UOH STAFF COOPERATIVE CREDIT SOCIETY LIMITED,HYDERABAD vs. ITO., WARD-8(1), HYDERABAD
Income Tax Appellate Tribunal, Hyderabad ‘A’ Bench, Hyderabad
प्रयत रवीश सूद, जे.एम./PER RAVISH SOOD, J.M.
The present appeal filed by the assessee society is directed against the order passed by the Commissioner of Income-Tax
2
UOH Staff Cooperative Credit Society Limited,
Hyderabad.
(Appeals), National Faceless Appeal Center (NFAC), Delhi, dated
16.01.2025, which in turn arises from the order passed by the Assessing Officer (for short “A.O.”) under Section 144 of the Income Tax Act, 1961 (for short “the Act”), dated 22.09.2022 for A.Y. 2020-21. The assessee society has assailed the impugned order on the following grounds of appeal before us:
“1. The Learned CIT(A) erred in Law and Facts in Partially Allowing the Appeal preferred by the Assessee.
2. The Learned CIT(A) erred in Law and Facts in deciding the disallowance of deduction u/s. 80P by CPC ws. 143(1)(a) of the Act.
3. The Learned CIT(A) erred in Law and Facts in deciding the allowance of deduction w's. 80P towards the Interest Earned from Term Deposits made out of Statutory
Reserves of the Society with Scheduled Public Sector Banks.
4.The Learned CIT(A) erred in evaluation of the Information and explanations offered by the Assessee during the Appellate Proceedings.
5. Any Other Ground (s) which may be urged during the course of Appellate
Proceedings.
Succinctly stated, the assessee, which is a Cooperative Society with the primary object of granting various credit facilities to its members, had filed its return of income for A.Y. 2020-21, declaring its total income at Rs. Nil (after claiming deduction under Section 80P of the Act). Subsequently, the case of the assessee society was selected for scrutiny assessment and notice u/s 143(2) of the Act, dated 29.06.2021 was issued by the A.O.
3
UOH Staff Cooperative Credit Society Limited,
Hyderabad.
Thereafter, the A.O., CPC/Bengaluru, vide an Intimation issued under Section 143(1) of the Act, dated 23.12.2021, declined the assessee’s entire claim for deduction under Section 80P of the Act of Rs. 47,41,241/- and determined its income at Rs. 47,41,240/-.
During the course of assessment proceedings, it was observed by the A.O. that the major activities of the assessee society were to accept thrift deposits from its members and grant loans to them. On a perusal of the details, it was observed by him that the assessee society had sought for deduction u/s 80P of the Act of the surplus as per its profit and loss account of Rs. 47,41,241/-. On a perusal of the details, it was observed by the A.O. that the assessee society, during the subject year, had received interest income of Rs. 4,97,556/- on its Fixed Deposits (FDRs). Observing that the claim of deduction u/s 80P(2)(d) of the Act was available only in respect of interest and dividend income received by the assessee society from its investments with any other co-operative societies, the A.O. called upon the assessee
4
UOH Staff Cooperative Credit Society Limited,
Hyderabad.
society to explain as to why its claim for deduction of the aforesaid interest income u/s 80P(2)(d) of the Act, may not be declined.
As the reply filed by the assessee society did not find favour with the A.O., therefore, he re-characterized the interest income from deposits with bank as the income of the assessee society from other sources, and thus, held it as ineligible for deduction u/s 80P(2)(d) of the Act.
Thereafter, the A.O vide his order passed under Section 143(3) r.w.s 144B of the Act, dated 22.09.2022, determined the income of the assessee society at Rs. 52,38,796/-, as under:
Income as per return of income filed Rs. Nil 2. Income as computed u/s 143(1)(a) Rs. 47,41,240/- 3. Variation in respect of Deduction u/s 80P(2)(d). Rs. 4,97,556/- 4. Total Income/Loss determined Rs. 52,38,796/-
Accordingly, the A.O., while quantifying the assessed income of the assessee society, had considered the income determined by the 5
UOH Staff Cooperative Credit Society Limited,
Hyderabad.
