Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, “D” BENCH, MUMBAI
Before: SHRI PAVAN KUMAR GADALE & SHRI AMARJIT SINGH
Appellant by : None Respondent by : Smt. Mahita Nair Date of Hearing 11.08.2022 Date of Pronouncement 24.08.2022 आदेश / O R D E R Per Amarjit Singh (AM): The solitary ground of appeal of the assessee is directed against the decision of CIT(A)-29, Mumbai, in sustaining the order of A.O for denying deduction u/s 80P(2)(a)(i) on account of interest earned from other cooperative society/bank. The assessee has raised the following ground:
“1. The Ld. CIT (Appeals) has erred in confirming with the Ld. AO and considering the interest earned by the society from other co-operative societies earned in due course of business as income from other sources and denying deduction u/s 80P(2)(a)(i) against the same 2 Durga Coop Credit Society Ltd. Vs. The ITO-22(1)(2) 2. Alternatively, the interest income earned from other co-operative societies/banks is eligible for deduction u/s 80P(2)(d), the Ld. AO had erred in not allowing the same to the society. The Ld. CIT(Appeals) has erred in confirming with the Assessing officer and not.
3. The Ld. CIT (Appeal) has also erred by confirming with the AO and not considering deduction u/s 80P(2)(c) amounting to Rs. 50,000/- eligible against taxable income of the society.
4. Your appellant further reserves the rights to add, amend or alter the aforesaid grounds appeal as they may think fit by themselves or by their representatives.”
The fact in brief is that return of income declaring income at Rs.nil was filed on 08.10.2017. The case was subject to scrutiny assessment and notice u/s 143(2) of the Act was issued on 10.08.2018. The assessee was cooperative society and during the year under consideration had declared income under the head income from business or profession. The assessee society was engaged in the business of accepting deposits from its members and advancing loan to its members. During the course of assessment the A.O noticed that assessee received income by way of interest of Rs.25,07,685/- from investment in cooperative bank and claimed deduction u/s 80P(2)(a)(i) of the Act. The A.O has disallowed the claim of deduction holding that interest income of Rs.25,75,611/- was derived from investment in the cooperative bank which was only a commercial cooperative bank and did not fall under the purview of a cooperative society.
Aggrieved, the assessee filed the appeal before the ld. CIT(A). The ld. CIT(A) has dismissed the appeal of the assessee. Reiterating the facts reported by the Assessing Officer.
Heard the ld. D.R. and perused the material on record. During the year under consideration the assessee received interest from investment in cooperative banks amounting to Rs.25,07,685/- and claimed 3 Durga Coop Credit Society Ltd. Vs. The ITO-22(1)(2) deduction u/s 80P(2)(a)(i) of the Act. The claim of deduction was denied stating that earning interest from bank was not an activity associated with the members of the society. During the course of appellate proceedings before us the ld .Counsel has referred the decision of the coordinate bench in the case of Lands End Cooperative Housing Society Ltd vs. ITO, ward 16(1)(3), dated 15.01.2016, wherein the ITAT has allowed deduction u/s 80P in respect of interest earned from cooperative banks. We have also gone through the decision of the ITAT Mumbai in the case of ITO Vs. M/s Shri Kulswami Co-op Credit Society Ltd. vide ITA No. 984 & 986/Mum/2022 dated 25.07.2022. The relevant operating para is reproduced as under:
“5. We heard the Ld. DR and perused the material on record. Prima- facie the sole grievance of the revenue is that the CIT(A) has erred in directing the AO to allow the deduction u/s 80(P)(2)(a)(i) of the Act. Without appreciating the facts that the assessee is not a primary cooperative bank. We find the assessee is a co-operative society and is engaged in providing credit facilities to its members which is not disputed. At this juncture we consider it appropriate to refer to the observations of the CIT(A) at page 12 Para 4 to 4.5 of the order allowing the claim of deduction u/sec 80P(2)(a)(i) of the Act , which is read as under: 4. DECISION: The 1st Ground of appeal relates to denial of deduction u/s 80P of the Act by A.O. as the AO observed that the appellant is a Co- operative bank other than a primary agricultural credit society or a primary co-operative agricultural and rural development bank and therefore provisions of Sec. 80P(4) are applicable in the case of the appellant. On the other hand, the appellant contended that the provisions of Sec. 80P(4) are not applicable in the case of the appellant as the appellant is not a co-operative bank and it is a co-operative society duly registered under the Maharashtra Co-operative Societies Act, 1960. I have carefully considered the impugned Assessment Order and the submissions made by the appellant. The appellant is an Co Operative Credit Society Ltd. had shown gross total income of Rs. 2,67,25,499/- and claimed deduction u/s 80P of Rs. 2,64,85,491/- and declared total income of Rs. 2,40,008/-. Case was taken-up for scrutiny assessment and order u/s.143(3) of the Act was passed on 21/12/2016 determining the total income of Rs. 2,67,25,499%.
4 Durga Coop Credit Society Ltd. Vs. The ITO-22(1)(2) 4.1 The AO while denying the deduction to the Assessee u/s 80P(2) (a)(i) took the view that the Assessee is a primary co-operative bank and therefore provisions of Sec. 80P(4) are applicable in the case of the Assessee. He relied upon the decision of the Hon'ble Kerala High Court in the case of Muhammed Usman Vs