The Salestax Employees Co.Op. Credit Society Limited, Ahmedabad V. The ACIT, Circle-1(3), Ahmedabad

ITA 612/AHD/2024

• Counselvise Citation: [2024] 101 COUNSELVISE.COM (IT) 5526 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-07-2024
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: SMC
• Next Hearing Date: 07-07-2024
• Assessment Year: 2017-2018
• Appeal Filed On: 03-04-2024
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHRISANJAYJAIN; FORTHEASSESSEEALSORELIEDUPONTHEOTHER
• Assessee Lawyers: SHRIPRADEEPGTULSIAN; FOLLOWINGTHEDECISIONOFHONBLEKARNATAKA; .THEISSUEFORCONSIDERATIONBEFOREUSISWHETHER

Judgement Text

THEINCOMETAXAPPELLATETRIBUNAL AHMEDABAD“SMC”BENCH Before:ShriRamitKochar,AccountantMember TheSalestax EmployeesCo- OperativeCredit SocietyLtd., C-5,Bahumali Building,Apna Bazaar, LalDarwaja, Ahmedabad-380001 Gujarat PAN:AABAT1830D (Appellant) v. TheACIT, Circle-1(3), Ahmedabad, Gujarat (Respondent) Assesseeby:ShriPradeepGTulsian,AR Revenueby:ShriSanjayJain,Sr.D.R. Dateofhearing:08-07-2024 Dateofpronouncement:30-07-2024 आदेश/ORDER ThisappealinITANo.612/Ahd/2024forassessment year2017-18isfiledbytheassesseebeforeIncomeTax AppellateTribunal,AhmedabadBench,Ahmedabad,which hasarisenfromtheappellateorderdated16-10-2023inDIN ITANo.612/Ahd/2024 AssessmentYear2017-18 I.T.ANo.612/Ahd/2024A.Y.2017-18PageNo. TheSalesTaxEmployeesCo.Op.CreditSocietyltd.v.ACIT 2 &OrderNo.ITBA/APL/S/250/2023-24/1057104725(1) passedbyld.CommissionerofIncome-Tax(Appeals),Addl/ JCIT(A),2Coimbatoreu/s250oftheIncome-taxAct,1961, whichinturnhasarisenfromtheassessmentorderdated17- 12-2019passedbylearnedAssessingOfficeru/s.143(3)ofthe Income-taxAct,1961(OrderNo.ITBA/AST/S/143(3)/2019- 20/1022556312(1). 2.Attheoutset,itisobservedthatthisappealisfiled belatedlyby111daysbeyondthetimestipulatedu/s253(3)of the1961Act.Theassesseehasfiledapplicationfor condonationofdelayinwhichitisstatedthattheassessee madeanapplicationu/s.154ofthe1961Actwithld.CIT(A) on18.11.2023,astherewasamistakeapparentfromrecords intheappellateorderdated16.10.2023passedbyld.CIT(A). Theld.CIT(A)dismissedtheappealoftheassesseeonthe groundsthattheassesseereceivedinterestincomefromFDR fromAxisBankLimitedonRs.86,730/-,buttheassessee claimedthatin-factreceivedinterestfromCo-operativeBank namelyAhmedabadDistrictCo-operativeBank,whichfactual errorledtodismissaloftheappealoftheassesseebyld. CIT(A),andhencerectificationapplicationwasfiledu/s154 withld.CIT(A)seekingamendmenttotheappellateorder dated16.10.2023passedbyld.CIT(A).Suchrectification applicationu/s154wasfiledon18.11.2023videapplication I.T.ANo.612/Ahd/2024A.Y.2017-18PageNo. TheSalesTaxEmployeesCo.Op.CreditSocietyltd.v.ACIT 3 no.518356300181123,andthesaidrectificationapplication wasdismissedbyNFAC,Delhivideordersdated31.05.2024 videDINandOrderNo.ITBA/NFAC/F/154/2024-25/ 1065306849(1).Itisstatedinthecondonationapplicationthat theassesseedidnotfileappealbeforetheTribunal,asthe aforesaidrectificationapplicationwaspendingwiththeld. CIT(A).TheappealwasfiledbytheassesseebeforeITATon 04 th April,2024.Therelevantordersareplacedonrecordin file.TheappellateorderoftheLd.CIT(A)isdated16.10.2023, andtheappealoughttohavebeenfiledwithTribunalwithin 60daysofserviceoftheorderoftheLd.CIT(A),whichasper