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www.taxpublishers.in Income Tax Act, 1961, Section 80P(2)(a)(i) Deduction under section 80P--*Co-operative society--Interest earned from co-operative institutions* *Conclusion:* Interest income earned by co-operative society on investments with co-operative banks/institutions, would be entitled for claim of deduction under section 80P(2)(a)(i). AO disallowed assessee-society s claim of deduction under section 80P(2)(a)(i) in respect of interest earned from co-operative institutions. CIT(A) upheld the disallowance. *Held:* In view of decision of Co-ordinate Bench of this Tribunal in the case of Rena Sahakari Sakhar Karkhana Ltd. v. Pr. CIT-2, Aurangabad [ITA No. 1249//PUN/2018, dt. 7-1-2022] : 2022 TaxPub(DT) 0787 (Pune-Trib), interest income earned by co-operative society on investments with co-operative banks/institutions, would be entitled for claim of deduction under section 80P(2)(a)(i). *Decision:* In assessee s favour *Followed:* Rena Sahakari Sakhar Karkhana Ltd. v. Pr. CIT-2, Aurangabad [ITA No. 1249//PUN/2018, dt. 7-1-2022] : 2022 TaxPub(DT) 0787 (Pune-Trib) Income Tax Act, 1961, Section 80P(2)(a)(i) Deduction under section 80P--*Co-operative society--Interest earned from other banks* *Conclusion:* Interest income derived by co-operative-society from nationalized/other banks would qualify for deduction under section 80P(2)(a)(i). AO disallowed assessee-society s claim of deduction under section 80P(2)(a)(i) in respect of interest earned from other banks. CIT(A) upheld the disallowance. *Held:* In view of decision of High Court in the case of The Vavveru Co-operative Rural Bank Ltd. v. The Chief CIT, Vijayawada (2017) 396 ITR 371 (AP) : 2017 TaxPub(DT) 1639 (Hyd-HC), interest income derived by co-operative-society from nationalized/other banks would qualify for deduction under section 80P(2)(a)(i). *Decision:* In assessee s favour *Followed:* The Vavveru Co-operative Rural Bank Ltd. v. The Chief CIT, Vijayawada (2017) 396 ITR 371 (AP) : 2017 TaxPub(DT) 1639 (Hyd-HC) IN THE ITAT PUNE BENCH SATBEER SINGH GODARA, J.M. Sharad Nagari Sahakari Patsanstha Maryadit v. ITO I.T.A. No. 335/PUN./2024 16 April, 2024 Assessee by: None Revenue by: Shri Manish Mehta ORDER *Satbeer Singh Godara, J.M.* This assessee s appeal for assessment year 2020-21, arises against the National Faceless Appeal Centre (in short the NFAC ) Delhi s Din and Order No. ITBA/NFAC/S/250/2023-24/ 1059217305(1), dated 29-12-2023, involving proceedings under section 143(3) of the Income Tax Act, 1961 (in short the Act ). Case called twice. None appears at assessee s behest. It is accordingly proceeded ex-parte. 2. Coming to the assessee s sole substantive grievance claiming Sec. 80P(2)(a)(i) deduction of Rs. 21,42,515 representing interest from cooperative institution(s) and other bank(s) involving Rs. 20,46,515 and Rs. 96,000 respectively; it is noticed that the same is no more res integra in light of this tribunal s recent coordinate bench s order ITA No. 1249//PUN/2018, dt. 7-1-2022 : 2022 TaxPub(DT) 0787 (Pune-Trib) in The Rena Sahakari Sakhar Karkhana Ltd. vs. PCIT s case has rejected the Revenue s identical arguments as follows : 3. After culmination of the assessment proceedings, the Principal Commissioner called for the assessment records of the assessee. It was observed by the Principal Commissioner that the assessee had during the year shown interest income from FDs with Co-operative Banks amounting to Rs. 75,38,534, against which it had claimed deduction under section 80P(2)(d) of the Act. It was observed by the Principal Commissioner, that the assessing officer while framing the assessment had allowed the aforesaid claim of deduction raised by the assessee. Observing, that as co-operative banks were commercial banks and not a co-operative society, therefore, the Principal Commissioner was of the view that the assessee was not eligible for claim of deduction under section 80P(2)(d). In the backdrop of his aforesaid conviction, the Principal Commissioner was of the view that the assessment order passed by the assessing officer under section 143(3), dated 07-3-2016, therein allowing the assesses claim for deduction under section 80P(2)(d), had therein rendered his order as erroneous, insofar it was prejudicial to the interest of the revenue. Accordingly, the Principal Commissioner not finding favour with the reply of the assessee, wherein the latter had tried to impress upon him that it was duly eligible for claim of deduction under section 80P(2)(d) of the Act, therein set aside the order of the assessing officer with a direction to redecide the issue afresh and reframe the assessment. 