Income Tax Appellate Tribunal - Chandigarh
The Jagraon Co-Operative Marketing Cum ... vs The Income Tax Officer Ward-1, Jagraon , ... on 25 September, 2024
आयकर अपीलीय अिधकरण,च डीगढ़ यायपीठ "एस.एम.सी" , च डीगढ़
IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENCHES, "SMC" CHANDIGARH
HEARING THROUGH : HYBRID MODE
ी िव म सह यादव, लेखा सद य
BEFORE: SHRI. VIKRAM SINGH YADAV, AM
आयकर अपील सं./ ITA No. 315/Chd/2024
िनधारण वष / Assessment Year : 2020-21
The Jagraon Co-operative Marketing बनाम The ITO
Cum Processing Society Ltd. Ward -1
Near Railway Crossing Sherpura Jagraon, Punjab
Road, Jagraon-Punjab- 142026
ायी लेखा सं ./PAN NO: AADAT6926E
अपीलाथ /Appellant यथ /Respondent
िनधा रती क ओर से/Assessee by : Shri Sudhir Sehgal, Advocate
राज व क ओर से/ Revenue by : Dr. Ranjeet Kaur, Sr. DR
सुनवाई क तारीख/Date of Hearing : 17/09/2024
उदघोषणा क तारीख/Date of Pronouncement : 25/09/2024
आदेश/Order
PER VIKRAM SINGH YADAV, AM:
This is an appeal filed by the Assessee against the order of the Ld. CIT(A)/NFAC, Delhi dt. 07/02/2024 pertaining to Assessment Year 2020-21.
2. In the present appeal, Assessee has raised the following grounds:
1. That the Ld. CIT(A) has erred in dismissing the appeal of the assessee and thereby, confirming the order of Assessing Officer in disallowing the deduction u/s 80P of the Act on account of interest received from The Ludhiana Central Cooperative Bank Ltd. to the tune of Rs. 28,92,492/-.
2. That the Ld. CIT(A) has failed to consider that the interest income is only from The Ludhiana Central Cooperative Bank Ltd. and, as such, the deduction u/s 80P (2)(d) of the Income Tax Act, has rightly been claimed.
3. That the Ld.CIT(A) has not followed the detailed recent judgment of Chandigarh Bench of the ITAT in the case of "Jagadhari Cooperative Marketing cum Processing Society Ltd. Vs. PCIT" reported in (2024), 125 TLC 103, in which, it has been held that any interest received by the Cooperative Society from the 'Cooperative Bank' is eligible for deduction u/s(80P (2) (d) of the Income Tax Act and that being the judgment of Jurisdictional Bench of the ITAT, the Ld. CIT(A) was supposed to follow and hence the confirmation of addition by the CIT(A) is bad in law.2
4. That the appellant craves leave to add or amend the grounds of appeal before the appeal is finally heard or disposed off.
3. During the course of hearing the Ld. AR submitted that the assessee is a co-operative society registered with the Registrar of Societies since 1955 vide Registration No. 155 dated 19.12.1955 as placed at Page No. 1 of the Paper Book. The assessee society is engaged in marketing of agriculture produce grown by its members, purchase of agriculture implements, seeds, livestock etc. for supplying the same to its members, letting out of godowns/warehouses etc. for storage purposes as evident from the Bye-Laws.
3.1 The Assessee e-filed its return of income for AY 2020-21 on 19.12.2020 declaring a net taxable income at Rs. 58,120/- after claiming deduction U/s 80-P of the Act at Rs. 49,52,952/-. The case of the assessee was selected for scrutiny and the Ld. Assessing Officer vide the order u/s 143(3) r.w.s. 144B of the Income Tax Act,1961 dated 26.09.2022 assessed income at Rs. 29,50,612/- as against returned income at Rs. 58,120/-. The Ld. AO made disallowance of Rs. 28,92,482/- on account of the deduction claimed U/s 80P of the Act on account of interest received by the appellant from The Ludhiana Central Cooperative Bank Limited by holding that the aforesaid amount of interest is not eligible for deduction U/s 80-P of the Act.
3.2 Thereafter, the Assessee filed an appeal before the CIT(A), NFAC, Delhi and the ld CIT(A) vide its order dated 07.02.2024 dismissed the appeal of the Assessee and confirmed the disallowance made by the Ld. AO.