Form36wasreceivedbytheassesseeon16.10.2023itself. ThustheappealoughttohavebeenfiledwithTribunalonor before16 th December2023,buthasbeenfiledon04.04.2024 belatedlyby111daysbeyondthetimestipulatedu/s253(3). ThereasonfordelayinfilingappealwithITATisthependency ofrectificationapplicationfiledbytheassesseeu/s154with ld.CIT(A).Thustheclaimoftheassesseeisthattheassessee hasbonafidelyfiledrectificationapplicationu/s.154withLd. CIT(A)astheLd.CIT(A)consideredtheinterestreceivedbythe assesseeonFDRwithAhmedabadDistrictCo.OperativeBank asinterestreceivedbytheassesseeonFDRwithAxisBank, whichledtodismissalofappealoftheassessee.Thus,the assesseepleadedbonafideinfilingthisappealbelatedlywith ITAT.TheLd.D.R.didnotopposethecondonationapplication I.T.ANo.612/Ahd/2024A.Y.2017-18PageNo. TheSalesTaxEmployeesCo.Op.CreditSocietyltd.v.ACIT 4 butsubmittedthatthereisalacunainthesystemwherein theordersofLd.CIT(A)couldnotberetrieved/availableon recordunderthefacelessscheme,whichledtodismissalof therectificationapplicationu/s154filedbytheassessee,I haveconsideredthecontentionofboththeparties,andIamof theconsideredviewthattheassesseebonafidelyfiledits rectificationapplicationu/s154ofthe1961Actwithld.CIT(A) seekingtocorrectmistakeapparentfromrecordsinthe appellateorderdated16.10.2023passedbyld.CIT(A)instead offilingappealwithITAT.Theassesseehasshownreasonable andsufficientcauseforfilingthisappealbelatedlywithITAT. TheassesseehasultimatelyfiledappealwithITATevenbefore dismissalofitsrectificationapplicationu/s154.Underthese factsandcircumstances,Iamoftheconsideredviewthatthe assesseehasshownreasonableandsufficientcauseinfiling thisappealbelatedlywithITATbeyondthetimestipulatedu/s 253(3),anddelayneedstobecondonedandtheappealbe heardonmerits.Whentechnicalitiesarepittedagainstthe substantialjustice,theCourtswillleantowardsadvancement ofsubstantialjusticeratherthantechnicalities,unlessthe malafideonthepartoftheassesseeisatwritlarge.Underthe factsandcircumstances,Idonotfindanymalafideonthe partoftheassesseeinfilingthisappealbelatedly,andinthe interestofjustice,Icondonethedelayof111daysand proceedtoadjudicatethisappealonmeritsinaccordancewith I.T.ANo.612/Ahd/2024A.Y.2017-18PageNo. TheSalesTaxEmployeesCo.Op.CreditSocietyltd.v.ACIT 5 law.ReferenceisdrawntothedecisionofHon’bleSupreme CourtinthecaseofCollectorofLandAcquisition, Anantnagv.Mst.Katiji(1987AIR1353(SC)). 3.ThegroundsofappealraisedbytheassesseeinMemoof AppealfiledwiththeITAT,AhmedabadBench,Ahmedabad, readsasunder:- 1)TheassesseemaintainsthesavingsbankaccountwithAxis Bankjusttofacilitatethemembersofthesociety,whereno surplusfundwasinvested,itistheinterestofRs.32755/- whichwasearnedintheroutinebalancewhichwaslyingin theaccountandtherefore,theinterestearnedisinthedue courseofbusinessonly. 2)YourgoodselfshouldappreciatethattheHonorableITAT Ahmedabad,intheassessee'sowncasefortheAY2014-15 hastreatedtheSavingBankInterestasbusinessincomeand allowedthedeductionunderSection80P.AcopyoftheITAT orderdated08/02/2023isattachedherewithforyourready reference.Further,therelevantparaisreproducedherewithfor yourreadyreference. "7.Heardboththepartiesandperusedalltherelevant materialavailableonrecord.Thefactremainsthatthe assesseeCo-operativeSocietyhasmaintaineditsaccountwith AxisBankwhichisnotaCo-operativeBankbuttheinterest