4. The assessee being aggrieved with the order of the Principal Commissioner has carried the matter in appeal before us. As the present appeal involved a delay of 52 days, therefore, the learned Authorised Representative took us through the reasons leading to the same. It was submitted by the learned Authorised Representative that as the then counsel of the assessee society who was looking after its tax matters, viz. Shr. Ravikiran Pandurang Todkar, Chartered Accountant was taken unwell due to kidney failure and had undergone kidney transplant, therefore, due to his unavailability the appeal could not be filed within the stipulated time period. Our attention was drawn towards the "affidavit" of the assessee society wherein the aforesaid facts were deposed. On the basis of the aforesaid facts, it was submitted by the learned Authorised Representative that the delay involved in filing of the present appeal in all fairness may be condoned. Per contra, the learned Departmental Representative did not object to the seeking of condonation of the delay in filing of the appeal by the assessee society. After giving a thoughtful consideration, we are of the considered view, that as there were justifiable reasons leading to delay on the part of the assessee in filing of the present appeal before us, therefore, the same merits to be condoned. 5. On merits, it was submitted by the learned Authorised Representative, that as the assessing officer while framing the assessment had after making necessary verifications taken a plausible view, therefore, the Principal Commissioner had exceeded his jurisdiction by seeking to review the order passed by him in the garb of the revisional powers vested with him under section 263 of the Act. It was submitted by the learned Authorised Representative, that the issue as regards the eligibility of the assessee for claim of deduction under section 80P(2)(d) on interest income derived from investments/deposits lying with co-operative banks was squarely covered by the various orders of the coordinate benches of the Tribunal viz., (i). M/s Solitaire CHS Ltd. v. Principal Commissioner, ITA No. 3155/Mum/2019, dt. 29-11-2019 : 2019 TaxPub(DT) 8002 (Mum-Trib) ( ITAT G Bench, Mumbai); Kaliandas Udyog Bhavan Premises Co-op Society Ltd. v. ITO-21(2)(1), Mumbai, ITA No. 6547/Mum/2017, dt. 25-4-2018 : 2018 TaxPub(DT) 3128 (Mum-Trib); and (iii). Majalgaon Sahakari Sakhar Karkhana Ltd. v. ACIT, Circle-3, Aurangabad, ITA No. 308/Pun/2018, dt. 14-3-2019 : 2019 TaxPub(DT) 2137 (Pune-Trib). On the basis of his aforesaid contentions, it was averred by the learned Authorised Representative that as the Principal Commissioner had exceeded his jurisdiction and had not only sought to review the plausible view that was taken by the assessing officer after necessary deliberations which was in conformity with the order of the jurisdictional bench of the Tribunal, therefore, his order may be vacated and that of the assessing officer be restored. 6. Per contra, the learned Departmental Representative (for short D.R ) relied on the order passed by the Principal Commissioner under section 263 of the Act. It was submitted by the learned Departmental Representative, that as the assessee was not eligible for claim of deduction under section 80P on the interest income received on the investments/deposits lying with the co-operative banks, therefore, the Principal Commissioner finding the assessment order passed by the assessing officer under section 143(3), dated 7-3-2016 as erroneous, insofar it was prejudicial to the interest of the revenue, had rightly "set aside" his assessment with a direction to re-adjudicate the issue therein involved. Our attention was also drawn by the learned Departmental Representative to his written submissions and certain judicial pronouncements in support of his aforesaid contention. 7. We have heard the learned authorised representatives for both the parties, perused the orders of the lower authorities and the material 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 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 section 80P as had been made available on the statute, vide the Finance Act 2006, with effect from 1-4-2007. On a perusal of the order passed by the Principal Commissioner under section 263 of the Act, we find, that he was of the view that pursuant to insertion of sub-section (4) of section 80P, the assessee would no more be entitled for claim of deduction under section 80P(2)(d) in respect of the interest income that was earned on the amounts which were parked as investments/deposits with the cooperative 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 Principal Commissioner was of the view that the interest income earned on such investments/deposits would not be eligible for deduction under section 80P(2)(d) of the Act. 8. After necessary deliberations, we are unable to persuade ourselves to concur with the view taken by the Principal Commissioner. Before proceeding any further, we may herein cull out the relevant extract of the aforesaid statutory provision, viz. section 80P(2)(d), as the same would have a strong bearing on the adjudication of the issue before us. 80P(2)(d) (1). Where in the case of an assessee being a co-operative 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)................................................................................. (b)................................................................................. (c).................................................................................. (d) in respect of any income by way of interest or dividends derived by the cooperative society from its investments with any other co-operative society, the whole of such income; On a perusal of section 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 cooperative society shall be deducted in computing its total income. We may herein observe, that what is relevant for claim of deduction under section 