RIL NMD EMP CO. OP. CREDIT SOCIETY LTD. ,RAIGAD vs. ITO, WARD-1, PANVEL, PANVEL
आयकर अपीलीय अधिकरण “एक सदस्य मामला” न्यायपीठ पुणे में ।
IN THE INCOME TAX APPELLATE TRIBUNAL “SMC” BENCH, PUNE
BEFORE SHRI MANISH BORAD, ACCOUNTANT MEMBER
AND MS. ASTHA CHANDRA, JUDICIAL MEMBER
आयकर अपील सं. / ITA No.123/PUN/2025
निर्धारण वर्ा / Assessment Year : 2016-17
RIL NMD EMP Co-op. Credit Society Ltd.,
Shop No. 7, Petrochemical Township,
Nagothane Roha, Dist.-Raigad – 402125
PAN : AAABR2518N
Vs.
Income Tax Officer,
Ward – 1, Panvel
अपीलधर्थी / Appellant
प्रत्यर्थी / Respondent
Assessee by :
Shri Ajinkya Vaishampayan
Department by :
Shri Akhilesh Srivastava
Date of hearing :
24-04-2025
Date of Pronouncement :
16-07-2025
आदेश / ORDER
PER ASTHA CHANDRA, JM :
The appeal filed by the assessee is directed against the order dated
03.01.2025 of the Ld. Commissioner of Income Tax (Appeals)/NFAC, Delhi
[“CIT(A)”] pertaining to Assessment Year (“AY”) 2016-17. 2. Briefly stated, the facts of the case are that the assessee is a Co- operative Society engaged in the business providing credit facilities to its members, sale of LPG gas cylinders to its members and other activities such as renting hall, zerox and lamination. For AY 2016-17, the assessee filed its original return of income on 20.02.2018 declaring total income at Rs.Nil after availing deduction of Rs.21,15,324/- under chapter VI-A of the Income Tax Act, 1961 (the “Act”). The return was subsequently revised on 16.03.2018 declaring gross total income of Rs.21,39,229/- and after claiming deduction under chapter VI-A of the Act of Rs.21,14,557/- in respect of income from co-operative society, the assessee declared taxable income at Rs.24,670/-. The case of the assessee was selected for scrutiny under CASS on the issue “large deduction claimed under chapter VI-A from total income”. Accordingly, statutory notice(s) u/s 143(2) and 142(1) of the 2
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Act along with questionnaire were issued and served upon the assessee seeking certain information/details contained therein. In response thereto, the assessee filed its reply stating that adjusted net profit of Rs.20,64,557/- i.e. net profit of Rs.20,40,652/- plus adjusted depreciation of Rs.23,905/- from providing credit facilities to its members is claimed as 100% deduction u/s 80P(2)(a)(i) of the Act. Out of net profit of Rs.74,672/- arising from other activities viz. sale of gas cylinders, hall rent, xerox charges, deduction of Rs.50,000/- u/s 80P(2)(c)(ii) has been claimed and on the balance amount of Rs.24,672/-, tax (inclusive of interest) of Rs.5,433/- has been paid. The reply of the assessee was not acceptable by the Ld. Assessing Officer (“AO”) and he rejected the assessee‟s claim of deduction u/s 80P of the Act amounting to Rs. 21,14,557/- for the reason that the activities carried out by the assessee i.e. purchase of auto rickshaws and selling them to members under hire purchase agreement is not eligible for deduction under section 80P(2)(a)(i) of the Act and income derived from LPG gas cylinder sale, house rent and locker rent received are not eligible for deduction u/s 80P(2)(i) of the Act. He also disallowed an amount of Rs.90,000/- (provision for expense) debited to P&L account as “Sanugrah Anudan” treating the same to be a kind of donation. The Ld.
