ANANTAPUR DISTRICT CO-OPERATIVE STAFF CO-OPERATIVE SOCIETY LIMITED,ANANTAPUR vs. ITO., WARD-1, ANANTAPUR
आआआआ आआआआआआ आआआआआआ, आआआआआआआआ आआआ
IN THE INCOME TAX APPELLATE TRIBUNAL
Hyderabad ‘B’ Bench, Hyderabad
BEFORE SHRI K. NARASIMHA CHARY, JUDICIAL MEMBER AND SHRI MADHUSUDAN SAWDIA, ACCOUNTANT MEMBER
आ.आआआ.आआ /ITA No.1142/Hyd/2024
(आआआआआआआआ आआआआ/Assessment
Year:2016-17)
M/s. Anantapur District Co- operative Staff Co-operative
Society Limited,
Anantapur.
PAN:AAEAA0133B
Vs.
Income Tax Officer,
Ward-1, Anantapur.
(Appellant)
(Respondent)
आआआआआआआआआआ आआआआआआ/Assessee by:
Dr. D. Harish Chandra Rama, CA
आआआआआआ आआआआआआ/Revenue by: Dr. Sachin Kumar, SR-DR
आआआआआआ आआ आआआआआ/Date of hearing:
24/02/2025
आआआआआ आआ
आआआआआ/Pronouncement:
04/03/2025
आआआआ/ORDER
PER MADHUSUDAN SAWDIA, A.M.:
This appeal is filed by M/s. Anantapur District Co-operative
Staff Co-operative Society Limited (“the assessee”), feeling aggrieved by the order passed by the Learned Commissioner of Income Tax
(Appeals), National Faceless Appeal Centre (NFAC), Delhi (“Ld.
CIT(A)”), dated 05.09.2024 for the A.Y. 2016-17. 2. The facts of the case are that the assessee is an Association of Persons (“AOP”), not filed any Return of Income (“ROI”) u/s.139
of the Income Tax Act, 1961 ('the Act'). From the information
ITA No.1142/Hyd/2024 2
flagged as per risk management strategy, the Learned Assessing
Officer (“Ld. AO”) found that, the assessee had deposited cash of Rs.67,77,190/- in the Anantapur Co-operative Central Bank
Limited during the year under consideration. The assessee did not furnish any explanation before the Ld. AO u/s.148A(b) of the Income Tax Act, 1961 (“the Act”). Consequently, the Ld. AO after passing an order u/s.148A(d) of the Act issued notice u/s.148 of the Act to the assessee on 21.03.2023. In response to the notice u/s.148 of the Act, the assessee filed its ROI on 19.04.2023
declaring total income at Rs. Nil by claiming deduction u/s.80P of the Act at Rs.5,50,728/-. The notice u/s.143(2) of the Act was issued on 23.08.2023 by the Ld. AO to the assessee. After considering the submission of the assessee, the Ld. AO completed the assessment u/s.147 r.w.s. 144B of the Act on 17.01.2024
determining the total income at Rs.68,82,509/-.
3. Aggrieved with the order of Ld. AO, the assessee filed appeal before Ld. CIT(A), who partly allowed the appeal of the assessee.
4. Aggrieved with the order of Ld. CIT(A), the assessee is in appeal before us. The Learned Authorised Representative (“Ld. AR”) submitted that, three issues are involved out of their grounds of appeal as under :
(i) Addition of Rs.62,82,240/- u/s.69A of the Act on account of cash deposits.
(ii) Addition of Rs.11,640/- on account of interest received from State Bank of India (Nationalised bank).
(iii) Addition of Rs.76,968/- on account of income from house property.
