Appeal Details
Counselvise Citation
[2019] 115 COUNSELVISE.COM (IT) 4258 (ITAT-MUMBAI)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
1 year(s) 1 month(s) 27 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
13-03-2019
Appeal Filed By
Assessee
Order Result
Allowed
Bench Allotted
D
Assessment Year
2014-2015
Appeal Filed On
16-01-2018
Judgement Text
D IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUMBAI BEFORE SHRI B.R.BASKARAN, ACCOUNTANT MEMBER AND SHRI RAVISH SOOD, JUDICIAL MEMBER ./ I.T.A. NO.374/ MUM/2018 ( / ASSESSMENT YEAR : 2014 - 15) SHREE MAHADESHWAR SAHAKARI PATPEDHI MARYADIT, 001, ADITI, PLOT NO. 183, SHIV SENA BHAVAN ROAD, DADAR(W), MUMBAI 400028 / V S . ITO 21(2)(2) MUMBAI ./ PAN :AADAS9472N ( / APPELLANT ) .. ( / RESPONDENT ) ASSESSEE BY: SHRI. SANTOSH JADHAV REVENUE BY : SHRI. D.G. PANSARI / DATE OF HEARING : 06.03.2019 / DATE OF PRONOUNCEMENT : 13 .0 3 .2019 / O R D E R PER RAVISH SOOD, JUDICIAL MEMBER : THE PRESENT APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER PASSED BY THE CIT(A) - 33, MUMBAI, DATED 11.10.2017, WHICH IN TURN ARISES FROM THE ORDER PASSED BY THE A.O UNDER SEC. 143(3) OF THE INCOME - TAX ACT, 1961 (FOR SHORT IT ACT), DATED 28.11.2016 FOR A.Y 2014 - 15 . THE ASSESSEE ASSAILING THE ORDER OF THE CIT(A) HAS RAISED BEFORE US THE FOLLOWING GROUNDS OF APPEAL: I.T.A. NO. 374/MUM/2018 2 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE HON'BLE CIT(A) HAS ERRED IN CONCLUDING THAT THE INTEREST ON DEPOSITS PLACED BY THE APPELLANT WIT H THE COOPERATIVE BANK IS NOT ELIGIBLE TO DEDUCTION U/S 80P(2)(D) ON THE GROUND THAT AS PER SEC. 80P(2)(D) INTEREST ON DEPOSIT WITH ANY OTHER CREDIT SOCIETY IS ELIGIBLE FOR DEDUCTION WHEREAS INTEREST ON DEPOSITS WITH CO - OPERATIVE BANK IS NOT ELIGIBLE UNDER THE SAID SECTION. THE APPELLANT WISH TO FRA M E A QUESTION OF LAW AS UNDER; 'WHETHER A CO - OPERATIVE BANK IS A CO - OPERATIVE CREDIT SOCIETY OR NOT AS SPECIFIED UNDER SEC. 80P(2)(D)?' 2. WITHOUT PREJUDICE TO GROUNDS OF APPEAL NO.1, INTEREST INCOME EARNED BY T HE APPELLANT ON FIXED DEPOSITS WITH CO - OPERATIVE BANK IS IN THE NATURE OF INCOME EARNED FROM BUSINESS OF LENDING TO ITS MEMBERS, HENCE THE INTEREST INCOME EARNED BY THE APPELLANT OUGHT TO HAVE BEEN ALLOWED AS DEDUCTION U/S 80P(2)(A)(I). 2. BRIEFLY STATED , THE ASSESSEE WHICH IS A C O - OPERATIVE CREDIT SOCIETY REGISTERED UNDER THE MAHARASHTRA CO - OPERATIVE SOCIETY ACT, 1960 AND IS ENGAGED IN PROVIDING CREDIT/LOANS TO ITS MEMBERS AND COLLECTING DEPOSITS FROM THEM BY WAY OF FIXED DEPOSITS, SAVING DEPOSITS AND DA ILY RECURRING DEPOSITS ETC. , HAD FILED ITS RETURN OF INCOME FOR A . Y 2014 - 15 ON 28.11.2014, DECLARING TOTAL INCOME AT RS. N IL AFTER CLAIMING DEDUCTION OF RS. 4 4,13,761/ - U/S. 80P(2)(D); RS. 20,02,782/ - U/S. 80P(2)(A)(I) ; AND RS. 50,000/ - U/S. 80P(2)(C) OF T HE I.T ACT. S UBSEQUENTLY, THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY ASSESSMENT U/S. 143(2) OF THE I.T. ACT . 2. DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS THE A . O AFTER DELIBERATING ON THE DEDUCTION CLAIM ED BY THE ASSESSEE U/S. 80P(2) OF THE IT ACT WAS OF THE VIEW THAT THE DEDUCTION S THEREIN ENVISAGED IN THE CASE OF A C O - OPERATIVE CREDIT SOCIETY ENGAGED IN CARRYING ON THE BUSINESS OF BANKING (CO - OPERATIVE BANKS) , EXCEPT FOR IN CASE OF A PRIMARY COOPERATIVE CREDIT SOCIETY OR A PRIMARY C OOPERATIVE AGRICULTURAL RURAL DEVELOPMENT BANK HAD BEEN WITHDRAWN W.E.F. AY 2007 - 08. IT WAS OBSERVED BY THE A . O THAT THE LEGISLAT URE VIDE THE FINANCE ACT, 2006 W.E.F. 01.04.2007 HAD SUBSTITUTED S UB - SECTION (4) TO S ECTION 80P OF THE IT ACT, WHICH POST AMEND MENT PROVIDED THAT THE PROVISION S OF THE SAID SECTION SHALL NOT APPLY IN RELATION TO ANY CO - I.T.A. NO. 374/MUM/2018 3 OPERATIVE BANK OTHER THAN A P RIMARY AGRICULTURAL CREDIT SOCIETY OR A P RIMARY CO - OPERATIVE AGRICULTURAL AND RURAL DEVELOPMENT BANK . APART THERE FROM, IT WAS NOTI CED BY THE A . O THAT THE EXPLANATION BELOW THE SUB - SECTION (4) TO S ECTION 80P DEFINED THE EXPRESSION CO - OPERATIVE BANK , PRIMARY AGRICULTURAL CREDIT SOCIETY AND PRIMARY CO - OPERATIVE AGRICULTURAL AND RURAL DEVELOPMENT BANK. FURTHER, IT WAS NOTICED BY HIM THAT THE FINANCE ACT, 2006 HAD ALSO INSERTED SUB - C LAUSE (VII A ) TO SECTION 2(24) OF THE IT ACT, AS PR WHICH THE PROFITS AND GAINS OF ANY BUSINESS OF BANKING (INCLUDING PROVIDING CREDIT FACILITY) CARRIED ON BY A CO - OPERATIVE SOCIETY WITH ITS MEMBERS SHA LL BE INCLUDED IN THE DEFINITION OF I NCOME. ON THE BASIS OF HIS AFORESAID DELIBERATIONS WHICH CAN BE BRIEFLY CU L LED OUT AS UNDER: - A) THE ASSESSSE E WAS MAINLY ENGAGED IN THE ACTIVITY OF PROVIDING CREDIT FACILITIES TO ITS MEMBERS FROM OUT OF THE DEPOSITS COLLECTED AND INCOME GENERATED THEREOF WHICH IS IN THE NATURE OF BANKING BUSINESS. (B) BY VIRTUE OF INCLUSIVE DEFINITION OF INCOME IN SECTION 2(24)(VIIA) OF THE INCOME TAX ACT, PROVIDING CREDIT FACILITIES BY A CO - OPERATIVE SOCIETY WITH ITS MEMBERS ARE TO BE INCLUDED AS PROFITS AND GAINS OF BUSINESS OF BANKING. (C) THE MEMBERSHIP TO THE ASSESSES SOCIETY WAS RESTRICTIVE AND ALSO SATISFIE D THE CONDITIONS PRESCRIBED FOR TREATING IT AS A PRIMARY CO - OPERATIVE BANK IN ACCORDANCE WITH THE DEFINITION L AID DOWN IN P ART V OF THE BANKING REGULATION ACT, 1949. (D) THE ASSESSEE SATISFIE D AL L THE 3 CONDITIONS PRESCRIBED TO COME UNDER THE PURVIEW OF THE DEFINITION OF PRIMARY COOPERATIVE BANK AS PER SECTION 5(CCV) OF THE BANKING REGULATION ACT, 1949. (E) THE PROVISIONS OF S ECTION 80P(4) R.W.S. 2(24) ( VIIA) ARE OVERRIDING OVER SECTION 8 OP AS IT STOOD AFTER THE AMENDMENTS TO THESE PROVISIONS W.E.F. AY 2007 - 08. (F) THERE WAS UNIFORMITY IN THE ACTIVITIES OF THE ASSESSEE WITH THAT OF A BANK IN AS MUCH AS FOR COLLECTING DEPOSITS THE DEPOSITOR HAS TO ENROL AS A MEMBER AND DEPOSIT THE MONEY THEN AND THERE AND AN IDENTICAL PROCESS IS FOLLOWED FOR CLAIMING BACK THE AMOUNTS. IN THE B ANKING BUSINESS ALSO, THE DEPOSITORS ARE TO TAKE DEPOSIT RECEIPTS AND BECOME ACCOUNT HOLDERS FOR TAKING LOANS AS WELL . EFFECTIVELY, THE TRANSACTIONS ARE COMPARABLE AND SIMILAR. MOREOVER, AS ALREADY POINTED OUT, THE ACTIVITIES WE RE RESTRICTIVE. I.T.A. NO. 374/MUM/2018 4 ,I T WAS CONC LUDED BY THE A . O THAT THE ASSESSEE WAS NOT ELIGIBLE FOR CLAIM OF DEDUCTION U/S. 80P(2)(A)(I), 80P(2)(C) OR 80P(2)(D) IN VIEW OF THE SPECIFIC PROVISION OF SECTION 2(24) (VIIA) R.W EXPLANATION TO SEC. 80P(4) OF THE IT ACT, W.E.F. 01.04.2007. T HE A . O TREATING THE ASSESSEE AS A P RIMARY CO - OPERATIVE BANK CONCLUDED THAT BY VIRTUE OF THE ACTIVITIES CARRIED OUT BY THE ASSESSEE THE PROVISION S OF S ECTION 80P(4) STOOD ATTRACTED AND ACCORDINGLY IT BEING A CO - OPERATIVE BANK WAS NOT ELIGIBLE FOR CLAIM OF DEDUCTION OF RS . 