TMI Blog2023 (9) TMI 777X X X X Extracts X X X X X X X X Extracts X X X X ..... of Jila Sahakari Bank, for the reason that as the latter was not a co-operative society, hence, the dividend income received therefrom would not be eligible for deduction u/s 80P(2)(d) - Admittedly, in the case of Gramin Sewa Sahakari Samiti Maryadit Ors. [ 2022 (3) TMI 75 - ITAT RAIPUR ] had observed, that the dividend income received by a co-operative 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. Thus vacate the disallowance of the assessee s claim for deduction. Other income which comprises of recovery from NPA accounts and receipts against paddy procurement as ineligible for deduction u/s. 80P(2) - Tribunal while disposing off the appeal in the case of Gramin Sewa Sahakari Samiti Maryadit Ors. [ 2022 (3) TMI 75 - ITAT RAIPUR ] while dealing with the assessee s claim for deduction of its income from paddy procurement business u/s. 80P(2)(a)(iii) of the Act had remanded the issue to the file of the A.O. Though concur with the claim of the assessee that the assessee society is entitled for deduction of its income from paddy procurement business u/s. 80P(2)(a)(iii), but restore the matter to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) on the following grounds of appeal: 1. That the learned CIT (Appeals) erred in confirming the addition of Rs. 38,88,571/- which is Gross Profit in PDS a/c made by the learned AO though after considering proportionate expenses of Rs. 36,07,768/-, there is profit of Rs. 2,60,923/-. Prayed that the addition of Rs. 38,88,571/- is unjustified and be deleted. 2. That under the facts and the law, the Ld. CIT (Appeals) erred in treating the dividend income amounting to Rs. 1,30,800/-as ineligible deduction u/s. 80P(2). Prayed that the dividend income is deductible u/s 80P(2)(d) and delete the addition. 3. That under the facts and the law, the Ld. CIT (Appeals) erred in treating the other income amounting to Rs. 9,05,369/- as ineligible deduction u/s. 80P(2). Prayed that the other income is deductible u/s 80P(2) and delete the addition. 3. At the very outset of the hearing of the appeals, it transpires that the captioned appeals are time barred by 10, 35, 37 38 days respectively. The assessee society has filed respective condonation applications dated 07.06.2023 stating reasons which are similar in nature except for the days of delay involved in the aforementioned appeals. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... zer, seeds, manures and pesticides as well as sale of controlled items under the Public Distribution System (PDS), had on 16.04.2013 filed its return of income for the assessment year 2012-13, declaring a total income of Rs. Nil (after claiming entire amount of its income as a deduction u/s 80P of the Act). Subsequently, the case of the assessee was selected for scrutiny assessment u/s. 143(2) of the Act. Assessment was, thereafter, framed by the Assessing Officer vide his order passed u/s. 143(3) of the Act, dated 19.03.2015 wherein the assessee s muti-facet claim for deduction under Sec. 80P of Rs. 53,62,432/- was declined a/w. disallowance of the amount of TDS on commission received on paddy procurement business, as under: Sl. No. Particulars Amount in Rs. 1. Disallowance of the assessee s claim for deduction of interest income u/s. 80P(2)(a)(i) of the Act. Rs. 15,44,096/- 2. Disallowance of the assessee s claim for deduction of profit from paddy procurement business u/s. 80P(2)(a)(iii) of the Act. Rs. 6,81,955/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n a thoughtful consideration to the aforesaid issue in the backdrop of the written submissions of the assessee appellant and the contentions advanced by the Ld. DR. As stated by the assessee, and rightly so, the Tribunal in the case of Gramin Sewa Sahakari Samiti Maryadit Ors Vs. ITO, Ward-1(3), Raipur in ITA No.114/RPR/2016 Ors., vide its order dated 23.02.2022 had after necessary deliberations on the issue in hand remanded the matter to the file of the A.O, with a specific direction i.e, to restrict its claim for deduction as regards its profit from PDS only to the extent of its net profit i.e., after considering the proportionate expenses, observing as under : 19. Before us, it is the claim of the assessee that as the profit from PDS activities after considering the proportionate expenses amounted to Rs. 3,08,338/-, therefore, its