incomeofRs.28,911/-derivedfromasavingsBankaccount maintainedwithAxisBankasbusinessincomeoftheassessee. ButasperthedecisionoftheHon'bleApexCourtincaseof Totgar'sCo-operativeSalesSocietyLimitedvs.ITO.352ITR 283(SC),thesurplusfundwhichimmediatelynotrequiredfor thebusinesspurposehasbeeninvestedfortheshortperiod I.T.ANo.612/Ahd/2024A.Y.2017-18PageNo. TheSalesTaxEmployeesCo.Op.CreditSocietyltd.v.ACIT 6 andsuchinvestmentuponwhichinterestisderivedisnot eligiblefordeductionunderSection80PoftheAct.Inthe presentcase,theassesseeCooperativeCreditSocietyhas thosesavingsbankaccountswithAxisBankand,therefore, theinterestincomereceivedthereoniseligibleunderSection 80PoftheAct.Asregardsinterestderivedfromloansgivento staff,thesameisalsoeligiblefordeductionunderSection80P oftheActasthestaffarethemembersofCo-operativeCredit SocietyastheyareemployeesofAxisBank.Thus,the AssessingOfficeraswellastheCIT(A)wasnotrightin rejectingthedeductionunderSection80PoftheAct." 3)CIT(A)hasnotallowedthedeductionofRs.32,755/-of savingbankinterestreceivedfromaxisbank.Accordingto CIT(A)thetwintestofincomeattributabletoactivityand mutualityprinciplehastobeapplied.Whilethefirstlimbis satisfied,interestaccruedattributable/incidenttothespecified activity,thesecondlimbisnotfulfilled.TheAxisbankisnota memberoftheappellantsociety.Buthefailedtoappreciate thatthesavingbankaccountisnotaninvestmentandthe interestearnedonsavingbankaccountsistheassessee'sday todayactivityandinterestearnedisanincidentaltothesame andhenceitisattributabletothebusinessactivity.CIT(A)has alsoignoredthefactthatHonorableITATAhmedabad,has alreadyallowedthesameu/s80Pwhilepassinganorderfor theAY2014-15.(Acopyofthesameisattachedherewithfor readyreference). 4)InterestofRs.86730/-earnedfromthefixeddepositwhich wasmaintainedbytheassesseewiththeAhmadabadDistrict Co-operativeBankagainstwhichtheassesseehastakenthe overdraftfacilityandhaspaidRs.88956/-.Therefore,the assesseehasincurredthenetinterestexpensesofRs.2,226/-. Therefore,thereisnointerestincomeafterasetofftheinterest paid.Sincetheinterestearnedisfromanothercooperative society,thesameisallowedfordeductionundersection80P I.T.ANo.612/Ahd/2024A.Y.2017-18PageNo. TheSalesTaxEmployeesCo.Op.CreditSocietyltd.v.ACIT 7 andfurthertheexpensesincurredagainsttheincomehastobe setoff.Therefore,notallowingthedeductionundersection80P isbadinlawandtherefore,shouldbeallowed. 5)TheHonorableCIT(A)hasmadeanerrorwhileconsidering theFDinterestwasearnedfromAxisbankwhichisnotaCo- operativeBank.WhereastheinterestonFDwasreceivedfrom theAhmadabadDistrictCo-operativeBank.Ifhehas consideredtheactualfacts,thenCIT(A)mighthaveallowedthe deductionu/s80Pandnotmadesuchanmistakeashehas simplydeniedthedeductiononthegroundofmutualityasthe assesseeisnotamemberoftheAxisbank,whichisabased onwrongfacts.Therefore,theassesseeisherebyhumble requestyourgoodselftopleaseallowthedeductionu/s80P ontheinterestincomeofRs.86730/-earnedonFDmaintained withAhmadabadDistrictCo-operativeBank. 