64,66,543/ - U/S. 80P OF THE I.T ACT. ON THE BASIS OF HIS AFORESAID OBSERVATIONS THE A . O DECLINED TO ALLOW THE CLAIM OF DEDUCTION RAISED BY THE ASSESSEE U/S. 80P AND ASSESSED ITS INCOME AT RS. 64,66,543/ - . 4. AGGRIEVED , THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CIT(A). INSOFAR THE DISALLOWANCE OF DEDUCTION OF RS. 20,02,782/ - CLAIMED BY THE ASSESSEE UNDER SEC. 80P(2)(A)(I) WAS CONCERNED, THE SAME WAS VACATED BY THE CIT(A). HOWEVER, THE CIT(A) WAS NOT PERSUADED TO SUBSCRIBE TO THE CONTE NTION S ADVANCED BY THE ASSESSEE IN CONTEXT OF THE DISALLOWANCE OF ITS CLAIM OF DEDUCTION UNDER SEC. 80P(2)(D) OF RS. 44,13,761/ - . THE CIT(A) WAS OF THE VIEW THAT THE ASSESSEE WAS NOT ELIGIBLE FOR DEDUCTION U/S. 80P AS REGARDS THE INTEREST INCOME EARNED FRO M ITS INVESTMENT S IN CO - OPERATIVE BANKS AND SUSTAINED THE DISALLOWANCE BY THE A.O OF THE ASSESSES CLAIM OF DEDUCTION U/S 80P(2)(D). INTERESTINGLY, THE CIT(A) SUPPLEMENTED THE BASIS FOR SUSTAINING THE DISALLOWANCE OF CLAIM OF DEDUCTION RAISED BY THE ASSESSE E U/S 80P(2)(D) BY OBSERV ING THAT THE INTEREST INCOME EARNED BY THE ASSESSEE FROM INVESTMENTS IN SCHEDULED BANKS AND CO - OPERATIVES BANKS W AS NOT ELIGIBLE FOR DEDUCTION U/S 80P(2)(D). IN SUM AND SUBSTANCE, THE CIT(A) RESTRICTED THE DISALLOWANCE OF THE CLAIM OF DEDUCTION RAISED BY THE ASSESSEE TO THE EXTENT THE SAME WAS RAISED U/S. 80P(2)(D) OF THE IT ACT. 5. THE ASSESSEE BEING AGGRIEVED WITH THE ORDER OF THE CIT(A) HAS CARRIED THE MATTER IN APPEAL BEFORE US. THE LD. AUTHORISED REPRESENTATIVE ( FOR SHORT A . R ) FOR THE ASSESSEE AT THE VERY OUTSET OF I.T.A. NO. 374/MUM/2018 5 THE HEARING OF THE APPEAL SUBMITTED THAT THE ISSUE AS TO WHETHER A CO - OPERATIVE SOCIETY IS ELIGIBLE FOR CLAIM OF DEDUCTION U/S. 80P(2)(D) IN RESPECT OF INTEREST INCOME EARNED FROM THE INVESTMENTS MADE WITH THE CO - OPERATIVE BANKS IS COVERED BY THE ORDER OF THE ITAT, SMC BENCH, MUMBAI IN THE CASE OF KALIAN DA S UDYOG BHAVAN PREMISES CO - OPERATIVE SOCIETY LTD.,MUMBAI V S. ITO - 2 1 (2)(1),MUMBAI (ITA N O. 6547/MUM /2017; DATED 25.04. 2018 ) . IT WAS SUBMITTED BY THE LD. A . R THA T THE T RIBUNAL IN THE AFORESAID CASE , AFTER DELIBERATING AT LENGTH ON THE ISSUE UNDER CONSIDERATION IN THE BACKDROP OF THE VARIOUS JUDICIAL PRONOUNCEMENT S HAD CONCLUDED THAT THE INTEREST INCOME EARNED BY A CO - OPERATIVE SOCIETY ON ITS INVESTMENTS HELD WITH A CO - OPERATIVE BANK WOULD BE ELIGIBLE FOR CLAIM OF DEDUCTION U/S. 80P(2)(D) OF THE I.T ACT. INSOFAR THE OBSERVATION OF THE LOWER AUTHORITIES (SPECIFICALLY THAT OF THE A.O) THAT THE ASSESSEE WAS A PRIMARY CO - OPERATIVE BANK, THE LD. A.R REBUTTED THE SAME A ND AVERRED THAT THE SAID OBSERVATIONS WERE ABSOLUTELY MISCONCEIVED AND BASELESS . IT WAS THE CONTENTION OF THE LD. A.R THAT THE ASSESSEE WAS A CO - OPERATIVE CREDIT SOCIETY AND NOT A CO - OPERATIVE BANK. IT WAS THUS THE CONTENTION OF THE LD. A . R THAT THE ORDER OF THE CIT(A) UPHOLDING THE DISALLOWANCE OF THE ASSESSES CLAIM OF DEDUCTION U/S. 80P(2)(D) OF RS. 44,13,761/ - MAY BE VACATED. 