TMI Blog2022 (4) TMI 394X X X X Extracts X X X X X X X X Extracts X X X X ..... to the interest of the revenue by the Pr. CIT in exercise of his jurisdiction u/s.263 - we are of the considered view that now when the AO had taken one of the plausible view qua the issue in hand i.e. entitlement of the assessee co-operative society for deduction of interest income earned on deposits with scheduled banks u/s. 80P(2)(a)(i) of the Act, therefore, the same could not have been revised by the Pr. CIT u/s.263 - We, thus, in terms of our aforesaid observations set-aside the order passed by the Pr. CIT u/s.263 qua the aforesaid issue in hand. Deduction of delayed deposit of employees share of contribution towards PF u/s.36 (i)(va) - Deduction for payment of employees contribution cannot be disallowed in case the contribution to the employee s welfare fund was credited on or before the due date of filing of return of income by the assessee. Backed by the aforesaid position of law, we are of the considered view that the Pr. CIT had wrongly held that the failure on the part of the AO to add back the delayed deposit of the employees share of contribution towards PF that was disallowable u/s.36(1)(va) of the Act, had rendered his order as erroneous in so far it was pre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owable u/s.80P(2)(a)(i) of the Act. On the facts and circumstances of the case, the deduction claimed u/s.80P was correct and justified. 3. The learned Pr. Commissioner of income tax erred in law and on facts in directing the AO to make disallowance of contribution to Provident Fund of ₹ 3,38,064/- u/s.36(i)(va) being paid late. On the facts and circumstances of the case, the AO had duly verified the details of payments made to Provident Fund and had allowed the same accordingly. The action of Pr. Commissioner of Income Tax is unjustified. 4. The learned Pr. Commissioner of income tax erred in law and on facts in stating that the nominal members are not members in real sense 80P deduction is not available if society provides credit facilities to non-members. On facts and circumstances of the case, this observation of Pr. Commissioner of Income Tax is misplaced and unjustified. 5. That for any other ground with kind permission of your honour at the time of hearing of appeal. 2.1 Succinctly stated, the assessee which is a co-operative society had filed its return of income for the assessment year 2013-14 on 31.10.2013, declaring an income of ₹ 1,31,200/- ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the assessee by making necessary disallowance u/s.36(1)(va) of the Act a/w. modification of its claim for deduction u/s.80P(2)(a)(i) of the Act. 5. The assessee being aggrieved with the order of the Pr. CIT has carried the matter in appeal before us. 6. We have heard the Ld. Authorized Representative of both the parties, perused the orders of the lower authorities and the material available on record, as well as considered the judicial pronouncements that have been pressed into service by them to drive home their respective contentions. As observed by us hereinabove, the Pr. CIT had held the order passed by the Assessing Officer u/s.143(3), dated 09.02.2016 as erroneous in so far it was prejudicial to the interest of the revenue u/s.263 of the Act for two fold reasons, viz. (a) that the Assessing Officer had wrongly allowed the assessee s claim for deduction of interest on deposits with scheduled commercial banks u/s.80P(2)(a)(i) of the Act; and (b). that the Assessing Officer had wrongly allowed the assessee s claim for deduction of the delayed deposit of the employees share of contribution towards PF. 7. Before us, it was the claim of the Ld. AR that the assessee is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .143(3) of the Act in the case of the assessee for the assessment year 2007-08 had after accepting the nominal members as members of the assessee society allowed its claim for deduction u/s.80P of the Act. It was submitted by the Ld. AR that now when during the year under consideration there was no change in the activities of the assessee society with its members, therefore, the inconsistent approach adopted by the department could not be permitted. Apart from that, it was averred by the Ld. AR that now when the assessee s claim for deduction u/s.80P was after deliberations allowed by the Assessing Officer in the course of original assessment proceedings, therefore, the Pr. CIT could not have invoked his revisional jurisdiction u/s 263 for the purpose of his substituting his view as against that of the A.O. 8. Adverting to the view taken by the Pr. CIT that interest income derived by the assessee from deposits with scheduled banks would not be eligible for deduction u/s. 80P(2)(a)(i) of the Act, it was submitted by the Ld. AR that the Assessing Officer had accepted the aforesaid claim of the assessee only after exhaustive deliberations. It was submitted by the Ld. AR that even o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts received, loans given to the nominal members etc. had rendered his order erroneous in so far as it was prejudicial to the interest of the revenue, for the reason, that pursuant to the judgment of the Hon ble Supreme Court in the case of Citizen Co-operative Society Ltd. Vs. ACIT (supra), as nominal members are not akin to members in real sense, therefore, deduction u/s.80P of the Act would not be available to the assessee qua its transactions with the nominal members. In our considered view the Pr. CIT had arrived at the aforesaid conclusion on the basis of misconceived and part baked facts. As stated by the Ld. AR, and rightly so, as the assessee society is registered under the Maharashtra Co-operative Credit Societies Act, 1960 which takes within the sweep of the definition of Member even Nominal Members and does not provide for any distinction between the duly registered member and nominal members, therefore, the view taken by the Pr. CIT that the transactions of the assessee society with its nominal members would not qualify for deduction u/s.80P cannot be accepted. At this stage, we may herein observe, that the reliance placed by the Pr. CIT on the judgment of the Hon b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the aforesaid issue in hand on the basis of which he had held the order passed by the Assessing Officer as erroneous in so far it was prejudicial to the interest of the revenue u/s.263 of the Act. 11. Adverting to the view taken by the Pr. CIT that the interest income earned by the assessee society on its deposits with scheduled banks would not be eligible for deduction u/s.80P(2)(a)(i) of the Act, we are unable to persuade ourselves to subscribe to the view so arrived at by the Pr. CIT. In our considered view the issue in hand i.e., as to whether or not interest income on deposits with the scheduled banks would be eligible u/s.80P(2)(a)(i) of the Act has been subjected to two schools of thoughts at the relevant point of time when the assessment order was passed by the Assessing Officer. In so far the interest income arises from short-term deposit of money for which there are no takers at the relevant point of time, the same had ben held to be duly eligible for deduction u/s.80P(2)(a) (i) of the Act. Our aforesaid view is fortified by the judgement of the Hon ble High Court of Karnataka in the case of Tumkur Merchants Souharda Cooperative Ltd. Vs. ITO, Tumkur, ITA No.307/2014, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the one hand and contributions to employees welfare funds on the other hand, which being curative in nature would be effective retrospectively w.e.f. 01.04.1988 i.e. the date of insertion of the first proviso . At this stage, we may herein observe, that the Hon ble Apex Court in its aforesaid judgment had set-aside the order of the Hon ble High Court of Bombay in the case of CIT Vs. Pamwi Tissues Ltd. (2009) 313 ITR 0137(Bom), wherein the High Court had observed that the employees contribution towards PF EPF and ESI not paid within the due date was disallowable u/s.43B of the Act. Apart from that, we find, that the aforesaid issue is also covered in favour of the assessee by the judgment of the Hon ble Bombay High Court in the case of CIT Vs. Ghatge Patil Transports Ltd. (2014) 368 ITR 0749 (Bom). In the aforesaid order, the Hon ble High Court had observed that deduction for payment of employees contribution cannot be disallowed in case the contribution to the employee s welfare fund was credited on or before the due date of filing of return of income by the assessee. Backed by the aforesaid position of law, we are of the considered view that the Pr. CIT had wrongly held ..... X X X X Extracts X X X X X X X X Extracts X X X X
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