OTTAR KARATTUPALAYAM MPCS LTD.,ERODE vs. ITO, WARD-2(1), ERODE
आयकर अपीलीय अिधकरण, ‘ए’ ᭠यायपीठ, चे᳖ई।
IN THE INCOME TAX APPELLATE TRIBUNAL
‘A’ BENCH: CHENNAI
ŵी एबी टी. वकŎ, Ɋाियक सद˟ एवं
ŵी जगदीश, लेखा सद˟ के समƗ
BEFORE SHRI ABY T. VARKEY, JUDICIAL MEMBER AND SHRI JAGADISH, ACCOUNTANT MEMBER
आयकर अपील सं./ITA No.2135/Chny/2024
िनधाᭅरणवषᭅ/Assessment Year: 2021-22
M/s. Ottar Karattupalayam-
MPCS Ltd.,
ED 1311,
Ottar Karattupalayam,
Gobichettipalayam,
Erode-638 457. v.
The ITO,
Ward-2(1),
Erode.
[PAN: AAAAO 0208 K]
(अपीलाथᱮ/Appellant)
(ᮧ᭜यथᱮ/Respondent)
अपीलाथᱮ कᳱ ओर से/ Appellant by :
Ms. S. Mathangi, Advocate
ᮧ᭜यथᱮ कᳱ ओर से /Respondent by :
Mr. P.K. Senthil Kumar,
Addl.CIT
सुनवाईकᳱतारीख/Date of Hearing
:
12.11.2024
घोषणाकᳱतारीख /Date of Pronouncement
:
15.01.2025
आदेश / O R D E R
PER ABY T. VARKEY, JM:
This is an appeal preferred by the assessee against the order of the Learned Commissioner of Income Tax (Appeal)/Addl./JCIT(A)-2, Nagpur,
(hereinafter in short "the Ld.CIT(A)”), dated 26.06.2024 for the Assessment Year (hereinafter in short "AY”) 2021-22. M/s. Ottar Karattupalayam MPCS Ltd.
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The main grievance of the assessee is against the action of the Ld.CIT(A) dismissing the appeal filed by the assessee against the adjustment made by the CPC u/s.143(1) of the Income Tax Act, 1961 (hereinafter in short ‘the Act’) intimation passed by the CPC disallowing the deduction claimed u/s.80P(2)(d) of the Act to the tune of Rs.5,47,247/-. 3. Brief facts are that the assessee which is a cooperative society has filed its Return of income (RoI) for AY 2021-22 on 20.12.2021 declaring total income at Rs.1,82,210/- after claiming deduction under Chapter VI- A of the Act amounting to Rs.11,49,812/- being deduction under various sub-clause of sec.80P(2) of the Act, which was processed by CPC u/s.143(1) of the Act on 19.10.2022 determining total income at Rs.7,29,460/- after allowing deduction u/s.80P(2)(b) & 80P(2)(c)(ii), amounting to Rs.5,52,565/- and Rs.50,000/- respectively, but disallowed the claim of deduction u/s.80P(2)(d) amounting to Rs.5,47,247/-, being interest/dividend from investment in other co-operative banks. 4. Aggrieved, the assessee filed an appeal before the Ld.CIT(A), who dismissed the appeal. 5. Aggrieved, the assessee is in appeal before us. M/s. Ottar Karattupalayam MPCS Ltd.
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We have heard both the parties and perused the records. The assessee which is a cooperative society has filed its RoI for AY 2021-22 on 20.12.2021 declaring total income at Rs.1,82,210/- after claiming deduction under Chapter VI-A of the Act amounting to Rs.11,49,812/- being deduction under various sub-clause of sec.80P(2) of the Act, which was processed by CPC u/s.143(1) of the Act on 19.10.2022 determining total income at Rs.7,29,460/- after allowing deduction u/s.80P(2)(b) & 80P(2)(c)(ii), amounting to Rs.5,52,565/- and Rs.50,000/- respectively, but disallowed the claim of deduction u/s.80P(2)(d) amounting to Rs.5,47,247/-, being interest/dividend from investment in other co- operative banks. The Ld.CIT(A) has confirmed the action of the CPC on the ground that interest derived by the assessee from its investment with a Co-operative Bank would not be eligible for deduction u/s.80P(2)(d) of the Act. The assessee is before us assailing the impugned action of the Ld.CIT(A). Therefore, we have to examine the impugned action of the Ld.CIT(A) and for that let us reproduce relevant provisions of sec.80P of the Act as well as sub-section 4 of section 80P of the Act which the Ld.CIT(A) referred to justify dismissing the appeal of the assessee which reads as under: M/s. Ottar Karattupalayam MPCS Ltd.
