ITO 22 3 1, PIRAMAL CHAMBER V. ADANI ELECTRICITY EMPLOYEES CO-OPERATIVE CREDIT SOCIETY LIMITED , PRABHAT COLONY

ITA 4443/MUM/2024

AI Insights

The case involves Adani Electricity Employees Cooperative Credit Society Limited, which appealed against the disallowance of a deduction under section 80P(2)(d) of the Income Tax Act, 1961, for interest income from deposits with cooperative banks. The Assessing Officer (AO) initially disallowed the deduction, which was partly reversed by the CIT(A). Both the revenue and the assessee filed appeals against the CIT(A)'s decision. The Tribunal's decision was influenced by precedents and interpretations of section 80P in relation to cooperative banks, leading to the dismissal of both appeals.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 470252 (ITAT-MUMBAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-01-2025
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2020-2021
• Other Referred Cases: PCIT vs. Totagar's Co-operative Society Ltd, Thorapadi Urban Co-op Credit Society Ltd vs. ITO, Back bay Premises Co-op. Society Ltd vs. ITO, Ramas Tower Co-Operative Housing Society vs. ITO
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Set aside; Question of law; Co-operative Credit Society
• Section: 142(1); 250; 139(1); 194A; 13; 80P; 2(19)

Judgement Text

"Page | 1 IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “A”, MUMBAI BEFORE SHRI NARENDRA KUMAR BILLAIYA, AM & SHRI RAJ KUMAR CHAUHAN, JM ITA NO. 4443/MUM/2024 (A.Y. 2020-21) ITO 22(3)(1) Room No. 307, 3rd floor, Piramal Chambers, Lalbaug, Mumbai-400 012 Vs. Adani Electricity Eomployees Co-Operative Credit Society Limited Ground floor, Reliance Energy Officers Quarters, Prabhat Colony, Nehru Road, Santacruz(E), Mumbai-400055 PAN: AAAAB0016E (Appellant) (Respondent) & C.O. NO. 209/MUM/2024 (A.Y. 2020-21) Adani Electricity Eomployees Co-Operative Credit Society Limited Ground floor, Reliance Energy Officers Quarters, Prabhat Colony, Nehru Road, Santacruz(E), Mumbai- Vs. ITO 22(3)(1) Room No. 307, 3rd floor, Piramal Chambers, Lalbaug, Mumbai-400 012 ITA NO. 4443/MUM/2024 CO NO. 209MUM/2024 Adani Electricity Eomployees Co-Operative Credit Society Limited Page | 2 400055 PAN: AAAAB0016E (Appellant) (Respondent) Assessee Represented by : Shri Dnyanesh Patade & Shri Rupesh Sawale, Ld. ARs Department Represented by : Shri Lieder Panicker (Sr. DR.) Date of conclusion of Hearing : 09.10.2024 Date of Pronouncement : 03.01.2025 O R D E R PER RAJ KUMAR CHAUHAN (J.M.): 1. The aforesaid appeal and cross appeal filed by the revenue and appellant/assessee against the order dated 02.07.2024 of Learned Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre, Delhi [hereinafter referred to as the “CIT(A)”], passed under section 250 of the Income Tax Act, 1961 [hereinafter referred to as “the Act”] for the A.Y. 2020-21 respectively. 2. Since the facts of appeal filed by the revenue and CO filed by the assessee are exactly same, hence both appeal and CO are taken up together in order to avoid the multiplicity of the decision. ITA NO. 4443/MUM/2024 CO NO. 209MUM/2024 Adani Electricity Eomployees Co-Operative Credit Society Limited Page | 3 3. The brief facts of the case are that, the assessee is co operative society Registered under Maharashtra Co operative Society Act. The assessee filed a Return of Income on 06.02.2021 declaring total income at Rs. NIL after claiming deduction under Section 80P(2)(d) of the Income tax Act 1961. The AO vide its order dated 12/09/2022 passed an Assessment Order u/s. Subsequently the case was selected for scrutiny under CASS and notices u/s 142(1) alongwith questionnaire were issued and duly served upon the assessee. In response to the notice, assessee filed requisite details through e-filing portal. Accordingly, the AO disallowed the claim of assessee made under 80P(2)(d) as deduction without assigning any proper reason and made disallowance of Rs. 2,14,24,575/-. 4. Assessee has filed the appeal against the said order before the Ld. CIT(A) and Ld. CIT(A) partly allowed the appeal of the assessee to the extent of interest earned from the cooperative societies and cooperative banks. 5. Aggrieved with the order of Ld. CIT (A) revenue filed the appeal as well as assessee filed the CO before us by raising the following grounds: ITA NO. 4443/MUM/2024 CO NO. 209MUM/2024 Adani Electricity Eomployees Co-Operative Credit Society Limited Page | 4 Ground of appeal filed by revenue:- 1. \"Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) was correct in allowing deduction u/s 80P(2)(d) of the Income Tax Act of Rs.2,14,24,575/- in respect of interest earned from deposits from cooperative bank ignoring the amendment made by Finance Act, 2015 in section 194A(3)(v) of the Act which excludes the Cooperative Banks from the definition of \"Cooperative Society\" and requiring them to deduct income tax at source under Section 194A of the Act that also makes the legislative intent clear that the Co-operative Banks are not that specie of genus cooperative society, which are entitled to claim deduction under the special provisions of Chapter VIA in the form of Section 80P of the Act.