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Income Tax Appellate Tribunal - Delhi

Saini Co Operative Tharift And Credit ... vs Cit(A)-Nfac, Delhi on 20 December, 2024

         IN THE INCOME TAX APPELLATE TRIBUNAL
               DELHI BENCH 'G', NEW DELHI
     Before Sh. Satbeer Singh Godara, Judicial Member
                                       &
           Sh. S. Rifaur Rahman, Accountant Member
          ITA No. 834/Del/2024 : Asstt. Year : 2011-12
          ITA No. 836/Del/2024 : Asstt. Year : 2015-16
Saini Co-operative Thrift and Credit       Vs   CIT(A)-16,
Society Ltd., 2420-2421, Bazar                  New Delhi-110002
Kamra Bangash, A. G. C. R. Central
Delhi, New Delhi-110002
(APPELLANT)                                     (RESPONDENT)
PAN No. AABAS8396K
                    Assessee by : Sh. K. Sampath, Adv. &
                                  Sh. V. Rajkumar, Adv.
                    Revenue by : Sh. Sahil Kumar Bansal, Sr. DR

Date of Hearing: 12.12.2024         Date of Pronouncement: 20.12.2024


                                ORDER

Per Satbeer Singh Godara, Judicial Member:

These assessee's tw in appeal in ITA No . 834/Del/2024 for Assessment Ye ars 2011-12, arise against the CIT (A)-16, New Delhi's order dated 06.08.20 19 passed in case No. 10333/2018-19 in proceedings u/s 143(3) r.w.s. 147 and it's latter appeal ITA No. 836/De l/2024 for A.Y . 2015-16, is directed against the CIT(A)/NFAC, Delhi's DIN & Order No. ITBA/NFAC/S/250/2023-24/1059607361(1) dated 11.01.2024, in proceedings u/s 271B of the Income Tax Act, 1961 (in short "the Act"), respectively.

2. Heard both the p arties at length. Case files peruse d.

3. The assessee's former appeal ITA No . 834/Del/2024 for A.Y . 2011-12 raises it' s sole sub stantive grievance on merits 2 ITA No. 3557/Del/2023 Synergy Waste Management Pvt. Ltd.

that both the le arned lower authorities have erred in law and on facts in disallowing it's section 80P(2)(a)(i) deduction of Rs.1 ,03,68,974/-; representing it's interest received from fixed deposit in cooperative socie ty/cooperative/nationalized banks; as the case may be, as not "derived" from the e ligible b usine ss in lig ht of Totgar's Co-operative Sale Society Ltd. Vs. ITO (2010) 322 IT R 283 (SC).

4. Learned departmental representative vehemently supports the impugned disallow ance in very terms.

5. We note in this factual backdrop that the tr ibunal's rece nt decisio n in ITO Vs. Shri Bhairavnath Multistate Cooperative Credit Socie ty Ltd. (2024) 164 taxmann.com 382 (Pune Trib.) has already re jected the Revenue's very stand as under:

"5 . We heard the ri val submissions a nd perus ed the mat erial on recor d. We fi nd this issue is no m ore res inte gra by virtue of ca tena of decisions pass ed by the Coordi nat e Benc hes of this Tribunal. In the pres ent case, we fi nd tha t admittedly the i nterest inc ome was earned from the i nves tme nts out of surpl us funds made with coopera tive ba nks /soci eites, t he coopera tive ba nk is a lso a s peci e of co operative s oci ety , therefore, the i nteres t inc ome earned by the coopera tive society from t he coopera tive ba nks qualifies for deduc tion u/s .80(P)(2 )(d) of the Ac t. Such i nteres t also qualifi es for exempt ion u/s .80P(2)(a )(i) as held by the C o-ordi na te Be nc h of Pune T ribunal i n the case of Nashi k Road Na gari Sa hkari Pat sa ns tha Ltd. v. I TO [IT Appeal No. 1700 (Pune) of 2017, dated 27-1 2-2021], wherein the Tribunal held as under:-

"9 . We heard the rival s ubmissi ons a nd perus ed the mate rial on r ecord. Admittedly, the appella nt is a Cooperative s oci ety formed under the pr ovis ions of Mahar ashtra C oopera tive S oci eties Act, 1960 with the obj ec ti ve of acce pting deposits a nd le ndi ng money t o its me mbers. The money whic h is not immedi at ely require d for t he purpose of l endi ng to the members is deposited wi th Ba nk of B aroda i n the form of Fixed Deposit. The question is whether the i nterest s o ea rned qualifies for exempti on u/s. 80P(2 )(a)(i ) of 3 ITA No. 3557/Del/2023 Synergy Waste Management Pvt. Ltd.