6)Moreover,AOwhilepassingtheorderu/s143(3)isofthe opinionthattheCo-operativeBankscannotbetreatedasCo- operativesocietyasthesectionhasspecificallymentionedthe deductionsonlyforthecooperativesocieties.Further,theAO hasgivenreferenceofvariousjudgementsonthelawof interpretationbutfailedtoconsiderthedefinitionofCo- operativeSocietiesasgivenintheIncomeTaxAct.Section2(19) isspecificallydefinedthemeaningofCo-operativeSociety, whichisreproducedherewithforreadyreference: Section2(19)oftheIncomeTaxAct,"Co-operativesociety" meansaco-operativesocietyregisteredundertheCo-operative SocietiesAct,1912(2of1912),orunderanyotherlawforthe timebeinginforceinanyStatefortheregistrationofco- operativesocieties." AOhasignoredthefactsthatalltheco-operativebanksare registeredundertheCo-operativeSocietiesAct,1912orunder I.T.ANo.612/Ahd/2024A.Y.2017-18PageNo. TheSalesTaxEmployeesCo.Op.CreditSocietyltd.v.ACIT 8 anyotherlawforthetimebeinginforceinanystateforthe registrationofco-operativesocieties. 7)Accordingtotheabove,AOwhilepassingtheorderu/s 143(3)hasfailedtoconsiderthatco-operativebankfalls withinthedefinitionofthetermcooperativesociety.Thus, interestreceivedbyaco-operativesocietyfromaco-operative bankisnothing,butinterestreceivedfromaco-operative societyandeligiblefordeductionu/s80P(2)(d). 8)LearnedA.OisnotjustifiedindenyingthedeductionofRs. 1,19,485/-(Rs.86730onFDandRs.32755/-onsavingbank interest)u/s80PoftheI.TActandconsequentlyerredin makingadditionofRs.1,19,485/-tothetotalincomeofthe assessee. 9)TheadditionmadebytheAOisbadinlawandtherefore, requirestobequashed. 10)Thatonthefactsandinthecircumstancesofthecase,the ld.AssessingOfficergrosslyerredincharginginterestu/s 234Aand234B,oftheIncomeTaxAct. 11)FurtherlearnedAOalsoinitiatedpenaltyproceedingsu/s 270AstatedthatAssesseehasunderreportedtheincome whereasthisisnotthecaseofunderreportingofincome.Itis basedontheAOopinionanddeductionhasbeenreducedto thatextent.Nopenaltyproceedingsshouldbeinitiated. 12)Theappellantcravesleavetoadd,alter,modifyoramend anygroundonorbeforethedateofhearing.” 4.Thebrieffactsofthecasearethattheassesseefiledits returnofincomeon05.10.2017,declaringNILincome.The caseoftheassesseewasselectedbyRevenueforframing I.T.ANo.612/Ahd/2024A.Y.2017-18PageNo. TheSalesTaxEmployeesCo.Op.CreditSocietyltd.v.ACIT 9 limitedscrutinyassessmentunderCASS.Statutorynotices u/s.143(2)andu/s.142(1)wereissuedbytheAO.Duringthe courseofassessmentproceedings,theA.O.observedfromthe perusalofincomeandexpenditureaccountaswellasreply filedbytheassesseeduringthecourseofassessment proceedingsthattheassesseehasearnedinterestincomeon FDRofRs.86,730/-andSavingBankInterestofRs.32,755/. Theassesseehasclaimedwithrespecttoaforesaidinterest income,deductionu/s.80PoftheAct.TheA.O.reliedupon thedecisionofHon’bleSupremeCourtinthecaseof Totgar Co-operativeSalesSocietyLtd.(322ITR283),andobserved thatinterestonbankdepositsdoesnotqualifyfordeduction u/s.80PoftheAct.ShowcausenoticewasissuedbytheAO totheassesseeastowhytheaforesaidincomefromFDRand savingBankaccountbenottreatedasincomefromother sourcesu/s56ofthe1961Act.Theassesseesubmittedthat theassesseeismaintainingsavingbankaccountwithAxis Banktodeposittheamountreceivedfrommembersandto issuethechequestomembersandforotherexpenses.The assesseefurtherclaimedthattheassesseeismaintaining LoanCCaccountwithAhmedabadDistrictCo.Op.BankLtd. andtheinterestispaidonthesaidloan.Theassesseealso submittedthatthefactsinthecasebeforeHon’bleSupreme Courtinthecaseof TotgarCo-operativeSalesSociety Limited(supra)aredistinguishable.TheA.O.wasoftheview I.T.ANo.612/Ahd/2024A.Y.2017-18PageNo. TheSalesTaxEmployeesCo.Op.CreditSocietyltd.v.ACIT 