\" 2. \"Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) was correct in allowing deduction u/s.80P(2)(d) of the Income Tax Act, 1961 of Rs.2,14,24,575/- in respect of interest earned from deposits in cooperative bank ignoring firstly, the purpose of bringing on the statute book subsection (4) in Section 80P of the Act to exclude the applicability of Section 80P of the Act altogether to any cooperative bank and secondly, ignoring the fact that words used in section 80P(4) are \"in relation to that can include within its ambit and scope even the interest income earned by the respondent assessee, a co-operative Society from a Co- operative Bank and this exclusion by Section, 80P(4) of the Act even though without any amendment in Section 80P(2)(d) of the Act is sufficient to deny the claim of the assessee for deduction under Section 80P(2)(d) of the Act.\" 3. \"Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) was correct in allowing deduction u/s.80P(2)(d) of the Income Tax Act of Rs.2,14,24,575/- in respect of interest earned from deposits in cooperative bank ignoring that whether the deposits and investment of ITA NO. 4443/MUM/2024 CO NO. 209MUM/2024 Adani Electricity Eomployees Co-Operative Credit Society Limited Page | 5 surplus funds of assessee not immediately required for its purposes, is made with Scheduled Bank or Nationalized Banks or with cooperative Banks does not make a difference as far as the character of the Income earned by assessee is concerned and it does not partake the character of its operational income from its activity as cooperative housing society, the same would continue to be fully taxable and will not be eligible for deduction under section 80P(2)(d) of the Act.\" 4. \"Whether on the facts and circumstances of the case and in law, the Ld.CIT(A) was correct in allowing deduction u/s.80P(2)(d) of the Income Tax Act, 1961 of Rs.2,14,24,575/- in respect of interest earned from deposits, though Hon'ble Karnataka High Court in a detailed judgment discussing the law and various related issues in the case of PCIT us. Totagar's Co- operative Society Ltd, Mumbai Society (395 ITR 611) has specifically decided the Question of Law about the allowability of interest earned from deposits with co-operative bank u/s 80P(2)(d) of the Income tax Act in favour of Revenue. 5. The appellant craves leave to amend or alter or add a new ground which may be necessary. 6. We have heard Ld. AR and Ld. DR. At the outset, Ld. AR submitted that the claim of deduction of interest income earned from deposits with cooperative banks is wrongly denied by the CPC and righty allowed by the Ld. CIT (A) in the impugned order notwithstanding that various judgments of the Tribunal and Hon’ble High Courts were cited and submitted before the Ld. CIT (A). He further argued that various benches of ITAT throughout ITA NO. 4443/MUM/2024 CO NO. 209MUM/2024 Adani Electricity Eomployees Co-Operative Credit Society Limited Page | 6 India has already taken view that the interest income earned by the Cooperative Society from depositing in Cooperative Banks is eligible to be exempted u/s 80P(2)(d) of the Act. He further relied on the following judgments in support of his arguments:- i) ITA No. 1048 & 1049/Mum/2024 for AY 2015-16 & 2018-19 dated 23.08.2024 in the case of The St. Sebastian Homes Cooperative Society Ltd. Vs. ITO (Mumbai Tribunal) ii) ITA No. 1259/Mum/2023 for AY 2018-19 dated 14.07.2023 in the case of ITO vs. Casa Grande Cooperative Housing Society (Mumbai Tribunal) iii) ITA No. 1089 & 1079/Mum/2024 for AY 2016-17 & 2017-18 in the case of Su Prabhat Cooperative Housing society Ltd. Vs. ITO (Mumbai Tribunal). 7. On the other hand, Ld. DR supported the order of lower authorities stating that the disallowance has been rightly made because the interest income was not earned from deposits with cooperative societies. 