6. PER CONTRA, THE LD. DEPARTMENTAL REPRESENTATIVE ( FOR SHORT D . R ) RELIED ON THE ORDERS OF THE LOWER AUTHORITIES. 7. WE HAVE HEARD THE AUTHORISED REPRESENTATIVES FOR BOTH THE PARTIES , P ERUSED THE ORDER S OF THE LOWER AUTHORITIES AND THE MATERIAL AVAILABLE ON RECORD. AS OBSERVED BY US HEREINABOVE, THE LOWER AUTHORITIES HAD DECLINED TO ALLOW THE CLAIM OF DEDUCTION OF RS. 44,13,761/ - RAISED BY THE ASSESSEE PRIMARILY ON TWO GROUNDS VIZ. (I). THE ASSESSEE WAS A PRIMARY CO - OPERATIVE BANK; AND (II). THE INTEREST INCOME EARNED BY A CO - OPERATIVE SOCIETY ON ITS INVESTMENTS HELD WITH A CO - OPERATIVE BANK WOULD NOT BE ELIGIBLE FOR CLAIM OF DED UCTION U/S. 80P(2)(D) OF THE I.T ACT. INSOFAR THE CHARACTERISATION OF THE ASSESSEE WHICH IS A CO - OPERATIVE CREDIT SOCIETY AS A PRIMARY CO - OPERATIVE BANK IS I.T.A. NO. 374/MUM/2018 6 CONCERNED , WE ARE UNABLE TO PERSUADE OURSELVES TO ACCEPT THE SAID OBSERVATION OF THE A.O. ADMITTEDLY , AS PER THE EXPLANATION TO SEC. 80P(4) THE TERM C O - OPERATIVE BANK HAS TO BE CONSTRUED AS PER THE MEANING GIVEN TO IT IN PART V OF THE BANKING REGULATION ACT, 1949 (10 OF 1949). AS IS DISCERNIBLE FROM SEC. 56 (CCI) OF PART V OF THE BANKING REGULATION ACT , 1949 , A CO - OPERATIVE BANK MEANS A STATE CO - OPERATIVE BANK, A CENTRAL CO - OPERATIVE BANK AND A PRIMARY CO - OPERATIVE BANK. IT IS THE CASE OF THE A.O THAT THE ASSESSEE IS A P RIMARY CO - OPERATIVE BANK. AS PER THE BANKING REGULATION ACT, 1949 A PRIMARY CO - OPERATIVE SOCIETY AS DEFINED IN SEC. 56(CCV) OF PART V, READS AS UNDER : SECTION 5 6 (CCV): PRIMARY CO - OPERATIVE BANK MEANS A CO - OPERATIVE SOCIETY, OTHER THAN A PRIMARY AGRICULTURAL CREDIT SOCIETY - (1) THE PRIMARY OBJECT OR PRINCIPAL BUSINESS OF WHI CH IS TRANSACTION OF BANKING BUSINESS : (2) THE PAID - UP SHARE CAPITAL AND RESERVES OF WHICH ARE NOT LESS THAN ONE LAKH OF RUPEES : AND (3) THE BYE - LAWS OF WHICH DO NOT PERMIT ADMISSION OF ANY OTHER CO - OPERATIVE SOCIETY AS A MEMBER : PROVIDED THAT THIS SUB - CLAUSE SHALL NOT APPLY TO THE ADMISSION OF A CO - OPERATIVE BANK AS A MEMBER BY REASON OF SUCH CO - OPERATIVE BANK SUBSCRIBING TO THE SHARE CAPITAL OF SUCH CO - OPERATIVE SOCIETY OUT OF FINDS PROVIDED BY THE STATE GOVERNMENT FOR THE PURPOSE. ADMITTEDLY, THE ASSESSEE IN THE CASE BEFORE US IS A CO - OPERATIVE SOCIETY REGISTERED UNDER THE MAHARASHTRA CO - OPERATIVE SOCIETY ACT, 1960. INSOFAR THE SATISFACTION OF THE FIRST CONDITION BY THE ASSESSEE I.E AS TO WHETHER THE PRIMARY OBJECT OR THE PRINCIPAL BUSINESS OF THE ASSESSEE IS THAT OF TRANSACTION OF BANKING BUSINESS IS CONCERNED, WE ARE UNABLE TO SUBSCRIBE TO THE VIEW TAKEN BY THE LOWER AUTHORITIES. AS PER THE DEFINITION OF 'BANKING BUSINESS' IN SECTION 5B OF THE BANKING REGULATION ACT, 1949, THE SAME MEANS THE ACCEPTING, FOR THE PURPOSE OF LENDING OR INVESTMENT OF DEPOSITS OF MONEY FROM THE PUBLIC , REPAYABLE ON DEMAND OR OTHERWISE AND WITHDRAWABLE BY CHEQUE, DRAFT, ORDER OR OTHERWISE. IN