10 thatasperprovisionsofSection80P(2)(d)oftheAct,income bywayofdividendsorinterestearnedbytheCo-operative societyfromitsinvestmentwithanyotherco-operativesociety isexemptfromtax.Butthisdeductioncannotbeextendedto theinterestincomeanddividendearnedfromtheinvestment inanyCo-operativebank.ThustheA.O.disallowedthe deductionofRs.86,730/-beingamountofinterestfromFDR andRs.32,755/-receivedassavingbankinterest,claimedby theassesseeu/s.80PoftheAct,andwasaddedtotheincome oftheassessee. 5.Aggrieved,theassesseefiledfirstappealwithld.CIT(A), whichstooddismissedbyLd.CIT(A)byholdingthatinterest receivedfromFDinAxisBanktothetuneofRs.86,730/-is notallowable.Althoughasperthegroundsofappealand statementoffact(SOF)filedbytheassesseebeforeld.CIT(A), theassesseehasstatedthatthesaidinterestonFDRtothe tuneofRs.86,730/-wasreceivedfromAhmedabadDistrict Co-OperativeBankLtd.Theassesseealsostatedthatthe assesseehasmaintainedLoanCCaccount(againstFDR)with theAhmedabadDistrictCo-operativeBankLimitedandpaid interestofRs.88,956/-onthesame.Theassesseestatedthat thefactsofthedecisionofHon’bleSupremeCourtinthecase ofTotgar(supra)weredifferent.Theld.CIT(A)dismissedthe appealbyholdingthattheinterestincomefromFDRfromAxis I.T.ANo.612/Ahd/2024A.Y.2017-18PageNo. TheSalesTaxEmployeesCo.Op.CreditSocietyltd.v.ACIT 11 Bankwhichisascheduledbankisnotdeductibleu/s 80P(2)(d)(whiletheclaimoftheassesseewasthatinterest incomeonFDRwereearnedw.r.t.FDRmaintainedbythe assesseewithAhmedabadDistrictCo-operativeBankandnot withAxisBank).Further,theld.CIT(A)heldthatnodeduction u/s80P(2)(i)shallalsobeallowedastheAxisBankisnot memberofthesociety.Astherewasapparentlymistakeonthe partoftheLd.CIT(A)byconsideringthesaidinterestas interestonFDRwithAxisBankasclaimedbytheassessee, insteadofclaimoftheassesseethatthesaidinterestonFDR wasinterestonFDRwithAhmedabadDistrictCo-operative BankLimited,theassesseefiledrectificationapplicationu/s. 154whichwasdismissedbyld.CIT(A)videorderdated 31.05.2024byholdingthattheappellateorderdated 16.10.2023passedbyLd.CIT(A)isnotretrievable/available onrecord. 6.Stillaggrieved,theassesseehasnowfiledsecondappeal withtheTribunal,andtheassesseehasclaimedthattheLd. CIT(A)haserredinholdingthattheassesseehasreceived interestonFDRwithAxisBankbutthefactofthematteris thattheassesseereceivedinterestofRs.86,730/-from AhmedabadDistrictCo-OperativeBankLtdandnotfromAxis Bank.Itissubmittedthattheassesseeisacreditco-operative societyandiseligiblefordeductionu/s.80P(2)(d)oftheAct. I.T.ANo.612/Ahd/2024A.Y.2017-18PageNo. TheSalesTaxEmployeesCo.Op.CreditSocietyltd.v.ACIT 12 TheLd.Counselfortheassesseealsoreliedupontheother decisionsoftheAhmedabadTribunal(SMC)initsowncasein SalesTaxEmployeesCo-operativeCreditSocietyLimitedv.ITO inITAno.750/Ahd/2018forassessmentyear2014-15. 6.2TheSr.Ld.D.R.ontheotherhandreliedupontheorders ofauthoritiesbelow,andprayedthatthemattermaybeset asidetothefileofld.CIT(A). 