TMI Blog2023 (8) TMI 916X X X X Extracts X X X X X X X X Extracts X X X X ..... , we are of the considered opinion that order of penalty levied by the Ld.AO u/s. 271B of the Act and confirmed by the Ld.CIT(A) is liable to be set aside with a direction to verify that the appointment of the statutory/tax auditor was done after the due date of completion of audit u/s 44AB of the Act, and if same is the case and audit was completed within a reasonable time of such appointment, then the penalty u/s 271B cannot be held as justified. We, therefore, set aside the order of the Ld.CIT(A) and restore the issue to the files of AO to verify the documents. Disallowance u/s 80P - Interest on the bank deposit - HELD THAT:- As issue involved in the present appeal regarding allowability of assessee s claim pertaining to sec.80P(2)(a)(i) of the Act, on the interest on the bank deposit remain the same as were there [ 2022 (8) TMI 597 - ITAT RAIPUR] as relied upon by the assessee, therefore, we respectfully following the same, direct the AO to allow the assessee s claim for deduction u/s. 80P(2)(a)(i). - Shri Ravish Sood, Judicial Member And Shri Arun Khodpia, Accountant Member For the Appellant : None (Written Submission) For the Respondent : Mr. Satya Prakash ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... common issue pertaining to levy of penalty u/s. 271B of the Act. ITA Nos. 108, 109, 110, 118, 125 126/RPR/2022: 3. We shall take up the appeal in ITA No. 108/RPR/2022 for the AY 2012-13 as the lead matter, and the order therein passed, shall be applied mutatis-mutandis to the remaining appeals i.e. ITA Nos. 109, 110, 118, 125 126/RPR/2022. The grounds of appeal raised by the assessee in ITA No. 108/RPR/2022, are as under: 1. That the Ld. CIT (Appeals) NFAC, Delhi erred in confirming the penalty levied u/s. 27IB by the Ld. Assessing officer at Rs. 1,50,000/- . Prayed that there is no delay on the part of the Appellant. The Statutory auditors was not appointed timely by the Registrar of Cooperative Society which was not in the hands of the appellant. only after completion of statutory audit tax audit was done. There is reasonable cause u/s. 273B for delay, therefore the penalty levied kindly be cancelled. 2. That the Appellant is functioning in a remote small village at Belar District Gariaband. The Notices fixation by the Ld.CIT (Appeals), NFAC, Delhi did not come to the knowledge of the Appellant and therefore, proceeding could not be attended. 3. Withou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Societies Act, 1960. However, by reason of the mandate contained in section 44AB, such auditing was required to be conducted before the specified date and the auditor was required to sign and verify the audit report on or before the specified date. The same was not done. It was done, however, after the specified date. Assessee is cooperative society governed by the provision of the Chhattisgarh Cooperative Societies Act, 1960. Assessee has relied upon following judgments:- (a). (2002) 257 677 (MP) INCOME-TAX OFFICER V. NANAK SINGH GULIANI b. Krishi Upaj Mandi Samiti vs. CIT (2008) 299 ITR (AT) (Jaipur- c. CIT v. U.P. Rajya Sahkari Evam Bhoomi Vikas Bank Ltd. (2013) 353 ITR 152 (ALL)- d. Lakshmi Car Clothing Manufacturing Co. P.Ltd. vs. DCIT (2013) 353 ITR 544 (Mad)- e. CIT v. Capital Electronics (Gariahat) (2003) 261 ITR-4 (Cal)- 2.1 In all the case laws cited above, the penalty imposed u/s. 271B was held not maintainable on the basis of principles of reasonable cause. 3. ........................the onus of establishing the existence of a reasonable cause failed in this case. Reliance is placed in this case of Khuda Wood Products ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Society, stating that the assessee s society is situated in a remote village viz., Belar having population of about 1200, the assessee is a Primary Agricultural Co-operative Society and he is working of benefit of farmers and also providing items to Below Poverty Line (BPL) people. The assessee is not well versed with electronic medium, have tried to contact his Counsel in the matter also due to involvement of society people for procuring paddy from farmers as per policy of the State Government, necessary action could not be taken in due time, it was, therefore, prayer that the delay in filing of the appeal may kindly be condoned. In view of the submissions of the assessee with regard to delay in filing of the appeal, we find that there were reasonable and sufficient cause, whereby the assessee was prevented to file its appeals in the prescribed time. Therefore, we find it appropriate to condone the delay. 