NAVEEN BEEJ UTPADAK SAHKARI SAMITI MARYADIT, RAIPUR,RAIPUR V. .INCOME TAX OFFICER, WARD-4(1), RAIPUR, RAIPUR

ITA 498/RPR/2024

AI Insights

The case involves Naveen Beej Utpadak Sahkari Samiti Maryadit, a cooperative society, appealing against the orders of the Income Tax Officer and the Commissioner of Income-Tax (Appeals) regarding the assessment year 2020-21. The primary issues were the disallowance of a deduction for interest income received from Raipur Central Cooperative Bank under Section 80P(2)(d) and the non-allowance of a deduction for income tax paid. The Tribunal referenced a similar case, Gramin Sewa Sahkari Samiti Maryadit & Ors. Vs. The ITO, which had set a precedent that such interest income is eligible for deduction under Section 80P(2)(d). The Tribunal dismissed one of the appeals as infructuous due to the existence of two overlapping appeals and allowed the other, directing the Assessing Officer to adjust the assessment accordingly.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 36560 (ITAT-RAIPUR)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-12-2024
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2020-2021
• Other Referred Cases: Gramin Sewa Sahkari Samiti Maryadit & Ors. Vs. The ITO, Ward-1(3), Raipur, Land and Cooperative Housing Society Ltd. Vs. ITO, M/s C. Green Cooperative Housing and Society Ltd. Vs. ITO-21(3)(2), Mumbai, Marvwanjee Cama Park Cooperative Housing Society Ltd. Vs. ITO-Range-20(2)(2), Mumbai, Kaliandas Udyog Bhavan Pemises Co-op. Society Ltd. Vs. ITO, Pr. Commissioner of Income Tax and Anr. Vs. Totagars Cooperative Sale Society, State Bank Of India Vs. CIT, Totgars Co-operative Sale Society Ltd. vs. ITO, K. Subramanian and Anr. Vs. Siemens India Ltd. and Anr
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: PRIYANKA PATEL
• Assessee Lawyers: G.S. AGRAWAL
• Keywords: Set aside; Business income; Revision of order
• Section: 263; 43; 80P; 2(19)

Judgement Text

"आयकर अपीलȣय अͬधकरण Ûयायपीठ रायपुर मɅ। IN THE INCOME TAX APPELLATE TRIBUNAL, RAIPUR BENCH, RAIPUR BEFORE SHRI RAVISH SOOD, JUDICIAL MEMBER AND SHRI ARUN KHODPIA, ACCOUNTANT MEMBER आयकर अपील सं. / ITA Nos. 497 & 498/RPR/2024 Ǔनधा[रण वष[ / Assessment Years : 2020-21 Naveen Beej Utpadak Sahkari Samiti Maryadit NBUSSM Hospital Ward Near Amardeep Talkies Road, Banstall, Raipur (C.G.)-492 001 PAN : AAAJN0435E .......अपीलाथȸ / Appellant बनाम / V/s. The Income Tax Officer, Ward-4(1), Raipur (C.G.) ……Ĥ×यथȸ / Respondent Assessee by : Shri G.S. Agrawal, CA Revenue by : Dr. Priyanka Patel, Sr. DR सुनवाई कȧ तारȣख / Date of Hearing : 16.12.2024 घोषणा कȧ तारȣख / Date of Pronouncement : 19.12.2024 2 Naveen Beej Utpadak Sahkari Samiti Maryadit Vs. ITO, Ward-4(1), Raipur ITA Nos.497 & 498/RPR/2024 आदेश / ORDER PER RAVISH SOOD, JM: The captioned appeals filed by the assessee society are directed against the order passed by the Commissioner of Income-Tax (Appeals), National Faceless Appeal Center (NFAC), Delhi, dated 25.09.2024, which in turn arises from the order passed by the A.O under Sec.143(3) r.w.s.144B of the Income-tax Act, 1961 (in short ‘the Act’) dated 30.08.2022 for the assessment year 2020-21. We shall first take up the appeal filed by assessee society in ITA No.498/RPR/2024 for A.Y.2020-21. ITA No.498/RPR/2024 A.Y.2020-21 2. Shri G.S. Agrawal, Ld. Authorized Representative (for short ‘AR’) for the assessee, at the threshold of hearing, submitted that inadvertently the assessee society had assailed the assessment order passed by the A.O u/s. 143(3) r.w.s. 144B of the Act, dated 30.08.2022 by filing two appeals as mentioned by the CIT(Appeals)/NFAC, Delhi, viz. (i) Appeal No. NFAC/2019- 20/10172434; and (ii) Appeal No. NFAC/2019-20/10172937. The Ld. AR submitted that the assessee society vide its letter dated 10.09.2024, Page 43 of APB had brought the said fact to the notice of the CIT(Appeals) and had sought for merger of the said appeals into one appeal, i.e. impliedly sought withdrawal of one appeal, but the said request was not considered by him. The Ld. AR submitted that the CIT(Appeals) had disposed off both 3 Naveen Beej Utpadak Sahkari Samiti Maryadit Vs. ITO, Ward-4(1), Raipur ITA Nos.497 & 498/RPR/2024 the aforementioned appeals vide his respective orders dated 25.09.2024. The Ld. AR submitted that as the impugned order of the CIT(Appeals) dated 25,09.2024 arises from the same order of assessment, and thus, had resulted to two appeals, therefore, one of the captioned appeals is rendered as infructuous. 