4. Against the order of the Ld. CIT(A) the Assessee is in appeal before us.
5. The ld. AR submitted that during the year under consideration, the Assessee claimed deduction amounting to Rs. 49,52,952/- as against the net profit of Rs. 50,11,072/- under section 80P and the clause wise details of the deduction claimed are as under:
3 Section Amount of Amount of
Income deduction claimed
80P(2)(d) - Interest from Investment in other 3094482 3094482
co-operative society
80P(2)(e) - Income from Letting of godowns 1808470 1808470
80P(2)(f) - Others 108120 50000
5.1 It was submitted that out of the above deductions claimed, the Ld. AO disallowed the deduction claimed u/s 80P(2)(d) of the Act to the tune of Rs. 28,92,482/-. The said amount pertains to the interest earned by the assessee society from The Ludhiana Central co-operative Bank as evident from Balance sheet and Profit & Loss account placed at Page No. 13-15 of the Paper Book.
5.2 It was submitted that the Assessee has received the interest of Rs. 28,92,482/- from the Ludhiana Central Co-operative Bank and dividend of Rs. 2,00,000/- from Indian Farmers Fertilizer Cooperative and Rs. 2,000/- from Krishak Bharati Cooperative, both being the cooperative societies, the Assessee is eligible to claim the deduction in respect of the interest earned from the same.
5.3 It was further submitted that the Worthy CIT(A) has wrongly linked the provisions of section 80P(2)(d) wth the provisions of Section 80P(4) of the Act, for the sake of brevity of the matter, both the provisions are reproduced hereunder:
"80P - Deduction in respect of income of co-operative societies.
(2) The sums referred to in sub-section (1) shall be the following, namely :--
(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;
(4) The provisions of this section shall not apply in relation to any co-operative bank other than a primary agricultural credit society or a primary co-operative agricultural and rural development bank.
Explanation.-For the purposes of this sub-section,--
(a) "co-operative bank" and "primary agricultural credit society" shall have the meanings respectively assigned to them in Part V of the Banking Regulation Act, 1949 (10 of 1949);
4b) "primary co-operative agricultural and rural development bank" means a society having its area of operation confined to a taluk and the principal object of which is to provide for long-term credit for agricultural and rural development activities."
5.4 It was submitted that the above two provisions are independent provisions and cannot be interlinked in the case of the Assessee. Section 80P(2)(d) clearly states that any interest or dividend income received by the Co-operative Society from the investment in other co-operative society is allowed for 100% deduction. However, provisions of section 80P(4) of the Act states that the provisions of section 80P does not apply to Co-operative banks which mean an assessee who is a co-operative bank cannot claim deduction u/s 80P. In the instant case, the Assessee is not a co-operative bank, so, section 80P(4) is not applicable in this case.
5.5 It was submitted that while adjudicating the deduction claimed u/s 80P(2)(d) of the Act, the Worthy CIT(A) in Para 5.3.5 at Page No. 4 of the Appellate Order, has wrongly relied upon the finding in Para 22-23 of the Apex Court's Judgment in the case of Mavilayi Co-operative Bank in CA No. 7343- 7350 a 8315 of 2019 dated 12.01.2021 which relates to the interpretation of provision of Section 80P(4), the extract of the same is reproduced hereunder:
"22. With the insertion of sub-section (4) by the Finance Act, 2006, which is in the nature of a proviso to the aforesaid provision, it is made clear that such a deduction shall not be admissible to a cooperative bank. However, if it is a primary agricultural credit society or a primary cooperative agricultural and rural development bank, the deduction would still be provided. Thus, cooperative banks are now specifically excluded from the ambit of section 80-P of the Act.
23. Undoubtedly, if one has to go by the aforesaid definition of "cooperative bank", the appellant does not get covered thereby. It is also a matter of common knowledge that in order to do the business of a cooperative bank, it is imperative to have a license from Reserve Bank of India, which the appellant does not possess. Not only this, as noticed above, Reserve Bank of India has itself clarified that the business of the appellant does not amount to that of a cooperative bank. The appellant, therefore, would not come within the mischief of sub-section (4) of section 80-P."5
5.6 Form the above paragraphs, it is clear that the same are the interpretation of Co-operative Banks referred in Section 80P(4) and not the co- operative societies as referred in section 80P(2)(d) of the Act. It is also clear that 80P(4) refers to the assessee who is a co-operative bank, so the assessee being a cooperative society is outside the ambit of the provisions of this section.