OUR CONSIDERED VIEW, AS NEITHER OF THE LOWER I.T.A. NO. 374/MUM/2018 7 AUTHORITIES HAVE RE CORDED ANY FINDING THAT THE ASSESSEE WAS ALSO ACCEPTING DEPOSITS OR LENDING MONEY FROM/ TO THE NON - MEMBERS, THEREFORE, THE 1ST CONDITION ENVISAGED IN SEC. 56(CCV) OF THE BANKING REGULATION ACT, 1949 WOULD NOT BE SATISFIED , AS IT CANNOT BE HELD THAT THE PRIM ARY OBJECT OR PRINCIPAL BUSINESS OF THE ASSESSEE WAS AS THAT OF TRANSACTING BANKING BUSINESS. APART THERE FROM, AS PER SEC. 56(4) OF THE BANKING REGULATION ACT, 1949 EVERY CO - OPERATIVE SOCIETY SHALL BEFORE COMMENCING BANKING BUSINESS IN INDIA APPLY IN WRI TING TO THE RESERVE BANK FOR A LICENSE UNDER THE SAID SECTION. IN FACT, A CO - OPERATIVE CREDIT SOCIETY CANNOT BE HELD TO HAVE AS ITS PRINCIPAL BUSINESS AS BANKING BUSINESS IN THE ABSENCE OF A BANKING LICENSE ISSUED BY THE RESERVE BANK OF INDIA UNDER THE BAN KING REGULATION ACT, 1949. RATHER, THE ISSUE THAT A CO - OPERATIVE SOCIETY CANNOT BE HELD TO BE A CO - OPERATIVE BANK IN THE ABSENCE OF A LICENSE TO DO BANKING BUSINESS IS COVERED BY THE HONBLE HIGH COURT OF KARNATAKA IN THE CASE OF CIT AND ANOTHER VS. SRI BIURU GURUBASVA PATTINA SAHAKARI SANGHA NIYAMITHA BAGALKOT (2014) 369 ITR 86 (KAR). THE HONBLE HIGH COURT IN ITS AFORESAID JUDGMENT HAD OBSERVED AS UNDER: T HEREFORE, AS THE ASSESSEE IS NOT A CO OPERATIVE BANK CARRYING ON EXCLUSIVELY BANKING BUSINESS AND AS IT DOES NOT POSSESS A LICENCE FROM RESERVE BANK OF INDIA TO CARRY ON BUSINESS, IT IS NOT A CO - OPERATIVE BANK. IT IS A CO - OPERATIVE SOCIETY WHICH ALSO CARRIES ON THE BUSINESS OF LENDING MONEY TO ITS MEMBERS WHICH IS COVERED UNDER SECTION 80P(2)(A)(I) I.E. CARRYING ON THE BUSINESS OF BANKING FOR PROVIDING CREDIT FACILITIES TO ITS MEMBERS. THE OBJECT OF THE AFORESAID AMENDMENT IS NOT TO EXCLUDE THE BENEFIT EXTENDED UNDER SECTION 80P(1) TO SUCH SOCI ETY WE THUS IN TERMS OF OUR AFORESAID OBSERVATIONS, IN ABSENCE OF ANY MATERIAL TO THE CONTRARY AVAILABLE ON RECORD, ARE OF THE CONSIDERED VIEW THAT IN CAN SAFELY BE CONCLUDED THAT THE ASSESSEE IS A CO - OPERATIVE CREDIT SOCIETY AND NOT A CO - OPERATIVE BANK. 8 . INSOFAR THE ISSUE THAT A CO - OPERATIVE SOCIETY IS ENTITLED TO CLAIM DEDUCTION UNDER SEC. 80P(2)(D) ON THE INTEREST RECEIVED FROM DEPOSITS WITH A CO - OPERATIVE BANK IS CONCERNED, THE SAME WE FIND IS COVERED BY THE ORDER OF ITAT, MUMBAI SMC BENCH IN THE CASE OF KALIANDAS UDYOG BHAVAN PREMISES CO - OP ERATIVE SOCIETY LTD. VS. ITO - 21(2)(1), I.T.A. NO. 374/MUM/2018 8 MUMBAI [ITA NO. 6547/MUM/2017; DATED 25.04.2018], W HEREIN IT WAS OBSERVED AS UNDER: 6. WE HAVE HEARD THE AUTHORISED REPRESENTATIVES FOR BOTH THE PARTIES, PERUSED THE ORD ERS OF THE LOWER AUTHORITIES AND THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT OUR INDULGENCE IN THE PRESENT APPEAL HAS BEEN SOUGHT TO ADJUDICATE AS TO WHETHER THE CLAIM OF THE ASSESSEE FOR DEDUCTION UNDER SECTION 80P(2)(D), IN RESPECT OF INTEREST INCOME EARNED FROM THE INVESTMENTS MADE WITH THE CO - OPERATIVE BANKS IS IN ORDER OR NOT. WE FIND THAT THE ISSUE INVOLVED IN THE PRESENT APPEAL HINGES AROUND THE ADJUDICATION OF THE SCOPE AND GAMUT OF SUB - SECTION (4) OF SEC. 80P, AS HAD BEEN MADE AVAILABLE