3. We have thoughtfully considered the aforesaid facts and after verifying the factual position, find that the assessee had assailed the order of assessment passed by the A.O vide two appeals as mentioned by the CIT(Appeals), viz. (i) Appeal No. NFAC/2019-20/10172434; and (ii) Appeal No. NFAC/2019-20/10172937. Although the assessee had brought the aforesaid fact to the notice of the CIT(Appeals), Page 43 of APB but no heed was paid to the same. As stated by the Ld. AR, and rightly so, as on date there are two orders of the CIT(Appeals) arising from the same order of assessment, therefore, the second appeal filed by the assessee on 29.09.2022 with the CIT(Appeals) marked as appeal no. NFAC/2019- 20/10172434 was not maintainable. 4. We, thus, in terms of our aforesaid observations dismiss the appeal filed by the assessee in ITA No.498/RPR/2024 (arising out of appeal No. NFAC/2019-20/10172434), dated 29.09.2022 as infructuous. ITA No.497/RPR/2024 A.Y.2020-21 4 Naveen Beej Utpadak Sahkari Samiti Maryadit Vs. ITO, Ward-4(1), Raipur ITA Nos.497 & 498/RPR/2024 5. We shall now take up the appeal filed by the assessee in ITA No.497/RPR/2024 for A.Y.2020-21 (arising out of appeal No. NFAC/2019- 20/10172937) for adjudication wherein the impugned order has been assailed by the assessee society on the following grounds of appeal: “1. That under the facts and the law, the Ld. Commissioner of Income Tax (Appeals) erred in confirming the disallowance made by the Ld. Assessing officer amounting to Rs.24,29,551/- being interest received from Raipur Central Cooperative Bank which is a cooperative society registered under Societies Registration Act, vide Registration Certificate dated 02.01.2013 and was claimed as deduction u/s 80P(2)(d). Prayed that Rs. 24,29,559/-be allowed as deduction from income. 2. That under the facts and the law, the Ld. Commissioner of Income Tax (Appeals) further erred in not allowing deduction of Rs.9,20,364/- paid towards Income Tax as the entire income of the Appellant is exempt, therefore, above deduction of Rs.9,20,364/- is uncalled-for and be deleted. 3. That under the facts and the law, the Ld. Commissioner of Income Tax (Appeals) erred in not merging /consolidating Appeal No. NFAC/2019-20/10172434 with the present Appeal i.e., Appeal No. NFAC/2019-20/10172937 as erroneously for the same year against the same Assessment Order above two Appeals were filed. Prayed that learned CIT (A) be directed to merge/consolidated Appeal NO. 10172434 with the present Appeal before the Ld. CIT (Appeals) vide Appeal No.10172937. 6. Shri G.S. Agrawal, Ld. AR submitted that the A.O had grossly erred in declining the claim of the assessee society for deduction u/s.80P(2)(d) of the Act of the interest of Rs.24,29,559/- received from Raipur Central Cooperative Bank. The Ld. AR submitted that the A.O had wrongly observed that pursuant to insertion of Section 80P(4) of the Act w.e.f. 01.04.2007, the provisions of Section 80P of the Act shall not apply in relation to any co- 5 Naveen Beej Utpadak Sahkari Samiti Maryadit Vs. ITO, Ward-4(1), Raipur ITA Nos.497 & 498/RPR/2024 operative bank other than a primary agricultural credit society or a primary co-operative agricultural or rural development bank, therefore, the claim of the assessee society for deduction u/s. 80P(2)(d) of the Act is not allowable. The Ld.AR submitted that the issue involved in the present appeal is squarely covered by the order of ITAT, Raipur in the case of Gramin Sewa Sahkari Samiti Maryadit & Ors. Vs. The ITO, Ward-1(3), Raipur, ITA Nos. 114/RPR/2016 & Ors, dated 23.02.2022, wherein after exhaustive deliberations, the Tribunal had held that interest earned by the assessee society from a Co-operative bank was eligible for deduction u/s. 80P(2)(d) of the Act. The Ld.AR had placed on record the copy of the order of the Tribunal. 7. Dr. Priyanka Patel, Ld. Sr. Departmental Representative (for short ‘DR’) relied on the orders of the lower authorities. 