7.Ihaveconsideredrivalcontentionsandperusedthe materialonrecord.Ihaveobservedthattheassesseeisa creditco-operativesociety.Thebrieffactsandbackgroundare culledoutbymeinprededingpara’softhisorderandarenot repeated.Theissueariseninthisappealiswithrespectto allowabilityofdeductionu/s80Pofthe1961Act,withrespect tointerestincomeearnedbytheassesseefromFDR maintainedwithAhmedabadDistrictCo-operativeBank LimitedtothetuneofRs.86,730/-andalsointerestonsaving bankaccounttothetuneofRs.32,755/-.Theassesseehas alsostatedthattheassesseeavailedCCLoanaccountfrom AhmedabadDistrictCo-operativeBankLimitedagainstthe securityofFDRmaintainedwithAhmedabadDistrictCo- operativeBankLimited,andpaidinterestofRs.88,956/-to AhmedabadDistrictCo-operativeBankLimited.TheAO applieddecisionofHon’bleSupremeCourtinthecaseof I.T.ANo.612/Ahd/2024A.Y.2017-18PageNo. TheSalesTaxEmployeesCo.Op.CreditSocietyltd.v.ACIT 13 Totgar(supra)anddisallowedthedeductionclaimedu/s80P. Theld.CIT(A)erredinholdingthattheassesseeearned interestonFDRmaintainedwithAxisBankdespitebeing clearlyspelledoutbytheassesseeinGroundsofAppeal/SOF filedbeforeld.CIT(A),andhencethesameisnotallowableas deductionu/s80PastheAxisBankisascheduledbankand isalsonotmemberoftheassessee’screditco-operativesociety. Theassesseefiledrectificationapplicationu/s154beforeld. CIT(A),andthesaidapplicationstooddismissedontheground thattheappellateorderu/s250originallypassedbyld.CIT(A) on16.10.2023isnotretrievable/availableonrecord.Theld. Sr.DRstatedbeforetheBenchthatthisisadeficiencyinthe systemunderfacelessregime,thatoncetheappellateorders arepassedbyld.CIT(A),itbecamenonretrievable/not availableonrecord.Bethatitmaybeso,thereisnoreason whytheassesseesuffersowingtodeficiencyinthesystemof thedepartment,andtheassessee’scannotbemadetorun frompillartopostandincurcostsandtimeowingto deficiencyinthesystemofdepartment.TheDepartmentand itsofficersareAuthoritieswhomustactdiligentlysothatthe tax-payersdonotsufferun-necessaryandun-calledfor difficulties,fornofaultofthem.TheAOisdirectedtobring thisdeficiencytothenoticeofld.CCITsothatthisissuecan betakenupatanappropriatelevel,sothatthisdeficiencycan beremoved/correctedattheearliest.Goingfurther,theissue I.T.ANo.612/Ahd/2024A.Y.2017-18PageNo. TheSalesTaxEmployeesCo.Op.CreditSocietyltd.v.ACIT 14 isofdeductionofinterestonFDRearnedbyCreditCo- operativesocietyfromdepositswithCo-operativeBanksisno moreresintegraastheHon’bleJurisdictionalHighCourtin thecaseofSuratVankarSahakariSanghLtd.v.ACITreportedin(2016) 72taxmann.com169(GujHC)andStateBankofIndiav.CITreportedin (2016)72taxmann.com64(GujHC)hasdecidedthisissueinfavour ofthetax-payerbyholdingthatinterestincomereceivedby CreditCo-operativeSocietyfromdepositsmadewithCo- operativeBankregisteredundertheCo-operativeSocietiesAct orundertheStateActshallbeallowedasdeductionu/s 80P(2)(d),andtheITATinseveralcaseshasalreadydecided thisissuealsoinfavourofthetax-payer,includinginthe caseof TheSardarPatelCo-operativeCreditSocietyLtd.v. ACIT(ITAno.525&526/Ahd/2023videorderdated 02.04.2024)inwhichIwasoneoftheMemberoftheDivision Benchwhichdecidedtheissueinfavouroftheassessee.,by holdingasunder(ITANo.525&526/Ahd/2023):- 7.Wehaveconsideredrivalcontentionsandperusedthe materialonrecord.Wehaveobservedthattheassesseeis Co-operativeCreditSocietyengagedinprovidingcredit facilitytoitsmembers.Thecaseoftheassesseewas selectedbyRevenueforframinglimitedscrutiny assessmentunderCASS. *** I.T.ANo.612/Ahd/2024A.Y.2017-18PageNo. TheSalesTaxEmployeesCo.Op.CreditSocietyltd.v.ACIT 15 7.2Theassesseehasalsoclaimeddeductionu/s80P(2)(d) ofRs.1,62,24,334/-towardsinterestearnedfrom depositsmadewithCo-operativebanks,detailed hereunder: Sr. No. NameofBankInterest receipt (Rs.l 1.Interestincome fromMehsana UrbanCo-op.Bank Ltd. 1,59,13,24 6/- 2.Interestincome fromKukarwada NagrikBankLtd 3,02,706/- 3.Interestincome fromMehsanaDist. Bank 159/- 4.InterestIncome fromVijapur NagarikSahakari BankLtd. 