ON THE STATUTE BY THE LEGISLATURE VIDE THE FINANCE ACT 2006, WITH EFFECT FROM 01.04.2007. WE FIND THAT THE LOWER AUTHORITIES HAD TAKEN A VIEW THAT PURSUANT TO INSERTION OF SUB - SECTION (4) OF SEC. 80P, THE ASSESSEE WOULD NO MORE BE ENTITLED FOR CLAIM OF DEDUCTION UNDER SEC. 80P(2)(D) OF THE INTEREST INCOME EARNED ON THE AMOUNTS PARKED AS INVEST MENTS WITH COOPERATIVE BANKS, OTHER THAN A PRIMARY AGRICULTURAL CREDIT SOCIETY OR A PRIMARY CO - OPERATIVE AGRICULTURAL AND RURAL DEVELOPMENT BANK. WE FIND THAT THE LOWER AUTHORITIES HAD OBSERVED THAT THE CO - OPERATIVE BANK WITH WHICH THE SURPLUS FUNDS OF THE ASSESSEE WERE PARKED AS INVESTMENTS, WERE NEITHER PRIMARY AGRICULTURAL CREDIT SOCIETY NOR A PRIMARY COOPERATIVE AGRICULTURAL AND RURAL DEVELOPMENT BANK, THEREFORE, THE INTEREST INCOME EARNED ON SUCH INVESTMENTS WOULD NOT BE ENTITLED FOR CLAIM OF DEDUCTION UNDER SEC. 80P(2)(D) OF THE ACT. 7. WE HAVE DELIBERATED AT LENGTH ON THE ISSUE UNDER 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 T HE RELEVANT EXTRACT OF THE SAID STATUTORY PROVISION, VIZ. SEC. 80P(2)(D), AS THE SAME 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 - OPERATIVE SOCIETY, THE GROSS TOTAL INC OME 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 SUMS 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)............................................................................................ (B)............................................................................................ (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 - OPERATIVE SOCIETY, THE WHOLE OF SUCH INCOME; I.T.A. NO. 374/MUM/2018 9 THUS, FROM A PERUSAL OF THE AFORESAID SEC. 80P(2)(D) IT STANDS GATHERED THAT INCOME BY WAY OF INTEREST DERIVED BY AN ASSESSEE COOPERATIVE 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 D EDUCTION UNDER SEC. 80P(2)(D) IS THAT THE INTEREST INCOME SHOULD HAVE BEEN DERIVED FROM THE INVESTMENTS MADE BY THE ASSESSEE COOPERATIVE SOCIETY WITH ANY OTHER COOPERATIVE SOCIETY. WE THOUGH ARE IN AGREEMENT WITH THE OBSERVATIONS OF THE LOWER AUTHORITIES T HAT 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 NOT APPLY IN RELATION TO ANY CO - OPERATIVE BANK OTHER THAN A PRIMARY AGRICULTURAL 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 THE CLAIM OF DEDUCTION OF A CO - OPERATIVE SOCIETY UNDER SEC. 80P(2)(D) IN RESPECT OF THE INTEREST INCOME ON THEIR INVE STMENTS PARKED WITH A CO - OPERATIVE BANK. WE HAVE GIVEN A THOUGHTFUL CONSIDERATION TO THE ISSUE BEFORE US AND ARE OF THE CONSIDERED VIEW THAT AS LONG AS IT IS PROVED THAT THE INTEREST INCOME IS BEING DERIVED BY A COOPERATIVE SOCIETY FROM ITS INVESTMENTS MAD E 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 OBSERVE THAT THE TERM CO - OPERATIVE SOCIETY HAD BEEN DEFINED UNDER SEC. 2(19) OF THE ACT, AS UNDER: - (19) CO - OPERATIVE SOCIETY MEANS A COOPERATIVE 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; WE ARE OF THE CONSIDERED VIEW, THAT THOUGH THE CO - OPERATIVE BANK PURSUANT TO THE INSERTION OF SUB - SECTION (4) OF SEC. 80P WOULD NO MORE BE ENTITLED FOR CLAIM OF DEDUCTION UNDER SEC. 80P OF THE ACT, BUT HOWEVER, AS A CO - OPERATIVE BANK CONTINUES