claim for deduction u/s. 80P(2)(c)(i) of the Act was liable to be restricted only to the said extent. After having given a thoughtful consideration to the claim of the Ld. AR, we though principally concur with his aforesaid claim, but then, the same cannot be accepted on the very face of it and would require factual verification. Therefore, for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erative 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. It was observed by the Tribunal as under: 22. After having given a thoughtful consideration to the aforesaid issue in hand, we are unable to concur with the view taken by the lower authorities. In our considered view, as a Co-operative bank falls within the realm of the definition of Co-operative Society as contemplated in Section 2(19) of the Act, therefore, the view taken by the lower authorities that dividend income received by the assessee from Jila Sahakari Kendriya Bank, Raipur, i.e a Cooperative Bank, would not eligible for deduction u/s. 80P(2)(d) of the Act cannot be sustained. Our aforesaid view is fortified by the order of the ITAT, Mumbai in the case of M/s Solitaire CHS Ltd Vs. Principal Commissioner of Income Tax-26, ITA No. 3155/Mum/2019, dated 29.11.2019 (wherein one of us, i.e, the JM was a party), had after exhaustive deliberations held as under: 6. We have heard the authorised representatives for both the parties, perused the orders of the lower authorities and the material available on record, as well as the judicial pronounc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (d) in respect of any income by way of interest or dividends derived by the co-operative society from its investments with any other co-operative society, the whole of such income; On a perusal of Sec. 80P(2)(d), it can safely be gathered that interest income derived by an assessee co-operative society from its investments held with any other co-operative society shall be deducted in computing its total income. We may herein observe, that what is relevant for claim of deduction under Sec. 80P(2)(d) is that the interest income should have been derived from the investments made by the assessee co-operative society with any other co-operative society. We are in agreement with the view taken by the Pr. CIT, that with the insertion of sub-section (4) of Sec. 80P, vide the Finance Act, 2006, with effect from 01.04.2007, the provisions of Sec. 80P would no more be applicable in relation to any co-operative bank, other than a primary agricultural credit society or a primary co-operative agricultural and rural development bank. However, at the same time, we are unable to subscribe to his view that the aforesaid amendment would jeopardise the claim of deduction of a co-operative societ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Bank Of India Vs. CIT (2016) 389 ITR 578 (Guj), had held, that the interest income earned by the assessee on its investments with a cooperative bank would be eligible for claim of deduction under Sec. 80P(2)(d) of the Act. Still further, we find that the CBDT Circular No. 14, dated 28.12.2006, also makes it clear beyond any scope of doubt that the purpose behind enactment of sub-section (4) of Sec. 80P was that the cooperative banks which were functioning at par with other banks would no more be entitled for claim of deduction under Sec. 80P(4) of the Act. Insofar the reliance placed by the Pr. CIT on the judgment of the Hon ble Supreme Court in the case of Totgars Co-operative Sale Society Ltd. vs. ITO (2010) 322 ITR 283 (SC) is concerned, we are of the considered view that the same being distinguishable on facts had wrongly been relied upon by him. The adjudication by the Hon‟ble Apex Court in the aforesaid case was in context of Sec. 80P(2)(a)(i), and not on the entitlement of a co- operative society towards deduction under Sec. 80P(2)(d) on the interest income on the investments/deposits parked with a co-operative bank. Although, in all fairness, we may herein observe th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng no justification on the part of the Pr. CIT, who in exercise of his powers under Sec. 263, had dislodged the view that was taken by the A.O as regards the eligibility of the assessee towards claim of deduction under Sec. 80P(2)(d), we set aside‟ his order and restore the order passed by the A.O under Sec. 143(3), date 14.09.2016. 