Technopolis Premises Co-operative Society Limited Vs PCIT (ITAT Mumbai)
We are of the considered view that though the co-operative bank pursuant to the insertion of sub-section (4) of Sec. 80P would no more be entitled for claim of deduction under Sec. 80P of the Act, however, as a co-operative bank continues to be a co-operative society registered under the Cooperative 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 Sec.80P(2)(d) of the Act.
FULL TEXT OF THE ITAT JUDGEMENT
The captioned appeal filed by the assessee is directed against the order passed by the Principal Commissioner of Income Tax-25, Mumbai (for short ‘ Pr.CIT’) under Sec. 263 of the Income Tax Act, 1961 (for short ‘Act’), dated 29.08.2019 for A.Y. 2015-16. The assessee has assailed the impugned order on the following grounds of appeal before us:-
“I. Order passed u/s. 263 bad-in-law and liable to be quashed.
1. The Learned Commissioner of Income-tax failed to appreciate that, the order passed by the Assessing Officer u/s. 143(3) is neither erroneous nor prejudicial to the interest of the revenue, hence the order passed u/s. 263 by the Commissioner of Income Tax is bad in law and liable to be quashed
2. Without prejudice to the above, during the assessment proceeding, the Assessing officer vide notice u/s. 142(1) dt. 30/10/2017 called details for deduction claimed under chapter VI-A and in regards to the same, the assessee vide letter dt. 15/11/2017 submitted detailed breakup of deduction claimed u/s 80P along with copies of interest certificates and the order passed by the Assessing officer u/s 143(3) was after considering the details and applying his mind, and hence the order of Assessing officer cannot be said to be erroneous or prejudicial to the interest of revenue and hence the order passed u/s 263 may be quashed.
II. Disallowance of deduction claimed u/s. 80(P)(2)(d) of Rs. 56,16,242/-
3. Without prejudice to the above, the learned Commissioner of Income-tax erred in directing the Assessing officer to disallow the claim of deduction u/s. 80P(2)(D) in respect of interest earned from deposits kept in co-operative banks without appreciating that, co-operatives banks are registered under the Co-operatives Societies Act, 1912 with a license to undertake banking activities and therefore assessee is eligible to claimed deduction u/s. 80(P)(2)(d). Accordingly the direction to disallow the deduction claimed u/s 80(P)(2)(d) is bad in law and without jurisdiction
4. Without prejudice to the above, the case laws relied by the Commissioner of Income tax is not applicable to the facts of the appellant hence the order of Commissioner may be quashed.
5. Without prejudice to the above, the learned Commissioner of Income-tax erred in directing the Assessing officer to calculate tax as per section 115JC and set aside to the Assessing officer without appreciating the fact that neither in the show cause notice the applicability of S.115JC of the Act, hence the order of revision may be quashed.
6. Without prejudice to above the order passed by the Assessing Officer is in accordance with the ratio laid down by various judgements of the Appellate Tribunal Mumbai, hence the revision order passed by the Commissioner may be quashed.
7. The appellant craves leave to add, amend, alter or delete any of the above grounds of appeal.
2. Briefly stated, the assessee which is a co-operative society had filed its return of income for A.Y. 2015-16 on 28.09.2015, declaring its total income at Rs. 57,39,670/-. Subsequently, the income of the assessee was assessed by the A.O under Sec. 143(3) of the Act, dated 23.12.2017 at a total income of Rs. 57,39,670/- (after allowing the assesses claim for deduction under Sec. 80P of Rs. 56,16,242/-).
3. The Pr.CIT after culmination of the assessment proceedings called for the records of the assessee. On a perusal of the records, the Pr. CIT was of the view that the assessment framed by the A.O under Sec. 143(3), dated 23.12.2017 was erroneous insofar it was prejudicial to the interest of the revenue on two counts viz. (i) that, the A.O had erroneously allowed the assesses claim for deduction under Sec. 80P(2)(d) on the interest income of Rs. 56,16,242/- that was earned from the investments made with the co-operative banks; and (ii) that, the A.O had erroneously worked out the tax liability of the assessee under the normal provisions at Rs. 19,47,515/- as against the alternate minimum tax (ALT) of Rs. 23,80,257/-. On the basis of his aforesaid observations the Pr.CIT called upon the assessee to explain as to why the assessment framed in its case may not be revised under Sec. 263 of the Act. In reply, the assessee assailed the validity of the jurisdiction assumed by the Pr. CIT under Sec. 263 of the Act. It was claimed by the assessee that as the A.O after necessary deliberations had framed the assessment, therefore, the exercise of the revisional jurisdiction under Sec. 263 by the Pr. CIT was clearly ousted. Also, the assessee tried to impress upon the Pr.CIT that no error did emerge from the assessment framed by the A.O vide his order passed under Sec. 143(3), dated 23.12.2017. It was averred by the assessee that its claim for deduction under Sec. 80P(2)(d) in respect of the interest income on its investments with co-operative banks was well in order. Apart from that, the assessee submitted before the revisional authority that the calculation of the AMT by the A.O suffered from a clerical mistake and the calculation of its tax liability under the normal provisions was rightly done by the A.O. However, the submissions of the assessee did not find favour with the Pr.CIT. Observing, that the assessment framed by the A.O under Sec. 143(3), dated 23.12.2017 was erroneous insofar it was prejudicial to the interest of the revenue for two reasons viz. (i) that, the A.O had wrongly allowed the assesses claim for deduction under Sec. 80P(2)(d) on the interest income earned from its investments with cooperative banks; and (ii) that, the tax liability of the assessee was not calculated under Sec. 115JC, the Pr.CIT „set aside‟ the assessment order and directed the A.O to pass a fresh order.