5.7 It was further submitted that in Para 5.3.5 of the Appellate Order, Worthy CIT(A) has also relied upon the judgment of Karnataka High Court in the case of Totgar Society (2017) 395 ITR 0611, which is not applicable in the case of the Assessee. The gist of discussion in the said judgment was the interest received from Nationalized Banks, disallowance of has been made for the interest income earned from the deposits made by the appellant with nationalized banks which is not the case of the Assessee.
5.8 Now, coming back to the application provision of Section 80P(2)(d) - Interest/Dividend from Investment in other co-operative society, it was submitted that the Worthy CIT(A) has rightly quoted in Para 5.3.3 at Page No. 3 of the Appellate Order, wherein CIT(A) has stated that every co-operative bank is a co-operative society, having banking license from RBI, extract of the same is as under:
"A cooperative bank is a cooperative society first registered under the state Act or Central Act, which applied for license for banking to RBI. In other words, a co- operative bank are co-operative societies engaged in banking business i.e., engaged in lending money to members of the public, which have a license in this behalf from the RBI."
5.9 Thus, Ld. CIT(A) has agreed to the fact that every co-operative bank is a co-operative society first, so, the Assessee rightly claimed the deduction on account of interest earned from the Ludhiana Central Co-operative Bank amounting to Rs. 28,92,482/-. As the Ludhiana Central Co-operative Bank is a co-operative society having a banking license from the RBI, copy of its 6 registration certificate as issued by the Registrar of Societies is placed at Page No. 16 of the Paper Book.
5.10 Further, the Ld. CIT(A), while relying upon the Apex Court Judgment in the case of Mavilayi Co-operative Bank (Supra) has ignored the findings given in Para 35 of the said judgment, discussing the provision of Section 80P(2)(d) (in which the assessee has claimed deduction in the instant case), the same reads as under:
"35. Eighthly, sub-clause (d) also points in the same direction, in that interest or dividend income derived by a co-operative society from investments with other co-operative societies, are also entitled to deduct the whole of such income, the object of the provision being furtherance of the co-operative movement as a whole."
5.11 It has been held by the Apex Court that the deduction under section 80P(2)(d) of the Act is given with an intent of furtherance of the co-operative movement as a whole. Further, in Para 45 of the said judgment, the Apex Court has laid down the rationale of the provision related to Co-operative Societies, the same reads as under:
"To sum up, therefore, the ratio decidendi of Citizen Co-operative Society Ltd. (supra), must be given effect to. Section 80P of the IT Act, being a benevolent provision enacted by Parliament to encourage and promote the credit of the co-
operative sector in general must be read liberally and reasonably, and if there is ambiguity, in favour of the assessee. A deduction that is given without any reference to any restriction or limitation cannot be restricted or limited by implication, as is sought to be done by the Revenue in the present case by adding the word "agriculture" into section 80P(2)(a)(i) when it is not there"
5.12 It was submitted that the Apex Court has off-set all the ambiguity in the cases of co-operative societies by passing the above conclusion. Therefore, when the law states that deduction in respect of the interest/dividend earned from the investment made in the Co-operative societies is allowed as a whole, and, all the co-operative banks are first the registered co-operative societies, then the disallowance of interest earned by the Assessee from the Ludhiana Central Cooperative bank is bad in law and baseless.7
5.13 It has been held in various judicial pronouncements including the judgment of Hon'ble Chandigarh Bench that the interest earned by a co- operative society from a co-operative bank is allowed as deduction under section 80P(2)(d) of the Act. Reliance in this regard is placed on the following judgments:
• Mullanpur Garibdas Co-operative Multipurpose Society vs. PCIT [2024] 163 Taxmann.Com 50 (Chandigarh - Trib.) "Assessee-society, being a cooperative society, is entitled to exemption under section 80P(2)(d), in respect of its interest income derived from fixed deposits with cooperative banks"
• Jagadhri Co-operative Marketing Cum Processing Society Ltd. vs. PCIT [2024] 159 taxmann.com 1253 (Chandigarh - Trib.) "Where assessee a co- operative society claimed deduction under section 80P(2)(d) on interest income earned from deposits placed with a co-operative bank and Assessing Officer after due examination of facts allowed said claim, Principal Commissioner was not justified in invoking revisionary jurisdiction merely on ground that interest income was not earned from any other co-operative society but from scheduled commercial banks.
