Appeal details
Counselvise Citation
[2024] 101 COUNSELVISE.COM (IT) 6285 (ITAT-PANAJI)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
3 month(s) 20 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
26-06-2024
Appeal Filed By
Department
Order Result
Dismissed
Bench Allotted
WT(D)
Next Hearing Date
10-06-2024
Assessment Year
2017-2018
Appeal Filed On
07-03-2024
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL PANAJI BENCH : PANAJI [THROUGH VIRTUAL HEARING AT ITAT : PUNE] BEFORE SHRI RAMA KANTA PANDA, VICE PRESIDENT AND SHRI SATBEER SINGH GODARA, JUDICIAL MEMBER ITA.No.64/PAN./2024 & Cross Objection No.1/PAN./2024 - Assessment Year 2017-2018 The Income Tax Officer, Ward-1, 1 st Floor, Feroj Khimajibhai Complex, Opp. Civil Hospital, Dr. B.R. Ambedkar Road, BELAGAVI – 590 001. Karnataka. vs. Vivekanand Multipurpose Souhard Sahakari Niyamit, 103, 1 st Floor, Mahalaxmi Apartment, College Road, Belagavi-590001. PAN AABAV0523F (Appellant/Respondent) (Respondent/ Cross Objector) For Revenue : Shri N. Shrikanth For Assessee : Shri Pramod Vaidhya Date of Hearing : 11.06.2024 Date of Pronouncement : 27.06.2024 ORDER PER SATBEER SINGH GODARA, J.M. : This Revenue’s appeal ITA.No.64/PAN./2024 and assessee’s Cross Objection No.1/PAN./2024, for assessment year 2017-18, arise against the National Faceless Faceless Appeal Centre [in short the “NFAC”) Delhi’s Din and Order No.ITBA/ NFAC/S/ 250/2023-24/1059928535(1), dated 19.01.2024, in proceedings u/s.143(3) of the Income Tax Act, 1961 (in short ‘the Act”). 2 ITA No.64/PAN/2024 & C.O.1/PAN./2024 Heard both the parties. Case file perused. 2. The Revenue’s appeal ITA.No.64/PAN./2024 pleads the following substantive grounds : 3 ITA No.64/PAN/2024 & C.O.1/PAN./2024 3. The assessee’s Cross Objection No.1/PAN./2024 pleads the following substantive grounds : “The learned CIT (A) erred in holding that the assessee society is not entitled for deduction in full of Rs.22,86,070/- u/s 80P(2)(d)/80P(2)(a)(i) in respect of interest income of Rs.1,46,928/- from Co-operative Societies, Rs.15,86,530/- from Co-operative Banks and Rs.5,52,6121- from Scheduled Banks.” 4. A combined perusal of the above extracted grounds makes it clear that the first and foremost substantive issue which arises for our apt adjudication is that of assessee’s eligibility to claim sec.80P deduction regarding it’s interest income derived from cooperative societies/banks and nationalized banks; as the case may be. 5. The Revenue’s stand on the other hand is that the assessee is first of all not entitled for sec.80P deduction once it is only a ‘Souharda’ society than cooperative society within the meaning of sec.2(19) of the Act. Hon’ble jurisdictional Karnataka high court [2022] 134 taxmann.com 170 (Kar.) Government of India Ministry of Finance vs. Karnataka State Souharda Federal Co-operative Ltd., has already settled the issue that such a ‘society’ is also under the state cooperative law and rejected the Revenue’s very arguments. 4 ITA No.64/PAN/2024 & C.O.1/PAN./2024 6. Next comes the Revenue’s second argument that the assessee has violated the provisions of the State Cooperative Law regarding it’s regular vis-à-vis associate/nominal members and therefore, such memberships indeed renders it disentitle for the impugned deduction. 7. We first of all note in this factual backdrop that case law Mavilayi Service Co-operative Bank Ltd., vs., CIT [2021] 431 ITR 1 (SC) has already rejected the Revenue’s stand regarding it’s endeavour to draw a distinction between a cooperative society regular members having voting and all other rights as against nominal/associate members. This is indeed coupled with the fact that there is no material before us which could indicate the state authority(ies) to have taken any action against the assessee alleging violation of the membership criteria hereinabove. Faced with this situation, we hardly see any substance in the Revenue’s instant second arguments as well. 8. Next comes the assessee’s sole substantive grievance in it’s cross objection C.O.No.1/PAN./2024 seeking to claim sec.80P deduction regarding interest income derived from cooperative societies/banks and nationalised banks, as the case may be, involving varying sums. It emerges that this tribunal in The Hukkeri Taluk Agri Produce Co-operative Marketing Society Ltd., Dist. Belagavi vs. ITO, Ward-1(1), 5 ITA No.64/PAN/2024 & C.O.1/PAN./2024 Belagavi ITA.No.30/PAN./2018 dated 16.11.2021 has accepted sec.80P deduction regarding the former category of interest income earned from cooperative societies/banks and The Vaveru Co-operative Rural Bank Ltd., vs. CCIT [2017] 396 ITR 371 (AP) has dealt with interest income from latter institutions i.e., public sector banks; against the department. Faced with this situation, we find merit in the assessee’s arguments as well as it’s cross objection C.O.No.1/PAN./2024. We accordingly hold that the assessee is entitled for sec.80P deduction in question. The net result is that the Revenue fails in it’s former substantive ground in the instant appeal ITA.No.64/PAN./2024, whereas the assessee succeeds in it’s cross objection C.O.No.1/PAN./2024. 