8. We have thoughtfully considered the contentions advanced by the Ld. Authorized Representatives of both the parties in the backdrop of the orders of the lower authorities a/w. the order of the Tribunal. We find that as stated by the Ld.AR, and rightly so, the issue involved in the present appeal is squarely covered by the order of ITAT, Raipur in the case of Gramin Sewa Sahkari Samiti Maryadit & Ors. Vs. The ITO, Ward-1(3), Raipur, ITA Nos.114/RPR/2016 & Ors, dated 23.02.2022. For the sake of clarity, the observations of the Tribunal are culled out as under: 6 Naveen Beej Utpadak Sahkari Samiti Maryadit Vs. ITO, Ward-4(1), Raipur ITA Nos.497 & 498/RPR/2024 “20. Now, we shall advert to the claim of the Ld. AR that the CIT(Appeals) had erred in confirming the rejection of the assessee’s claim for deduction of Rs. 1,16,224/- u/s. 80P(2)(d) of the Act, i.e, deduction of the dividend income received on the shares of Jila Sahakari Kendriya Bank, Raipur, i.e a co-operative bank. 21. On a perusal of the assessment order, we find that the Assessing Officer holding a conviction that as the aforementioned bank viz. Jila Sahakari Kendriya Bank (supra.) was not a co- operative society, therefore, the dividend income of Rs, 1,16,224/- received by the assessee on the shares of the said bank was not eligible for deduction u/s.80P(2)(d) of the Act. In order to fortify his aforesaid conviction, the Assessing Officer had drawn support from sub-section (4) of Section 80P of the Act, as per which, the entitlement of deduction u/s.80P of the Act is no more available to co-operative banks w.e.f AY 2007-08. Backed by his aforesaid observation the Assessing Officer had declined the assesee’s claim for deduction u/s.80P(2)(d) of the Act. 22. After having given a thoughtful consideration to the aforesaid issue in hand, we are unable to concur with the view taken by the lower authorities. In our considered view, as a Co-operative bank falls within the realm of the definition of “Co-operative Society” as contemplated in Section 2(19) of the Act, therefore, the view taken by the lower authorities that dividend income received by the assessee from Jila Sahakari Kendriya Bank, Raipur, i.e a Co- operative Bank, would not eligible for deduction u/s. 80P(2)(d) of the Act cannot be sustained. Our aforesaid view is fortified by the order of the ITAT, Mumbai in the case of M/s Solitaire CHS Ltd Vs. Principal Commissioner of Income Tax-26, ITA No.3155/Mum/2019, dated 29.11.2019 (wherein one of us, i.e, the JM was a party), had after exhaustive deliberations held as under: “6. We have heard the authorised representatives for both the parties, perused the orders of the lower authorities and the material available on record, as well as the judicial pronouncements relied upon by them. Our indulgence in the present appeal has been sought, for adjudicating, as to whether the claim of the assessee for deduction under section 80P(2)(d) in respect of interest income earned from the investments/deposits made with the co-operative banks is in order, or not. In our considered view, the issue involved in the present appeal revolves around the adjudication of the scope and gamut of sub-section (4) of Sec. 80P as had been made available on the statute, vide the Finance Act 2006, with effect from 01.04.2007. On a perusal of the order passed by the Pr. CIT under Sec. 263 of the Act, we find, that he was of the view that pursuant to insertion of sub-section (4) of Sec. 80P, the 7 Naveen Beej Utpadak Sahkari Samiti Maryadit Vs. ITO, Ward-4(1), Raipur ITA Nos.497 & 498/RPR/2024 assessee would no more be entitled for claim of deduction under Sec. 80P(2)(d) in respect of the interest income that was earned on the amounts which were parked as investments/deposits with co-operative banks, other than a Primary Agricultural Credit Society or a Primary Co-operative Agricultural and Rural Development Bank. Observing, that the co-operative banks from where the assessee was in receipt of interest income were not co-operative societies, the Pr. CIT was of the view that the interest income earned on such investments/deposits would not be eligible for deduction under Sec. 80P(2)(d) of the Act. 7. After necessary deliberations, we are unable to persuade ourselves to be in agreement with the view taken by the Pr. CIT. Before proceeding any further, we may herein reproduce the relevant extract of the aforesaid 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 income 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;” On a perusal