KAI FAKIRA JAIRAM PATIL SAHAKARI PATSANSTHA MARYADIT SHAHADA,NANDURBAR vs. INVCOME TAX OFFICER WARD-1, DHULE, DHULE
What did the Tribunal hold?
The Tribunal held that interest income earned by a cooperative society on deposits made out of surplus funds with cooperative banks and scheduled banks qualifies for deduction under Section 80P(2)(a)(i) and 80P(2)(d) of the Act.
What were the facts?
The assessee, a cooperative credit society, claimed deduction under Section 80P(2)(a)(i) for interest income earned on deposits with cooperative and scheduled banks. The Assessing Officer denied this exemption, and the National Faceless Appeal Centre confirmed the denial.
What were the issues?
Whether interest income earned by a cooperative society from deposits made with cooperative banks and scheduled banks is eligible for deduction under Section 80P(2)(a)(i) and 80P(2)(d) of the Income Tax Act, 1961.
Which sections of the Income-tax Act were involved?
AI-generated summary — verify with the full judgment below
Cases cited in this judgment(8)Show listHide list
Detected automatically from the text. Citations are also linked where they appear in the judgment. The count shows how many other judgments on BharatTax rely on the same authority.
- Totgars Co-operative Sale Society Ltd. v. ITO1,283 citing322 ITR 283 · 2010 · SC
- Pr. CIT v. Totagars1,074 citing395 ITR 611 · 2017 · HC
- Pr. Commissioner of Income Tax and Anr. v. Totagars Cooperative Sale Society762 citing392 ITR 74 · 2017 · HC
- Tumkur Merchants Souharda Credit Cooperative Ltd. v. ITO527 citing230 Taxmann 309 · 2015 · HC
- Tumkur Merchants Souharda Credit Co-op. Ltd. v. ITO267 citing55 Taxmann.com 447 · 2015 · HC
- Mantola Co-operative Thrift & Credit Society Ltd. v. CIT242 citing50 Taxmann.com 278 · 2014 · HC · Read judgment
- Sant Motiram Maharaj Sahakari Pat Sanstha Ltd. v. ITO135 citing120 Taxmann.com 10 · 2020 · ITAT
- Mantola Cooperative Thrift Credit Society Ltd. v. CIT125 citing110 DTR 89 · 2014 · HC
Income Tax Appellate Tribunal, PUNE BENCH “A”, PUNE
Before: SHRI S. S. GODARA & SHRI INTURI RAMA RAO
ORDER
PER INTURI RAMA RAO, AM :
This is an appeal filed by the assessee directed against the order of the National Faceless Appeal Centre, Delhi [‘NFAC’] dated 24.03.2023 for the assessment year 2020-21.
Briefly, the facts of the case are that the appellant is a co- operative credit society registered under Maharashtra Co-operative Societies Act, 1960. The Return of Income for the assessment year 2020-21 was filed on 28.12.2020 disclosing total income of Rs.67,200/- after claiming deduction u/s 80P(2)(a)i) of the Income Tax Act, 1961 (‘the Act’) of Rs.37,15,640/-. Against the said return of income, the assessment was completed by the Assessing Officer vide order dated 05.09.2022 passed u/s 143(3) r.w.s. 144B of the Act at a total income of Rs.89,75,032/-. While doing so, the Assessing Officer denied the exemption u/s 80P(2)(a)(i) in respect of interest income on deposits made out of the surplus funds in cooperative banks and scheduled banks on the ground that the said income does not qualify for deduction u/s 80P(2)(a)(i) or 80P(2)(d) of the Act. 3. Being aggrieved, an appeal was filed before the NFAC, who vide impugned order confirmed the addition made by the Assessing Officer. 4. Being aggrieved, the appellant is in appeal before us in the present appeal. 5. When the appeal was called on, none appeared on behalf of the assessee trust despite due service of notice of hearing. 6. We heard the ld. Sr. DR and perused the material on record. The only issue in the present case is as to the allowability of exemption under the provisions of section 80P(2)(d) in respect of interest income earned by a cooperative society from the cooperative bank. This issue is no longer res integra as the issue Co-ordinate Bench of the this Tribunal in the case of The Ugar Sugar Works Kamgar & Dr. Shirgaokar Shaikshanik Trust Nokar Co-op Credit Society vs. ITO in for A.Y. 2012-13 order dated 27.05.2022 in favour of the appellant society. The relevant paragraphs of the said order of Co-ordinate Bench of the Tribunal (supra) is reproduced herein under :- “8. We heard the rival submissions and perused the material on record. The only issue in the present appeal is pertaining to the allowability of deduction under the provisions of section 80P(2)(d) of the Act. On perusal of provisions of section 80P(2)(d), it is clear that the income derived by a cooperative society from its investment held with other cooperative societies shall be exempt from the total income of a cooperative society. Therefore, what is relevant for claiming of deduction u/s 80P(2)(d) is that interest income should have been derived from the investment made by the assessee cooperative society with any other cooperative society. In the present case, the reasoning given by the lower authorities for denial of exemption u/s 80P(2)(d) of the Act is that interest was received from cooperative bank has no legs to stand as a cooperative bank is also a cooperative society. This issue was considered by the Hon’ble Karnataka High Court in the case of CIT vs. Totagars Cooperative Sale Society, 392 ITR 74 (Karn) wherein the Hon’ble High Court referring to the Hon’ble Supreme Court in the case of Totgars Co-operative Sales Society Ltd. (supra) held that the ratio of decision of the Hon’ble Supreme Court in the aforesaid case (supra) not to be applicable in respect of interest income on investment as same falls under the provisions of section 80P(2)(d) and not u/s 80P(2)(a)(i) of the Act.