4. Aggrieved, the assessee has assailed the order passed by the Pr.CIT under Sec. 263, dated 29.08.2019 in appeal before us. The Learned Authorized Representative (for short „A.R‟) for the assessee took us through the observations recorded by the revisional authority in his order passed under Sec. 263 of the Act. It was submitted by the Ld. A.R that as the A.O had framed the assessment under Sec. 143(3), dated 23.12.2017 after necessary deliberations, therefore, the Pr.CIT was in error in seeking a review of the order in the garb of his revisional jurisdiction under Sec. 263 of the Act. It was submitted by the Ld. A.R that the assesses claim for deduction of the interest income of Rs. 56,16,242/- earned on its investments with cooperative banks under Sec.80P(2)(d) was in order and in conformity with the settled position of law. It was averred by the Ld. A.R that the A.O only after necessary deliberations as regards the entitlement of the assessee towards claim of deduction under Sec. 80P(2)(d) had allowed the same. Apart from that, it was vehemently submitted by the Ld. A.R that the aforesaid claim of deduction raised by the assessee under Sec. 80P(2)(d) was supported by host of orders of the jurisdictional Tribunal viz. (i) Kaliandas Udyog Bhavan Premises Co-op Society Ltd. Vs. ITO 21(2)(1), Mumbai [2018] 94 taxmann.com 15 (Mumbai-Trib.); (ii) Lands End Co-operative Housing Society Ltd. Vs. ITO [2016] 46 CCH 52 (Mum); (iii) Sea Green Co-operative Housing Society Ltd. Vs. ITO [IT Appeal No. 1343 (Mum) of 2017, dated 31-03-2017; and (iv) Merwanjee Cama Park Co-operative Housing Society Vs. ITO [IT Appeal No. 6139 (Mum) of 2014, dated 27-09-2017. In fact, it was submitted by the Ld. A.R that all of the aforesaid orders of the Tribunal were available at the time the assessment was framed by the A.O, vide his order under Sec. 143(3), dated 23.12.2017. As such, it was submitted by the Ld. A.R that now when the A.O while allowing the assesses claim deduction under Sec. 80P(2)(d) had taken a plausible view, which was in conformity with the aforesaid orders of the jurisdictional Tribunal, therefore, the Pr.CIT was clearly divested of his jurisdiction to hold the aforesaid view arrived at by the A.O as erroneous. As regards the observation of the Pr.CIT that the A.O had erred in not computing the tax liability of the assessee as per the AMT, it was submitted by the Ld. A.R that the aforesaid observation of the revisional authority was in itself based on incorrect working of the A.O in the ITNS. On the basis of his aforesaid contentions, it was averred by the Ld. A.R that as the Pr.CIT had erroneously assumed jurisdiction under Sec. 263 of the Act, therefore, the order passed by him was liable to be set aside.
5. Per contra, the Learned Departmental Representative (for short „D.R) relied on the order passed by the Pr. CIT under Sec. 263 of the Act. It was submitted by the Ld. D.R that as the assessment framed by the A.O was found to be erroneous insofar it was prejudicial to the interest of the revenue, therefore, the Pr.CIT has rightly exercised her revisional jurisdiction and „set aside‟ the assessment framed by the A.O, vide her order passed under Sec. 143(3),dated 23.12.2017.
6. We have heard the authorized representatives for both the parties, perused the orders of the lower authorities and the material available on record, as well as the jurisdictional pronouncements relied upon by them. As is discernible from the order of the Pr.CIT, the assessment framed by the A.O under Sec.143(3), dated 23.12.2017 had been held to be erroneous insofar it was prejudicial to the interest of the revenue, for two reasons viz. (i) that, the A.O had erroneously allowed the assesses claim for deduction under Sec. 80P(2)(d) on the interest income of Rs. 56,16,242/- that was earned from its investments made with the cooperative banks; and (ii) that, the A.O had erroneously worked out the tax liability of the assessee under the normal provisions at Rs. 19,47,515/- as against the alternate minimum tax (ALT) of Rs. 23,80,257/-.
7. We shall first advert to the view taken by the Pr.CIT that the A.O by erroneously allowing the assesses claim of deduction under Sec. 80P(2)(d) in respect of the interest income that was earned by it from its investments with the co-operative banks, had thus rendered the assessment framed by him under Sec. 143(3), dated 23.12.2017 as erroneous, insofar it was prejudicial to the interest of the revenue. On a perusal of the orders of the lower authorities, we find, that the assessee had during the year under consideration earned interest income of Rs. 56,16,242/- on its investments with the following co-operative banks :