31.168/- TheAOhasdeniedthedeductionu/s80P(2)(d)tothe assesseebyfollowingthedecisionofHon’bleKarnataka HighCourtinthecaseofPCITv.TotgarCo-operativeSale Society(supra),whileld.CIT(A)hadallowedthededuction byfollowingthedecisionofITAT,AhmedabadBenchin I.T.ANo.612/Ahd/2024A.Y.2017-18PageNo. TheSalesTaxEmployeesCo.Op.CreditSocietyltd.v.ACIT 16 theassessee’sowncaseforassessmentyear2016-17. Thetribunalwhileallowingtheclaimoftheassesseefor assessmentyear2016-17(immediatelypreceding assessmentyear)hasfollowedthedecision(s)ofHon’ble GujaratHighCourtinthecaseofStateBankofIndiav. CIT,reportedin(2016)389ITR578(Guj.)andSurat VankarSahakariSanghLimitedv.ACIT,reportedin (2016)72taxmann.com169(Guj).TheTribunalinITANo 1404/Ahd/2019inassessee’sowncaseforassessment year2016-17allowedtherelieftotheassessee,by holdingasunder: “5.1Theissueforconsiderationbeforeusiswhether theassesseeiseligibletoclaimdeductiononinterest earnedfromCo-OperativeBanksu/s80P(2)(d)ofthe Act.TheHon’bleGujaratHighCourtinthecaseof StateBankofIndiaVs.CIT(2016)389ITR578(Guj), heldthatthattheinterestincomeearnedbyaco- operativesocietyonitsinvestmentsheldwitha cooperativebankwouldbeeligibleforclaimof deductionunderSec.80P(2)(d)oftheAct.The HonourableGujaratHighCourtmadefollowing observationsinrespectofinterestearnedfrom depositskeptwithacooperativebank: Therefore,itisonlytheinterestderivedfromthe creditprovidedtoitsmemberswhichis deductibleundersection80P(2)(a)(i)oftheAct andtheinterestderivedbydepositingsurplus fundswiththeStateBankofIndianotbeing attributabletothebusinesscarriedonbythe appellant,cannotbedeductedundersection 80P(2)(a)(i)oftheAct.Iftheappellantwantsto I.T.ANo.612/Ahd/2024A.Y.2017-18PageNo. TheSalesTaxEmployeesCo.Op.CreditSocietyltd.v.ACIT 17 availofthebenefitofdeductionofsuchinterest income,itisalwaysopenforittodepositthe surplusfundswithaco-operativebankand availofdeductionundersection80P(2)(d)ofthe Act. 5.2InthecaseofSuratVankarSahakariSanghLtd. vAssistantCommissionerofIncome-tax[2016]72 taxmann.com169(Gujarat),theGujaratHighCourt heldassessee-co-operativesocietywaseligiblefor deductionundersection80P(2)(d)inrespectofgross interestreceivedfromcooperativebankwithout adjustinginterestpaidtosaidbank. 5.3InthecaseofSurendranagarDistrictCo-op.Milk ProducersUnionLtd.vDeputyLd.CIT(A)111 taxmann.com69(RajkotBench)theITATheldthat assessee-co-operativesocietycouldnotclaimbenefit ofsection80P(2)(d)inrespectofinterestearnedbyit fromdepositsmadewithnationalised/privatebanks, however,saidbenefitwasavailableinrespectof interestearnedondepositsmadewithco-operative bank. 5.4InthecaseofPr.CommissionerofIncomeTax andAnr.Vs.TotagarsCooperativeSaleSociety(2017) 392ITR74(Karn),theKarnatakaHighCourthas heldthattheinterestincomeearnedbyacooperative societyonitsinvestmentsheldwithaco-operative bankwouldbeeligibleforclaimofdeductionunder Sec.80P(2)(d)oftheAct. I.T.ANo.612/Ahd/2024A.Y.2017-18PageNo. TheSalesTaxEmployeesCo.Op.CreditSocietyltd.v.ACIT 18 5.5Respectfully,followingthedecisionofHonourable HighCourtofGujaratandothercasescitedabove,in ourview,interestearnedbytheassesseeonsurplus heldwithcooperativebankswouldbeeligiblefor deductionunderSec.80P(2)(d)oftheAct. 