ITA No.1142/Hyd/2024 3
1 The Ld. AR submitted that, the assessee is an employees co-operative society which is for the benefit of Anantapur District “co-operative staff”. The co-operative society has been formed with the object to accept deposits from the employee members and to advance loans to the employee members only. In the course of regular transactions of the society, the assessee received cash from its members and deposit the same in the bank account and whenever their members are in need of loans/advances, the society provides loans/advances to the members out of the amount deposited in the bank. Accordingly, during the year under consideration, the assessee has deposited cash of Rs.67,77,190/- in bank out of the money collected from its members during the year under consideration. During the assessment proceedings, the Ld. AO called for the details / evidences on account of such deposit of Rs.67,77,190/-. Due to voluminous details, the assessee only filed the details for the period from 01.04.2015 to 30.06.2015 for cash deposit of Rs.4,94,950/- as sample for verification and also submitted that, if the Ld. AO requires the details for the balance 9 months will also be submitted by the assessee for verification. However, without calling for the details / evidences for balance period of 9 months, the Ld. AO treated the cash deposit for balance period of 9 months amounting to Rs.62,82,240/- as unexplained money and added the same u/s.69A of the Act in the hands of the assessee. The Ld. CIT(A) also confirmed the addition made by the Ld. AO. The Ld. AR further submitted that, the assessee was not provided sufficient opportunity to file the necessary details / evidences towards cash deposit of Rs.62,82,240/- with regard to balance period of 9 months. However, the assessee is having all the ITA No.1142/Hyd/2024 4
details / evidences related to cash deposit of Rs.62,82,240/-.
Therefore, the Ld. AR requested before the bench to provide one more opportunity to the assessee to produce all the relevant details before the Ld. AO in support of cash deposit of Rs.62,82,240/- so that the case of the assessee can be decided on merits.
4.2 Per contra, the Ld. DR submitted that the plea of Ld. AR be rejected in view of the sufficient opportunities provided to the assessee before deciding the matter by the authorities below.
4.3 We have heard the rival contentions and also gone through the record in the light of the submissions made by either side. It is seen from the record that the Ld. AO has not verified the details /
evidences for balance period of 9 months. Now, the assessee is ready to furnish the necessary details / evidences in support of his case. However, the assessee is having all the details / evidences related to cash deposit of Rs.62,82,240/-. Be that as it may, now that the assessee is ready to produce the balance of 9 months all such documentary evidence in support of his contentions and get the matter disposed of on merits. The highest that would happen by allowing an opportunity to the assessee is that a cause would be decided on merits. In the interest of justice, we are of the view that fresh opportunity should be given to the assessee and, accordingly, we set aside the issue to the file of the Ld. AO for fresh adjudication on merits, after affording the opportunity of hearing to the assessee.
5. As far as the second issue regarding addition of Rs.11,640/- on account of interest received from Nationalised bank is concerned, we have heard both the parties and perused the ITA No.1142/Hyd/2024 5
material on record. We found that, the interest of Rs.11,640/- received from nationalized bank has been denied to be allowed as deduction u/s80P(2)(d) of the Act. An identical issue came before the co-ordinate bench of Hyderabad Bench of ITAT in the case of Durgamatha House Building Construction Co-operative Housing
Society Ltd. Vs. ITO in ITA No.659/Hyd/2024 dated 10.12.2024 in which the Tribunal has held as under :
“7. We have heard the rival submissions and gone through the record in view of the submissions made by both the parties. There is no dispute with regard to the fact that, the interest of Rs.6,62,116/- was received from nationalized bank. The only question before us is to decide whether the assessee is eligible for deduction u/s 80P(2)(d) of the Act or not on receipt of such interest from nationalized bank. The Ld.AR relied on the decision of co-ordinate Bench of ITAT in its own case (supra), wherein the ITAT relied on the decision of Hon'ble High
Court of Andhra Pradesh in case of The Vavveru Co-operative Rural
Bank Ltd., Vs. CCIT reported in (2017) 396 ITR 371 (AP) and decided the issue in favour of the assessee. The relevant portion of the decision of the co-ordinate Bench of ITAT in assessee’s own case
(supra) is reproduced as under :
“6. I have gone through the record in the light of the submissions made on either side. Issue involved in this matter is no longer res integra and the Hon’ble juri ictional High Court considered the same in extenso in the case of The Vavveru Co-operative Rural Bank Ltd. (supra). On a threadbare analysis of the provisions under section 80P of the Act in the light of various decisions including the decision of the Hon’ble Apex Court in the case of Totgars Co-operative Sale Society Ltd. vs. ITO [2010] 188 Taxman 282 (SC) and the decision of juri ictional High Court in the case of CIT vs. Andhra
Pradesh State Co-operative Bank Ltd [2011] 12 taxmann.com 66 (Andhra
Pradesh), the Hon’ble High Court reached a conclusion that if the investment is made in fixed deposits in nationalised banks from out of the own funds of the assessee, the interest derived from such investment would be from the activities listed in clause (i) to (vii) of section 80P(2)(a) of the Act and would be eligible for deduction.
