RATNESHWARI CO.OP.CREDIT SOCIETY LTD.,MEHSANA V. THE ACIT., PATAN CIRCLE, PATAN

ITA 1409/AHD/2024

AI Insights

The case involves Ratneshwari Co. Op. Credit Society Limited, which appealed against the order of the CIT(A) that upheld the disallowance of a deduction of Rs. 10,23,047 under section 80P(2)(d) of the Income-tax Act, 1961, for the Assessment Year 2013-14. The deduction was initially disallowed by the ACIT, Patan, on the grounds that the interest income from cooperative banks was not eligible for deduction under the said section. The Tribunal's decision was influenced by precedents from the Gujarat High Court, which clarified that such income is indeed eligible for deduction if the cooperative bank is also a cooperative society.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 473704 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-11-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 26-11-2024
• Assessment Year: 2013-2014
• Appeal Filed On: 24-07-2024
• Other Referred Cases: PCIT Vs. Ashwinkumar Arban Co-Operative Society Ltd, Katlary Kariyana Merchant Sahkari Sarafi Mandali Ltd. v Asstt. Commissioner of Income Tax, State Bank of India v Commissioner of Income Tax, Totgars' Cooperative Sale Society v. Income Tax Officer, Kerala State Co-operative Agricultural & Rural Development Bank Ltd. v. Assessing Officer
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NEEJU GUPTA
• Assessee Lawyers: S N DIVATIA; SAMIR VORA
• Keywords: Principle of natural justice; TDS; Revision of order
• Section: 250; 263; 80P