8. Since, the delay of the assessee was condoned, now we are taking up the issues in the present appeal for our consideration and adjudication. 9. At the outset, it was noticed that there was no representation on behalf of the assessee, however, written submission was subm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt u/s. 44AB in Form No. 3CA statement of particulars required to be furnished u/s. 44AB in Form No. 3CD from the tax auditor. That since statutory auditor had given audit certificate for the F.Y. 2011/12 on 20.02.2013, which was beyond the specified date mentioned in section 44AB, after appointment of tax auditor assessee society could get Form No. 3CA Form No. 3CD only on 20.03.2013. Copies of report of statutory auditor appointed by the Registrar of Co-operative Society dt. 20.02.2023, tax audit reports in Form No. 3CA Form No. 3CD dt. 20.03.2013, computation of total income acknowledgment of return for the A.Y. 2012/13 and reply filed before CIT(A) are enclosed for ready reference. Since, there was reasonable cause for delay in getting tax audit report u/s 44AB in Form No. 3CA statement of particulars required to be furnished u/s. 44AB in Form No. 3CD from the tax auditor for the F.Y. 2011/12 in terms of section 273B of the Income-tax Act' 1961, the penally levied u/s. 271B may kindly be cancelled. That your honour in similar set of facts of case divisional bench of Hon'ble ITAT, Raipur in case of Adim Jati Sewa Sahakari Samiti Maryadit, Mainpur Dho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e rival contentions and perused the orders of the authorities below along with the relevant documents placed on record. Before us, the ld. AR of the assessee has filed paper book containing the documents relating to the audit report of auditors appointed by Registrar of Co-operative Society dated 22.08.2015, audited accounts, tax audit report dated 11.09.2015, computation of income and ITR and reply before the ld. CIT(A). It was also submitted by the ld. AR that the explanation of the assessee has not been considered in the proceeding before the ld. CIT(A). It is fairly admitted that the statutory auditor has provided the audit certificate and audit report only on 22.08.2015 and thereafter the tax audit was conducted, completed and submitted. This being so, we are of the view that the assessee has sufficient and reasonable cause for delay in submitting the audit report. Since the auditor was appointed by the Registrar of Cooperative Societies, therefore, there is no delay on the part of the assessee. Accordingly, respectfully following the various judicial pronouncements, referred to above, we are of the considered opinion that the penalty levied by the AO u/s. 271B of the Act and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the AO before he completes assessment proceedings. The assessee has given reasons for delay in filing tax audit report. As per which, the audit of accounts of society done by the Dept. of Cooperative Audit, could not be completed on or before 31.10.2015 and said delay was not in the hands of the assessee. Therefore, there is a reasonable cause for not filing the tax audit report within prescribed time limit ad thus, penalty cannot be levied. We find merits in the submission of the assessee for the simple reason that non-filing of audit report within the due date is a venial technical breach without any mala fide intention on the part of the assessee. Because, completion of audit of books of accounts of the society is under the control of Dept. of Cooperative Audit and thus, unless the Dept. of Cooperative Audit completes audit, the assessee cannot file return of income along with tax audit report. Therefore, we are of the considered view that reasons given by the assessee for not filing tax audit report prescribed u/s. 44AB of the Act, is neither intention nor any mala fide intention, but it is venial technical breach and for this reason, penalty u/s. 271B of the Act, cannot be lev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... due to the reasons beyond the control of the assessee and the same constituted the sufficient cause for its failure to comply with the requirement of section 44AB. Moreover, the tax audit report obtaining belatedly was filed by the assessee along with its return of income for the year under consideration on 05.01.2010 and the same, therefore, was available to the Assessing Officer while making the assessment of the assessee for the year under consideration. The default on the part of the assessee in obtaining and furnishing the tax audit report by the specified date thus was technical or venial in nature. Having regard to all these facts and circumstances of the case, we are of the view that it is not a fit case to impose penalty under section 271B and cancelling the penalty so imposed by the Assessing Officer and confirmed by the ld. CIT(Appeals), we allow this appeal of the assessee. 