ITA No.1142/Hyd/2024 6
In the cases of Ashoka Palace Co-op. Hsg. Soc. Ltd., and Hilla Heights Co- operative Housing Society Limited (supra), the claim for deduction under section 80P(2)(d) of the Act was disallowed through intimation under section 143(1) of the Act and the rectification application filed by the assessee under section 154 of the Act was rejected. Appeal filed against the order under section 154 of the Act was also rejected on the ground that the disallowance under section 80P(2) of the Act in the original assessment order under section 143(1) of the Act, but not under section 154 of the Act and, therefore, the assessee cannot challenge the order under section 154 of the Act, directly without challenging the order under section 143(1) of the Act. 8. In the case of Hilla Heights Co-operative Housing Society Limited (supra), since the disallowance was made under section 143(1) of the Act assessee filed a rectification application before Centralized Processing Centre, Bangalore, however, the same was denied without giving any proper reasons and assessee filed the appeal before the learned CIT(A) and learned CIT(A) did not decide the issue on merits, however, he proceeded to decide the issue on technical ground whether assessee should file the appeal under section 143(1) or 154 of the Act, the Tribunal proceeded to decide the issue on merits in the light of the decided case law. 9. Since the case on hand is squarely covered by the decision of the juri ictional High Court in the case of The Vavveru Co-operative Rural Bank Ltd. vs. CCIT (supra), while following the decision of the Co-ordinate Bench of the Tribunal in the case of Hilla Heights Co-operative Housing Society Limited (supra), I am of the considered opinion that the assessee is entitled to claim deduction under section 80P(2)(d) of the Act, if the interest is earned on the deposits of its own funds in the nationalized banks. 10. With this view of the matter, I set aside the orders of the Revenue authorities and restore the issue to the file of learned Assessing Officer to cause verification as to whether the interest in question was earned by the assessee in respect of its own amounts deposited in the nationalized banks, and if it is so, to allow the deduction under section 80P(2)(d) of the Act. Assessee should produce all the relevant material before the learned Assessing Officer and get the matter disposed of on merits.”
We have gone through the decision of Hon'ble High Court of Andhra Pradesh in the case of the Vavveru Co-operative Rural Bank Ltd (supra), where the Hon'ble High Court in a different issue at Para Nos.36 and 37 has held as under :
“36. The original source of the investments made by the petitioners in nationalised Banks is admittedly the income that the petitioners derived from the activities listed in sub- Clauses (i) to (vii) of Clause (a). The character of such income may not be lost, especially when the statute uses the expression attributable to and not anyone of the two expressions, namely, derived from or directly attributable to.
ITA No.1142/Hyd/2024 7
Therefore, we are of the considered view that the petitioners are entitled to succeed. Hence, the Writ Petitions are allowed, and the order of the Assessing Officer, insofar as it relates to treating the interest income as something not allowable as a deduction under Section 80P (2) (a), is set aside.”
