Begpur Samabay Krishi Unnayan Samity Ltd., Bheruapara V. ACIT,Cir-1, Burdwan. , Burdwan

ITA 873/KOL/2023

• Counselvise Citation: [2023] 100 COUNSELVISE.COM (IT) 5593 (ITAT-KOLKATA)
• Duration Of Justice: 2 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-11-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2016-2017
• Appeal Filed On: 21-08-2023
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Condonation of delay; Set aside
• Section: 56; 143(3); 80P

Judgement Text

आयकर अपीलीय अधिकरण कोलकाता 'एसएमसी' पीठ, कोलकाता म ें IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA ‘SMC’ BENCH, KOLKATA श्री राज े श क ु मार, ल े खा सदस्य एवं श्री संजय शमा ा , न्याधयक सदस्य क े समक्ष Before SRI RAJESH KUMAR, ACCOUNTANT MEMBER & SONJOY SARMA, JUDICIAL MEMBER I.T.A. No.: 873/KOL/2023 Assessment Year: 2016-17 Begpur Samabay Krishi Unnayan Samity Ltd..........Appellant [PAN: AAABB 0252 F] Vs. ACIT, Circle-1, Burdwan.......................................Respondent Appearances by: Assessee represented by – Sh. Suvo Chakraborty, Adv. Department represented by – Sh. Ajoy Robin Singh, JCIT. Date of concluding the hearing : October 16 th , 2023 Date of pronouncing the order : November 6 th , 2023 ORDER Per Rajesh Kumar, Accountant Member: This appeal preferred by the assessee is against the order of Learned Commissioner of Income-tax (Appeals)- NFAC, Delhi [hereinafter referred to Ld. ‘CIT(A)’] dated 16.06.2023 for the Assessment Year (in short ‘AY’) 2016-17. I.T.A. No.: 873/KOL/2023 Assessment Year: 2016-17 Begpur Samabay Krishi Unnayan Samity Ltd. Page 2 of 6 2. At the outset we note that there is a delay of 06 days in filing of the appeal which was stated by the ld. Counsel for the assessee to be attributable to his illness and therefore he was not in a position to attend to this Court. Ld. A/R therefore, submitted that the delay may kindly be condoned as the reasons are beyond the control of the assessee and the assessee has not been benefitted from the same in any manner whatsoever. Ld. D/R, on the other hand, left the issue of condonation of delay at the wisdom of the Bench. On perusing the explanation of the assessee, we are inclined to condone the delay as the same is for sufficient and good reasons and accordingly admit the appeal for adjudication. 3. The only issue raised by the assessee is against the order of Ld. CIT(A) upholding the order of the Assessing Officer (in short ld. 'AO') wherein deduction claimed u/s 80P(2)(d) of the Act in respect of income derived by way of interest was rejected resulting into an addition of Rs. 28,05,000/-. 4. The facts in brief are that the assessee filed the return of income on 30.03.2017 declaring total income at NIL. The case of the assessee was selected for scrutiny through CASS and statutory notices were duly issued and served upon the assessee. The assessee is a cooperative society engaged in the business of sale and supply of fertilizer, pesticide, agricultural allied raw material and equipment etc. The AO observed from the return of income of the assessee that the assessee has claimed deduction u/s 80P of the Act to the tune of Rs. 32,77,677/- out of which Rs. 29,02,436/- was claimed in respect of income earned from interest on term deposit and Rs. 6,34,195/- towards interest on saving bank I.T.A. No.: 873/KOL/2023 Assessment Year: 2016-17 Begpur Samabay Krishi Unnayan Samity Ltd. Page 3 of 6 account. According to the AO, in view of the decision of Hon'ble Apex Court in the case of Totgars Cooperative Sale Society (Civil Appeal no. 1622/2010), held that the interest on surplus fund invested in short term deposits with bank would not qualify for deduction as business income u/s 80P(2)(a)(i) of the Act and accordingly not attributable to the business of providing credit facilities to the members and therefore, is assessable as other income. Consequently, the AO rejected the claim of the assessee u/s 80P(2)(d) of the Act in the assessment framed u/s 143(3) of the Act vide order dated 14.12.2018. Ld. CIT(A) also confirmed the order of the AO. 5. After hearing the rival contentions and perusing the material on record including the decisions cited before us by the rival parties, we find that the issue is squarely covered in favour of the assessee by the decisions wherein the Hon'ble Courts have held that the interest earned by the cooperative society from its cooperative bank is squarely covered under the provisions of Section 80P(2)(d) of the Act. It is observed that though the authorities below had relied on the decision of the Hon'ble Apex Court in the case of Totgars Cooperative Sale Society vs. ITO reported in [2010] 188Taxman282 (SC). However, the same has been considered by the Coordinate Bench in the case of The Totgars’ Co-operative Sale Society Ltd. vs. ACIT in ITA No. 376 to 379/Bang/2023 order dated 18.07.2023 and has been distinguished. The operative part of the decision is as follows: “9. We have perused