9. In the present case also the assessee could not obtain and file the tax audit report as required u/s. 44AB of the Act due to delay in appointment of auditors by the co-operative department for statutory audit. This appointment is not in the control of the assessee. It is only then after that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee did not take proper care to comply with various statutory provisions. No default is attributable to the act and conduct of the assessee. Therefore, in my opinion, it is not a fit case for levy of penalty under section 271B of the IT Act. The penalty levied is held to be unjustified and is cancelled. In the light of above finding I deem it unnecessary to go into several other legal issues raised by the learned counsel for the assessee. The penalty imposed is cancelled. v) Mathana Model Co-op Credit Services Society Ltd., [2008] 299 ITR 70 (Punjab Haryana), wherein the Hon ble Punjab Haryana High Court held as under :- Section 271B, read with section 273B, of the Income-tax Act, 1961 - Penalty - For failure to get accounts audited - Assessment year 2004-05 - As assessee-co-operative society failed to get its accounts audited within stipulated date, a show-cause notice under section 271B was issued to it - Assessee submitted copy of audit report along with its reply stating that it being a co-operative society was required to get its accounts audited by auditor appointed by Registrar, Co-operative Societies and since auditor was not appointed by Registrar within s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... able to act in the manner prescribed by the statute. 14. On perusal of the ratio of law emerged in the aforesaid orders, respectfully following the judicial pronouncements, considering the facts and issue in the present appeal wherein it was the admitted fact that the Audit certificate was issued by the Tax Auditor on 20.02.2013, which was after the due date of completion of the audit u/s 44AB, which was contented by the assessee as beyond its control, and rightly so, we find merit in the submission of the assessee, however in the submissions of the assessee there was no whisper pertaining to delayed appointment of the Auditor, which could be the key fact or event justify the contention of the assessee that there was nothing on the part of assessee which makes asseseee responsible for the delay. It is therefore necessary to verify when the statutory auditors and tax auditor were appointed by the regulatory authority i.e. registrar of cooperative society, thus, we are of the considered opinion that order of penalty levied by the Ld.AO u/s. 271B of the Act and confirmed by the Ld.CIT(A) is liable to be set aside with a direction to verify that the appointment of the statutory/tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee is directed in all above appeals to furnish requisite documents, evidence, and information, before the Ld.AO to decide the issue in terms of our observations herein above, failing which the Ld.AO would be at liberty to dispose off the issue in accordance with law. 19. In combined result, ITA Nos. 109, 110, 118, 125, 126/RPR/2022 of the assessee are partly allowed for statistical purposes. ITA No. 111, 112, 113, 116 117/RPR/2022: 20. Now, we shall take up the appeal in ITA No. 111/RPR/2022 for the AY 2011-12 as the lead matter, since the issue pertaining to disallowance u/s 80P of the Income Tax Act, 1961, raised in these appeals (ITA Nos. 111, 112, 113, 116 117/RPR/2022) are common and identical, therefore, the ratio of our observations in order passed in ITA No. 111/RPR/2022, shall be applied mutatis-mutandis to the remaining appeals i.e. ITA Nos. 112, 113, 116 117/RPR/2022. The grounds of appeal raised by the assessee in ITA No. 111/RPR/2022, are as under: 1. That under the facts and law, the Ld. Commissioner of the income Tax (Appeals), National Faceless Center (NFAC), New Delhi erred in the passing order u/s 250 ex parte without allowing opportu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th part relief to the assessee by remitting certain issues back for verification to the AO. 23. Being aggrieved with the order of the Ld.CIT(A), the assessee has carried the matter before us. 24. At the beginning of the hearing, it was pointed out by the Registry that the appeal of the assessee is delayed by 24 days, for which, an affidavit was submitted by the Manager of the Co-operative Society, stating the reasons similar to that of we have observed in ITA No. 108/RPR/2022, we, therefore, in view of the submissions of the assessee with regard to delay in filing of the appeal, which we find that there were reasonable and sufficient cause, whereby the assessee was prevented to file its appeals in the prescribed time. Therefore, we find it appropriate to condone the delay. 