INCOME TAX OFFEICER, WARD 7(2)(5), BANGALORE, KORAMANGALA vs. KAMMAVARI CREDIT CO-OPERATIVE SOCIETY TD., BANASHANKARI

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ITA 775/BANG/2023Status: DisposedITAT Bangalore14 December 2023AY 2017-185 pages
AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that the issue was squarely covered in favour of the assessee by a coordinate bench's decision and jurisdictional High Court judgments. Therefore, the deduction under Section 80P(2)(a)(i) was rightly allowed by the CIT(A).

What were the facts?

The assessee, a cooperative society, earned interest income from fixed deposits made out of its surplus funds. The Assessing Officer disallowed the deduction claimed under Section 80P(2)(a)(i) of the Income Tax Act on this interest income.

What were the issues?

Whether interest income earned by a cooperative society from fixed deposits made out of surplus funds is eligible for deduction under Section 80P(2)(a)(i) of the Income Tax Act.

Which sections of the Income-tax Act were involved?

Section 80P(2)(a)(i)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘B’ BENCH : BANGALORE

Before: SHRI CHANDRA POOJARI

For Appellant: Shri Chattraj B, Advocate
For Respondent: Shri Subramanian S, Addl. CIT (DR), Shri Chattraj B, Advocate

ORDER

PER MADHUMITA ROY, JUDICIAL MEMBER

1.

The appeal filed by the Revenue is directed against the order dated 06/09/2023 passed by the National Faceless Appeal Centre (NFAC), Delhi vide DIN and Order No.ITBA/NFAC/S/250/2023-24/1055799399(1) arising out of the order dated 30/12/2019 passed by the ITO, Ward-7(2)(4) u/s 143(3) of the Act for assessment year 2017-18 wherein and where under the deduction u/s 80((2)(a)(i) of the Act claimed by the assessee has been allowed.

2.

The assessee before us is a cooperative society engaged in the business of extending credit facility and accepting deposits from its members, registered under Karnataka Cooperative Societies Act and has been assessed to Income-tax from year to year and also was allowed deduction u/s 80P(2)(a)(i) of the Act. In this particular year under consideration, the assessee kept various fixed deposits in credit State Cooperative Apex Ltd., and also other banks out of its surplus fund and earned interest to the extent of Rs.2,78,23,521/-.

3.

However, such deduction has been disallowed by the ld.AO. It is also the case of the assessee that identical issue in regard to addition already deleted in assessee’s case for asst. Year 2012-13 and 2014-15 by the CIT(A),NFAC. In that view of the matter, following the decision taken by the predecessor, the present CIT(A), NFAC, Delhi has passed order in favour of the assessee allowing the deduction u/s 80P(2)(1) of the Act.

4.

At the time of hearing of instant appeal, the ld.Counsel for the assessee submitted before us that sec. 80P(2)(a)(i) of the Act is clearly covered in favour of the assesee by and under the judgment passed by this coordinate Bench of this Tribunal in the case of M/s Kammavari Credit Co-operative Society Ltd., in for the asst. year 2014-15. A copy of the said order has also been placed before us. Such statement rendered by assessee’s counsel could not be controverted by the ld.DR.

5.

We have heard both the parties and perused the materials on record, we have considered the judgment passed by the coordinate bench in the case of M/s Kammavari Credit Co- operative Society Ltd., cited Supra. We find that while dealing with the identical issues, the Co-ordinate Bench was pleased to observe as follows:-

“3.1 The case of the assessee was otherwise. According to the assessee the interest earned by the co-operative society was attributable to the business activity of the appellant and a good portion of the said interest income was also from the investment with the other co-operative societies which is exempt u/s. 80P(2)(a)(i) of the Act. The assessee relied upon the judgement passed by the Hon'ble jurisdictional High Court in case of M/s. Guttigedarara Credit Co- operative Ltd. in of 2015 on this aspect. The case further made out by the assessee is that the fixed deposits were made out of the money not required by the society immediately for lending. Further that this was also not out of the money due to the members. In that view of the matter, the interest earned from such investment was attributable to the carrying out of the business of the appellant society and the judgment mentioned hereinabove in case of M/s. Guttigedarara Credit Co-operative Ltd. (supra) squarely applies to the facts of the present case. The ultimate prayer was to allow the income earned by the assessee. However, such contention made by the assessee was found to be not acceptable and the addition was made to the impugned amount which was ultimately deleted by the Ld.CIT(A), relying upon the judgment passed by the Hon'ble jurisdictional High Court in case of M/s. Guttigedarara Credit Co- operative Ltd. (supra) and in the case of Tumkur Merchants Souharda Credit Co-operative Ltd. in ITA no. 307 of 2014 and also the order passed by his predecessor in appeals in case for A.Ys. 2012-13 and 201314. At the time of hearing the instant appeal, the Ld.Counsel appearing for the assessee submitted before us that the issue is squarely covered by the judgment passed by the Hon'ble jurisdictional High Court in case of M/s. Guttigedarara Credit Co- operative Ltd. (supra) and the impugned addition has been rightly deleted by the Ld.CIT(A) applying the ratio laid down therein. Such contention made by the assessee, however, was not been able to be controverted by the Ld.DR. 4.1 Having heard the Ld.Counsel appearing for the parties and having regard to the facts and circumstances of the case, and particularly considering the judgment passed by the Hon'ble jurisdictional High Court in case of M/s. Guttigedarara Credit Co- operative Ltd. (supra) on the identical facts and circumstances of the case, we find that the order passed by the Ld.CIT(A) is just and proper so as to warrant interference. The same is, therefore, upheld. In that view of the matter, the appeal preferred by the revenue is found to be devoid of any merit and thus dismissed.”

6.

Thus, it appears that this issue is squarely covered in favour of the assessee and assessee is rightly allowed the deduction u/s 80P(2)(a)(i) of the Act by the ld.CIT(A). Considering the entire aspect and we do not find any reason to interfere with the orders passed by the ld.CIT(A) in granting relief to the assessee. Therefore, the appeal preferred by the Revenue is found to be devoid of any merit and hence dismissed.

7.

In the result, the appeal of the Revenue is dismissed.

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