Provisions of section 80P(4) is relevant only where assessee is a cooperative bank and claims deduction under section 80P and not where assessee is a co- operative society"
• Ashok Tower "D" Co Op Housing Society Ltd. vs. ITO [2024] 163 taxmann.com 598 (Mumbai - Trib.) Sangli Division Telecom Workers Co-op Credit Society Ltd. Vs. ITO [2024] 161 Taxmann.com 206 (Pune-Trib.) • Ruby Hall Clinic Karmachari Sahakari Pat Sanstha Maryadit vs. ITO [2024] 161 taxmann.com 23 (Pune - Trib.) "Section 80P of the Income-tax Act, 1961 - Deductions - Income of cooperative societies (Interest income) - Assessment year 2018-19 -Whether where assessee, a co-operative society, had received interest income from a co-operative bank which was registered under Co-. operative Societies Act, 1912, said interest income was eligible for deduction under section 80P(2)(d) - Held, yes [Paras 2 and 3] [In favour of assessee]"
5.14 It was submitted that in all the above-cited judgments, including the judgments of Jurisdictional ITAT Chandigarh Bench, it can be held that interest earned from a co-operative bank being a co-operative society registered 8 under the Co-operative Societies Act is also covered under the provisions of Section 80P(2)(d) of the Act and eligible for 100% deduction. Likewise, in the case of the Assessee, interest earned from The Ludhiana Central Co-operative bank amounting to Rs. 28,92,482/- is eligible for deduction and the disallowance confirmed by CIT(A) deserves to be deleted.
6. The ld. DR is heard, who has relied on the order of the lower authorities.
7. We have heard the rival contentions and perused the material available on the record. We find that the matter is squarely coved by the decision of Coordinate Chandigarh Bench in case of Jagadhri Co-operative Marketing Cum Processing Society Ltd. Vs. PCIT (supra) wherein the relevant findings read as under:
"15. We have heard the rival submissions and perused the material available on record. The limited dispute relates to claim of deduction under Section 80P(2)(d) of the Act in respect of interest income of Rs. 13,58,969/- received by the assessee cooperative society on deposits placed with Yamuna Nagar Central Co-op Bank Ltd.
16. As per the provisions of section 80P(1) of the Act, the income referred to in sub-section (2) to section 80P shall be allowed as a deduction to an assessee being a Co-operative Society. Further, Section 80P(2)(d) of the Act provides for deduction 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. Thus, for the purpose of Section 80P(2)(d) of the Act, there are only two conditions which are required to be cumulatively satisfied, i.e, the income should be by way of interest or dividend earned by a Co-operative Society from its investments, and secondly, such investments should be with any other Cooperative Society. Besides these two conditions, there are no other condition(s) which has been provided in the statue as apparent from the plain reading of the provisions of Section 80P(2)(d) of the Act.
17. The term "co-operative society" as defined under section 2(19) of the Act (19) 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.
18. As per the ld PCIT own findings, as per Section 80P(2)(d), interest income derived by a co-operative society from its investments held with any other cooperative society shall be deducted in computing its total income. Further, she has referred to the amendment by way of insertion of sub-section (4) of sec. 80P, vide the Finance Act, 2006 with effect from 1-4-2007 where the provisions of sec. 80P are no more applicable in the case of a co-operative bank other than a 9 primary agricultural credit society or a primary co-operative agricultural and rural development bank. As per the ld PCIT, the aforesaid amendment does not jeopardise the claim of deduction of a co-operative society under Section 80P(2)(d) in respect of its interest income on investments/deposits parked with a cooperative bank.