25. Since, the delay of the assessee was condoned, now we are taking up the issues in the present appeal for our consideration and adjudication. 26. At the outset, in all these five appeals i.e. ITA No. 111, 112, 113, 116 117/RPR/2022, there was none appeared on behalf of the assessee, however, written submissions were filed by the assessee dated 22.07.2023, which reads as under: 1. Assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e said interest was earned in the normal course of its business of providing credit facilities to its members and is directly attributable to the banking business being carried on by the assessee society, interest earned on surplus funds deposited with co-operative bank is duly eligible for deduction u/s. 80P(2)(a)(i). However, AO had disallowed the deduction u/s. 80P(2)(a)(i) on interest on deposit with co-operative bank of Rs. 18,25,283/- by alleging that the assessee society had made such deposits as an ordinary investor and hence, interest on such investment was liable to be taxed under the head Income from other sources and not as Business Income eligible for deduction u/s. 80P(2)(a)(i). On first appeal, CIT (Appeals) has upheld the said action of AO. That your honour aforesaid ground of appeal is duly covered in favour of the assessee society by the decision of divisional bench of Hon'ble ITAT, Raipur dt. 04.08.2022 in 22 cases of Gramin Sewa Sahakari Samiti Maryadit (Co-operative society) by taking appeal in ITA No. 126/RPR/2017 for the A.Y. 2014/15 as the lead matter. Copy of said decision of ITAT is enclosed. Relevant extract of the above referred de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id observations direct the AO to allow the assessee's claim for deduction under Sec. 80P(2)(a)(i) of Rs. l,39,450/-. The Ground of appeal No. 1 (i) raised by the assessee is allowed in terms of our aforesaid observations . (Page No. 15 of the ITAT order) The assessee society prays that - As can be affirmed from the decision of divisional bench of the Hon'ble ITAT' Raipur in ITA No. 126/RPR/2017 Ors (supra.), income earned by the assessee society by way of interest on deposit of surplus funds during the course of it's banking business amounting to Rs. 18,25,283/- in the F.Y. 2010/11 relevant to the A.Y. 2011/12 is duly eligible for deduction u/s 80P(2)(a)(i) and hence, the same should kindly be allowed. ' Ground No. 3:- That under the facts and the law, the Ld CIT (Appeals) NFAC Delhi further erred in treating 35% surplus of Paddy procurement business amounting to Rs. 1,93,998/- as ineligible for deduction u/s 80P(2). Prayed that the deduction u/s 80P(2) be allowed and the addition be deleted. That in this case, either during the course of assessment proceedings or before the CIT (Appeals), the assessee society had not submitted d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of such surplus. The AO by observing that such activity does not qualify for deduction u/s 80P of the Act, deemed income from such activity as income from business and treated the same as part of total income of the assessee society. On first appeal, CIT (Appeals) has upheld the said action of the AO. That your honour aforesaid ground of appeal is duly covered in favour of the assessee society by the decision of divisional bench of Hon'ble ITAT, Raipur dt. 04.08.2022 in 22 cases of Gramin Sewa Sahakari Samiti Maryadit (Co-operative society) by taking appeal in ITA No. 126/RPR/2017 for the A.Y. 2014/15 as the lead matter. Copy of said decision of ITAT is enclosed. Relevant extract of the above referred decision is reproduced below for your ready reference: - 16. Adverting to the assessee's claim for deduction under Sec. 80P(2)(c)(ii) of the Act of Rs. 5.54,758/- i.e. profit from PDS activity i.e, distribution of essential commodities to the ration holders through fair price shop, it was submitted by the Ld. AR that the said issue had already been adjudicated upon by the Tribunal in the case of Gramin Sewa Sahakari Samiti Maryadit Ors Vs. ITO, Ward-l(3) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... losed. Relevant extract of the above referred decision is reproduced below for your ready reference: - 19. Before us, it is the