TMI Blog2022 (8) TMI 28X X X X Extracts X X X X X X X X Extracts X X X X ..... ons holding the corresponding regular assessment dated 18.11.2019 as an erroneous one causing prejudice to the interest of Revenue for the reason that the Assessing Officer had wrongly accepted its section 80P(2)(a) deduction claim regarding interest income of Rs.8,69,470/- derived from deposits made in the co-operative banks. 3. Learned CIT-DR vehemently supported the PCIT s revision directions under challenge reading as under: 6. I have examined the submission made by the assessee and issues involved. I have also gone through various case laws filed and relied upon by the assessee in support of claim u/s 8oP(2)(a)(i) or 80P(2)(d) of the Act. It is the submission of the assessee that, Thus the Assessing Officer has already made requisite enquiries in detail, applied his mind on the submissions made by the Assessee, followed the binding decisions of Hon. Pune Bench of ITAT relied by the Assessee and then allowed the deduction claimed U/s 80P(2) of the Income Tax Act. Hence, it is the case of complete enquiry by the AO and decision of the AO cannot be termed as erroneous as he has followed the binding decision of Jurisdictional Bench of ITAT. Hence, we submit that assessmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e investment made with the bank in the form of FDs are at Rs. 1.05 Crs. as on 31/03/2017. Also there is surplus from the Income Expenditure account. Thus the deposits with banks are made out of the deposits received from the members or the surplus fund available with the society has not been verified. This aspect clearly has not been verified by the AO. c. Para 10 of the Karnataka High Court decision in the case of Tumkur Merchants Souharda Credit Co-op Society Ltd V CIT (2017) 396 ITR is relevant to be considered. In that it is mentioned that, the amount which was invested in banks to earn interest was not an amount due to any members. It was not the liability, it was not shown as liability in their account. Now, in the case of the present assessee, it is found that the deposits are made out of Deposits made by members. These deposits are liable to be returned back to the Members and hence are to be shown as liability in the Balance sheet. These deposits from members are Invested in the fixed deposits and interest income is earned from them. It implies that the deposits' accepted from the members were not used by the Society in its business of providing Credit faci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for adjudicating, as to whether or not the claim of the assessee for deduction under section 80P(2)(d) in respect of interest income earned from the investments/deposits made with the co-operative banks is in order. In our considered view, the issue involved in the present appeal hinges around the adjudication of the scope and gamut of sub-section (4) of Sec. 80P as had been made available on the statute, vide the Finance Act 2006, with effect from 01.04.2007. On a perusal of the order passed by the Pr. CIT under Sec. 263 of the Act, we find, that he was of the view that pursuant to insertion of sub-section (4) of Sec. 80P, the assessee would no more be entitled for claim of deduction under Sec. 80P(2)(d) in respect of the interest income that was earned on the amounts which were parked as investments/deposits with the co-operative bank, other than a Primary Agricultural Credit Society or a Primary Co-operative Agricultural and Rural Development Bank. Observing, that the co-operative banks from where the assessee was in receipt of interest income were not cooperative societies, the Pr. CIT was of the view that the interest income earned on such investments/deposits would not be eli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /deposits parked with a co-operative bank. In our considered view, as long as it is proved that the interest income is being derived by a co-operative society from its investments made with any other co-operative society, the claim of deduction under the aforesaid statutory provision, viz. Sec. 80P(2)(d) would be duly available. We find that the term co-operative society had been defined under Sec. 2(19) of the Act, as under:- (19) Co-operative society means a cooperative 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; We are of the considered view, that though the co-operative banks pursuant to the insertion of sub-section (4) to Sec. 80P would no more be entitled for claim of deduction under Sec. 80P of the Act, but as a cooperative bank continues to be 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, therefore, the interest income derived by a co-operative society from its inv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onflicting judicial pronouncements, we may herein observe, that as held by the Hon'ble High Court of Bombay in the case of K. Subramanian and Anr. Vs. Siemens India Ltd. and Anr (1985) 156 ITR 11 (Bom), where there is a conflict between the decisions of non-jurisdictional High Court s, then a view which is in favour of the assessee is to be preferred as against that taken against him. Accordingly, taking support from the aforesaid judicial pronouncement of the Hon ble High Court of jurisdiction, we respectfully follow the view taken by the Hon'ble High Court of Karnataka in the case of Pr. Commissioner of Income Tax and Anr. Vs. Totagars Cooperative Sale Society (2017) 392 ITR 74 (Karn) and that of the Hon ble High Court of Gujarat in the case of State Bank Of India Vs. CIT (2016) 389 ITR 578 (Guj), wherein it was observed that the interest income earned by a co-operative society on its investments held with a co-operative bank would be eligible for claim of deduction under Sec.80P(2)(d) of the Act. 6. Learned CIT-DR could hardly pinpoint any distinction on facts and on law regarding the instant issue of 80P deduction claim raised on interest income derived from deposi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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