TMI Blog2021 (10) TMI 861X X X X Extracts X X X X X X X X Extracts X X X X ..... T ] wherein the Hon'ble Karnataka High Court held that interest earned by a Co-operative Society from surplus deposits kept with Co-operative bank, is not eligible for deduction under section 80P(2)(d). Considering the legal position that when there are conflicting decisions of non-jurisdictional High Courts, on similar issue, the decision of Jurisdictional High Court is having binding precedent. Thus, keeping in view of the decision Hon'ble Jurisdictional High Court in Surat Vankar Sahakari Sangh Ltd.(supra) [ 2016 (7) TMI 1217 - GUJARAT HIGH COURT ] wherein the assessee-co-operative society is held eligible for deduction under section 80P(2)(d) in respect of gross interest received from co-operative bank without adjusting interest paid to said bank, we conclude that the order passed by assessing officer is not erroneous. Hence, the grounds of appeal raised by assessee are allowed. - ITA No.305/SRT/2019 - - - Dated:- 15-9-2021 - Shri Pawan Singh, Judicial Member And Dr. Arjun Lal Saini, Accountant Member For the Assessee : Shri Yogesh Gamit-Advocate with Shri Shaunak Javeri CA. For the Revenue : Shri Ritesh Mishra CIT(DR) ORDER UNDER SECTION 254(1) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the assessment verified the interest income earned from Cooperative Societies as well as from Nationalised Bank and disallowed the income from Nationalised Bank. Thereafter, the assessment order was revised by the ld. PCIT vide order dated 27.02.2019 under section 263 of the Act. Before revising the assessment order, the ld. Pr.CIT took his view that the interest income earned from Surat District Co-operative Bank ltd was to be disallowed 80-P(2)(d). On the basis of aforesaid view, the Ld.Pr.CIT issued show cause notice dated 06.03.2019 under section 263. 3. The assessee filed its reply dated 13.03.2019. In the reply, the assesse stated the during the assessment, the AO examined the issue of deduction under section 80-P(2)(d) in-depth and after application of mind, allowed the deduction under section 80-P(2)(d). The assessee furnished the copy of notice issued under section 142(1) dated 30.10.2016 and their reply dated 08.11.2016 and claimed that all details about the deduction under section 80-P(2)(d) had been submitted to the AO. The assessee prayed to drop the proceedings under section 263 of the Act. 4. The reply furnished by the assessee was not accepted by the ld. Pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court in CIT vs. Mepco Industries Ltd., [2007] 207 CTR 462 (Madras), wherein the Hon'ble High Court held that when two view are possible on the issue and it is not the case of commissioner that the view taken by AO is not permissible in law, Commissioner cannot invoke his jurisdiction under section 263 of the Act. The ld.AR invited our attention on para 4.2, and carried us through entire para and would submit that the AO raised a specific query on the issue regarding interest income earned from Nationalised Bank, their explanation in response to show cause notice of AO. 7. On merit, the ld.AR for the assessee submits that Cooperative Banks are primarily Cooperative Societies as has been held by various Benches of Tribunal. The Cooperative Societie s interest income from deposit with Cooperative Bank is eligible for claim of deduction under section 80- P(2)(d), to support his submission, the ld.AR of the assessee relied upon the following decisions: Surat Vankar Sahakari Sangh Ltd Vs ACIT [2016] 72 taxmann.com 169 (Gujarat) [2020] 421 ITR 134 (Gujarat) Bardoli Vibhag Gram Vikas Co.Op. Credit Society Ltd Vs. The Principal Commissioner of Income Tax-2, Surat [2021] 127 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... held that Cooperative Society is also eligible for deduction under section 80-P(2)(d) in respect of gross interest received from Cooperative Bank without adjusting interest paid to said bank. 9. On the other hand, the ld.CIT-DR for the revenue supported the order of ld. Pr.CIT. The ld CIT-DR for the revenue submits that the ld PrCIT passed a detailed order while revising the assessment order. 10. We have considered the rival submission of both the parties. We have also deliberated on various case laws relied by the ld AR for the assessee. We find that during the assessment, the AO examined the issue by issuing show cause notice dated 09.11.2016. The AO while examining the issue allowed the deduction under section 80-P(2)(d) of the Act, on the interest earned from with Surat District Cooperative Bank, however, the AO disallowed other interest income of ₹ 13,62,958/- earned from Nationalised Bank while passing the assessment order. These facts are clearly discernible from para 4 of the assessment order. We find the ld. Pr. CIT by examining the record, took a different view that the assessee is not entitled for deduction under section 80-P(2)(d) of the Act on the interest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ible for deduction under section 80P(2)(d) in respect of gross interest received from cooperative bank without adjusting interest paid to said bank. 15. The Co-ordinate Bench of Rajkot Tribunal in Surendarnagar District Cooperative Milk Producer Union Ltd. v. Dy. CIT [2019] 111 taxmann.com 69/179 ITD 690 (Rajkot Tribunal) also held the assessee co-operative society could not claim benefit under section 80P(2)(d) in respect of interest earned by it from deposits made with nationalized/private banks, however, the said benefit was available in respect of interest earned and on deposits made with co-operative bank. Thus, in view of the aforesaid legal discussion we are of the considered view that order passed by Assessing Officer is not erroneous, though it may be prejudicial to the interest of the Revenue. Therefore, the twin conditions that orders is erroneous and so far as prejudicial to the interest of revenue, as prescribed under section 263 is not fulfilled in the present case. 16. The ld.Pr.CIT while revising the assessment order relied on the case law in Totagars Co-operative Sales Society (second case) (supra), wherein the Hon'ble Karnataka High Court held that inter ..... X X X X Extracts X X X X X X X X Extracts X X X X
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