Income Tax Appellate Tribunal - Panji
The Bori Urban Co-Operative Credit ... vs Income Tax Officer, Ward - 2(3), Panaji on 27 December, 2022
IN THE INCOME TAX APPELLATE TRIBUNAL
PANAJI BENCH "SMC" : PANAJI
[THROUGH VIRTUAL HEARING]
BEFORE SHRI SATBEER SINGH GODARA, JUDICIAL MEMBER
I.T.A.Nos.220 & 221/PAN/2019
Assessment Years 2013-14 & 2014-15
The Bori Urban Co-
Operative Credit Society The Income Tax Officer,
Ltd., Borim Ponda Goa
PAN AAEAT6473H Ward - 2 (3), Aayakar
C/o. M/s. S.J. Kamat &
Bhavan, Plot No.5, EDC
Associates, Flat No.17/A, vs
1st Floor, Shriji Complex, Complex, Patto Plaza,
Nr. Hotel Manoshanti,
Dr. Gama Pinto Road, Panaji, Goa - 403001
Panaji. Goa - 403 001.
Appellant Respondent
Assessee by : Shri S.J. Kamat
Revenue by : Smt. Neelima Nadkarni, Sr.DR
Date of hearing : 29.11.2022
Date of pronouncement : 27.12.2022
ORDER
These assessee's twin appeals for Assessment Years 2013-14 & 2014-15 are directed against the Commissioner of Income Tax (Appeals), Panaji-1, Panaji's common orders dated 15.03.2019 passed in case No. CIT(A), PNJ-1/10451/2017-18 [for the A.Y. 2013-14] and in case No.CIT(A), PNJ-1/10475/2017-18 [for the A.Y. 2014-15] respectively, in proceedings u/s.143(3) r.w.s. 147 of the Income Tax Act, 1961 [in short "the Act"].
2. Heard both the parties. Case files perused.
3. It emerges during the course of hearing that the assessee's instant appeal raised three folded issue of assessee's 2 ITA.No.220 & 221/PAN/2019 The Bori Urban Co-operative Credit Society Limited, Panaji, Goa. challenging validity of sec.148/147 proceedings [not pressed] followed by sec.80P(2)(a)(i) deduction r.w.s. 80P(2)(d) deduction claim of Rs.8,33,126/- and Rs.11,89,267/-, assessment year-wise, respectively, along with CIT(A)'s jurisdiction to issue directions to the Assessing Officer, as the case may be.
4. I have given my thoughtful consideration to the rival submissions. There could be hardly any dispute that hon'ble apex court's recent landmark decision in Mavilayi Service Co-operative Bank Ltd., vs., CIT [2021] 431 ITR 1 (SC) has settled the law between the issues of assessee's registration as a cooperative credit society vis-à-vis a cooperative bank as well as distinction between nominal and regular members, addressed whilst rejecting the department's stand in very terms. I thus wish no reason to accept the Revenue's very twin arguments against the assessee and treat it eligible for sec.80P deduction in principle, in both these assessment years.
5. Learned DR next vehemently argued that the assessee has in fact derived interest income from deposits made in cooperative banks only. I find that this tribunal's recent coordinate bench's decision in the case of Belgaum Coal & Coke Consumer Cooperative Association Ltd., vs. ITO in ITA No.103/PAN/2018 dated 17.11.2021 held as under :
"6. We heard the rival submissions and perused the material on record. The solitary issue in the present appeal relates to the 3 ITA.No.220 & 221/PAN/2019 The Bori Urban Co-operative Credit Society Limited, Panaji, Goa. eligibility of exemption of income received from cooperative banks under the provisions of section 80P(2)(d) of the Act. The Assessing Officer as well as the ld. CIT(A) was of the opinion that the same does not call for exemption u/s 80P(2)(d) of the Act as they were received from a cooperative bank. The reasoning of the lower authorities cannot be sustained in the eyes of law as the cooperative banks also the spies of the cooperative societies and continue to be cooperative society despite the fact that they enjoy the licence from Reserve Bank of India to carry out the business of the banking. Then the issue that comes up for consideration is that whether the cooperative banks is also cooperative society or not?. This issue was considered by the Hon'ble Karnataka High Court in the case of CIT vs. Totagars Cooperative Sale Society, 392 ITR 74 (Karn) wherein the Hon'ble High Court referring to the Hon'ble Supreme Court in the case of Totgars Co-operative Sales Society Ltd. (supra) held that the exemption is not to be denied in respect of interest income on investment as same falls under the provisions of section 80P(2)(d) and not u/s 80P(2)(a)(i) of the Act. Even the decision of Pune Bench of the Tribunal in the case of Sant Motiram Maharaj Sahakari Pat Sanstha Ltd. vs. ITO, 120 taxmann.com 10 after making reference to the decisions of the Hon'ble Supreme Court in the case of Totgars Co-operative Sales Society Ltd. (supra), having noticed the divergent views of the Hon'ble Karnataka High Court in the case of Tumkur Merchants 4 ITA.No.220 & 221/PAN/2019 The Bori Urban Co-operative Credit Society Limited, Panaji, Goa. Souharda Credit Co-op. Ltd. vs. ITO, 55 taxmann.com 447 and the Hon'ble Delhi High Court in the case of Mantola Cooperative Thrift Credit Society Ltd. vs. CIT, 50 taxmann.com 278, the decision of the Hon'ble Delhi High Court in the case of Mantola Cooperative Thrift Credit Society Ltd. (supra) was not preferred to the view of the Hon'ble Karnataka High Court in the case of Tumkur Merchants Souharda Credit Co-op. Ltd. (supra) by observing as under :-