AO, therefore, completed the assessment at the assessed income of Rs.22,29,230/- u/s 143(3) of the Act vide order dated 10.12.2018 by making the addition of - (i) Rs.21,14,557/- on account of disallowance of deduction u/s 80P and (ii) Rs.90,000/- on account of disallowance of provision of expense debited to P&L account, to the return income of Rs.24,670/-.
Aggrieved, the assessee filed an appeal before the Ld. CIT(A) challenging the above additions/disallowances made by the Ld. AO. Before the Ld. CIT(A), relying on various favorable decisions on the impugned issue, the assessee submitted that it has rightly claimed deduction of – (i) Rs.18,43,446/- u/s 80P(2)(a)(i) of the Act comprising of Rs. 18,24,574/- in respect of profits from carrying on business of providing credit facilities to its members and (ii) Rs.18,872/- in respect of interest earned from balance in savings bank account maintained with State Bank of India (SBI) for business purposes. Further claim of deduction amounting to Rs.2,21,111/- has been made by the assessee u/s 80P(2)(d) in respect of interest earned from balance in savings bank account maintained with 3
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Raigad District Central Co-operative Bank Ltd. Also, Rs.50,000/- has been claimed as deduction u/s 80P(2)(c)(ii) of the Act on account of profit from other activities viz. resale of refilled gas cylinders to the members of the society and hall rent, xerox and lamination charges. Thus, the total claim of deduction under section 80P of the Act amounts to Rs. 21,14,557/-
Another issue raised before the CIT(A) pertained to addition made by the Ld. AO of Rs.90,000/- towards disallowance of provision for expense namely “Sanugraha Anudan” treating the same as kind of a donation. The assessee submitted before the Ld. CIT(A) that the said amount of Rs.90,000/- is the provision for bonus payable to the employees which were actually paid on 04.10.2016 and hence the said amount of Rs.50,000/- has been wrongly added to the income of the assessee. On support thereof, the assessee relied upon various judicial precedents and submitted the relevant documents before the Ld. CIT(A) forming part of the appeal memo in Form No. 35. The Ld. CIT(A), however, rejected the appeal of the assessee and confirmed the addition(s) made by the Ld. AO observing as under :
“1. Grounds of appeals objects to disallowing adjusted net profit of Rs.
2064557 being credit facilities provided to its members. The original return of income for AY 2016-17 was filed by the assessee society on 20.02.2018
declaring total income at Rs. Nil after availing deduction of Rs.21.15.324/- under chapter VI-A of the Income-tax Act, 1961. Further, the assessee society was filed the revised return of income on 16.03.2018 declaring taxable income of Rs.24,670/- alter availing deduction of Rs.21,14,3241- under chapter VI-A of the income-tax Act. 1961. Whether in case of society engaged in providing credit facilities to its members, it is only interest derived from credit provided to its members which is deductible under section 80P(2)(a)(i) and interest derived by depositing surplus funds with bank not being attributable to business carried on by society, cannot be deductible under section 80P(2)(a)(i). In view of the above the claim of deduction under section 80P of the assessee, is hereby rejected and Rs. 21,14,557/- is included in the income of the assessee.. During the course of assessment proceedings, on verification of the profit and loss A/c, the assessee has made provisions of Rs. 19,89,397/- it includes Rs.90,000/- as Sanugrah Anudan. It is a kind of donation. It is not admissible. Hence, the same is disallowed and included in the income of the assessee. The addition of Rs.2114557 and Rs.90000 are confirmed.”
Dissatisfied, the assessee is in appeal before the Tribunal raising the following grounds of appeal : “On facts and in law, 1. The Ld. CIT(A) NFAC erred In confirming the addition of Rs.22,04,557/- made by the Ld. AO. 2. The Ld. CIT(A)-NFAC erred in confirming action of the Ld. AO in disallowing the deductions, aggregating to Rs.21,14,557/-:
ITA No.123/PUN/2025, AY 2016-17
a) u/s 80P(2)(a)(i) at Rs.18,43,446/-, earned out of business operations, and b) u/s 80P(2)(d) at Rs.2,21,111/-, earned from co-operative credit societies / banks, and c) u/s 80P(2)(c)(ii) at Rs. 50,000/-, as basic deduction.