8. We have considered the rival submissions made by the parties and perused the material placed on record. We find that the issue raised by the assessee is covered by the decision of the Coordinate Bench in the case of Ramas Tower Co-Operative Housing Society vs. ITO (ITA No. ITA NO. 4443/MUM/2024 CO NO. 209MUM/2024 Adani Electricity Eomployees Co-Operative Credit Society Limited Page | 7 4770/Mum/2024) dated 06.11.2024 wherein the Bench has held as under:- 5. We heard the parties and perused the record. We notice that the CPC appears to have rejected the claim for deduction u/s 80P(2)(d) of the Act for the reason that the return of income was not filed within the time allowed u/s 139(1) of the Act. We also noticed that the Ld CCIT has condoned the delay in filing return of income and hence the claim of the assessee should be allowed. However, the Ld CIT(A) has taken a different stand and rejected the claim for deduction u/s 80P(2)(d) of the Act by applying the provisions of sec.80P(4) of the Act. 6. The question as to whether a co-operative society is entitled for deduction u/s 80P(2)(d) of the Act in respect of interest earned on deposits kept with co- operative bank is no more res integra. We notice that an identical issue has been decided by the Hon’ble Madras High Court in the case of Thorapadi Urban Co-op Credit Society Ltd (2023) (156 taxmann.com 419)(Mad) in favour of the assessee. The relevant observations made by Hon’ble Madras High Court are extracted below: “8. The main issue is to decide in the present case is as to whether the petitioner Co-operative Society is entitled for a deduction for the interest income received from the Co-operative Bank? 9. It would be appropriate to extract hereunder the relevant portion of Section80P(2)(d). “80 P. Deduction in respect of income of cooperative societies: (1) ……… ………. ……… (2) The sums referred to in sub-section (1) shall be the following, namely :— (a) to (c) ……. ……. …… ITA NO. 4443/MUM/2024 CO NO. 209MUM/2024 Adani Electricity Eomployees Co-Operative Credit Society Limited Page | 8 (d) “in respect of any income by way of interest or dividends derived by the co-operative society from its investment with any other co-operative society, the whole of such income” 9.1 A reading of the above said provision makes it clear that in the event if any Co-operative Society derived income by way of interest from investment made in any other Co-operative Society the whole such interest is eligible for deduction. Now the issue is as to whether the Cooperative Bank would fall within the purview of the term „Co- operative Society‟. In the present case, the petitioner produced a document to show that the Co-operative Bank, where they have made investments was registered under the Tamil Nadu Co-operative Societies Act, 1983 on 20.5.2003. In this regard, he also produced a copy of the Certificate of Incorporation of the said Co-operative Bank. Therefore, it is clear that the investment made by the petitioner is a Co-operative Bank registered under the Co-operative Societies Act. The Income Tax Act, 1961 has also defined „Co-operative Society‟ under Section 2(19) as follows: “2(19). “Co-operative society” means a co-operative 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.” 10. A reading of the above definition would make it clear that „Co- operative Society‟ means a Co-operative Society registered under Co- operative Societies Act,1912. Thus, a Co-operative Society referred therein is only a co-operative society as defined under the Act, be it a Co- operative Society carrying on banking business or Co-operative Society carrying on the other businesses or a Co-operative bank.” ITA NO. 4443/MUM/2024 CO NO. 209MUM/2024 Adani Electricity Eomployees Co-Operative Credit Society Limited Page | 9 7. Following the above said decision of the Hon’ble Madras High Court, this Bench of Tribunal has held in the case of Back bay Premises Co-op. Society Ltd (ITA Nos. 4144 & 4146/Mum/2023 dated 14.06.2024) that the interest income earned by a co-operative society from co-operative banks are eligible for deduction u/s 80P(2)(d) of the Act. 8. In view of the above discussions, we are of the view that the Ld CIT(A) was not justified in denying deduction u/s 80P(2)(d) of the Act in respect of interest income earned by the assessee from deposits kept cooperative banks. The delay in filing return of income has already been condoned by Ld CCIT. Hence, the assessee is entitled for deduction u/s 80P(2)(d) of the Act. Accordingly, we set aside the order passed by Ld CIT(A) on this issue and direct the AO to allow deduction u/s 80P(2)(d) to the assessee on the interest income earned from deposits kept with co-operative banks. 9. In the result, the appeal filed by the assessee is allowed 9. The facts and circumstances of the appeal are perfectly covered by the above decision of this Bench to the effect that the co-operative banks though pursuant to the insertion of subsection (4) to Sec. 80P would no more be entitled for claim of deduction under Sec. 80P of the Act, but as a co-operative bank continues to be a co-operative society registered under the Co-operative Societies Act, 1912, or under any other law for the time being in force in any State for the registration of co-operative societies, therefore, the interest income derived by a co-operative society from its ITA NO. 4443/MUM/2024 CO NO. 209MUM/2024 Adani Electricity Eomployees Co-Operative Credit Society Limited Page | 10 investments held with a co-operative bank would be entitled for claim of deduction u/s. 