9. This leaves us with the Revenue’s second substantive ground seeking to revive sec.68 unexplained cash credit addition of Rs.70,22,500/- made during demonetization. 10. There is hardly any dispute between the parties that the assessee’s stand all along has been that the same had come from the members concerned. There is further no quarrel between the parties that the list of the members along with all other relevant details stood duly submitted right in the course of assessment itself. These details form part of the case records before us as well. 6 ITA No.64/PAN/2024 & C.O.1/PAN./2024 11. Learned DR vehemently argued that the assessee is not entitled to accept these demonetized currency notes and therefore, the only option left available with the departmental authorities to invoke sec.68 of the Act. We find that this tribunal in Shrijeett Finance Private Limited vs. ACIT, Jalna [2024] 162 taxmann.com 243 (Pune.) has already rejected the Revenue’s stand as under : “5. During the assessment proceedings, the AO observed that the assessee has received cash in old currency during the demonetization period between 08.11.2016 to 13.12.2016 of Rs.12,34,000/-. The assessee submitted before the AO that these amounts were deposited by their customers towards the loan installments. Assessee submitted list of customers. Assessee also submitted that all the customers were having proper KYC Documents. However, the AO made addition under section 68 of the Act, on the ground that as per the RBI Guidelines assessee being an NBFC was not permitted to accept the old currencies which were no-more legal tender after 08.11.2016. Ld.CIT(A) confirmed the said addition. The only plea taken by the AO, ld.CIT(A) and ld.DR that as per the notification no.S.O. 3407(E) dated 08/11/2016 & S.O. 3418(E) of Ministry of Finance (Department of Economic Affairs), New Delhi dated 08/11/2016 (F. No. 10/03/2016-cy.l) only banking company defined under 7 ITA No.64/PAN/2024 & C.O.1/PAN./2024 the Banking Regulation Act were allowed to accept demonetized currency after 08.11.2016, and NBFCs were not allowed to accept impugned currencies. 5.1 The AO made addition under section 68 of the Act. To invoke section 68 of the Act, the AO has to prove that assessee failed to file identity of the depositors, genuineness of the transaction and creditworthiness. In this case, the assessee had submitted the names of the persons from whom cash was received during the demonetization period in the form of demonetized currency. Assessee also submitted that assessee maintains all KYC documents of all these persons. The AO had not asked the assessee to produce the said KYC Documents. Rather AO has not challenged the identity of the depositors, genuineness of the transactions and creditworthiness of the depositors. In these facts and circumstances of the case, we are of the opinion that no addition can be made under section 68 of the Act. We find support from the order of ITAT Pune Bench authored by then Hon’ble Vice-President, Shri R.S.Syal in the case of M/s.Bhagur Urban Credit Co-operative Society Ltd., Vs. ITO in ITA No.561/PUN/2022 for A.Y.2017-18 dated 03.01.2023. Therefore, the AO is directed to delete the addition of Rs.12,34,000/- made under section 68 of the Act. Accordingly, Ground No.2 and 3 are allowed.” 8 ITA No.64/PAN/2024 & C.O.1/PAN./2024 12. We adopt the foregoing detailed discussion mutatis mutandis to reject the Revenue’s instant substantive grievance as well. No other ground or argument has been pressed before us during the course of hearing. 13. This Revenue’s appeal ITA.No.64/PAN./2024 is dismissed and assessee’s cross objection Cross Objection No.1/PAN./2024 is allowed in above terms. A copy of this common order be placed in the respective case files. Order pronounced in the open Court on 27.06.2024. Sd/- Sd/- [RAMA KANTA PANDA] [SATBEER SINGH GODARA] VICE PRESIDENT JUDICIAL MEMBER Pune, Dated 27 th June, 2024 VBP/- Copy to 1. The applicant 2. The respondent 3. The Pr. CIT, Panaji concerned 4. D.R. ITAT, Panaji-Bench, Panaji. 5. Guard File. //By Order// //True Copy // Sr. Private Secretary, ITAT, Pune Benches, Pune.
Mehul