claim of the Ld. AR that the aforesaid issue is squarely covered by the order of the Tribunal in the case of Gramin Sewa Sahakari Samiti Maryadit Ors. Vs. the ITO, Ward-l(3), Raipur in ITA No. l 14/RPR/2016 Ors, dated 23.02.2022. It was submitted by the Id. AR that the Tribunal in its aforesaid order, had observed, that the dividend income received by a cooperative society on the shares of a co-operative bank held by it would be eligible for deduction under Sec. 80P(2)(d) of the Act. Admittedly, in the case of Gramin Sewa Sahakari Samiti Maryadit Ors. Vs. the ITO, Ward-1(3), Raipur in ITA No. 114/RPR/2016 Ors the Tribunal, had observed, that the dividend income received by a cooperative society on the shares of a cooperative bank held by it would be eligible for deduction under Sec. 80P(2)(d) of the Act. (Page Nos. 22 to 23 of the ITAT order) We find that as stated by the Ld. AR, and rightly so, as the aforesaid issue in hand i.e, entitlement of a co-operative society for claim of deduction under Sec. 80P(2)(d) qua the dividend rece ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No. 2 of the assessee s appeal is pertaining to declining of deduction u/s. 80P(2)(a)(i) of the Act, we find that the issues of the present appeals is squarely covered by the order of the ITAT relied upon by the assessee (supra), wherein, support was drawn from the judgment of the Hon ble High Court of Karnataka in the case of Tumkur Merchants Souharda Cooperative Ltd., in ITA No. 307/2014 dated 28.10.2014, on the basis of its exhaustive deliberations concluded that interest income earned on the surplus fund which were part as deposit by the cooperative society in the normal course of business of providing credits facilities to its members i.e. At a point of time when there were no takers for the said funds was duly entitled for deduction u/s. 80P(2)(a)(i) of the Act, observing as under: 13. We shall first advert to the assessee s grievance that the lower authorities had erred in declining its claim for deduction u/s. 80P(2)(a)(i) of the Act, i.e, as regards the interest income that was earned on the surplus funds which were deposited by it with Jila Sahakari Kendriya Bank, i.e, a co-operative bank. After deliberating at length on the issue in hand, we find that the aforesai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ream of its business activity, therefore, the interest income received on such short-term deposits was duly eligible for deduction under the aforesaid statutory provision, i.e., Sec. 80P(2)(a)(i) of the Act. We may herein observe, that though the assessee-society in addition to its business of providing credit facilities to its members was also engaged in other multiple activities for its members, viz. business of paddy procurement, sale of fertilizers, seeds, manures and pesticides and sale of controlled items under Public Distribution System (PDS), however, it is neither the case of the revenue nor a fact discernible from the record that the funds deposited by the assessee-society with the bank, viz. Jila Sahakari Kendriya Bank (supra) were the amounts that were payable by the society to its members, and the same having being retained were for the time being invested as a short-term deposit/security with the bank. If that would have been so, then, the interest income earned on such short-term deposit/security with the bank would not have been eligible for deduction u/s. 80P(2)(a)(i) of the Act. But then, as the amount deposited by the assessee-society with the bank, viz. Jila Sah ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... refore, whether this interest is attributable to the business of providing credit facilities to its members, is the question. In this regard, it is necessary to notice the relevant provision of law i.e. section 80P(2)(a)(i): Deduction in respect of income of cooperative societies: 80P. (1) Where, in the case of an assessee being a cooperative society, the gross total income includes any income referred to in sub-section (2), there shall be deducted, in accordance with and subject to the provisions of this section, the sums specified in sub-section (2), in computing the total income of the assessee. (2) The sums referred to in sub-section (1) shall be the following, namely: (a) in the case of a co-operative society engaged in (i) carrying on the business of banking or providing credit facilities to its members, or (ii) xxx (iii) xxx (iv) xxx (v) xxx (vi) xxx (vii) xxx the whole of the amount of profits and gains of business attributable to any one or more of such activities. 