TO BE A CO - OPERATIVE SOCIETY REGISTERED UNDER THE CO - OPERATIVE SOCIETIES ACT, 1912 (2 OF 1912), OR UNDER ANY OTHER LAW FOR THE TIME BEING ENFORCED IN ANY STATE FOR THE REGISTRATION OF COOPERATIVE SOCIETIES, THEREFORE, THE INTEREST INCOME DERIVED BY A CO - OPERATIVE SOCIETY FROM ITS INVESTMENTS HELD WITH A CO - OPERATIVE BANK, WOULD DULY BE ENTITLED FOR CLAIM OF DEDUCTION UNDER SEC.80P(2)(D) OF THE ACT. 8. WE SHALL NOW ADVERT TO THE JUDICIAL PRONOUNCEMENTS THAT HAD BEEN RELIED UPON BY THE AUTHORIZED REPRESENTATIVES FOR BOTH THE PART IES AND THE LOWER AUTHORITIES. WE FIND THAT THE ISSUE THAT A CO - OPERATIVE SOCIETY WOULD BE ENTITLED FOR CLAIM OF DEDUCTION UNDER SEC. 80P(2)(D), IN RESPECT OF THE INTEREST INCOME DERIVED FROM ITS INVESTMENTS HELD WITH A COOPERATIVE BANK IS COVERED IN FAVOU R OF THE ASSESSEE IN THE FOLLOWING CASES: (I) LAND AND COOPERATIVE HOUSING SOCIETY LTD. VS. ITO (2017) 46 CCH 52 (MUM) (II) M/S C. GREEN COOPERATIVE HOUSING AND SOCIETY LTD. VS. ITO - 21(3)(2), MUMBAI (ITA NO. 1343/MUM/2017, DATED 31.03.2017 I.T.A. NO. 374/MUM/2018 10 (III) MARVWAN JEE CAMA PARK COOPERATIVE HOUSING SOCIETY LTD. VS. ITO - RANGE - 20(2)(2), MUMBAI (ITA NO. 6139/MUM/2014, DATED 27.09.2017. WE FURTHER FIND THAT THE HON'BLE HIGH COURT OF KARNATAKA IN THE CASE OF PR. COMMISSIONER OF INCOME TAX AND ANR. VS. TOTAGARS COOPERATIV E SALE SOCIETY (2017) 392 ITR 74 (KARN) AND HONBLE HIGH COURT OF GUJARAT IN THE CASE OF STATE BANK OF INDIA VS. CIT (2016) 389 ITR 578 (GUJ), HAD ALSO HELD THAT THE INTEREST 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 FUNCTIONING AT PAR WITH OTHER BANKS WOULD NO MORE BE ENTITLED FOR CLAIM OF DEDUCTION UNDER SEC. 80P(4) OF THE ACT. WE ARE OF THE CONSIDERED VIEW THAT THE RELIANC E PLACED BY THE CIT(A) ON THE JUDGMENT OF THE HONBLE SUPREME COURT IN THE CASE OF TOTGARS CO - OPERATIVE SALE SOCIETY LTD. VS. ITO (2010) 322 ITR 283(S.C) BEING DISTINGUISHABLE ON FACTS, THUS, HAD WRONGLY BEEN RELIED UPON BY THE CIT(A). THE ADJUDICATION BY THE HONBLE 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 TOWARDS DEDUCTION UNDER SEC. 80P(2)(D) ON THE INTEREST INCOME ON THE INVESTMENTS PARKED WITH CO - OPERATIVE BANK. WE FURTHE R FIND THAT THE RELIANCE PLACE BY THE LD. D.R ON THE ORDER OF THE ITAT F BENCH, MUMBAI IN THE CASE OF M/S VAIBHAV COOPERATIVE CREDIT SOCIETY VS. ITO - 15(3)(4) (ITA NO. 5819/MUM/2014, DATED 17.03.2017 IS DISTINGUISHABLE ON FACTS. WE FIND THAT THE SAID ORDE R WAS PASSED BY THE TRIBUNAL IN CONTEXT OF ADJUDICATION OF THE ENTITLEMENT OF THE ASSESSEE CO - OPERATIVE BANK TOWARDS 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 CA RRYING OUT A CONJOINT READING OF SEC. 80P(2)(A)(I) R.W. SEC. 80P(4) HAD ADJUDICATED THE ISSUE BEFORE THEM. WE ARE AFRAID THAT THE RELIANCE PLACED BY THE LD. D.R ON THE AFORESAID ORDER OF THE TRIBUNAL BEING DISTINGUISHABLE ON FACTS, THUS, WOULD BE OF NO ASS ISTANCE FOR ADJUDICATION OF THE ISSUE BEFORE US. STILL FURTHER, THE RELIANCE PLACED BY THE LD. D.R ON THE ORDER OF THE ITAT SMC BENCH, MUMBAI IN THE CASE OF SHRI SAI DATTA CO - OPERATIVE CREDIT SOCIETY LTD. VS. ITO (ITA NO. 2379/MUM/2015, DATED 15.01.2016, 