80P(2)(d) of the Act. 10. From the discussion and observations of Ld. CIT(A), it is noticed that Ld. CIT(A) has not rightly decided the issue and has ignored the fact that Ld. CIT (A) and AO are bound to follow the decision of ITAT and Hon’ble High Courts as held in the decision of the Hon'ble Allahabad High Court in the case of K. N. Agarwal Vs. Commissioner of Income Tax, order dated 11.01.1991, [1991] 189 ITR 769B (ALL) which says, “Indeed, the orders of the Tribunal and the High Court are binding upon the Assessing Officer and since he acts in a quasi-judicial capacity, the discipline of such functioning demands that he should follow the decision of the Tribunal or the High Court, as the case may be. He cannot ignore it merely on the ground that the Tribunal's order is the subject-matter of revision in the High Court or that the High Court's decision is under appeal before the Supreme Court. Permitting him to take such a view would introduce judicial indiscipline, which is not called for even in such cases.” ITA NO. 4443/MUM/2024 CO NO. 209MUM/2024 Adani Electricity Eomployees Co-Operative Credit Society Limited Page | 11 11. Thus in view of the above discussions and observations, we are of the considered opinion that the assessee is eligible for deduction u/s 80P(2)(d) of the Act in respect of interest income earned from Cooperative Banks, therefore the order of Ld. CIT(A) is hereby confirmed. 12. In the result, the appeal filed by the revenue is dismissed. CO No. 209/Mum/2024 (AY 2020-21) 13. The assessee has raised the following ground in CO as under:- 1. The assessee is co-operative credit society and is eligible for deduction under section 80P(2)(a) (i). Ld. AO has disallowed the deduction, without considering the facts and circumstances of the case and in law. Moreover the Ld CIT(A) has confirmed the disallowance made by the AO on this ground. Appellant pleads that the disallowance under the section should be deleted. 2. Appellant pleads that findings of CIT(A) on grounds 7,8 with regards to deduction under section 80P(4) are correct and we do not want object the same. 3. On the basis of above grounds of appeal, the Appellant prays that the said order be annulled and additions/rejections/disallowances may please be deleted. ITA NO. 4443/MUM/2024 CO NO. 209MUM/2024 Adani Electricity Eomployees Co-Operative Credit Society Limited Page | 12 14. The assessee has filed the CO because it is evident from para 5.8 to 5.10 of the assessment order and AO has disallowed a sum of Rs. 2, 14 ,24,575/- and added to the income of the assessee as income from other sources by holding that such interest income earned by the assessee is not eligible for deduction u/s 8oP(2) (a(i) of the Act. The AO further held that the impugned interest income in question earned by the assessee is also not eligible for deduction u/s 8oP(2)(d) of the Act. 15. Aggrieved with this order, assessee preferred an appeal before Ld. CIT(A) and Ld. CIT(A) in his order dated 02.07.2024 passed u/s 250 of the Act, has allowed the deduction of the said amount u/s 8oP(2)(d) of the Act and by the same order, the Ld. CIT(A) has dismissed the claim of the assessee for deduction of the said amount u/s 8oP(2)(a)(i) of the Act and has partly allowed the appeal of the assessee. 16. The revenue has challenged the order of Ld. CIT(A) wherein Ld. CIT(A) has allowed the assessee for deduction u/s 8oP(2)(d) of the Act. The assessee has filed the CO against the order of Ld. CIT(A) wherein Ld. CIT(A) upheld the order of AO with respect to the claim of the assessee for seeking deduction u/s 8op(2)(a)(i) of the Act. ITA NO. 4443/MUM/2024 CO NO. 209MUM/2024 Adani Electricity Eomployees Co-Operative Credit Society Limited Page | 13 17. Since we have already dismissed the appeal of the revenue, then the issue raised by the assessee in CO is relegated to academic interest only, therefore the decision on the said grounds pales into insignificance. We are of the opinion that once the deduction of the amount in question has been allowed by the Ld. CIT(A) u/s 80p(2)(d) of the Act and the same has been confirmed by us vide this order, therefore the grounds raised by the assessee in CO becomes infructuous and is accordingly dismissed. Resultantly the CO filed by the assessee is dismissed. 18. In the net result, the appeal filed by the revenue and CO filed by the assessee are dismissed. Order pronounced in the open court on 03.01.2025 Sd/- Sd/- (NARENDRA KUMAR BILLAIYA) (RAJ KUMAR CHAUHAN) (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) Mumbai / Dated 03.01.2025 Dhananjay, Sr. PS Copy of the Order forwarded to: 1. The Appellant 2. The Respondent. 3. CIT 4. DR, ITAT, Mumbai 5. Guard file. ITA NO. 4443/MUM/2024 CO NO. 209MUM/2024 Adani Electricity Eomployees Co-Operative Credit Society Limited Page | 14 //True Copy// BY ORDER (Asstt. Registrar) ITAT, Mumbai "