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 Principal Commissioner, that with the insertion of sub-section (4) to section 80P of the Act, vide the Finance Act, 2006 with effect from 1-4-2007, the provisions of section 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 jeopardize the claim of deduction of a co-operative society under section 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 co-operative society, the claim of deduction under the aforesaid statutory provision, viz. section 80P(2)(d) would be duly available. We find that the term "co-operative society" had been defined under section 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 cooperative banks pursuant to the insertion of sub-section (4) to section 80P would no more be entitled for claim of deduction under section 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 investments held with a co-operative bank would be entitled for claim of deduction under section 80P(2)(d) of the Act. 9. In so far the judicial pronouncements that have been relied upon by the learned Authorised Representative are concerned, we find that the issue that a co-operative society would be entitled for claim of deduction under section 80P(2)(d) on the interest income derived from its investments held with a co-operative bank is covered in favour of the assessee in the following cases: (i). M/s Solitaire CHS Ltd. v. Pr. CIT, ITA No. 3155/Mum/2019, dt. 29-11-2019 : 2019 TaxPub(DT) 8002 (Mum-Trib) (ITAT G Bench, Mumbai); (ii). Majalgaon Sahakari Sakhar Karkhana Ltd. v. ACIT, Circle-3, Aurangabad, ITA No. 308/Pun/2018, dt. 14-3-2019 : 2019 TaxPub(DT) 2137 (Pune-Trib) (iiii). Kaliandas Udyog Bhavan Pemises Co-op. Society Ltd. v. ITO, 21(2)(1), Mumbai We further find that the Hon'ble High Court of Karnataka in the case of Pr. Commissioner of Income Tax and Anr. v. Totagars Cooperative Sale Society (2017) 392 ITR 74 (Karn) : 2017 TaxPub(DT) 0677 (Karn-HC) and Hon ble High Court of Gujarat in the case of State Bank Of India v. CIT (2016) 389 ITR 578 (Guj) : 2016 TaxPub(DT) 3564 (Guj-HC), had held, that the interest income earned by the assessee on its investments with a co-operative bank would be eligible for claim of deduction under section 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 section 80P was that the co-operative banks which were functioning at par with other banks would no more be entitled for claim of deduction under section 80P(4) of the Act. Although, in all fairness, we may herein observe that the Hon'ble High Court of Karnataka in the case of Pr. CIT v. Totagars co-operative Sale Society (2017) 395 ITR 611 (Karn) : 2017 TaxPub(DT) 1748 (Karn-HC), as had been relied upon by the learned Departmental Representative before us, had held, that a co-operative society would not be entitled to claim deduction under section 80P(2)(d); but then, the Hon'ble High Court in the case of Pr. CIT and Anr. v. Totagars Cooperative Sale Society (2017) 392 ITR 74 (Karn) : 2017 TaxPub(DT) 0677 (Karn-HC) and Hon ble High Court of Gujarat in the case of State Bank of India v. CIT (2016) 389 ITR 578 (Guj) : 2016 TaxPub(DT) 3564 (Guj-HC), 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 section 80P(2)(d) of the Act. Backed by the aforesaid conflicting 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. v. Siemens India Ltd. and Anr (1985) 156 ITR 11 (Bom) : 1985 TaxPub(DT) 0158 (Bom-HC), 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. CIT and Anr. v. Totagars Cooperative Sale Society (2017) 392 ITR 74 (Karn) : 2017 TaxPub(DT) 0677 (Karn-HC) and that of the Hon ble High Court of Gujarat in the case of State Bank of India v. CIT (2016) 389 ITR 578 (Guj) : 2016 TaxPub(DT) 3564 (Guj-HC), 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 section 80P(2)(d) of the Act. 10. Be that as it may, in our considered view, as the assessing officer while framing the assessment had taken a possible view, and allowed the assessee s claim for deduction under section 80P(2)(d) on the interest income earned on its investments/deposits with co-operative banks, therefore, the Principal Commissioner was in error in exercising his revisional jurisdiction under section 263 of the Act for dislodging the same. Accordingly, finding no justification on the part of the Principal Commissioner, who in exercise of his powers under section 263 of the Act, had dislodged the view that was taken by the assessing officer as regards the eligibility of the assessee towards claim of deduction under section 80P(2)(d), we set-aside his order and restore the order passed by the assessing officer under section 143(3), dated 07-3-2016. 3. Even the latter limb of interest income of Rs. 96,000 derived from investments made in nationalized/other bank(s), the Revenue could hardly dispute that case law The Vaveru Cooperative Rural Bank Ltd., v. CCIT (2017) 396 ITR 371 (AP) : 2017 TaxPub(DT) 1639 (Hyd-HC) that interest income(s) derived from such nationalized/other bank(s) also qualifies for section 80P deduction and thereby declined it s very stand. Faced with this situation, I adopt the foregoing detailed discussion mutatis mutandis to accept the assessee s section 80P(2)(a)(i)/80P(2)(d) deduction claim(s) in very terms. Ordered accordingly. 4. This assessee s appeal is allowed in above terms. Order pronounced in the open Court on 16-4-2024.