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Deduction in respect of income of co-operative societies.
80P.(1) Where, in the case of an assessee being a co-operative society, the gross total income includes any income referred to in sub-section (2), there shall be deducted, in accordance with and subject to the provisions of this section, the sums specified in sub-section (2), in computing the total income of the assessee.
(2)The sums referred to in sub-section (1) shall be the following, namely:-
(d) in respect of any income by way of interest or dividends derived by the co-operative society from its investments with any other co-operative society, the whole of such income;
[(4) The provisions of this section shall not apply in relation to any co-operative bank other than a primary agricultural credit society or a primary co-operative agricultural and rural development bank.
Explanation - For the purposes of this sub-section,-
(a) "co-operative bank" and "primary agricultural credit society" shall have the meanings respectively assigned to them in Part V of the Banking
Regulation Act, 1949 (10 of 1949);
(b) primary co-operative agricultural and rural development bank" means a society having its area of operation confined to a taluk and the principal object of which is to provide for long-term credit for agricultural and rural development activities.]
The Ld.CIT(A) has assumed that assessee has received interest from Co-operative Banks, but has not considered the assertion made by the assessee that it received interest from Co-operative Bank which was basically a Co-operative Society. The assessee’s assertion made has not been controverted by the department or the Ld.CIT(A). In such a scenario, the CPC’s action of denying the claim can’t be accepted as well as the action of the Ld.CIT(A) confirming the same without any material to disprove the claim/assertion of assessee can’t be countenanced. Since the assessee has received the interest from Co-operative Society/Bank, M/s. Ottar Karattupalayam MPCS Ltd.
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we are of the view that interest earned by assessee from another Co- operative Society, which in this case a Co-operative Society/Bank is eligible u/s.80P(2)(d) of the Act; unless the Ld.CIT(A)/AO could show that those Co-operative Banks (from whom assessee earned interest on its deposits) possess a license from the RBI to do banking business with the public; and for such a proposition, we rely on the decision of the Hon’ble
Supreme Court in the case of Mavilayi Service Co-operative Bank Ltd.
& Othrs. V. CIT reported in [2021] 431 ITR 1 (SC); and since, it is not the case of the Ld.CIT(A) that the Co-operative Societies/Bank from whom the assessee has derived interest had possessed license from RBI to do banking business, we are unable to uphold the impugned action of the Ld.CIT(A). Therefore, we hold that unless the assessee earns interest income from a Co-operative Bank which possess RBI license, the assessee cannot be denied the deduction u/s.80P of the Act, which is a benevolent provision enacted by the Parliament to encourage and promote the cooperative sector in general and therefore, must be read liberally and reasonably and if there is ambiguity in favour of the assessee. Therefore, a deduction that is given without any reference to any restriction, or limitation cannot be restricted or limited by implication. Therefore, the Ld.CIT(A) ought not to have denied the claim of assessee. Therefore, we set-aside, the impugned order of Ld CIT(A), and direct the AO to allow the M/s. Ottar Karattupalayam MPCS Ltd.
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deduction claimed by the assessee u/s.80P(2)(d) of the Act, to the tune of Rs.5,47,247/-.
8. In the result, appeal filed by the assessee is allowed.
Order pronounced on the 15th day of January, 2025, in Chennai. (जगदीश)
(JAGADISH)
लेखा सद˟/ACCOUNTANT MEMBER (एबी टी. वकŎ)
(ABY T. VARKEY)
᭠याियक सद᭭य/JUDICIAL MEMBER
चे᳖ई/Chennai,
ᳰदनांक/Dated: 15th January, 2025. TLN, Sr.PS
आदेश कᳱ ᮧितिलिप अᮕेिषत/Copy to:
अपीलाथŎ/Appellant 2. ŮȑथŎ/Respondent 3. आयकरआयुƅ/CIT, Chennai / Madurai / Salem / Coimbatore. 4. िवभागीयŮितिनिध/DR 5. गाडŊफाईल/GF