19. In the present case, there is no dispute that the assessee is a CoOperative Society. There is also no dispute that Yamuna Nagar Central Co-op Bank Ltd. is also a Co-operative society. Further, during the course of assessment proceedings, we find that the AO while examining the claim of the assessee under Section 80P observed that out of total claim of Rs 76,77,246/-, the assessee has claimed Rs 50,25,234/- under section 80P(2)(d) of the Act. The AO noted that said claim under section 80P(2)(d) consist of dividend income from KHRIBHCO, IFFCO and HAFED, interest income on deposits placed with HDFC Bank, ICICI Bank, AXIS Bank and Yamuna Nagar Central Co-operative Bank Ltd and referring to the provisions of section 80P(2)(d) of the Act, a show-cause was issued as to why claim of deduction in respect of interest income on deposits placed with HDFC Bank, ICICI Bank, AXIS Bank should not be disallowed and thereafter, after considering the submissions of the case, has returned a finding that such interest income has not been earned from any other Cooperative society but from Scheduled commercial banks and the deduction so claimed from Scheduled commercial banks was denied and while doing so, the AO has allowed the claim of deduction in respect of Yamuna Nagar Central Cooperative Bank Ltd, being the deduction in respect of interest income on deposits with any other Co- operative Society. We therefore find that the AO has duly examined the facts of the present case and has allowed the deduction in respect of interest income received from the Yamuna Nagar Central Co-op Bank Ltd. as being in compliance with the provisions of Section 80P(2)(d) of the Act. Where the facts in the present case and legal position is not in dispute, we therefore don't understand how the ld PCIT in the same breath hold that the assessee shall not be eligible for claim of deduction under section 80P(2)(d) of the Act.
20. Now, coming to the decision of the Hon'ble Punjab and Haryana High Court in case of Punjab State Cooperative Federation of Housing Building Societies Ltd. (Supra), the question for consideration before the Hon'ble High Court was whether the Tribunal was right in holding that interest income from commercial banks, being attributable to business activity of the assessee qualifies for deduction u/s 80P(2)(a)(i) of the Act ignoring the fact that direct source of income is not the loans advanced to members of the society and it is only the interest income from commercial banks in form of fixed deposits and saving bank accounts. Referring to the decision of the Hon'ble Supreme Court in case of case of Totgars Co-operative Sale Society Ltd. (Supra), it was held that since the judgment of the Tribunal was prior to the judgment of the Hon'ble Supreme Court, the Tribunal did not have the advantage of the said judgment and the matter was decided in favour of the Revenue. We therefore find that the Hon'ble Punjab and Haryana High Court following the decision of the Hon'ble Supreme Court which was also rendered in the context of section 80P(2)(a)(i) held that interest income from commercial banks was not eligible for claim of deduction under section 80P(2)(a)(i) of the Act. Therefore, the said decision rendered in the context of section 80P(2)(a)(i) is distinguishable and doesn't support the case of the Revenue and has been wrongly referred in support while challenging the assessee's claim of deduction on interest income under section 80P(2)(d) of the Act in respect of deposits placed with Yamuna Nagar Central Co-op Bank Ltd 10
21. Now, coming to another decision of the Hon'ble Punjab and Haryana High Court in case of Doaba Co-op Sugar Mills Ltd. (Supra). Briefly the facts of the case were that the assessee, a cooperative society, filed its return of income claiming deduction in respect of interest income received from the cooperative bank. The assessment was completed after making disallowance of the deduction claimed which on appeal has been allowed by the Tribunal and thereafter, the question of law which was proposed by the Revenue for the opinion of the Hon'ble High Court was "whether on the facts and circumstances of the case, the Tribunal is right in law in allowing deduction under section 80P(2)(d) of the Act in respect of interest of Rs. 4,90,919/- on account of interest received from Nawanshahr Central Co-operative Bank without adjusting interest paid to the bank and in that background, the Hon'ble High Court has held as under:
"5. The contention of Mr. Gupta, the learned counsel appearing for the revenue, is that the Tribunal was wrong in allowing deduction under section 80P(2)(d) because it is not established that the assessee had derived interest by investing all the amount of surplus funds. It is further contended by Mr. Gupta that the assessee has paid interest to Jalandhar Central Co-operative Bank and has also received interest from the said co-operative bank, thereby showing that the assessee has on the aggregate paid interest to the bank and, therefore, no deduction under section 80P(2)(d) can be allowed. To appreciate this argument, we have to look to the provisions of section 80P(2)(d). For facility of reference, it is reproduced as under:
"(d)in respect of any income by way of interest or dividends derived by the cooperative society from its investments with any other co-operative society, the whole of such income;"
So far as the principle of interpretation applicable to a taxing statute is concerned, we can do no better than to quote the by now classic words of Rowlatt, J., in Capce Brandy Syndicate v. IRC [1921] 1 KB 64 :
". In a taxing Act, one has to look merely at what is clearly said. There is no room for any intendment. There is no equity about a tax. There is no presumption as to a tax. Nothing is to be read in, nothing is to be implied. One can only look fairly at the language used." (p. 71) The principle laid down by Rowlatt, J., has also been time and again approved and applied by the Supreme Court in different cases including the one Hansraj Gordhandas v. H.H. Dave, Assistant Collector of Central Excise & Customs AIR 1970 SC 755 at p. 759.