A.O, CPC/Bengaluru vide Intimation issued u/s 143(1) of the Act, dated 23.12.2021. 7. Aggrieved, the assessee society carried the matter in appeal before the CIT(A).
The CIT(A) after deliberating al length upon the facts in the case before him, observed that the assessee society had, as its primary object, the granting of various credit facilities to its members. It was observed by him that the A.O. had declined the assessee society’s claim for deduction of interest income of Rs. 4,97,556/- that it had earned from its investments with cooperative banks and held the same as its “Income from other sources”. The CIT(A) observed that it was the claim of the assessee society that the interest income derived from the cooperative banks was eligible for deduction u/s 80P(2)(d) of the Act.
The CIT(A) deliberated on the issue in hand at length and concluded that the assessee society was duly eligible to claim deduction of the interest income on its investments from cooperative banks/cooperative societies u/s 80P(2)(d) of the Act. At the same time, the CIT(A) directed the A.O. to verify as to 6 UOH Staff Cooperative Credit Society Limited, Hyderabad.
whether the cooperative societies/banks from whom the assessee society had received the interest income, during the subject year, were registered under the Cooperative Societies Act or under the State Act. Also, the CIT(A) had observed that only the interest income received by the assessee society from cooperative societies/banks would be eligible for deduction under Section 80P(2)(d), and any interest income received from entities other than cooperative societies/cooperative banks would not qualify for such deduction. Accordingly, the CIT(A) relied upon the judgment of the Hon'ble Supreme Court in the case of Mavilayi Service Co- operative Bank Ltd. Vs. CIT (2021) 123 taxmann.com 161, and allowed the claim of the assessee society for deduction of interest income u/s 80P of the Act, subject to the necessary verification.
However, we find that though the assessee society had, vide a specific “Ground of appeal No. 2”, inter alia, assailed before the CIT(A) the determining of its income u/s 143(1) of the Act at Rs.
47,41,240/- (supra), but there is no whisper on the said issue in the order passed by him while disposing off the appeal.
The assessee society, being aggrieved with the order of the CIT(A), has carried the matter in appeal before us.
7
UOH Staff Cooperative Credit Society Limited,
Hyderabad.
We have heard the Ld. Authorized Representatives for both parties, and perused the orders of the lower authorities and the material available on record.
We have thoughtfully considered the contentions advanced by the Ld. Authorized Representatives for both parties in the backdrop of the orders of the authorities below. 13. We are unable to approve the declining of the assessee’s claim for deduction under Section 80P of the Act amounting to Rs. 47,41,241/- by the A.O., CPC/Bengaluru, vide his Intimation issued under Section 143(1) of the Act, dated 23.12.2021. We say so, for the reason that as the Intimation u/s 143(1) of the Act, dated 23.12.2021, was issued after the notice issued by the A.O under Section 143(2) of the Act, dated 29.06.2021, therefore, the same has no sanctity of law. Once the A.O. had issued a Notice u/s 143(2) of the Act, he is thereafter divested of his juri iction to issue an intimation u/s 143(1) of the Act. Our aforesaid view is fortified by the judgment of the Hon’ble Supreme Court in the case of CIT Vs. Gujarat Electricity Board (2003) 260 ITR 84 (SC). The Hon’ble Supreme Court had observed that it is not open
8
UOH Staff Cooperative Credit Society Limited,
Hyderabad.