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Income Tax Act, 1961, Section 80P(2)(a)(i)

Deduction under section 80P--Co-operative society--Interest earned from co-operative institutions

Conclusion: Interest income earned by co-operative society on investments with co-operative banks/institutions, would be entitled for claim of deduction under section 80P(2)(a)(i).

AO disallowed assessee-society s claim of deduction under section 80P(2)(a)(i) in respect of interest earned from co-operative institutions. CIT(A) upheld the disallowance. Held: In view of decision of Co-ordinate Bench of this Tribunal in the case of Rena Sahakari Sakhar Karkhana Ltd. v. Pr. CIT-2, Aurangabad [ITA No. 1249//PUN/2018, dt. 7-1-2022] : 2022 TaxPub(DT) 0787 (Pune-Trib), interest income earned by co-operative society on investments with co-operative banks/institutions, would be entitled for claim of deduction under section 80P(2)(a)(i).

Decision: In assessee s favour

Followed: Rena Sahakari Sakhar Karkhana Ltd. v. Pr. CIT-2, Aurangabad [ITA No. 1249//PUN/2018, dt. 7-1-2022] : 2022 TaxPub(DT) 0787 (Pune-Trib)

Income Tax Act, 1961, Section 80P(2)(a)(i)

Deduction under section 80P--Co-operative society--Interest earned from other banks

Conclusion: Interest income derived by co-operative-society from nationalized/other banks would qualify for deduction under section 80P(2)(a)(i).

AO disallowed assessee-society s claim of deduction under section 80P(2)(a)(i) in respect of interest earned from other banks. CIT(A) upheld the disallowance. Held: In view of decision of High Court in the case of The Vavveru Co-operative Rural Bank Ltd. v. The Chief CIT, Vijayawada (2017) 396 ITR 371 (AP) : 2017 TaxPub(DT) 1639 (Hyd-HC), interest income derived by co-operative-society from nationalized/other banks would qualify for deduction under section 80P(2)(a)(i).

