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Facts
The assessee, a cooperative credit society, earned interest from deposits in nationalized banks. The Assessing Officer disallowed the deduction claimed under Section 80P(2)(d) of the Act. The CIT(A) allowed the deduction, relying on a High Court judgment.
Held
The Tribunal held that the issue was squarely covered by the Supreme Court's judgment in Kerala State Co-operative Agricultural & Rural Development Bank Ltd. Therefore, the substantial question of law was answered in favour of the assessee.
Key Issues
Whether interest income earned by a cooperative credit society from deposits in nationalized banks is eligible for deduction under Section 80P(2)(a)(i) of the Income Tax Act, 1961.
Sections Cited
80P, 80P(2)(a)(i), 80P(2)(d)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “B” BENCH: KOLKATA
Before: Shri Pradip Kumar Choubey & Shri Sanjay Awasthi]
ORDER / आदेश Per Pradip Kumar Choubey, JM:
These are the appeals preferred by the revenue against order of Commissioner of Income Tax (Appeal)-NFAC, Delhi (hereinafter referred to as the Ld. CIT(A)] dated 07.06.2024 for AY 2014-15 & 2020-21 respectively.
& 2076/Kol/2024 Assessment Year: 2014-15 & 2020-21 Kolkata Reserve Bank Employees Co-operative Credit Society Ltd. In both the appeals issues are common, therefore, taken up together for disposal. We shall take the revenue’s appeal in for AY 2014-15 as a lead case.
Brief facts of the case of the assessee are that the assessee submitted its return of income for the AY 2014-156 as well as for AY 2020-21 declaring total income Nil. The case of the assessee was selected for scrutiny and thereafter the AO held that the interest income earned by the assessee from non-co-operative bank is taxable and accordingly in both the assessment years AO disallowed the amount claimed by the assessee u/s 80P(2)(d) of the Act.
Being aggrieved and dissatisfied the assessee has preferred appeal before the Ld. CIT(A) against both the assessment years wherein the appeal of the assessee has been allowed by the Ld. CIT(A), keeping in view the judgment passed by the Hon’ble Calcutta High Court against the assessee against the same issue.
Being aggrieved and dissatisfied the department has preferred both the appeals before us.
The Ld. D.R has challenged the order of the CIT(A) against both the assessment years by submitting that the Ld. CIT(A) erred in allowing the deduction u/s 80P without appreciating the provisions of section 80P (2)(a) (i) of the Act which is applicable to business of lending and banking and in the instant case earning interest on F.D. with nationalized bank.
Contrary to that the Ld. A.R supports the impugned order thereby submitting that the Ld. CIT(A) passed the order in favour of the assessee going over the facts of the case as well as judgment passed by the Hon’ble Calcutta High Court in favour of the assessee.
6. Upon hearing the rival submissions of the counsel of the respective parties we have perused the facts of the case as well as the order of Ld. CIT(A). In the present case, the AO has denied the claim of the assessee made u/s 80P of the Act. It is important to & 2076/Kol/2024 Assessment Year: 2014-15 & 2020-21 Kolkata Reserve Bank Employees Co-operative Credit Society Ltd. mention herein that for AY 2014-15 the assessment was completed on 08.12.2016, the assessee went in appeal before the Ld. CIT(A) where in CIT(A) vide order dated 30.11.2017 deleted the disallowance, department preferred an appeal before the ITAT wherein the Hon’ble ITAT directed the AO to decide the issue afresh. In compliance to the same Assessing officer computed the total income as well as the deduction u/s 80P at Rs 1,77,39,820. It is pertinent to mention herein that during the fresh assessment proceedings, the AO worked out the figure and held that interest income to this extent does not qualify for deduction. On perusal of the order of CIT(A) we find that the Ld. CIT(A) has passed the order in favour of the assessee considering the decisions passed by the Hon’ble Calcutta High court against the own case of the assessee for AY 2013- 14. The Order of Hon’ble Calcutta High Court has reproduced by the Ld. CIT(A) which is as under:
“1. Heard Mr. Soumen Bhattacharjee, learned standing counsel for the appellant/income tax department and Mr. Siddhartha Das, learned Counsel assisted by Ms. Swapna Das, learned Advocate for the respondent/assesses. This appeal has been admitted by an order dated 18th July, 2019 on the following 2. substantial question of law. ‘Whether on the facts and in the circumstances of the case the interest income earned by the assessee is eligible for deduction u/s 80P and in particular section 80P (2)(a)(i) of the Income tax Act, 1961 and whether the tribunal committed an error in law in not appreciating the law in subject?’ 3. The Ld. CIT(A) allowed the appeal of the assessee holding that the interest earned by the assessee such as the one at hand, namely a Credit Co-operative sale Society that carries on business of providing credit facilities to its members and earned interest by deposits made in nationalized banks, would be eligible for deduction u/s 80P(2)(a)(i) of the Income Tax Act, 1961. The appellant herein i.e. Income Tax Department filed an appeal bearing (Assessment year 2013-14) 4. In paragraph 10 of the impugned order the Tribunal held that the order of the Ld. CIT(A) on the aforesaid issue has to be upheld and consequently, the Ground no. 1 raised by the revenue is accordingly dismissed.
5. Aggrieved by the order of the Income Tax Appellate Tribunal, the revenue has filed the present appeal which has been admitted on the above quoted substantial question of law.
We find that the substantial question of law as raised in this appeal is squarely covered by a recent judgment of the Hon’ble Supreme Court in the case of Kerala State Co-operative Agricultural & Rural Development Bank Ltd. vs. Assessing Officer reported in [2023] 154 taxmann.com 305 (SC). Both the learned counsel for the parties also jointly agree that the substantial question of law, as above quoted, is squarely covered by the judgment of the Hon’ble & 2076/Kol/2024 Assessment Year: 2014-15 & 2020-21 Kolkata Reserve Bank Employees Co-operative Credit Society Ltd. Supreme Court and, in view thereof, the substantial question of law needs to be answered in favour of the assessee and against the revenue and the appeal needs to be dismissed.
In view of the aforesaid, the substantial question of law, as framed above, is answered in favour of the assessee and against the revenue in terms of the law laid down in the judgment of the Hon’ble Supreme Court in the case of Kerala State Co-operative Agricultural & Rural Development Bank Ltd. (supra).”
7. Since, in the present case, the Ld. CIT(A) has passed the order, keeping in view the order passed by Hon’ble Calcutta High Court against the same assessee against the same issue, we are not inclined to interfere in the impugned order, accordingly the appeal of the revenue is hereby dismissed.
In the result, both the appeals filed by the revenue are dismissed.
Order is pronounced in the open court on 26th February, 2025