10. Resultantly, the appeal filed by the assessee is allowed. Backed by our aforesaid observations, we not being able to persuade ourselves to subscribe to the view taken by the lower authorities, therein vacate the disallowance of the assessee s claim for deduction of Rs. 1,16,224/- u/s. 80P(2)(d) of the Act. The Ground of appeal No.4 is allowed in terms of the aforesaid observations. It is evident that as stated by the assessee, 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 received on shares of a co-operative bank is squarely covered by the aforesaid decision of the Tribunal in ITA No.114/RPR/2016 Ors (supra), dated 23.02.2022, therefore, principally concurring with the claim of the ld. AR, I herein vacate the disallowance of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Chhattisgarh Marketing Federation (CMF) had facilitated the procurement of paddy from the agriculturists, and for the said service was paid a fixed commission as per the rates prescribed by the Government. The gross profit of Rs. 16,21,218/- that was earned by the assessee from its aforesaid stream of business activity, i.e., paddy procurement business was claimed by it as a deduction u/s. 80P(2)(a)(iii) of the Act. However, as per the mandate of Sec. 80P(2)(a)(iii) the deduction therein contemplated was only available qua the marketing of the agricultural produce grown by members of the society, therefore, the Assessing Officer in the course of assessment proceedings had called upon the assessee society to produce the register maintained in respect of its paddy procurement for the year under consideration. As the register produced by the assessee society did not reveal the requisite details which were required to identify the members and non-members, therefore, the Assessing Officer in the backdrop of the said fact had restricted the assessee s claim for deduction u/s. 80P(2)(a)(iii) of the Act on an adhoc basis to 35% (i.e. nearly 1/3rd of the aforesaid gross profit) of the profi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id observation set-aside the matter to the file of the Assessing Officer, with a direction to re-adjudicate the same after considering the additional documentary evidence that had been filed by the asssessee before us. The A.O shall after determining as to what extent the assessee society had facilitated the marketing of the agricultural produce grown by non-members, therein, restrict the assessee s claim for deduction u/s. 80P(2)(a)(iii) of the Act 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. The Ground of appeal No.2 is allowed for statistical purposes in terms of our aforesaid observations. Considering the parity of the facts involved in the present case as against those which were involved in ITA No.114/RPR/2016 Ors., dated 23.02.2022, I am of the considered view that as stated by the assessee, and rightly so, the assessee society in the present case was principally entitled for deduction of its income from the business of paddy procurement u/s. 80P(2)(a)(iii) of the Act. However, as observed by me while disposing of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taken by the lower authorities who in absence of requisite details had declined the assessee s claim for deduction u/s. 80P w.r.t. such part of its other income . Accordingly, the view taken by the CIT(Appeals) to the said extent is upheld. Thus, the Ground of appeal No.3 raised by the assessee is partly allowed for statistical purposes in terms of our aforesaid observations. 20. I, thus, in terms of my aforesaid observations set-aside the order of the CIT(Appeal) and partly allow/allow for statistical purposes the appeal of the assessee in terms of the aforesaid observations. 21. Resultantly, the appeal of the assessee in ITA No.202/RPR/2023 for the assessment year 2012-13 is partly allowed/allowed for statistical purposes in terms of the aforesaid observations. ITA No.(s) 203/RPR/2023, 204/RPR/2023, 205/RPR/2023, 206/RPR/2023, 207/RPR/2023 208/RPR/2023 A.Ys. 2013-14, 2015-16, 2016-17 2017-18 22. As the facts and issues involved in the captioned appeals remains the same as were there before me in the appeal of Gramin Sewa Sahakari Samiti Maryadit in ITA No.202/RPR/2023 for assessment year 2012-13, therefore, the order therein passed while disposing off the said ..... X X X X Extracts X X X X X X X X Extracts X X X X
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