TMI Blog2024 (4) TMI 449X X X X Extracts X X X X X X X X Extracts X X X X ..... that co-operative banks are not specie of genus co-operative society, which would entitled to exemption or deduction under the special provisions of Chapter VI-A in the form of section 80P of the Act. Thus the allowance of deduction of the income derived by way of interest from the investment in the form of FDR's with other banks was incorrect. No infirmity in the Revision order passed by the Ld. PCIT which does not warrant any interference. Thus the grounds raised by the assessee is devoid of merits liable to be rejected. - Shri Waseem Ahmed, Accountant Member And Shri T.R. Senthil Kumar, Judicial Member For the Assessee : Written Submission For the Revenue : Shri Shramdeep Sinha, CIT-DR ORDER PER : T.R. SENTHIL KUMAR, JUDICIAL MEMBER: - This appeal is filed by the Assessee as against the Revision order dated 01.02.2022 passed by the Principal Commissioner of Income Tax, Rajkot-1, arising out of the assessment order passed under section 143(3) of the Income Tax Act, 1961 (hereinafter referred to as the Act ) relating to the Assessment Year 2017-18. 2. The Grounds of Appeal raised by the Assessee reads as under: 1. The Ld. C.I.T. has erred in law and facts in passing order U/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reliance about Rajkot Bench decisions in the case of Rajkot Jilla Sahakari Kharid Vechan Sangh wherein it was held that interest received from Cooperative Bank is allowable as deduction u/s. 80P of the Act and also relied on the following other case laws;. (i) Aliudepur Seva Sahakar Mandli Ltd. in ITA No. 269/Rjt/2022, A.Y. 2019-20 dated 24.02.2023 (ii) Antaliya Kheti Vikas Karyakari Seva Sahakari Mandali Ltd. in ITA No. 276/Rjt/2022, A.Y. 2019-20 dated 24.02.2023 (iii) Dahida Seva Sahakari Mandli Ltd. in ITA No. 277/Rjt/2022, A.Y. 2019-20 dated 24.02.2023 (iv) Nava Vaghaniya Seva Sahakar Mandli Ltd. in ITA No. 13/Rjt/2022, A.Y. 2019-20 dated 01.03.2023 3.2. It is further stated Miscellaneous Applications filed by the Revenue were been dismissed by the Hon ble Rajkot Tribunal in the following cases: (i) Trambakpur Sahakari Mandli Ltd.- M.A. No. 10/Rjt/2023 in ITA No.23/Rjt/2022, A.Y. 2019-20 dated 08.11.2023 (ii) Nava Ujala Seva Sahakri Mandli Ltd. M.A. No. 13/Rjt/2023 in ITA No. 20/Rjt/2022, A.Y. 2019-20 dated 08.11.2023 (iii) Dhar Seva Sahkari Mandli Ltd. M.A. No. 11/Rjt/2023 in ITA No. 33/Rjt/2022, A.Y. 2019-20 dated 08.11.2023 (iv) Medi Seva Sahakari Mandli Ltd. M.A. No. 12/Rj ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urprising that the submissions of department and the reliance of Department on Katlary Kariyana (2022) is unreasonably being ignored by Id. ITAT in their orders, viz order in the case of Tifls Cooperative in ITA number 115/Rjt/2023, where despite recording the reliance of department on Katlary Kariyana, Ld. ITAT has ignored the ratio-decidendi of jurisdictional High Court. It is prayed that such cases cannot act as precedent or bar for Ld. ITAT Rajkot, as these decisions have been sub- silentio on the ratio of jurisdictional HC in Katlary Kariyana (2022). In this case, such violation of judicial discipline may be avoided and appeal of the appellant may be dismissed while upholding the order of Ld. PCIT in 263. 5. We have given our thoughtful consideration and fully gone through the submission filed by the Revenue. It is appropriate to consider the jurisdictional high Court judgement in the case of Katlary Kariyana Merchant Sahkart Sarafi Mandali Ltd. Vs. ACIT (2022) 140 taxmann.com 602 (Gujarat) wherein it was held as follows: 11. In this context, when we look at the facts of the case on hand, it is not in dispute that the writ applicant cooperative Society is incorporated as Coope ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... business activity and had prayed for deductions under section 80P (2) of the Income Tax Act. 13. Similar issue arose for consideration before the Hon'ble High Court of Karnataka (Dharwad Bench) in the case of Principal Commissioner of Income Tax and ors. Vs. Totagars co-operative sale Society, reported in (2017) 395 ITR 611(KAR). The substantial questions of law which arose for consideration as recorded in Para1 are reproduced as under: (I) Whether the assessee, Totagar Co-operative Sale Society, Sirsi, is entitled to 100% deduction under Section 80P(2)(d) of the Income Tax Act, 1961 (for short 'the Act') in respect of whole of its income by way of interest earned by it during the relevant Assessment Years from 2007-2008 to 2011-2012 on the deposits or investments made by it during these years with a Co-operative Bank, M/s. Kanara District Central Co-operative Bank Limited? (II) Whether the Supreme Court decision in the case of the present respondent assessee, Totgar Co-operative Sale Society Limited itself rendered on 08th February 2010, in Tot- gar's Co-operative Sale Society Limited v. ITO , reported in MANU/SC/0095/2010: (2010) 322 ITR 283 SC : (2010) 3 SCC 223 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in- come derived from investing surplus funds with the State Bank of India must be closely linked with the business of providing credit facilities for it to be held that it is attributable to the business of the assessee. Therefore, the profits and gains can be said to be directly attributable to the business of providing credit facilities to its members if there is a direct and proximate connection between the profits gains and the business of the appellant. In the present case there is no obligation upon the appellant to invest its surplus funds with the State Bank of India. In- vesting surplus funds in a bank is no part of the business of the assessee of providing credit facilities to its members. Therefore, it is only the interest derived from the credit provided to its members which is deductible under section 80P(2)(a)(i) of the Act and the interest derived by depositing surplus funds with the State Bank of India not being attributable to the business carried on by the appellant, cannot be deducted under section 80P(2)(a)(i) of the Act. If the appellant wants to avail of the benefit of deduction of such interest income, it is always open for it to deposit the surplus funds wi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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