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Facts
The assessee, a cooperative housing society, claimed a deduction of Rs. 11,08,262/- under Section 80P(2)(d) for interest income earned from cooperative banks. The CPC disallowed this claim, and the CIT(A) upheld the disallowance. The assessee appealed to the ITAT.
Held
The Tribunal held that the CIT(A) erred in disallowing the deduction. The assessee had filed the return before the due date, and similar deductions had been allowed in previous years, establishing a principle of consistency. The Tribunal followed coordinate bench decisions and deleted the addition.
Key Issues
Whether the disallowance of deduction under Section 80P(2)(d) for interest income earned from cooperative banks was justified, especially when similar deductions were allowed in prior years and the return was filed within the due date.
Sections Cited
80P(2)(d), 250, 143(1)(a), 139(1), 10AA, 80AIA, 80IAB, 80IB, 80IC, 80ID, 80IE, 80IP
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Before: SHRI AMIT SHUKLA & SMT. RENU JAUHRI
आदेश / O R D E R PER RENU JAUHRI [A.M.] :- This appeal is filed by the assessee against the order of the ADDL/JCIT (A)-4 Delhi, 27.03.2025 passed u/s. 250 of the Income-tax Act, 1961 [hereinafter referred to as “Act”] for Assessment Year: 2021-22.
The assessee has raised the following grounds of appeal:
1. The CIT(A) erred in law and facts by disallowing deduction of ₹11.08.262 under Section 80P(2)(d) on interest income earned from deposits with Cooperative Banks, despite the same being squarely covered under the provisions of the Act.
1. 2. The CIT(A) erred in law and facts by misinterpreting the provisions of Section 80P(2)(d), which allows deductions for interest income earned by cooperative Ay 2021-22 Twinstar Jupiter CHSG LTD. societies from investments with other cooperative societies without distinguishing between banking and non-banking cooperative societies.
3. The CIT(A) failed to appreciate that the interest income derived from deposits/investments with another cooperative society is expressly eligible for deduction under Section 80P(2)(d).
4. The CIT(A) wrongly upheld the disallowance despite the appellant fulfilling all conditions under Section 80P(2)(d), including: i The income was in the nature of interest (not dividend or other income). ii The investment/deposit was made with another cooperative society (not a bank or other entity). iii. The payee society was a duly registered cooperative society under the relevant law.
5. The CIT(A) ignored binding judicial precedents, including: a. Mavilayi Service Cooperative Bank Ltd. vs. CIT [(2021) 432 ITR 1 (SC)] - Liberal interpretation of Section 80P. b. New Ideal Co-operative Housing society Ltd. V/s ITO Ward 19(2)(4), The claim u/s 80(P) cannot be disallowed u's 143(1)(a)/deduction allowed u/s 80P(2)(d) on interest from cooperative banks c. Thorapadi-Urban-Co-op-Credit-Society-Limited-Vs-ITO (Case W.P.Nos. 11172, 11174, 11177 and 11180 of 2023) Deduction allowed u/s 80P(2)(d) on interest from cooperative banks.
6. The CIT(A) disregarded past assessment/appeal orders where similar deductions were allowed, violating the principle of consistency as upheld in Radhasoami Satsang vs. СІП (1992) 193 ITR 321 (SC).
7. The appellant prays that the ITAT: i) Set aside the CIT(A)'s order and allow the deduction of Rs. 11,08,262/- under Section 80P(2)(d) of the Act. ii) Direct the Assessing Officer (AO) to grant the benefit of Section 80P(2)(d) of the Act. iii) Grant any other relief deemed fit in the interest of justice.
Brief facts of the case are that the assessee is a co-operative housing society registered under the Maharashtra Co-operative Housing Societies Act, 1960. Return declaring income of Rs. 2,59,930/- was filed after claiming, inter Ay 2021-22 Twinstar Jupiter CHSG LTD. alia, deduction u/s. 80P(2)(d) of Rs. 11,08,262/- in respect of interest received from Cooperative banks. Subsequently, a notice was issued by the CPC proposing adjustment of Rs. 11,08,262/- u/s. 143(1)(a)(ii) of the Act in respect of claim of deduction 80P(2)(d) of the Act. The assessee filed its objections. However, the CPC proceeded to disallowed the claim and issued intimation order dated 25.10.2022 after computing total income at Rs. 13,68,190/-. Aggrieved with the order of CPC, the assessee preferred an appeal before Ld. CIT(A). Vide order dated 20.12.2023, the assessee’s appeal was dismissed by Ld. CIT(A) on merits. Aggrieved with the order of Ld. CIT(A), the assessee has filed an appeal before the Tribunal. Although several grounds have been taken, the assessee’s arguments are essentially on two grounds i.e. the claim of deduction u/s. 80P cannot be disallowed u/s. 143(1)(a) and on merits as well, in view of the fact that similar deduction has been allowed to the assessee vide assessment/appeal orders for earlier years, the same could not have been disallowed in the current year disregarding the principal of consistency. Before us, Ld. AR has pointed out that the assessee was allowed the claim of deduction u/s. 80P(2)(d) under similar circumstances in the AY 2019-20 by the coordinate bench. Vide order dated 28.06.2024, the assessee’s appeal was allowed with the following observations: “2. The assessee has filed its return of income on 18/09/2019 and due date for filing of return of income in the case of audited accounts was on 30/09/2019. The assessee being a co-operative housing society, its accounts has to be necessarily audited u/s. 81 of Maharashtra Co-operative Housing Societies Act, 1960. Thus, return of income filed by the assessee was within due date as the duc date of return of income was on or before 30/09/2019, which was the due date u/s.139(1). The CPC has made the adjustment disallowing the claim u/s.80P on the ground that return has been filed beyond the due date. Prior to the amendment made by the Finance Act 2021 w.e.f. A.Y. 2021-22, there was no scope for making any adjustment u/s.143(1)(a) except for the claim of deduction claimed u/s. u/s.10AA, 80ΑΙΑ, 801AB, 801B, 80IC, 801D or Ay 2021-22 Twinstar Jupiter CHSG LTD. Section 801E There was no such provision to disallow the claim of deduction u/s.80IP. Further, even after the amendment such an adjustment can be made, only if return has been filed beyond the due date, which is not the case here. Accordingly, the adjustment of 80P(2)(d) made by the CPC and as confirmed by the First Appellate Authority is deleted.”
3.1. In the current year, the assessee has filed its return of income on 02.02.2022 as against the due date of 15.03.2022. Since the return has been filed before the due date, no adjustment u/s. 143(1)(a) could have been made even after the amendment. On merits also the assessee has been allowed similar deduction in earlier years. There are numerous decisions of the coordinate benches in the cases of cooperative housing societies allowing the claim of deduction u/s. 80P(2)(d) of the Act in respect of interest income earned on investments with cooperative banks. Respectfully following the decisions of the coordinate benches in the assessee’s own case as well other cases we hereby delete the addition made by the CPC on account of disallowance of deduction claimed u/s. 80P(2)(d) of the Act and direct the AO to allow the same.
In the result, appeal of the assessee is allowed.