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “SMC” BENCH, AHMEDABAD BEFORE DR. B.R.R. KUMAR, VICE-PRESIDENT I.T.A. No. 1409/Ahd/2024 (Assessment Year: 2013-14) Ratneshwari Co. Op. Credit Society Limited, Patel Pura, At. Post. Pilwai, Tal. Vijapur, Mehsana-382850 PAN : AAAAR 2179 N Vs. ACIT, Patan Circle, Patan (Appellant) .. (Respondent) Appellant by : Shri SN Divatia, AR & Shri Samir Vora, AR Respondent by: Ms. Neeju Gupta, Sr DR Date of Hearing 26.11.2024 Date of Pronouncement 29.11.2024 O R D E R This appeal has been filed by the Assessee against the order passed by the Ld. ADDL/JCIT(A)-2, Lucknow (hereinafter referred to as \"CIT(A)\" for short), dated 24.05.2024 passed under Section 250 of the Income-tax Act, 1961 [hereinafter referred to as \"the Act\" for short], for Assessment Year (AY) 2013-14. 2. The Assessee has taken following grounds of appeal:- “1.1 The order passed by U/s.250 passed on 24-05-2024 by NFAC [CIT(A)], Delhi (for short \"CIT(A)\" upholding the disallowance of deduction u/s 80P(2)(d) of Rs. 10,23,047/- is wholly illegal, unlawful and against the principles of natural justice. 1.2 The ld. CIT(A) has failed to appreciate that there was a sufficient cause for failure to respond to the notices alleged to be issued for hearing u/s 250 of the Act. 2.1 The ld. CIT(A) has grievously erred in law and or on facts in upholding the disallowance of deduction u/s 80P(2)(d) of Rs.10,23,047/-. ITA No.1409/Ahd/2024 Ratneshwari Co op Cr Soc Ltd Vs. ACIT Asst. Year : 2013-14 - 2– 3.2 That the in the facts and circumstances of the ld. CIT(A), ought not to have upheld the disallowance of deduction u/s 80P(2)(d) of Rs.10,23,047/-.” 3. Heard the arguments of both the parties and perused the record before us. The order for the Assessment Year 2012-13 u/s 263 r.w.s. 143(3) of the Act has been passed by the ACIT, Patan on 18.10.2018 disallowing the interest received by the assessee from the Mehsana Dist. Central Co-operative Bank and the Kukarwada Nagrik Sahakari Bank Ltd. of Rs.10,23,047/- claimed by the assessee u/s 80P(2)(d) of the Act. The ld. CIT(A) affirmed the action of the Assessing Officer. 4. Aggrieved, the assessee filed appeal before the Tribunal. 5. On this issue, we are guided by the judgment of Hon’ble jurisdictional High Court in the case of PCIT Vs. Ashwinkumar Arban Co-Operative Society Ltd, [2024] 168 taxmann.com 314 (Gujarat). For the sake of ready reference, snippets of the said order is reproduced below:- “Section 80P, read with section 263 of the Income-tax Act, 1961 Deductions Income of co-operative societies (Interest from co- operative bank) Assessment year 2018-19- Principal Commissioner invoked revisional powers under section 263 on ground that Assessing Officer had allowed deduction on interest earned by assessee, a cooperative society, from investment made with a cooperative bank under section 80P(2)(d) which was erroneous and prejudicial to Interest of revenue Tribunal reversed Principal Commissioner's order holding that cooperative bank was a cooperative society registered under Gujarat State Cooperative Societies Act and, therefore, interest earned by assessee from said bank was eligible for deduction under section 80P(2)(d) - Whether deduction under section 80P(2)(d) is ITA No.1409/Ahd/2024 Ratneshwari Co op Cr Soc Ltd Vs. ACIT Asst. Year : 2013-14 - 3– available to cooperative societies on income earned as interest on investment made with cooperative bank which in turn, is a cooperative society itself - Held, yes - Whether exclusion of applicability of section 80P to cooperative banks by section 80P(4) would not disentitle assessee from claiming deduction under section 80P(2)(d) in absence of any amendment in said section - Held, yes - Whether thus, provisions of section 80P(2)(d) would be applicable to instant case and Principal Commissioner was not justified in invoking revisional powers under section 263 which was rightly reversed by Tribunal - Held, yes [In favour of assessee) *** • The controversy sought to be canvassed with regard to deduction under section 80P(2)(d) is no more res integra in view of the decision of this Court in case of Katlary Kariyana Merchant Sahkari Sarafi Mandali Ltd. v Asstt. Commissioner of Income Tax [2022] 140 taxmann.com 602 (Guj.) as well as in case of State Bank of India v Commissioner of Income Tax (2018) 389 ITR 578 (Guj.) wherein it was held that the deduction under section 80P(2)(d) is available to the cooperative societies on the income earned as interest on the investment made with the cooperative bank which in turn, is a cooperative society itself. [Para 28] • Reliance placed by the revenue on decisions of the Karnataka High Court in Totgars’ Cooperative Sale Society (2017) 395 ITR 611 and Supreme Court in case of Totgars Cooperative Sale Society Ltd v. Income Tax Officer 322 ITR 283 (S.C), the Karnataka High Court appears to have taken into consideration the amendment in section 194A(3)(v) wherein the cooperative bank is excluded from the applicability of tax to be deducted at source. However, it appears that the interpretation made by the Karnataka High Court to the effect that the cooperative banks have been excluded from the definition of the cooperative societies by Finance Act, 2015 by amending section 194A(3)(v) is concerned, on perusal of section 194A (3), it appears that it provides for exemption from deducting Tax Deducted at Source from the income on interest other than interest on securities as the cooperative societies other than cooperative banks meaning thereby that the cooperative banks are liable to deduct TDS from the interest other than interest on ITA No.1409/Ahd/2024 Ratneshwari Co op Cr Soc Ltd Vs. ACIT Asst. Year : 2013-14 - 4– securities. Therefore it cannot be said that cooperative banks are excluded from the definition of cooperative societies by such an amendment. [Para 29] • Moreover, as reliance placed on the aforesaid decision for applicability of section 80P(4) in the facts of the case is also not possible to accept as section 80P(4) would be applicable to the cooperative bank when the cooperative bank is liable to pay tax under the provisions of the Act and in such eventuality, the provision of section 80P would not be applicable as per the amendment of sub-section (4) of section 80P. Therefore, the exclusion of applicability of section 80P to cooperative banks by section 80P (4) would not disentitle the respondent-assessee from claiming deduction under section 80P(2)(d) in absence of any amendment in the said section and that would not be sufficient to deny the claim of the respondent-assessee for deduction of interest earned from investment made in a cooperative bank which is also a cooperative society from the total income. [Para 30] • The Apex Court in case of Kerala State Co-operative Agricultural & Rural Development Bank Ltd. v. Assessing Officer in 458 ITR 184 while considering various provisions of the Banking Regulation Act read with provisions of the Income Tax Act has held that the provision of section 80P(4) would not be applicable to a cooperative bank which is not a bank as per the provisions of the Banking Regulation Act, 1949.[Para 31] • In view of the above the provisions of section 80P(2)(d) would be applicable in the facts of the case and the Principal Commissioner was not justified in invoking revisional powers under section 263 which is rightly reversed by the Tribunal holding that the cooperative bank is a cooperative society registered under the Gujarat State Cooperative Societies Act and in view of the various decisions of the Court, the Tribunal after following the same has come to the conclusion that the assessment was not erroneous allowing deduction of section 80P(2)(d) which is in consonance with the various decisions of the Court as a twin condition invoking section 263 as to the assessment being erroneous and prejudicial to the interest of the revenue are not being fulfilled. [Para 33] ITA No.1409/Ahd/2024 Ratneshwari Co op Cr Soc Ltd Vs. ACIT Asst. Year : 2013-14 - 5– • In view of the foregoing reasons the question is answered in favour of the assessee and against the revenue. Tax Appeals being devoid of any merit are dismissed [Para 34].” Respectfully following the order of the Hon’ble jurisdictional High Court, the appeal of the assessee is hereby allowed. The order is pronounced in the open Court on 29.11.2024 Sd/- (DR. B.R.R. KUMAR) VICE-PRESIDENT Ahmedabad; Dated 29/11/2024 btk आदेश की \u0007ितिलिप अ\rेिषत/Copy of the Order forwarded to : 1. अपीलाथ\u0007 / The Appellant 2. \b\tथ\u0007 / The Respondent. 3. संबंिधत आयकर आयु\u0015 / Concerned CIT 4. आयकर आयु\u0015(अपील) / The CIT(A)- 5. िवभागीय \bितिनिध, आयकर अपीलीय अिधकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाड\u001f फाईल / Guard file. आदेशानुसार/ BY ORDER, True Copy उप/सहायक पंजीकार (Dy./Asstt. Registrar) आयकर अपीलीय अिधकरण, अहमदाबाद / ITAT, Ahmedabad 1. Date of dictation …28.11.2024….. 2. Date on which the typed draft is placed before the Dictating Member …28.11.2024 3. Other Member………………… 4. Date on which the approved draft comes to the Sr.P.S./P.S ……28.11.2024………. 5. Date on which the fair order is placed before the Dictating Member for pronouncement …29.11.24.. 6. Date on which the fair order comes back to the Sr.P.S./P.S …29.11.2024………………. 7. Date on which the file goes to the Bench Clerk ……29.11.2024….…. 8. Date on which the file goes to the Head Clerk…………………………………... 9. The date on which the file goes to the Assistant Registrar for signature on the order 10. Date of Dispatch of the Order…………………………………… "