BASAVESHWAR GRAMIN BIGARSHETI SAHAKARI PAT SANSTHA MARYAJATH MANGALWAR PETH JATH,SANGLI vs. INCOME TAX OFFICER, WARD-2, SANGLI, SANGLI

This appeal by the assessee arises out of the order dated 22-05-2023 passed by the CIT(A) in National Faceless Appeal Centre, Delhi u/s.250 of the Income-tax Act, 1961 (hereinafter also called ‘the Act’) in relation to the assessment year 2020-21.

There is no appearance from the side of the assessee despite notice. I have heard the ld. DR and gone through the relevant material on record. I, therefore, proceed to dispose of the appeal on merits.

Briefly stated, the facts of the case are that the assessee is a cooperative credit society engaged in the business of banking or providing credit facilities to its members. The assessee claimed deduction u/s.80P(2)(a)(i) under Chapter VIA of the Income-tax Act, 1961 (hereinafter also called ‘the Act’) for the equal amount leading to total income at Nil. During the course of assessment proceedings, the Assessing Officer (AO) observed that the assessee earned interest amounting to Rs.30,64,302/-. He worked out the proportionate interest income from cooperative banks forming part of business income at Rs.10,27,355/-, which in his opinion did not qualify for deduction u/s.80P(2)(a)(i). Eventually, the AO disallowed the deduction on this amount. The ld. CIT(A) countenanced the view point of the AO on this score, against which the assessee has approached the Tribunal.

The sole issue assailed in this appeal is no more res integra. The Pune Benches of the Tribunal in Rena Sahakari Sakhar Karkhana Ltd. Vs. Pr.CIT (ITA No.1249/PUN/2018) has held, vide its order dated 07-01-2022, that though co-operative banks, other than primary agricultural credit society or a primary co-operative agricultural and rural development bank, are not eligible for deduction pursuant to insertion of section 80P(4) w.e.f. 1.4.2007, but this provision does not dent the otherwise eligibility u/s 80P(2)(d) of the Act of a co- operative society on interest income on investments/deposits parked with a co-operative bank, which is a registered co-operative society as per section 2(19) of the Act, defining co-operative society to mean a co-operative society registered under the Co-operative Societies Act, 1912 or under any law for the time being in force. The assessee is also a co-operative society, being, registered as such.

Respectfully following the decision of the Division Bench as discussed supra, I overturn the impugned order and direct to grant deduction u/s.80P of the Act on the said interest income.

In the result, the appeal is allowed. Order pronounced in the Open Court on 28th July, 2023.