Decision: In assessee s favour

Followed: The Vavveru Co-operative Rural Bank Ltd. v. The Chief CIT, Vijayawada (2017) 396 ITR 371 (AP) : 2017 TaxPub(DT) 1639 (Hyd-HC)

IN THE ITAT PUNE BENCH

SATBEER SINGH GODARA, J.M.

Sharad Nagari Sahakari Patsanstha Maryadit v. ITO

I.T.A. No. 335/PUN./2024

16 April, 2024

Assessee by: None

Revenue by: Shri Manish Mehta

ORDER

Satbeer Singh Godara, J.M.

This assessee s appeal for assessment year 2020-21, arises against the National Faceless Appeal Centre (in short the NFAC ) Delhi s Din and Order No. ITBA/NFAC/S/250/2023-24/ 1059217305(1), dated 29-12-2023, involving proceedings under section 143(3) of the Income Tax Act, 1961 (in short the Act ).

Case called twice. None appears at assessee s behest. It is accordingly proceeded ex-parte.

2. Coming to the assessee s sole substantive grievance claiming Sec. 80P(2)(a)(i) deduction of Rs. 21,42,515 representing interest from cooperative institution(s) and other bank(s) involving Rs. 20,46,515 and Rs. 96,000 respectively; it is noticed that the same is no more res integra in light of this tribunal s recent coordinate bench s order ITA No. 1249//PUN/2018, dt. 7-1-2022 : 2022 TaxPub(DT) 0787 (Pune-Trib) in The Rena Sahakari Sakhar Karkhana Ltd. vs. PCIT s case has rejected the Revenue s identical arguments as follows :

3. After culmination of the assessment proceedings, the Principal Commissioner called for the assessment records of the assessee. It was observed by the Principal Commissioner that the assessee had during the year shown interest income from FDs with Co-operative Banks amounting to Rs. 75,38,534, against which it had claimed deduction under section 80P(2)(d) of the Act. It was observed by the Principal Commissioner, that the assessing officer while framing the assessment had allowed the aforesaid claim of deduction raised by the assessee. Observing, that as co-operative banks were commercial banks and not a co-operative society, therefore, the Principal Commissioner was of the view that the assessee was not eligible for claim of deduction under section 80P(2)(d). In the backdrop of his aforesaid conviction, the Principal Commissioner was of the view that the assessment order passed by the assessing officer under section 143(3), dated 07-3-2016, therein allowing the assesses claim for deduction under section 80P(2)(d), had therein rendered his order as erroneous, insofar it was prejudicial to the interest of the revenue. Accordingly, the Principal Commissioner not finding favour with the reply of the assessee, wherein the latter had tried to impress upon him that it was duly eligible for claim of deduction under section 80P(2)(d) of the Act, therein set aside the order of the assessing officer with a direction to redecide the issue afresh and reframe the assessment.

4. The assessee being aggrieved with the order of the Principal Commissioner has carried the matter in appeal before us. As the present appeal involved a delay of 52 days, therefore, the learned Authorised Representative took us through the reasons leading to the same. It was submitted by the learned Authorised Representative that as the then counsel of the assessee society who was looking after its tax matters, viz. Shr. Ravikiran Pandurang Todkar, Chartered Accountant was taken unwell due to kidney failure and had undergone kidney transplant, therefore, due to his unavailability the appeal could not be filed within the stipulated time period. Our attention was drawn towards the "affidavit" of the assessee society wherein the aforesaid facts were deposed. On the basis of the aforesaid facts, it was submitted by the learned Authorised Representative that the delay involved in filing of the present appeal in all fairness may be condoned. Per contra, the learned Departmental Representative did not object to the seeking of condonation of the delay in filing of the appeal by the assessee society. After giving a thoughtful consideration, we are of the considered view, that as there were justifiable reasons leading to delay on the part of the assessee in filing of the present appeal before us, therefore, the same merits to be condoned.