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 REGARDS THE RELIANCE PLACED BY THE LD. D.R ON THE JUDGMENT OF THE HON'BLE HIGH COURT OF KARNATAKA IN THE CASE OF PR. CIT VS. TOTAGARS CO - OPERATIVE SALE SOCIETY (2017) 395 ITR 611 (KARN), THE HIGH COURT HAD CONCLUDED THAT A CO - OPERATIVE SOCIETY WOULD NOT BE ENTITLED TO CLAIM OF DEDUCTION UNDER SEC. 80P(2)(D). HOWEVER, AS HELD B Y THE HON'BLE HIGH COURT OF BOMBAY IN THE CASE OF K. SUBRAMANIAN AND ANR. VS. SIEMENS INDIA LTD. AND ANR (1985) 156 ITR 11 (BOM), THAT WHERE THERE IS A CONFLICT BETWEEN DECISIONS OF NON - JURISDICTIONAL HIGH COURTS, THEN A VIEW WHICH IS IN FAVOUR OF THE ASS ESSEE IS TO BE PREFERRED AS AGAINST THAT TAKEN AGAINST HIM. THUS, TAKING SUPPORT FROM THE AFORESAID JUDICIAL PRONOUNCEMENT OF THE HONBLE HIGH COURT OF JURISDICTION, WE THUS RESPECTFULLY FOLLOW THE VIEW TAKEN BY I.T.A. NO. 374/MUM/2018 11 THE HON'BLE HIGH COURT OF KARNATAKA IN THE C ASE OF PR. COMMISSIONER OF INCOME TAX AND ANR. VS. TOTAGARS COOPERATIVE SALE SOCIETY (2017) 392 ITR 74 (KARN) AND HONBLE HIGH COURT OF GUJARAT IN THE CASE OF STATE BANK OF INDIA VS. CIT (2016) 389 ITR 578 (GUJ), WHEREIN IT HAS OBSERVED THAT THE INTEREST INCOME EARNED BY A CO - OPERATIVE SOCIETY ON ITS INVESTMENTS HELD WITH A CO - OPERATIVE BANK WOULD BE ELIGIBLE FOR CLAIM OF DEDUCTION UNDER SEC.80P(2)(D) OF THE ACT. 9. WE THUS IN THE BACKDROP OF OUR AFORESAID OBSERVATIONS ARE UNABLE TO PERSUADE OURSELVES T O BE IN AGREEMENT WITH THE VIEW TAKEN BY THE LOWER AUTHORITIES THAT THE ASSESSEE WOULD NOT BE ENTITLED FOR CLAIM OF DEDUCTION UNDER SEC. 80P(2)(D), IN RESPECT OF THE INTEREST INCOME ON THE INVESTMENTS MADE WITH THE CO - OPERATIVE BANK. WE THUS SET ASIDE THE ORDER OF THE LOWER AUTHORITIES AND CONCLUDE THAT THE INTEREST INCOME OF RS.27,48,553/ - EARNED BY THE ASSESSEE ON THE INVESTMENTS HELD WITH THE CO - OPERATIVE BANK WOULD BE ENTITLED FOR CLAIM OF DEDUCTION UNDER SEC. 80P(2)(D). 10. THE APPEAL OF THE ASSESSEE IS ALLOWED IN TERMS OF OUR AFORESAID OBSERVATIONS. ON THE BASIS OF OUR AFORESAID OBSERVATIONS, IT CAN SAFELY BE CONCLUDED THAT THE ASSESSEE WHICH IS A CO - OPERATIVE CREDIT SOCIETY WAS DULY ENTITLED TO CLAIM DEDUCTION U/S 80P(2)(D) ON THE INTEREST INCOME O N ITS INVESTMENTS HELD WITH THE CO - OPERATIVE BANKS. 9. WE THUS BEING OF THE CONSIDERED VIEW THAT THE ASSESSEE WHICH IS A CO - OPERATIVE CREDIT SOCIETY IS ENTITLED TO CLAIM DEDUCTION ON ITS INVESTMENTS HELD WITH THE CO - OPERATIVE BANKS, THEREIN DIRECT THE A.O TO ALLOW THE SAME TO THE SAID EXTENT. THE ORDER OF THE CIT(A) IS SET ASIDE IN TERMS OF OUR AFORESAID OBSERVATIONS. 10. THE APPEAL OF THE ASSESSEE I S ALLOWED IN TERMS OF OUR AFORESAID OBSERVATIONS. ORDER P RONOUNCED IN THE OPEN COURT ON 1 3 .0 3 .2019. 1 3 .0 3 .2019 S D / - S D / - ( B.R. BASKARAN ) ( RAVISH SO OD ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATE D: 1 3 .03 .2019 NISHANT VERMA SR. PRIVATE SECRETARY I.T.A. NO. 374/MUM/2018 12 COPY TO 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) CONCERNED, MUMBAI 4. THE CIT - CONCERNED, MUMBAI 5. THE DR BENCH, 6. MASTER FILE // TUE COPY// BY ORDER DY/ASSTT. REGISTRAR ITAT, MUMBAI
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