SM 55 MEDC EXECUTIVE EMPLOYEE CO-OP THRIFT AND CREDIT SOCIETY,SALEM vs. CIT(A), CHENNAI

This is an appeal preferred by the assessee against the order of the Learned Commissioner of Income Tax (Appeals)/NFAC, (hereinafter ‘the Ld.CIT(A)’), Delhi, dated 31.03.2024 for the Assessment Year (hereinafter ‘AY’) 2020-21.

At the outset, it is noted that there is a delay of 86 days in filing of this appeal. The assessee has filed an affidavit explaining the cause for the delay. After going through the contents of the affidavit and the reason for condonation of delay, we find that there was sufficient cause for the delay and therefore, we condone the delay and proceed to hear the appeal on merits.

The main grievance of the assessee is against the action of the Ld.CIT(A) confirming the action of the AO denying the deduction of interest income from investments made in Salem District Central Cooperative Bank amounting to Rs.41,92,145/-.

The brief facts are that the assessee society filed its return of income for the assessment year 2020-21 declaring ‘nil’ taxable income which was selected for scrutiny. The AO noted that the assessee had claimed deduction under Chapter VIA i.e., section 80P(2) of the Act amounting to Rs.2,31,30,475/- out of which Rs.41,93,070/- has been earned from Salem District Central Cooperative Bank (in short “Salem Co-opertive Bank), which was disallowed by the AO. Aggrieved, the assessee preferred an appeal before the Ld.CIT(A), who was pleased to confirm the same.

We have heard both the parties and perused the records. We note that the assessee, a co-operative thrift and credit society which has inter-alia claimed 80P(2) deduction of Rs.2,31,30,475/- out of which Rs.41,93,070/- being interest received from Salem District Central Co-operative Bank was disallowed by the AO / CIT(A). The assessee has cited the decision of Hon’ble Jurisdictional Madras High Court in TCA No.5 of 2015, order dated 10.08.2016 to support its claim u/s.80P(2) of the Act. According to AO, since assessee has received interest from its FD with the Salem Cooperative Bank, claim u/s.80P cannot be allowed, whereas the Ld.CIT(A) has observed that assessee has received interest from investment in nationalized banks also, which fact the assessee assails as incorrect observation; and brought to our notice that its consistent stand before the AO as well as the Ld.CIT(A) that it didn’t had any fixed deposit in any other bank other than Salem District Cooperative Bank. Therefore, we find that the Ld.CIT(A) erred in observing that assessee received interest income from investments made in nationalized banks. Having said so, we note that the Ld.CIT(A) confirmed the disallowance of Rs.41,93,070/- u/s.80P(2) of the Act, by citing few decisions, which are not applicable to the facts of the assessee’s case. Therefore, we, do not agree to the impugned action of the Ld.CIT(A). As noted the assessee had received interest of Rs.41,93,070/- from Salem District Cooperative Bank and has disallowed the claim of the assessee, which action we don’t countenance. Relevant provisions of Sec.80P(2)(d) of the Act reads as under:

The assessee’s case is that it has received interest from Salem District Co-operative Bank which is basically a Co-operative Society.

In the result, appeal filed by the assessee is allowed.