7. The word attributable used in the said section is of great importance. The Apex Court had an occasion to consider the meaning of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come is attributable to the profits and gains of the business of providing credit facilities to its members only. The society is not carrying on any separate business for earning such interest income. The income so derived is the amount of profits and gains of business attributable to the activity of carrying on the business of banking or providing credit facilities to its members by a co-operative society and is liable to be deducted from the gross total income under section 80P of the Act. 9. In this context when we look at the judgment of the Apex Court in the case of M/s. Totgars Co-operative Sale Society Ltd, on which reliance is placed, the Supreme Court was dealing with a case where the assessee co-operative society, apart from providing credit facilities to the members, was also in the business of marketing of agricultural produce grown by its members. The sale consideration received from marketing agricultural produce of its members was retained in many cases. The said retained amount which was payable to its members from whom produce was bought, was invested in a short-term deposit/security. Such an amount which was retained by the assessee-society was a liability a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessing Officer to allow deduction of Rs. 7,98,705/- u/s. 80P(2)(a)(i) of the Act on the interest income earned by the assessee society on its deposits with the co-operative bank. Thus, the Ground of appeal No. 1 raised before us is allowed in terms of our aforesaid observations. 31. The aforesaid issue involved in the present appeal regarding allowability of assessee s claim pertaining to sec.80P(2)(a)(i) of the Act, on the interest on the bank deposit remain the same as were there in ITA No. 126/RPR/2017 Others (supra), as relied upon by the assessee, therefore, we respectfully following the same, direct the AO to allow the assessee s claim for deduction u/s. 80P(2)(a)(i) of the Act, of Rs. 18,25,283/-. 32. In the result, Ground No. 2 of the appeal of the assessee is allowed in terms of our observation hereinabove. 33. We shall now take up Ground No. 3 of the assessee, wherein, the grievance of the assessee is that both the revenue authorities had erred in law and facts of the case in declining the assessee s claim for deduction of income from paddy requirement business for Rs. 1,93,900/- u/s. 80P(2)(a)(iii) of the Act. 34. For adjudication of this issue in Groun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... addy from its members only. It was submitted by the Ld. AR that though as per the policy of the Government the assessee-society is obligated to purchase paddy from each and every farmer, whether member or non-member, i.e whosoever approaches it, but transactions with the non-members during the year under consideration was minimal and by no means exceeded 25% of the total transactions. In order to buttress his aforesaid claim the Ld. AR had taken us through the compilation of paddy purchase by the assessee-society, Page 1 to 55 of additional documentary evidence that was placed on our record. By drawing support from compilation of paddy purchase from its members, i.e. Page 1A to 255 of the additional documentary evidences filed before us, it was submitted by the ld. A.R that only a small fraction of the paddy procurement was carried out by the assessee society from non-members. In the backdrop of his aforesaid contentions, the Ld. AR had claimed that the restriction of its claim for deduction u/s 80P(2)(a)(iii) to 35% of the profit from paddy procurement business so made by the Assessing Officer was not only on the higher side, but in fact exorbitant and unrealistic. 17. After ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the file of the A.O for the limited purpose of restricting the said claim of deduction to the extent of the profit relatable to the marketing of the agricultural produce of the members of the assessee society. In the course of the set-aside proceedings the AO shall re-adjudicate the assessee s claim for deduction under Sec. 80P(2)(a)(iii) i.e. after determining as to what extent the assessee society had facilitated the marketing of the agricultural produce grown by its members, and thus, restrict it s claim for deduction u/s. 80P(2)(a)(iii) only to the extent of the profit relatable thereto. Needless to say, the assessee shall in the course of the set-aside proceedings furnish the requisite details/documents that are called for by the A.O. Thus, the Ground of appeal No. 1 (ii) raised by the assessee is allowed for statistical purposes in terms of our aforesaid observations. 