3. The Ld. CIT(A)-NFAC erred in confirming addition of expense
'Sanugraha Anudan' i.e. 'Bonus' in Marathi at Rs.90,000/- debited to profit and loss account, forming part of the business income further eligible to deduction u/s 80P(2)(a)(i) , as enhanced eligibility.
The appellant craves leave to add, alter, amend or delete any of the above grounds of appeal.”
The Ld. AR at the outset submitted that the first issue relating to claim of deduction u/s 80P(2)(a)(i) and 80P(2)(d) of the Act is covered in favour of the assessee by catena of decisions of various judicial forums, including the Pune Tribunal. He submitted that the said deduction has been rightly claimed by the assessee as the income is earned out of business operations carried out by the assessee. Further, the assessee is also eligible for the deduction of Rs.50,000/- in respect of profits from other activities u/s 80P(2)(c)(ii) as basic deduction. As regards the addition of Rs.90,000/-, the Ld. AR submitted that the same is not any kind of a donation but an expense. He submitted that the word “Sanugraha Anudan” means “bonus” in Marathi which was debited to the P&L account under the head provision for expenses and as the same forms part of the business income of the assessee, it is eligible for deduction u/s 80P(2)(a)(i) of the Act.
The Ld. DR, on the other hand, supported the order of the Ld. AO/CIT(A).
We have heard the Ld. Representatives of the parties, perused the material available on records, paper book filed by the Ld. AR on behalf of the assessee as well as judicial precedents relied upon by the Ld. AR. The facts of the case are not in dispute. From the perusal of the Ld. CIT(A)‟s order we, find that the Ld. CIT(A) has passed his order concurrence with the order of the Ld. AO without considering the submissions made by the assessee before him. The Ld. AO/CIT(A) has disallowed the entire deduction claimed by the assessee u/s 80P which was bifurcated by the assessee u/s 80P(2)(a), 80P(2)(c) & 80P(2)(d) of the Act. So far as issue pertaining to the deduction claimed by the assessee u/s 80P(2)(a)(i)/
ITA No.123/PUN/2025, AY 2016-17
80P(2)(d) of the Act in respect of profits from provisions of credit facility to the members of the assessee society and the interest earned from deposits from Co-operative banks/scheduled banks are concerned, we find some force in the submission of the Ld. Counsel for the assessee find that this issue is no more res-integra and has been decided in favour of the assessee by various decision(s) of the Co-ordinate Bench(es) of the Tribunal including the Pune Tribunal wherein it has been consistently held that the assessee society is eligible for deduction u/s 80P(2)(a)(i)/80P(2)(d) of the Act as the same is attributable to the business of the assessee society.
Support may be drawn from the decision of the Co-ordinate Bench of the Pune Tribunal in the following cases:
i.
Lake Town Co-operative Housing Society Ltd. Vs. ITO, ITA No.
88/PUN/2024, dated 07.05.2024. ii.
No.888/PUN/2024, dated 05.08.2024. iii.
743/PUN/2024, dated 03.06.2024. iv.
P. P. Pandurang Gramin Bigarsheti Sahakari Patsanstha Maryadit vs. AU, Delhi (ITA No.854/PUN/2024, dated 26.06.2024. v.
Pat Sanstha Ltd., iTA No.853/PUN/2024, dated 31.07.2024. vi.
2447/PUN/2024, dated 28.02.2025. vii.
Nashik District Primary Teachers Co-op Credit Society Ltd. Vs. ITO,
Nashik, ITA Nos. 2070 & 2071/PUN/2024, dated 28.02.2025. viii.
