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BONGAON CO-OPERATIVE CREDIT SOCIETY LIMITED,BONGAON vs DCIT, CIRCLE 32,, KOLKATA | BharatTax

BONGAON CO-OPERATIVE CREDIT SOCIETY LIMITED,BONGAON vs. DCIT, CIRCLE 32,, KOLKATA

ITA 1371/KOL/2025Status: DisposedITAT Kolkata18 December 2025AY 2022-2023Bench: Shri Rajesh Kumar (Accountant Member), Shri Pradip Kumar Choubey (Judicial Member)1 pages

AI SummaryAllowed

Facts

The assessee declared nil income after claiming a deduction under Section 80P of the Act. The Assessing Officer disallowed this deduction on interest income received from banks, leading to a total income of Rs. 71,81,740/-. The assessee's appeal to the CIT(A) was dismissed.

Held

The Tribunal held that based on previous orders in similar cases concerning the assessee and other cooperative banks, the interest income received from banks is eligible for deduction under Section 80P(2)(d) of the Act.

Key Issues

Whether interest income earned by a cooperative society from banks is eligible for deduction under Section 80P of the Income Tax Act.

Sections Cited

250, 80P, 143(3), 144B, 68, 80P(2)(d)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “A” BENCH KOLKATA

Before: Shri Rajesh Kumar & Shri Pradip Kumar Choubey

order

: December 18, 2025 ORDER

Per Pradip Kumar Choubey, Judicial Member:

1.

The present appeal has been preferred by the assessee against the order dated 26.05.2025 of the National Faceless Appeal Centre [hereinafter referred to as ‘CIT(A)’] passed u/s 250 of the Income Tax Act (hereinafter referred to as the ‘Act’).

2.

Brief facts of the case are that the assessee filed its return of income for the year under consideration on 28.08.2022 declaring nil income after claiming deduction u/s 80P of the Act of Rs.25,75,431.98/- . The case of the assessee was selected for scrutiny through CASS. The assessment was completed vide order u/s 143(3) r.w.s. 144B of the Act dated 15.03.2024 determining total income at Rs.71,81,740/- by disallowing deduction u/s 80P of the Act with regard to the interest income received from banks.

Bongaon Cooperative Credit Society Ltd 3. Aggrieved by the said order, the assessee preferred appeal before the ld. CIT(A) wherein the appeal of the assessee has been dismissed.

4.

Aggrieved and dissatisfied, the assessee is in appeal before us. The ld. AR challenges the very impugned order thereby submitting that under similar circumstances in the assessee’s own case for the assessment year 2017-18, the ld. CIT(A) has granted relief to the assessee and the Tribunal vide order dated 18.11.2024 in has confirmed the order of the ld. CIT(A) and allowed the appeal of the assessee u/s 80P of the Act with regard to interest income received from banks. The ld. AR further submits that interest income of Rs.58,83,164/- received from West Bengal State Cooperative Bank Limited is eligible for deduction in full u/s 80P(2)(d).

5.

Contrary to that, the ld. DR supports the impugned order.

“3. We have carefully considered the rival submissions and also gone through the authorities relied on by either side. Regarding the addition made on account of unexplained cash credit the reliance placed on the case of Sri Bhageeratha Pattina Sahakara Sangha Niyamitha (supra) is acceptable considering that the facts are remarkably similar as the following extract from the said order would reveal: “13. The Ld. A.R. submitted that, under the provisions of section 68 of the Act, the assessee's liability is to explain the nature and sources of the money. He submitted that the assessee has explained the nature as well as sources i.e. the above said deposit was made out of its collections in the ordinary course of carrying on business, i.e., it represented money deposited by its 2 Bongaon Cooperative Credit Society Ltd members towards repayment of loans, pigmy deposits, etc. Accordingly, he submitted that the assessee has discharged its responsibility u/s 68 of the Act. Further, the collections and deposits have been duly recorded in the books of account and hence, there is no reason to treat the same as unexplained money of assessee. The Ld. A.R. further submitted that merely because demonetized notes ceased to be legal tender, it does not mean that the amount collected by the assessee from its members would become unexplained money of the assessee. The Ld. A.R. also submitted that the Reserve Bank of India issued a series of notifications with regard to the deposit of demonetized notes from 8.11.2016 onwards. He submitted that the RBI, vide notification dated 14.11.2016, clarified that District Central Co- operative Banks can allow their existing customers to withdraw money from their accounts up to Rs.24,000/- per week. It further clarified that no exchange facility against demonetized notes or deposit of such notes should be entertained by them. In view of the above said notification, the assessee has stopped collecting the demonetized notes from 14.11.2016 onwards. Accordingly, the Ld. A.R. submitted that the above said deposits were collected by the assessee prior to 14.11.2016 and it cannot be considered as violation of any of the Provisions of the Act. Accordingly, he submitted that the A.O. was not justified in invoking the provisions of section 68 of the Act.

14.

I heard Ld. D.R. on this issue and perused the record. I notice that the A.O. has not doubted the submissions of the assessee that the above said amount of Rs.24,47,500/- represents collection of money in the normal course of carrying on of business of the assessee, i.e., it represents money remitted by the members of the assessee society towards repayment of the loan taken by them and also towards pigmy deposits, etc. The Ld A.R submitted that the assessee has duly recorded in its books of account the transactions of collections of money as well as deposits made into bank account. Thus, I notice that the assessee has explained the nature and source of the above said amount of Rs.24,47,500/-, which was in-turn deposited by the assessee society in its bank account and further, all these transactions have been duly recorded in the books of account. Hence, the above said deposits cannot be considered as "unexplained money" in the hands of the assessee.” 3.1 It needs to be further mentioned that while the appellant may have been accepting the demonetised currency notes even beyond the date of the RBI Circular dated 14.11.2016 then to as long as a valid explanation has been tendered for the said amounts, then the provisions of section 68 of the Act would not apply since, the said section would be triggered once the sales found deposited with the assessee were found to be unexplained. In this case, it is not proved that the sums of money found credited have not been explained, rather cash book etc. have been presented for appropriate perusal before the Ld. AO. In light of this fact the action of Ld. CIT(A) in deleting the impugned amount is upheld. 3.2 Regarding the action of Ld. CIT(A) in terms of granting relief on account of interest income earned, it is seen that there is considerable discussion regarding the legality and judicial precedents on the matter in the impugned order. Admittedly, the Ld. CIT(A) has gone by language of section 80P(2)(d) of the Act to hold that the amount of Rs. 29,11,418/- was clearly eligible for claiming deduction u/s 80P of the Act. The Ld. CIT(A)’s reliance on certain authorities mentioned in page 15 of the impugned order are also appropriate for the issue at hand. We may further add that in the following two cases also cooperative banks have been held to be covered for the purposes of section 80P(2)(d): 3 Bongaon Cooperative Credit Society Ltd (i) Thorapadi Urban Co-op Credit Society Ltd. Vs. Income Tax Officer reported in 296 Taxman 250 (Madras) (ii) Principal Commissioner of Income Tax, Hubli Vs. Totagars Co-operative Sale Society reported in 392 ITR 74 (Karnataka). Considering this discussion, the action of Ld. CIT(A) is upheld on this point also. In result, the Revenue’s appeal fails on this point too.”