6.Intheresult,theappealoftherevenueis dismissed.” RespectfullyfollowingtheaforesaiddecisionofITAT, AhmedabadBench(whichhasfollowedthedecisionof jurisdictionalHighCourt),inassessee’sowncase,for assessmentyear2016-17whichisimmediatelypreceding year,andinordertomaintainconsistency,weallowthe claimoftheassesseefordeductionu/s80P(2)(d)with respecttointerestincomeearnedfromCo-operativeBanks. However,noneoftheauthoritiesbelowhavegivena findingthatthesefourentitiesfromwhomtheinterest incomeisearnedbytheassesseeareCo-operativeBanks whichareco-operativesocietiesdulyregisteredunderthe Co-operativeSocietiesActorundertheStateActandto thislimitedextentwearedirectingAOtoverifythefacts beforegrantingrelieftotheassessee.Whileallowingthe claimoftheassessee,wenotethatprinciplesofres judicatearenotapplicabletotheincometaxproceedings, butprinciplesofconsistencyistobemaintained. ReferenceisdrawntothedecisionofHon’bleSupreme CourtinthecaseofRadhasoamiSatsangv.CIT,reported in(1992)193ITR321(SC).Theassesseesucceedsonthis issueinthemannerasindicatedabove.Weorder accordingly.” I.T.ANo.612/Ahd/2024A.Y.2017-18PageNo. TheSalesTaxEmployeesCo.Op.CreditSocietyltd.v.ACIT 19 TheHon’bleGujaratHighCourtinthecaseof KatlaryKariyana MerchantSahkariSarafiMandaliLtd.v.ACIT,reportedin(2022)140 taxmann.com602(Guj.HC)videorderdated04.01.2022has decidedtheissueinfavourofRevenue,butbyorderinMA dated26.04.2024inR/SpecialCivilApplicationNo.20585of2019, theaforesaidorderdated04.01.2022wasmodifiedbyHon’ble GujaratHighCourt,andthisissuestooddecidedinfavourof thetax-payer.I,thusdecidethisissueinfavourofthe assesseethatinterestincomeearnedfromdepositswithCo- operativeBanksshallbeallowedasdeductionu/s80P(2)(d). However,similardirectionsasweregivenbyDivisionBenchin theappellateorderinthecaseofSardarPatelCo-operative CreditSocietyLimited(ITANo.525&526/Ahd/2023) arenow givenbymetotheAOtoverifythattheentityfromwhomthe interestincomeisclaimedtohavebeenearnedbytheassessee namelyAhmedabadDistrictCo-operativeBankisCo- operativeBankwhichisaCo-operativesocietiesduly registeredundertheCo-operativeSocietiesActorunderthe StateAct,andtothislimitedextentIamdirectedAOtoverify thefactsbeforegrantingrelieftotheassessee.Sofaras interestincomereceivedbyassesseefromsavingbank accountmaintainedwithAxisBankisconcerned,thesame shallnotbeallowedasdeduction,keepinginviewdecisionof Hon’bleSupremeCourtinthecaseofTotgar(supra)aswell decisionofDivisionBenchofITATinthecaseof SardarPatel I.T.ANo.612/Ahd/2024A.Y.2017-18PageNo. TheSalesTaxEmployeesCo.Op.CreditSocietyltd.v.ACIT 20 Co-operativeCreditSocietyLimited(supra).Theassesseehas claimedthatithasnotinvestedsurplusfundsinitsbank account,butthereisnoevidencetosupportitscontentions. Theappealoftheassesseeispartlyallowedasindicatedabove. Iorderaccordingly 8.Intheresult,appealoftheassesseeinITAno. 612/Ahd/2024forassessmentyear2017-18ispartlyallowed asindicatedabove. 9.OrderpronouncedinaccordancewithRule34(4)ofthe IncomeTaxAppellateTribunalRules,1963atAhmedabadon 30.07.2024. Sd/- (RAMITKOCHAR) ACCOUNTANTMEMBER (TrueCopy) Ahmedabad:Dated30/07/2024