6. Section 80P(2)(d) allows whole deduction of an income by way of interest or dividends derived by the co-operative society from its investment with any other co-operative society. This provision does not make any distinction in regard to the source of the investment because this section envisages deduction in respect of any income derived by the co-operative society from any investment with a cooperative society. It is immaterial whether any interest paid to the co-operative society exceeds the interest received from the bank on investments. The revenue is not required to look to the nature of investment whether it was from its surplus funds or otherwise. The Act does not speak of any adjustment as sought to be made out by the learned counsel for the revenue. The provision does not indicate any such adjustment in regard to interest derived from the co-operative society from its investment in any other co-operative society. Therefore, we do 11 not agree with the argument advanced by the learned counsel for the revenue. In our opinion, the Tribunal was right in law in allowing deduction under section 80P(2)(d) in respect of interest of Rs. 4,90,919 on account of interest received from Nawanshahr Central Co-operative Bank without adjusting interest paid to the bank. Therefore, the reference is answered against the revenue, i.e., in the affirmative, and in favour of the assessee."
22. In the aforesaid decision, the Hon'ble Jurisdictional High Court has referred to the provisions of Section 80P(2)(d) and held that the said provisions does not make any distinction with regard to the source of the investment because this section envisages deduction in respect of any income derived by the co- operative society from any investment with a co-operative society. It was held that it is immaterial whether any interest paid to the co-operative society exceeds the interest received from the bank on investments and the Revenue is not required to look to the nature of investment whether it was from its surplus funds or otherwise. The Hon'ble High Court thus held that the nature and source of investment is not relevant for claiming deduction under Section 80P(2)(d) of the Act, and what is relevant to examine is whether there is any income derived by a cooperative society from any investment with another co-operative society. In the instant case, we therefore find that it is not relevant to examine whether interest income is earned from any specified co-operative activity or it is a case of deployment of surplus funds by the assessee society so long as the interest income is earned from deposits placed with a co-operative society. Where the AO has allowed the claim of the assessee under section 80P(2)(d) of the Act after due examination of the facts of the case, he has rightly followed the dicta laid down by the Hon'ble Jurisdictional High Court and therefore, the order so passed by the AO cannot be held as erroneous in so far as prejudicial to the interest of Revenue.
23. Now, coming to the decisions of the Hon'ble Karnataka High Court, we find that there are two decisions in case of Totagars Co-operative Sale Society and in both of these decisions, the Hon'ble Karnataka High Court has referred to the decision of the Hon'ble Supreme Court in case of Totagars Cooperative Sale Society (Supra). In case of first decision referred by the ld AR, it was held that according to section 80P(2)(d) of the Act, the amount of interest earned from a Co-operative Society Bank would be deductable from the gross income of the Co-operative Society in order to assess its total income. In the latter decision referred by the ld PCIT (he has not referred to the earlier decision), it was held that interest earned by the assessee, a Co-operative Society, from surplus deposits kept with a Co-operative Bank, was not eligible for deduction under Section 80P(2)(d) of the Act. We therefore find that there are divergent views of the non-jurisdictional High Court on the issue of eligibility of deduction under Section 80P(2)(d) of the Act in respect of interest earned from Co-operative Bank as against the decision of the Jurisdictional Punjab and Haryana High Court in case of Doaba Co-operative Sugar Mills Ltd. (supra) and the latter shall be our guiding force as far as the present proceedings are concerned.