of Sec. 80P(2)(d), it can safely be gathered that interest income derived by an assessee co-operative society from its investments held with any other co- operative society shall be deducted in computing its total income. We may herein observe, that what is relevant for claim of deduction under Sec. 80P(2)(d) is that the interest income should have been derived from the investments made by the assessee co-operative society with any other co-operative society. We are in agreement with the view taken by the Pr. CIT, that 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 no more be applicable in relation to any co-operative bank, other than a primary agricultural credit society or a primary co-operative agricultural and rural development bank. However, at the same time, we are unable to subscribe to his view that the aforesaid amendment would jeopardise the claim of deduction of a co-operative society under Sec. 80P(2)(d) in respect of its interest income on investments/deposits parked with a co-operative bank. In our 8 Naveen Beej Utpadak Sahkari Samiti Maryadit Vs. ITO, Ward-4(1), Raipur ITA Nos.497 & 498/RPR/2024 considered view, as long as it is proved that the interest income is being derived by a co-operative society from its investments made 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 find that the term „cooperative 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 banks 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 (2 of 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 investments held with a co-operative bank would be entitled for claim of deduction under Sec.80P(2)(d) of the Act. 8. We shall now advert to the judicial pronouncements that have been relied upon by the ld. A.R. We find that the issue that a co-operative society would be entitled for claim of deduction under Sec. 80P(2)(d) on the interest income derived from its investments held with a co-operative bank is covered in favour 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 (iii) MarvwanjeeCama Park Cooperative Housing Society Ltd. Vs. ITO-Range- 20(2)(2), Mumbai (ITA No. 6139/Mum/2014, dated 27.09.2017. (iv). KaliandasUdyog Bhavan Pemises Co-op. Society Ltd. Vs. ITO, 21(2)(1), Mumbai We further find that the Hon'ble High Court of Karnataka in the case of Pr. Commissioner of Income Tax and Anr. Vs. Totagars Cooperative Sale Society (2017) 392 ITR 74 (Karn) and Hon’ble High Court of Gujarat in the case of State Bank Of India Vs. CIT (2016) 389 ITR 578 (Guj), had held, that the interest income earned by the assessee on its investments 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, also makes it clear beyond any scope of doubt that the purpose behind enactment of sub-section (4) of Sec. 80P was that the co- operative banks which were functioning at par with other banks would no more be entitled for claim of deduction under Sec. 80P(4) of the Act. Insofar the reliance placed by the Pr. CIT on the judgment of the Hon’ble Supreme Court in the case of Totgars Co-operative Sale Society Ltd. vs. ITO (2010) 322 ITR 283 (SC) is concerned, 9 Naveen Beej Utpadak Sahkari Samiti Maryadit Vs. ITO, Ward-4(1), Raipur ITA Nos.497 & 498/RPR/2024 we are of the considered view that the same being distinguishable on facts had wrongly been relied upon by him. The adjudication by the Hon‟ble 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/deposits parked with a co-operative bank. Although, in all fairness, we may herein observe that the Hon'ble High Court of Karnataka in the case of Pr. CIT Vs. Totagars co-operative Sale Society (2017) 395 ITR 611 (Karn), had concluded 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 High Court of Karnataka in the case of Pr. Commissioner of Income Tax and Anr. Vs. Totagars Cooperative Sale Society (2017) 392 ITR 74 (Karn) and Hon’ble High Court of Gujarat in the case of State Bank Of India Vs. CIT (2016) 389 ITR 578 (Guj), had 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. We find that as held by 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), where there is a conflict between the decisions of non-jurisdictional High Court‟s, then a view which is in favour of the assessee is to be preferred as against that taken against him. Accordingly, taking support from the aforesaid judicial pronouncement of the Hon‟ble High Court