5. On merits, it was submitted by the learned Authorised Representative, that as the assessing officer while framing the assessment had after making necessary verifications taken a plausible view, therefore, the Principal Commissioner had exceeded his jurisdiction by seeking to review the order passed by him in the garb of the revisional powers vested with him under section 263 of the Act. It was submitted by the learned Authorised Representative, that the issue as regards the eligibility of the assessee for claim of deduction under section 80P(2)(d) on interest income derived from investments/deposits lying with co-operative banks was squarely covered by the various orders of the coordinate benches of the Tribunal viz., (i). M/s Solitaire CHS Ltd. v. Principal Commissioner, ITA No. 3155/Mum/2019, dt. 29-11-2019 : 2019 TaxPub(DT) 8002 (Mum-Trib) ( ITAT G Bench, Mumbai); Kaliandas Udyog Bhavan Premises Co-op Society Ltd. v. ITO-21(2)(1), Mumbai, ITA No. 6547/Mum/2017, dt. 25-4-2018 : 2018 TaxPub(DT) 3128 (Mum-Trib); and (iii). Majalgaon Sahakari Sakhar Karkhana Ltd. v. ACIT, Circle-3, Aurangabad, ITA No. 308/Pun/2018, dt. 14-3-2019 : 2019 TaxPub(DT) 2137 (Pune-Trib). On the basis of his aforesaid contentions, it was averred by the learned Authorised Representative that as the Principal Commissioner had exceeded his jurisdiction and had not only sought to review the plausible view that was taken by the assessing officer after necessary deliberations which was in conformity with the order of the jurisdictional bench of the Tribunal, therefore, his order may be vacated and that of the assessing officer be restored.

6. Per contra, the learned Departmental Representative (for short D.R ) relied on the order passed by the Principal Commissioner under section 263 of the Act. It was submitted by the learned Departmental Representative, that as the assessee was not eligible for claim of deduction under section 80P on the interest income received on the investments/deposits lying with the co-operative banks, therefore, the Principal Commissioner finding the assessment order passed by the assessing officer under section 143(3), dated 7-3-2016 as erroneous, insofar it was prejudicial to the interest of the revenue, had rightly "set aside" his assessment with a direction to re-adjudicate the issue therein involved. Our attention was also drawn by the learned Departmental Representative to his written submissions and certain judicial pronouncements in support of his aforesaid contention.

7. We have heard the learned authorised representatives for both the parties, perused the orders of the lower authorities and the material 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 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 section 80P as had been made available on the statute, vide the Finance Act 2006, with effect from 1-4-2007. On a perusal of the order passed by the Principal Commissioner under section 263 of the Act, we find, that he was of the view that pursuant to insertion of sub-section (4) of section 80P, the assessee would no more be entitled for claim of deduction under section 80P(2)(d) in respect of the interest income that was earned on the amounts which were parked as investments/deposits with the cooperative 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 Principal Commissioner was of the view that the interest income earned on such investments/deposits would not be eligible for deduction under section 80P(2)(d) of the Act.

8. After necessary deliberations, we are unable to persuade ourselves to concur with the view taken by the Principal Commissioner. Before proceeding any further, we may herein cull out the relevant extract of the aforesaid statutory provision, viz. section 80P(2)(d), as the same would have a strong bearing on the adjudication of the issue before us.

80P(2)(d) (1).

Where in the case of an assessee being a co-operative 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).................................................................................

(b).................................................................................

(c)..................................................................................

(d) in respect of any income by way of interest or dividends derived by the cooperative society from its investments with any other co-operative society, the whole of such income;

On a perusal of section 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 cooperative society shall be deducted in computing its total income. We may herein observe, that what is relevant for claim of deduction under section 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 Principal Commissioner, that with the insertion of sub-section (4) to section 80P of the Act, vide the Finance Act, 2006 with effect from 1-4-2007, the provisions of section 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 jeopardize the claim of deduction of a co-operative society under section 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 co-operative society, the claim of deduction under the aforesaid statutory provision, viz. section 80P(2)(d) would be duly available. We find that the term "co-operative society" had been defined under section 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 cooperative banks pursuant to the insertion of sub-section (4) to section 80P would no more be entitled for claim of deduction under section 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 investments held with a co-operative bank would be entitled for claim of deduction under section 80P(2)(d) of the Act.