Even the decision of Pune Bench of the Tribunal in the case of Sant Motiram Maharaj Sahakari Pat Sanstha Ltd. vs. ITO, 120 taxmann.com 10 wherein the Tribunal after making reference to the decisions of the Hon’ble Supreme Court in the case of Totgars Co- operative Sales Society Ltd. (supra) and having noticed the divergent views of the Hon’ble Karnataka High Court in the case of Tumkur Merchants Souharda Credit Co-op. Ltd. vs. ITO, 55 taxmann.com 447 and the Hon’ble Delhi High Court in the case of Mantola Cooperative Thrift Credit Society Ltd. vs. CIT, 50 taxmann.com 278, decision of the Hon’ble Delhi High Court in the case of Mantola Cooperative Thrift Credit Society Ltd. (supra) had not been preferred to view of the Hon’ble Karnataka High Court in the case of Tumkur Merchants Souharda Credit Co-op. Ltd. (supra). The relevant observation of the Pune Bench of the Tribunal in the case (supra) is as under :- “9. The Pune Benches of the Tribunal in Sureshdada Jain Nagari Sahakari Patsanstha Maryadit Vs. The Pr.CIT (ITA No.713/PUN/2016, dated 9-4-2019) decided the question of availability of deduction u/s 80P on interest income by noticing that the Pune Bench in an earlier case of Shri Laxmi Narayan Nagari Sahakari Pat Sanstha Maryadit Vs. ITO (ITA No.604/PN/2014, dated 19-8-2015) has allowed similar deduction. In the said case, the Tribunal discussed the contrary views expressed by the Hon'ble Karnataka High Court in Tumkur Merchants Souharda Credit Cooperative Ltd. Vs. ITO (2015) 230 Taxman 309 (Kar.) allowing deduction u/s. 80P on interest income and that of the Hon'ble Delhi High Court in Mantola Cooperative Thrift Credit Society Ltd. Vs. CIT (2014) 110 DTR 89 (Delhi) not allowing deduction u/s.80P on interest income earned from banks. Both the Hon'ble High Courts took into consideration the ratio laid down in the case of Totgar's Cooperative Sale Society Ltd. (2010) 322 ITR 283 (SC). There being no direct judgment from the Hon'ble jurisdictional High Court on the point, the Tribunal in Shri Laxmi Narayan Nagari Sahakari Pat Sanstha Maryadit (supra) preferred to go with the view in favour of the assessee by the Hon'ble Karnataka High Court in the case of Tumkur Merchants Souharda Credit Cooperative Ltd. (supra).
Insofar as the reliance of the ld. DR on the case of Pr. CIT and Another Vs. Totagars Cooperative Sales Society (2017) 395 ITR 611 (Kar.) is concerned, we find that the issue in that case was the eligibility of deduction u/s.80P(2)(d) of the Act on interest earned by the assessee co-operative society on investments made in co-operative banks. In that case, the assessee was engaged in the activity of marketing agricultural produce by its members; accepting deposits from its members and providing credit facility to its members; running stores, rice mills, live stocks, van section, medical shops, lodging, plying and hiring of goods and carriage etc. It was in that background of the facts that the Hon'ble High Court held that the assessee could not claim deduction u/s.80P(2)(d) of the Act. When we consider the impact of this decision, it turns out that the same is not germane to case under consideration in view of the position that the claim of the instant assessee is directly about the eligibility of deduction u/s.80P(2)(a)(i) of the Act and not u/s.80P(2)(d). Moreover, so many decisions relied on by the ld. AR amply go to prove that the view taken by the AO, cannot by any standard, be construed as not a possible view. We, therefore, hold that the ld. Pr. CIT was not justified in exercising the revisional power anent to interest income of Rs.22,34,270/- earned on investments made with co-operative banks.”
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