the Act. The AO as well as t he C IT(A) were of the opi ni on t ha t the i nterest earned fr om thi rd pa rti es or nonmembers do es not quality for exempti on u/s .80P. It is an admitted position tha t the i nt eres t s o earned sho ul d be taxed as 'i nco me from other s ourc es ' There is a cleava ge of j udicial opinion am ong s everal High Courts on the iss ue of eli gibi lity of this ki nd of i ncome for exemption u/s. 80P(2 )(a)(i ) of the Act. The Hon'ble Punjab & Hary ana Hi gh Court in the cas e of CI T v. P unjab State C oope rative Feder ation of Housing Building S oci eties Ltd. [2011] 11 taxmann.c om 448 (Punjab & Ha rya na) , t he H on'ble Gujarat Hi gh C ourt in the case of State Bank of India v. CIT [2016] 72 taxma nn.c om 64/241 Taxma n 163/389 ITR 578 (Gujarat), t he Hon'ble D elhi Hi gh Court in the case of Mantola C oopera tiv e Thrift & Cr edit S oci ety Ltd. v. CIT [2014] 50 taxma nn.c om 278/229 Taxma n 68 (Del hi ), the Hon'ble Punj ab & Har ya na High Cour t in the case of C IT v. Punj ab State Cooperative Agricultur al Devel opme nt Ba nk Ltd . [2017] 77 ta xmann.com 308/245 Ta xman 125/389 ITR 68 (Bombay) a nd t he Hon'ble Kol kata Hi gh Co urt in the cas e of C IT v . Souther n Eastern Empl oyees Cooperative Credit Soci ety Lt d. [2016] 73 taxmann.c om 123/390 ITR 524 (Calc utt a) too k a view that t he i ncome arising on the surpl us i nves ted i n sho rt t erm de posits a nd sec ur ities ca nnot be att ributed to the activities of the soc i ety a nd, ther efore, not eligible for exemption u/s.80P(2 )(a)(i) of t he Act. However, the Hon'ble Kar nata ka Hi gh Court i n the cas e of Tumkur Mercha nts Souha rda Cr edit C ooperativ e Ltd. v. ITO (2015) 230 taxma nn 309 (Kar.) a nd t he H on'ble Tela nga na a nd H on'bl e Andhra Prades h Hi gh C ourt i n the c a se of Va veru C o- operative R ural Bank Ltd. v. C IT [(2 017) 396 ITR to ok a view t hat s uc h int eres t i ncome is attributabl e to t he ac tivities of the soci ety a nd, therefore , eli gibl e for exemption u/s.80P(2 )(a )(i) of the Ac t. The C oordi nat e Bench of Pune Benches in the case of M/s. Ra tnatray Gramin Bi gar Sheti Sah. Pa t Sa nst ha Ma ryadit v. ITO (ITA Nos .559/560/PUN/2018, dat ed 11-122018) has ta ken vi ew i n fa v our of t he ass ess ee follo wi ng the judgment of Hon'ble Karnat a ka High Court in t he c as e of Tumkur Merc hants S ouharda C redit Cooperative Ltd. (supra ). Respectfully follo wi ng the dec ision of the Coordi nate Benc h, we hold that the i nteres t income ear ned on the i nvestme nt of surplus money with banks is also eli gible fo r exemption u/s.80P(2)(a)(i) of the Act. Thus, the gro unds of appeal No. 1 & 2 s ta nds allowed."

Synergy Waste Management Pvt. Ltd.

6. Thus, t he order pa ss ed by the ld.C IT(A ) is in conformity wi th the settl ed position of law by virt ue of the above discussion. Ther efore, we af firm the impugned order directi ng t he Assess ing Officer to allow the c laim of exemption u/s .80P(2)(a)(i )/80P(2)(d) on the i nteres t inc ome earned on investments made out of s urpl us funds made wi th Cooper ative banks, Coo perative S oc ieti es a nd Na tionalized banks ."

5.1 We adopt the above extract reasoning mutatis mutandis to accept the assessee's instant sole substantive grievance and direct the learned Assessing Officer to frame his consequential computat ion as per law. The assessee succeeds in it' s " lead"

appeal ITA No . 834/Del/2024.

6. Next comes the assessee's latter appeal ITA No. 836/Del/2024 wherein both the learned lower authorities have levied section 271B penalty on the ground that it had fa iled to get it's books aud ited u/s 44AB of the Ac t once the correspond ing business turnover was of Rs.2,71,51,232/- in the relevant previo us year.

7. Learned departmental representative could hardly dispute the clinching fact that the assessee herein is a co-operative society which is to abide by the various statutory regula tions from time to time. And also that case law C IT vs. Market Committee, Sirsa (2012) 25 taxmann.com 384 (P&H) and CIT Vs. Distric t Co-operative Bank (2013) 36 taxmann.com 318 (All.) hold that income from business or profession is must and such an aud it by internal Aud itor is also sufficient compliance. We thus that the impug ned penalty is not sustainable in law. The same is dire cted to be deleted therefore. This asses see's latter appeal ITA No. 836/Del/2024 also succeeds.

8. No o ther ground or arguments has been pressed before us.

Synergy Waste Management Pvt. Ltd.

9. These assessee's twin appeal in ITA No. 834 & 836/Del/2024 are allowed in above terms. A copy of this common order be placed in the respective ca se files.

Order Pronounced in the Open Court o n 20/12/2024.

           Sd/-                                                  Sd/-
(S. Rifaur Rahman)                             (Satbeer Singh Godara)
Accountant Member                                 Judicial Member
Dated: 20/12/2024
*Subodh Kumar, Sr. PS*

Copy forwarded to:
1. Appellant
2. Respondent
3. CIT
4. CIT(Appeals)
5. DR: ITAT
                                                          ASSISTANT REGISTRAR