Further, it has been observed that out of the total deduction of Rs.22,04,557/- claimed u/s 80P of the Act, sum of Rs.50,000/- has been claimed as deduction u/s 80P(2)(c)(ii) of the Act. It is the submission of the Ld. AR that out of net profits aggregating to Rs.74,672/- from other activities carried out by the assessee, the assessee has claimed maximum of Rs.50,000/- and on the balance amount of Rs.24,672, the applicable taxes have already been paid by the assessee. Even before the Ld. CIT(A), the assessee has submitted that the said deduction of Rs.50,000/- has been claimed in respect of profits from resale of gas cylinders to the 6
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employees of Reliance Industries Ltd. at its Nagothane township, who are the members of the assessee society and hall rent, xerox and lamination charges and hence it is eligible for deduction u/s 80P(2)(c)(ii) of the Act.
However, the Ld. CIT(A) completely brushed off the above submissions of the assessee and confirmed the addition made by the Ld. AO. In our considered view, the said claim of the assessee finds due support from the decision of Co-ordinate Bench of the Pune Tribunal in the case of Banganga Nagri Sah. Patsanstha Ltd. Vs. ITO, ITA No. 873/PUN/2014, dated 31.03.2016 wherein the Tribunal under the similar set of facts as that of the assessee in the present case has allowed the deduction claimed u/s 80P(2)(c)(ii) of the Act in respect of incomes earned from certain allied activities viz. locker rent, ambulance rent, commission on collection of MSEB bills and health club carried out by the co-operative society.
2 As regards addition of Rs.90,000/- made by the Ld. AO and confirmed by the Ld. CIT(A) treating the same as a kind of donation. It has been brought to our notice by the Ld. AR that the said amount of Rs.90,000/- pertains to „Sanugraha Anudan‟ which means „bonus‟ in Marathi and therefore it is in the nature of expense debited to profit and loss account forming part of the business income of the assessee which is further eligible for deduction u/s 80P(2)(a)(i) of the Act as enhanced eligibility. In this view of the factual finding, in our opinion, the Ld. CIT(A) has erred in confirming the addition of Rs.90,000/- to the income of the assessee. The claim of the assessee also finds support from the decision of the Bangalore Tribunal in the case of Sharavathi Pathina Sahakara Sangha Niyamitha Vs. ITO, reported in (2022) 144 taxmann.com 170 (Bangalore- Trib.) wherein it has been held that where disallowance for non-deduction of TDS liability would increase business income of assessee-society which was eligible for deduction under section 80P(2)(a)(i), deduction under section 80P(2)(a)(i) to be allowed on profit as enhanced by sum disallowed under section 40(a)(ia) of the Act.
In light of the factual matrix of the case and legal position set out above and respectfully following the decisions (supra) and in the absence of any contrary material brought on record by the Revenue to enable us to take a different view, we hereby set aside the impugned order of the Ld. CIT(A) and allow the deduction claimed by the assessee u/s 80P of the Act.
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Ground No. 2 (along with its sub-grounds (a), (b) & (c)) and ground No. 3
raised by the assessee are accordingly allowed. Ground No. 1 is general in nature.
In the result, the appeal of the assessee is allowed.
Order pronounced in the open court on 16th July, 2025. (Manish Borad)
JUDICIAL MEMBER
पुणे / Pune; ददन ांक / Dated : 16th July, 2025. रदि
आदेश की प्रनिनलनप अग्रेनर्ि / Copy of the Order forwarded to :
अपील थी / The Appellant. 2. प्रत्यथी / The Respondent. 3. The Pr. CIT concerned. 4. धिभागीय प्रधिधिधि, आयकर अपीलीय अधिकरण, “एक सदस्य मामला” बेंच, पुणे / DR, ITAT, “SMC” Bench, Pune. 5. ग र्ड फ़ इल / Guard File.
//सत्य दपत प्रदत////
आदेश नुस र / BY ORDER,
िररष्ठ दनजी सदिि / Sr. Private Secretary
आयकर अपीलीय अदधकरण ,पुणे / ITAT, Pune