , SR. PS(O/S) COPY OF THE ORDER FORWARDED TO : 1. ) / THE APPELLANT , 2. *+ / THE RESPONDENT. 3. ,+ ( )/ THE CIT(A)- 4. ,+ CIT 5. -.*+% , . . . , / DR, ITAT, MUMBAI 6. ./012 / GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT. REGISTRAR) ITAT, MUMBAI