the submissions advanced by both the sides in the light of the records placed. When we look at the decision of Hon’ble I.T.A. No.: 873/KOL/2023 Assessment Year: 2016-17 Begpur Samabay Krishi Unnayan Samity Ltd. Page 4 of 6 Supreme Court in case of Totgars Co-operative Sale Society's case reported in (2010) 188 Taxman 282, relied by the Ld. DR. Hon’ble Supreme Court was dealing with a case where the assessee therein, apart from providing credit facilities to the members, was also in the business of marketing of agricultural produce grown by its members. The sale consideration received from marketing agricultural produce of its members was retained in many cases. The said retained amount payable to its members from whom produce was bought, was invested in a short-term deposit/security. Such amount retained by the assessee therein was a liability and it was shown in the balance sheet on the liability side. Therefore, to that extent, such interest income cannot be said to be attributable either to the activity mentioned in Section 80P(2)(a)(i) of the Act or under Section 80P(2)(a)(iii) of the Act. On these facts Hon’ble Supreme Court held the assessing officer was right in taxing the interest income indicated above under Section 56 of the Act. Hon’ble Supreme Court, also clarified that, they are confining the said judgment to the facts of that case. 9.1. In the instant case, the amount which was invested in banks to earn interest was not any amount due to its members. Further the claim of the assessee in u/s 80P(2)(d) was not the liability. It was not shown as liability in their account. In fact this amount which is in the nature of profits and gains, was not immediately required by the assessee for lending money to its members, as there were no takers. Therefore they had deposited the money in a co-operative bank again which interest/dividend was earned. The said interest income is attributable to carrying on the business of banking and therefore it is liable to be deducted in terms of Section 80P(l) of the Act. In fact similar view is taken by the Andhra Pradesh High Court in the case of CIT v. Andhra Pradesh State Co-operative Bank Ltd. [2011] 336 ITR 516/200 Taxman 220/12 taxmann.com 66. 9.2. Therefore, reliance was placed by the Ld.DR on the decision of Hon’ble Supreme Court in the case of Totgars Co-operative Sale Society Ltd. vs. ITO reported in (2010) 188 Taxman 282 is distinguishable on facts. The adjudication by the Hon’ble Supreme Court in case of Totgars Co-operative Sale Society Ltd. vs. ITO (supra) was in context of Sec. 80P(2)(a)(i), and not on the entitlement of a cooperative society towards deduction under Sec.80P(2)(d) on the interest income on the investments/deposits parked with a cooperative bank. I.T.A. No.: 873/KOL/2023 Assessment Year: 2016-17 Begpur Samabay Krishi Unnayan Samity Ltd. Page 5 of 6 9.3. At this juncture, we refer to subsequent decision of Hon’ble Karnataka High Court in the case of PCIT Vs. Totagars cooperative Sale Society reported in (2017) 395 ITR 611, wherein Hon’ble Court held that, a co-operative society would not be entitled to claim of deduction under Sec. 80P(2)(d). At the same time, we find, that the Hon’ble Karnataka High Court in the case of PCIT & Anr. vs. Totagars Cooperative Sale Society reported in (2017) 392 ITR 74 and Hon’ble Gujarat High Court in the case of State Bank of India Vs. CIT reported in (2016) 389 ITR 578, held, that the interest income earned by a co- operative society on its investments held with a cooperative bank would be eligible for claim of deduction under Sec.80P(2)(d) of the Act. 9.3. At this juncture, we respectfully following the view taken by the Hon’ble Karnataka High Court in the case of PCIT & Anr. Vs. Totagars Cooperative Sale Society reported in (2017) 392 ITR 74 and Hon’ble Gujarat High Court in the case of State Bank of India Vs. CIT reported in (2016) 389 ITR 578, hold that the interest income earned by a cooperative society on its investments held with a cooperative bank would be eligible for claim of deduction under Sec.80P(2)(d) of the Act.” 6. Accordingly, we are not in agreement with the conclusion drawn by Ld. CIT(A) on this issue and consequently, we set aside the order of Ld. CIT(A) and direct the AO to delete the addition by allowing deduction u/s 80P(2)(d) of the Act as claimed by the assessee. 7. In the result, the appeal filed by the assessee is allowed. Kolkata, the 6 th November, 2023. Sd/- Sd/- [Sonjoy Sarma] [Rajesh Kumar] Judicial Member Accountant Member Dated: 06.11.2023 Bidhan (P.S.) I.T.A. No.: 873/KOL/2023 Assessment Year: 2016-17 Begpur Samabay Krishi Unnayan Samity Ltd. Page 6 of 6 Copy of the order forwarded to: 1. Begpur Samabay Krishi Unnayan Samity Ltd., Bheruapara, Birta, Kalna-713 422. 2. ACIT, Circle-1, Burdwan. 3. CIT(A)-NFAC, Delhi. 4. CIT- 5. CIT(DR), Kolkata Benches, Kolkata. //True copy // By order Assistant Registrar ITAT, Kolkata Benches Kolkata