THE DAD COOPERATIVE AGRI MULTIPURPOSE SOCIETY LIMITED, LUDHIANA,LUDHIANA vs. JAO THE INCOME TAX OFFICER WARD 3(1), LUDHIANA, LUDHIANA

Aforesaid appeals by assessee for Assessment Years (AY) 2018-19 & 2020-21 have identical facts & issues. First, we take up appeal for AY 2018-19 which arises out of an order of learned Commissioner of Income Tax (Appeals), NFAC [CIT(A)] dated 21-11- 2024 in the matter of an assessment framed by Ld. AO u/s 143(3) on 12-03-2021. The sole issue that arises in the appeal is assessee’s

The assessee is a co-operative credit society registered under Punjab Co-operative Societies Act, 1960. The main object of the assessee is to provide finance and credit facilities to its members. The assessee earned interest income of Rs.1,04,49,849/- from Ludhiana Central Co-operative Bank for which it initially claimed deduction u/s 80(P)(2)(a)(i) but later on during assessment proceedings, this deduction was alternatively claimed u/s 80P(2)(d). The Ld. AO denied the same on the ground that the said bank was not a co-operative society but a co-operative bank. For the same, Ld. AO referred to the decision of Hon’ble Karnataka High Court in the case of The Totgars Co-operative Sale Society Ltd. (322 ITR 283) holding that interest received from cooperative bank and urban bank was to be assessed as income from other sources.

The Ld. CIT(A) held that interest income earned out of surplus funds was to be assessed as income from other sources and no deduction would be available to the assessee u/s 80P(2)(a)(i). The alternative deduction u/s 80P(2)(d) would also be not available since co-operative bank was not mentioned therein. Aggrieved, the assessee is in further appeal before us.

It is a fact that Ludhiana Central Co-operative Bank Ltd. has been registered as a co-operative society which is evident from certificate of