9. In so far the judicial pronouncements that have been relied upon by the learned Authorised Representative are concerned, we find that the issue that a co-operative society would be entitled for claim of deduction under section 80P(2)(d) on the interest income derived from its investments held with a co-operative bank is covered in favour of the assessee in the following cases:

(i). M/s Solitaire CHS Ltd. v. Pr. CIT, ITA No. 3155/Mum/2019, dt. 29-11-2019 : 2019 TaxPub(DT) 8002 (Mum-Trib) (ITAT G Bench, Mumbai);

(ii). Majalgaon Sahakari Sakhar Karkhana Ltd. v. ACIT, Circle-3, Aurangabad, ITA No. 308/Pun/2018, dt. 14-3-2019 : 2019 TaxPub(DT) 2137 (Pune-Trib)

(iiii). Kaliandas Udyog Bhavan Pemises Co-op. Society Ltd. v. ITO, 21(2)(1), Mumbai

We further find that the Hon'ble High Court of Karnataka in the case of Pr. Commissioner of Income Tax and Anr. v. Totagars Cooperative Sale Society (2017) 392 ITR 74 (Karn) : 2017 TaxPub(DT) 0677 (Karn-HC) and Hon ble High Court of Gujarat in the case of State Bank Of India v. CIT (2016) 389 ITR 578 (Guj) : 2016 TaxPub(DT) 3564 (Guj-HC), had held, that the interest income earned by the assessee on its investments with a co-operative bank would be eligible for claim of deduction under section 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 section 80P was that the co-operative banks which were functioning at par with other banks would no more be entitled for claim of deduction under section 80P(4) of the Act. Although, in all fairness, we may herein observe that the Hon'ble High Court of Karnataka in the case of Pr. CIT v. Totagars co-operative Sale Society (2017) 395 ITR 611 (Karn) : 2017 TaxPub(DT) 1748 (Karn-HC), as had been relied upon by the learned Departmental Representative before us, had held, that a co-operative society would not be entitled to claim deduction under section 80P(2)(d); but then, the Hon'ble High Court in the case of Pr. CIT and Anr. v. Totagars Cooperative Sale Society (2017) 392 ITR 74 (Karn) : 2017 TaxPub(DT) 0677 (Karn-HC) and Hon ble High Court of Gujarat in the case of State Bank of India v. CIT (2016) 389 ITR 578 (Guj) : 2016 TaxPub(DT) 3564 (Guj-HC), 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 section 80P(2)(d) of the Act. Backed by the aforesaid conflicting 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. v. Siemens India Ltd. and Anr (1985) 156 ITR 11 (Bom) : 1985 TaxPub(DT) 0158 (Bom-HC), 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. CIT and Anr. v. Totagars Cooperative Sale Society (2017) 392 ITR 74 (Karn) : 2017 TaxPub(DT) 0677 (Karn-HC) and that of the Hon ble High Court of Gujarat in the case of State Bank of India v. CIT (2016) 389 ITR 578 (Guj) : 2016 TaxPub(DT) 3564 (Guj-HC), 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 section 80P(2)(d) of the Act.

10. Be that as it may, in our considered view, as the assessing officer while framing the assessment had taken a possible view, and allowed the assessee s claim for deduction under section 80P(2)(d) on the interest income earned on its investments/deposits with co-operative banks, therefore, the Principal Commissioner was in error in exercising his revisional jurisdiction under section 263 of the Act for dislodging the same. Accordingly, finding no justification on the part of the Principal Commissioner, who in exercise of his powers under section 263 of the Act, had dislodged the view that was taken by the assessing officer as regards the eligibility of the assessee towards claim of deduction under section 80P(2)(d), we set-aside his order and restore the order passed by the assessing officer under section 143(3), dated 07-3-2016.

3. Even the latter limb of interest income of Rs. 96,000 derived from investments made in nationalized/other bank(s), the Revenue could hardly dispute that case law The Vaveru Cooperative Rural Bank Ltd., v. CCIT (2017) 396 ITR 371 (AP) : 2017 TaxPub(DT) 1639 (Hyd-HC) that interest income(s) derived from such nationalized/other bank(s) also qualifies for section 80P deduction and thereby declined it s very stand. Faced with this situation, I adopt the foregoing detailed discussion mutatis mutandis to accept the assessee s section 80P(2)(a)(i)/80P(2)(d) deduction claim(s) in very terms. Ordered accordingly.

4. This assessee s appeal is allowed in above terms.

Order pronounced in the open Court on 16-4-2024.