"9. The Pune Benches of the Tribunal in Sureshdada Jain Nagari Sahakari Patsanstha Maryadit Vs. The Pr.CIT (ITA No.713/PUN/2016, dated 9-4-2019) decided the question of availability of deduction u/s 80P on interest income by noticing that the Pune Bench in an earlier case of Shri Laxmi Narayan Nagari Sahakari Pat Sanstha Maryadit Vs. ITO (ITA No.604/PN/2014, dated 19-8-2015) has allowed similar deduction. In the said case, the Tribunal discussed the contrary views expressed by the Hon'ble Karnataka High Court in Tumkur Merchants Souharda Credit Cooperative Ltd. Vs. ITO (2015) 230 Taxman 309 (Kar.) allowing deduction u/s. 80P on interest income and that of the Hon'ble Delhi High Court in Mantola Cooperative Thrift Credit Society Ltd. Vs. CIT (2014) 110 DTR 89 (Delhi) not allowing deduction u/s.80P on interest income earned from banks. Both the Hon'ble High Courts took into 5 ITA.No.220 & 221/PAN/2019 The Bori Urban Co-operative Credit Society Limited, Panaji, Goa. consideration the ratio laid down in the case of Totgar's Cooperative Sale Society Ltd. (2010) 322 ITR 283 (SC). There being no direct judgment from the Hon'ble jurisdictional High Court on the point, the Tribunal in Shri Laxmi Narayan Nagari Sahakari Pat Sanstha Maryadit (supra) preferred to go with the view in favour of the assessee by the Hon'ble Karnataka High Court in the case of Tumkur Merchants Souharda Credit Cooperative Ltd. (supra).
10. Insofar as the reliance of the ld. DR on the case of Pr. CIT and Another Vs. Totagars Cooperative Sales Society (2017) 395 ITR 611 (Kar.) is concerned, we find that the issue in that case was the eligibility of deduction u/s.80P(2)(d) of the Act on interest earned by the assessee co-operative society on investments made in co-operative banks. In that case, the assessee was engaged in the activity of marketing agricultural produce by its members;
accepting deposits from its members and providing credit facility to its members; running stores, rice mills, live stocks, van section, medical shops, lodging, plying and hiring of goods and carriage etc. It was in that background of the facts that the Hon'ble High Court held that the assessee could not claim deduction u/s.80P(2)(d) of the Act. When we consider the impact of this decision, it turns 6 ITA.No.220 & 221/PAN/2019 The Bori Urban Co-operative Credit Society Limited, Panaji, Goa. out that the same is not germane to case under consideration in view of the position that the claim of the instant assessee is directly about the eligibility of deduction u/s.80P(2)(a)(i) of the Act and not u/s.80P(2)(d). Moreover, so many decisions relied on by the ld. AR amply go to prove that the view taken by the AO, cannot by any standard, be construed as not a possible view. We, therefore, hold that the ld. Pr. CIT was not justified in exercising the revisional power anent to interest income of Rs.22,34,270/- earned on investments made with co- operative banks."
7. In the light of the above legal position, we hold that the interest income earned by the appellant society on investment made with the cooperative bank which are also cooperative societies is exempt from the Income Tax Act u/s 80P(2)(d) of the Act. Therefore, we hold that the lower authorities was not justified in denying the claim of deduction u/s 80P(2)(d) of the Act. Accordingly, we direct the Assessing Officer to allow the same as deduction u/s 80P(2)(d) of the Act."
6. I thus accept the assessee's instant latter argument(s) and direct the learned Assessing Officer to frame necessary computation as per law in very terms. Ordered accordingly. 7
ITA.No.220 & 221/PAN/2019 The Bori Urban Co-operative Credit Society Limited, Panaji, Goa.
7. These assessees twin appeals are allowed. A copy of this common order be placed in the respective case files.
Order pronounced in the open Court on 27th December, 2022.
Sd/-
(SATBEER SINGH GODARA) JUDICIAL MEMBER Pune, Dated 27th December, 2022 VBP/-
Copy of the Order forwarded to :
1. The Appellant.
2. The Respondent.
3. The CIT(A), concerned.
4. The Pr. CIT, concerned.
5. DR, ITAT, SMC Bench, Panaji, Goa.
6. Guard File.
BY ORDER, // TRUE COPY // Senior Private Secretary ITAT, Pune.