36. Respectfully following the aforesaid observation of the ITAT in ITA No. 126/RPR/2017 Others (supra), wherein, it was observed that the claim of the deduction would be limited to the extent, it had facilitated the marketing of agricultural produce of its members. Though, we agreed with the claim of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Assessing Officer for doing the needful. During the course of the set-aside proceedings, the Assessing Officer is directed to restrict the assessee s claim for deduction as regards its profit from PDS only to the extent of its net profit, i.e., after considering the proportionate expenses. Needless to say, the assessee shall in the course of set-aside proceedings furnish the requisite details/documents as would be called for by the Assessing Officer. The Ground of appeal No. 3 is allowed for statistical purposes in terms of our aforesaid observations. Considering our aforesaid observations in the order passed in ITA No. 114/RPR/2016 Ors, dated 23.02.2022, we on the same terms restore the matter to the file of the AO, with a direction to restrict the assessee s claim for deduction as regards its profit from PDS only to the extent of its net profit i.e., after considering the proportionate expenses. Thus, the Ground of appeal No. 1 (iv) is allowed for statistical purposes in terms of our aforesaid observations. 40. Since Ground No 4 of the present appeal is covered by the aforesaid observations of the Tribunal in ITA No. 126/RPR/2017 Others (supra), we on the sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aterial available on record, as well as the judicial pronouncements relied upon by them. Our indulgence in the present appeal has been sought, for adjudicating, as to whether 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, or not. In our considered view, the issue involved in the present appeal revolves 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 co-operative banks, 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 i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oresaid amendment would jeopardise the claim of deduction of a co-operative society under Sec. 80P(2)(d) in respect of its interest income on investments/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 cooperative society, the claim of deduction under the aforesaid statutory provision, viz. Sec. 80P(2)(d) would be duly available. We find that the term cooperative 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 subsection (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 b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... posits parked with a co-operative bank. Although, in all fairness, we may herein observe that the Hon'ble High Court of Karnataka in the case of Pr. CIT Vs. Totagars co-operative Sale Society (2017) 395 ITR 611 (Karn), had concluded that a co-operative society would not be entitled to claim of deduction under Sec. 80P(2)(d). At the same time, we find, that 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 Hon ble High Court of Gujarat in the case of State Bank Of India Vs. CIT (2016) 389 ITR 578 (Guj), had 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. We find 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 afor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... concurring with the claim of the ld. AR we herein vacate the disallowance of the assessee s claim for deduction u/s 80P(2)(d) qua the dividend received on shares of a co-operative bank, viz. Jila Sahakari Bank. Thus, the Ground of appeal No. 1(v) raised in appeal by the assessee is allowed in terms of our aforesaid observations. 44. Respectfully following the aforesaid observation of the ITAT in ITA No. 126/RPR/2017 Others (supra), wherein, it was observed that the entitlement of cooperative society for claiming deduction u/s. 80P(2)(d) of the Act, qua the dividend received on shares of cooperative banks is eligible for deduction u/s 80P(2)(d), which is squarely covered by the aforesaid decision, therefore, principally concurring with the claim of assessee i.e. disallowance made by the AO sustained by the Ld.CIT(A) stands vacated. In the result, Ground No. 5 of the assessee is allowed. 45. In the result, appeal filed by the assessee in ITA No. 111/RPR/2022 is partly allowed for statistical purposes. 46. Now, we shall be taking ITA Nos. 112, 113, 116 117/RPR/2022, which are also barred by limitation as pointed out by the Registry, however, we condone the delay in all ..... X X X X Extracts X X X X X X X X Extracts X X X X
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