On perusal of the order of the Hon'ble High Court of Andhra Pradesh in the case of The Vavveru Co-operative Rural Bank Ltd (supra), it is abundantly clear that if original source of funds, which is invested in nationalized bank is from the activities listed in (i) to (vii) of clause (a) of Section 80P(2), then only the interest received from nationalized bank shall be treated as income attributable to the activities listed in sub-section (i) to (vii) of clause (a) of Section 80P(2) and accordingly, will be eligible for deduction u/s 80P(2)(a) of the Act. However, in the case of the assessee, the funds deposited in the nationalized bank are not out of surplus funds from the activities listed in (1)(2) of (vii) of clause (a) of Section 80P(2) of the Act. Further, the assessee has claimed deduction u/s 80P(2)(d) and not under Section 80P(2)(a) of the Act. Therefore, reliance made by the Ld.AR in the case of co-ordinate Bench of the Tribunal(Supra) and Hon'ble High Court’s decision in the case of The Vavveru Co-operative Rural Bank Ltd. (supra) are not applicable in the present case.
Further, for the sake of clarity, it is crucial to reproduce here the provisions of Section 80P(2)(d) of the Act, which is to the following effect :
“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;”
On going through the aforesaid provisions, it is abundantly clear that the interest or the dividend received from co-operative society is ITA No.1142/Hyd/2024 8
only eligible for such deduction u/s 80P(2)(d) of the Act. However, in the case of the assessee, interest is not received from Co-operative
Society. Therefore, in our considered opinion, the interest received by the assessee from nationalized bank is not eligible for deduction u/s 80P(2)(d) of the Act. Hence, we dismiss the appeal of the assessee.”
1 On perusal of above, we found that, the Tribunal has given the findings that, only interest or dividend received from co- operative society is eligible for deduction u/s.80P(2)(d) of the Act. Further, the Tribunal has given the findings that, if original source of fund invested in Nationalised bank is from the activity listed in sub-clauses (i) to (vii) of clause (a) of section 80P(2) of the Act, then only, the interest received from nationalized bank shall be treated as income attributable to the activity listed in sub-clauses (i) to (vii) of clause (a) of section 80P(2) of the Act and will be eligible for deduction u/s.80P(2)(a) of the Act. However, under the case before us, the interest of Rs.11,640/- received by the assessee is from nationalized bank and not from co-operative society, therefore, the deduction u/s.80P(2)(d) of the Act is not available to the assessee. Further, whether the same is available as deduction u/s.80P(2)(a) or not, the same is subject matter of verification, whether the original source of funds which is invested in nationalized bank is from the activity listed in clauses (i) to (vii) of clause (a) of section 80P(2) of the Act or not. Therefore, we set aside the issue to the file of Ld. AO to verify the original source of funds invested in nationalized bank and if after verification, the Ld. AO is found that the original source of fund which is invested in nationalized bank is from the activity listed in clauses (i) to (vii) of clause (a) of section ITA No.1142/Hyd/2024 9
80P(2) of the Act, then allow the interest of Rs.11,640/- u/s.80P(2)(a) of the Act. Accordingly, this ground is allowed for statistical purposes.
6. As far as the third issue regarding addition on account of income from house property of Rs.76,938/- is concerned, we found that the house property income of Rs.76,938/- is no way related to the business income of the assessee. We also found that the main activity of the assessee is taking of loan and advances from its members and providing loans and advances to its members.
Accordingly, the rental income is nowhere related to the business activity of the society. We have also gone through the provisions of section 80P(2)(a)(i) of the Act and found that, the income of the co- operative society from the business of banking for providing credit facility to its members are only for liable for deduction. Hence, we are of the considered opinion that, the rental income of the society is not eligible for deduction u/s.80P(2) of the Act. Accordingly, we dismiss this ground of appeal of the assessee.
7. In the result, the appeal of the assessee is partly allowed for statistical purposes.
Order pronounced in the open Court on 4th March, 2025. (K NARASIMHA CHARY) (MADHUSUDAN SAWDIA)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Hyderabad.
Dated: 04.03.2025. * Reddy gp
ITA No.1142/Hyd/2024 10
Copy of the Order forwarded to :
Anantapur District Co-operative Staff Co-operative Society Ltd., 10-401, Co-operative Central Bank, Central Bank Compound, Anantapur-515001 2. ITO, Ward-1, Anantapur. 3. Pr. CIT, Kurnool. 4. DR, ITAT, Hyderabad. 5. Guard File.
BY ORDER,