of jurisdiction, we respectfully follow the view taken by the Hon'ble High Court of Karnataka in the case of Pr. Commissioner of Income Tax and Anr. Vs. Totagars Cooperative Sale Society (2017) 392 ITR 74 (Karn) and Hon’ble High Court of Gujarat in the case of State Bank Of India Vs. CIT (2016) 389 ITR 578 (Guj), wherein it was observed that the interest income earned by a cooperative 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. Be that as it may, in our considered view, as the A.O while framing the assessment had taken a possible view, and therein concluded that the assessee would be entitled for claim of deduction under Sec. 80P(2)(d) on the interest income earned on its investments/deposits with co-operative banks, therefore, the Pr. CIT was in error in exercising his revisional jurisdiction u/s 263 for dislodging the same. In fact, as observed by us hereinabove, the aforesaid view taken by the A.O at the time of framing of the assessment was clearly supported by the order of the jurisdictional Tribunal in the case of Land and Cooperative Housing Society Ltd. Vs. ITO (2017) 46 CCH 52 (Mum). Accordingly, finding no justification on the part of the Pr. CIT, who in exercise of his powers under Sec. 263, had dislodged the view that was taken by the A.O as regards the eligibility of the assessee towards claim of deduction under Sec. 80P(2)(d), we „set aside‟ his order and restore the order passed by the A.O under Sec. 143(3), date 14.09.2016. 10. Resultantly, the appeal filed by the assessee is allowed.” Backed by our aforesaid observations, we not being able to persuade ourselves to subscribe to the view taken by the lower authorities, 10 Naveen Beej Utpadak Sahkari Samiti Maryadit Vs. ITO, Ward-4(1), Raipur ITA Nos.497 & 498/RPR/2024 therein vacate the disallowance of the assessee’s claim for deduction of Rs.1,16,224/- u/s. 80P(2)(d) of the Act. The Ground of appeal No.4 is allowed in terms of the aforesaid observations.” As the facts and issue involved in the present appeal remain the same as were there before the Tribunal in the aforementioned case, therefore, we follow the same. Accordingly, the A.O is directed to allow the assessee’s claim for deduction u/s. 80P(2)(d) of the Act of Rs.24,29,559/- i.e. interest received by the assessee society from Raipur Central Co-operative Bank. Thus, the Ground of appeal No.1 raised by the assessee society is allowed in terms of our aforesaid observations. 9. Apropos the observation of the A.O that the assessee was disentitled from claiming deduction of income tax of Rs.9,20,364/-, we find no infirmity in the same. As observed by the A.O, and rightly so, as per the mandate of Section 40(a)(ii) of the Act, any sum paid on account of any rate or tax levied on the profits or gains of any business or profession or assessed at a proportion of or otherwise on the basis of any such profits or gains is not deductible while computing the business income, therefore, we find no infirmity in the view taken by the lower authorities, and thus, approve the same. Thus, the Ground of appeal No.2 raised by the assessee society is dismissed in terms of our aforesaid observations. 10. Ground of appeal No.3 wherein the assessee had sought for rendering the second appeal i.e. ITA No.498/RPR/2024 (arising out of 11 Naveen Beej Utpadak Sahkari Samiti Maryadit Vs. ITO, Ward-4(1), Raipur ITA Nos.497 & 498/RPR/2024 appeal No. NFAC/2019-20/10172434), dated 29.09.2022 which is allowed in terms of our aforesaid observations. 11. In the result, appeal of the assessee society in ITA No.497/RPR/2024 is partly allowed, while for appeal filed by the assessee in ITA No.498/RPR/2024 is dismissed in terms of our aforesaid observations. Order pronounced in open court on 19th day of December, 2024. Sd/- Sd/- ARUN KHODPIA RAVISH SOOD (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) रायपुर/ RAIPUR ; Ǒदनांक / Dated : 19th December, 2024 **SB, Sr. PS आदेश कȧ ĤǓतͧलͪप अĒेͪषत / Copy of the Order forwarded to : 1. अपीलाथȸ / The Appellant. 2. Ĥ×यथȸ / The Respondent. 3. The CIT(Appeals)-1, Raipur (C.G.) 4. The Pr. CIT, Raipur-1 (C.G) 5. ͪवभागीय ĤǓतǓनͬध, आयकर अपीलȣय अͬधकरण, रायपुर बɅच, रायपुर / DR, ITAT, Raipur Bench, Raipur. 6. गाड[ फ़ाइल / Guard File. आदेशानुसार / BY ORDER, // True Copy // Senior Private Secretary आयकर अपीलȣय अͬधकरण, रायपुर / ITAT, Raipur. "