for the revenue to issue intimation under Section 143(1)(a) of the Act, after notice for regular assessment is issued under Section 143(2). The Hon’ble Apex Court was seized of the issue, viz. - that as to whether or not it is open to the revenue to issue intimation under Section 143(1)(a) of the Income-tax Act, after notice for regular assessment has been issued under Section 143(2) of the Income-tax Act, 1961?. The Hon’ble Apex Court, while approving the order of the High Court of Gujarat, had observed as under:
“Even otherwise, the view taken by the Gujarat High Court seems to be correct on principle. There is no dispute that Section 143(1)(a) of the Act enacts a scheme that if there is a serious objection to any of the orders made by the Assessing Officer determining the income, it is open to the assessee to ask for rectification under section 154. Apart therefrom, the provisions of section 143(1)(a)(i) indicate that the intimation sent under section 143(1)(a) shall be without prejudice to the provisions of sub- section (2). The Legislature, therefore, intended that, where the summary procedure under sub-section (1) has been adopted, there should be scope available for the Revenue, either suo motu or at the instance of the assessee to make regular assessment under sub-section (2) of section 143. The converse is not available; a regular assessment proceedings having been commenced under section 143(2), there is no need for a summary proceeding under section 143(1)(a).
In the result, we see no infirmity in the judgment of the High
Court. The appeals are dismissed. There shall be no order as to costs.”
We thus, are of a firm conviction, that as the disallowance by the A.O of the assessee’s claim for deduction u/s 80P of Rs. 47,41,241/- is not based on any independent observations recorded by him in the course of the assessment proceedings, but 9 UOH Staff Cooperative Credit Society Limited, Hyderabad.
is rather based on the intimation u/s 143(1) of the Act, dated
23.12.2021, which was issued by the A.O, CPC/Bengaluru after the initiation of assessment proceedings vide notice u/s 143(2) of the Act, dated 29.06.2021, and thus, is devoid and bereft of any force of law, therefore, the same cannot be sustained and is liable to be vacated. Accordingly, we herein set aside the order passed by the CIT(A), wherein he had impliedly approved the disallowance made by the A.O., CPC/Bengaluru u/s 143(1) of the Act of the claim of the assessee society for deduction u/s 80P of the Act of Rs. 47,41,241/-. The Ground of appeal No. 2 is allowed.
15. Apropos the claim of the assessee society for deduction of the interest income earned from its investments/deposits, we find that the CIT(A) had principally concurred with the assessee society that it was eligible to claim deduction u/s 80P(2)(d) of the Act in respect of the interest income earned from its investments/ deposits with the cooperative banks, but had directed the A.O. to verify whether such interest income was, in fact, earned from cooperative societies/banks. We find no infirmity in the observations of the CIT(A) and thus, approve the same to the said extent. The Ground of appeal No. 3 is dismissed.
10
UOH Staff Cooperative Credit Society Limited,
Hyderabad.
The Grounds of appeal Nos. 1, 4 & 5 being general are dismissed as not pressed. 17. Resultantly, the appeal filed by the assessee society is partly allowed in terms of our aforesaid observations.
Order pronounced in the Open Court on 6th August, 2025. (मंजूनाथ जी)
(MANJUNATHA G.)
लेखा सदस्य/ACCOUNTANT MEMBER (श्री रवीश सूद)
(RAVISH SOOD)
न्यायिक सदस्य/JUDICIAL MEMBER
Hyderabad, dated 06.08.2025. TYNM/sps
आदेशकी प्रयतयलयप अग्रेयर्त/ Copy of the order forwarded to:-
यनर्ााररती/The Assessee : UOH Staff Cooperative Credit Society, University of Hyderabad, Admin Block back side, above SBI, Prof C R Rao Road, Gachibowli – 500046, Hyderabad, Telangana. 2. राजस्व/ The Revenue : The Income Tax Officer, Ward – 8(1), Hyderabad. 3. The Principal Commissioner of Income Tax, Hyderabad. 4. यवभागीयप्रयतयनयर्, आयकर अपीलीय अयर्करण, हैदराबाद / DR, ITAT, Hyderabad 5. गार्ाफ़ाईल / Guard file
आदेशानुसार / BY ORDER
Sr. Private Secretary
ITAT, Hyderabad.