24. Having said that, we find that in the latter decision of Hon'ble Karnataka High Court in case of Totgars Co-operative Sale Society (Supra), the Hon'ble High Court has basically laid great emphasis on the provision of Section 80P(4) of the Act and basis interpretation of Section 80P(4) of the Act, the deduction under section 80P(2)(d) has been held to be not eligible. In this regard, we find that the Hon'ble Supreme Court in case of Mavilayi Service Cooperative Bank Ltd. (supra) 12 while analyzing the provision of Section 80P(4) of the Act has held that Section 80P(4) is a proviso to the main provision contained in Section 80P(1) and 80P(2) and excluded only cooperative banks which are cooperative society and also possesses a licence from RBI to do banking business. The Hon'ble Supreme Court further held that the limited object of section 80P(4) is to exclude Co-operative Banks that function at par with other commercial banks i.e. which lend money to members of the public. Therefore Section 80P(2)(4) is relevant only where the assessee is a cooperative bank and who claimed the deduction under section 80P of the Act which is not the facts of the present case. Therefore the said decision of the Hon'ble Karnataka High Court is distinguishable and in any case, the later decision of Hon'ble Supreme Court in case of Mavilayi Service Co- operative Bank Ltd. (Supra) wherein the correct legal preposition has been laid down by the Hon'ble Supreme Court has to be followed. Interestingly, as per the ld PCIT own findings, section 80P(4) does not jeopardise the claim of deduction of a co-operative society under Section 80P(2)(d) in respect of its interest income on investments/deposits parked with a cooperative bank and at the same time, she has placed reliance on the said decision of Hon'ble Karnataka High Court. As against that, we find that the AO has referred to the said decision in case of Mavilayi Service Cooperative Bank Ltd. (Supra) and has thus followed the dicta laid down by the Hon'ble Supreme Court and thus, the order so passed cannot be held as erroneous in so far as prejudicial to the interest of Revenue.
25. In light of aforesaid discussion and in the entirety of facts and circumstances of the case, we find that there is no legal and justifiable basis to invoke the provisions of section 263 by the ld PCIT and therefore, the order so passed u/s 263 is hereby set-aside and that of the AO who has rightly allowed the deduction u/s 80(P)(2)(d) is sustained."
8. Similar view has been taken by the Coordinate Chandigarh Benches in case of Mullanpur Garibdas Co-operative Multipurpose Society vs PCIT (supra) wherein it was held as under:
44. It is seen that section 80P(2)(d) provides for deduction in respect of income by way of interest or dividend derived by the assessee from its investments with any other cooperative society. The assessee is a cooperative society. It had invested amounts with the Central Cooperative Bank, Mullanpur and the Central Cooperative Bank, Parol. Both these Banks are members of the SAS Central Cooperative Bank. It remains undisputed that as per the Reserve Bank of India Act, 1934, as amended by the Banking Laws (Applicable to Cooperative Societies) Act, 1965, 'Central Cooperative Bank' means the principle cooperative society in a district in a state, the primary object of which is the financing of other cooperative societies in the district. This being so, the investment made by the assessee society is nothing other than investment with another cooperative society and, therefore, interest earned thereon is entitled to deduction under section 80P(2)(d) of the Act.
9. In light of the aforesaid discussion and following the decisions referred supra, we find that the assessee cooperative society is eligible for claim of deduction 13 under Section 80P(2)(d) of the Act in respect of interest receipts of Rs. 28,92,482/- on deposits placed with The Ludhiana Central Co-operative Bank Limited.
10. In the result, the appeal of the assessee is allowed.
(Order pronounced in the open Court on 25/09/2024 ) Sd/-
िव म सह यादव (VIKRAM SINGH YADAV) लेखा सद य / ACCOUNTANT MEMBER AG Date: 25/09/2024 आदेश क ितिलिप अ ेिषत/ Copy of the order forwarded to :
1. अपीलाथ / The Appellant
2. यथ / The Respondent
3. आयकर आयु / CIT
4. आयकर आयु (अपील)/ The CIT(A)
5. िवभागीय ितिनिध, आयकर अपीलीय आिधकरण, च डीगढ़/ DR, ITAT, CHANDIGARH
6. गाड फाईल/ Guard File आदेशानुसार/ By order, सहायक पंजीकार/ Assistant Registrar