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Facts
The assessee, a credit cooperative society, earned interest income of Rs. 67,07,883/- from deposits in other cooperative banks. The Assessing Officer disallowed this deduction, which was upheld by the CIT(A).
Held
The Tribunal held that interest income earned by a cooperative society from other cooperative banks/societies is eligible for deduction under Section 80P(2)(a)(i) or 80P(2)(d) of the Income Tax Act, following its own prior decisions.
Key Issues
Whether interest income earned by a credit cooperative society from deposits with other cooperative banks/societies is eligible for deduction under Section 80P of the Income Tax Act.
Sections Cited
80P(2)(d), 80P(2)(a)(i)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, PUNE BENCH “A”, PUNE
Before: SHRI MANISH BORAD & SHRI VINAY BHAMORE
Assessment Year : 2018-19 Dhanvantari Nagari Sahakari Vs. ITO, National e- Patsanstha Maryadit, Assessment Centre, Burudgalli, Delhi. Baramati- 413102. PAN : AAAAD2725Q Appellant Respondent Assessee by : Shri Nitin Rander & Shri Jitender Rander Revenue by : Shri Ramnath P. Murkunde Date of hearing : 28.01.2025 Date of pronouncement : 25.04.2025 आदेश / ORDER
PER VINAY BHAMORE, JM:
This appeal filed by the assessee is directed against the order dated 21.06.2024 passed by Ld. CIT(A)/NFAC for the assessment year 2018-19.
The appellant has raised the following grounds of appeal :-
1. On the facts and in the circumstances of the case and in law, Ld. Assessing Officer and Ld. CIT(A) have erred in disallowing a sum of Rs.67,07,883/- for interest income earned out of fixed deposits/investments with other co-operative societies and which is eligible for deduction u/s 80P(2)(d) or 80P(a)(i) of the Act.
2. The Appellant craves leaved to add, alter, vary, omit, substitute or amend the above grounds of appeal
, at any time before or at the time of hearing of the appeal, so as to enable the Honourable Members to decide this appeal according to law.”
3. The facts of the case, in brief, are that the assessee is a Credit Cooperative Society registered under the Maharashtra state Cooperative societies act & is engaged in the activity of providing credit facilities to its members & accepting deposits from them. During the period under consideration, the assessee cooperative society earned interest income from other cooperative banks of Rs.2,92,21,036/- & after claiming expenses, resultant income of Rs.67,07,883/- was claimed as deduction u/s 80P of the IT Act & accordingly the return of income was filed on 24.09.2018 declaring Rs.Nil income. By relying on the Judgement of Hon’ble Apex Court passed in the case of Totgars Cooperative Sale Society, the Assessing Officer disallowed the claim of the assesses made u/s 80P(2)(a)(i)/80P(2)(d) of the IT Act, and vide order dated 23.02.2021, assessment order was passed by determining the total income at Rs.67,07,880/- as against Rs.Nil income declared by the assessee.
4. Being aggrieved with the above assessment order, the assessee preferred first appeal before Ld.. CIT(A)/NFAC. After considering the reply of the assessee, Ld. CIT(A)/NFAC dismissed the appeal and confirmed the disallowance u/s 80P(2)(d) regarding interest income of Rs.67,07,883/- made by the Assessing Officer.
5. Being aggrieved with the decision of Ld. CIT(A)/NFAC, the assessee is in appeal before this Tribunal.
Ld. AR appearing from the side of the assessee submitted before us that the order passed by Ld. CIT(A)/NFAC is unjustified. It was further submitted that the assessee is a credit cooperative society and engaged in the activity of providing loans and accepting deposits from its members and the assessee credit cooperative society has deposited the amount in other cooperative banks, which are also cooperative society and from there it has earned interest income. It is submitted that being business income of credit cooperative society the interest income earned is eligible for deduction u/s 80P(2)(a)(i) of the IT Act. It was also submitted alternatively that the same interest income has been earned from investments made with other cooperative societies, therefore, it is also entitled for deduction u/s 80P(2)(d) of the IT Act. It was Co-ordinate Bench of this Jurisdictional Tribunal has decided the issue in favour of assessee. It was further submitted that Jurisdictional Co-ordinate Bench of the Tribunal i.e. Pune Benches, Pune, consistently following that the business income of credit cooperative society is deductible u/s 80P(2)(a)(i) & interest income earned from other cooperative bank is also deductible u/s 80P(2)(d) of the IT Act. In this regard, reliance was placed on the decisions passed in the case of Talegaon Nagri Sahakari Patsanstha Ltd. vs. ITO (ITA No.743/PUN/2024 dated 03.06.2024), PP Pandurang Gramin Bigarshet Sahakari Patsanstha Maryadit vs. AU, Delhi (ITA No.854/PUN/2024 dated 26.06.2024, & ITO Pandarpur vs. Dhanshree Mahila Graming Bigarsheti Sahakari Pat Sanstha Ltd. (ITA No.853/PUN/2024 dated 31.07.2024). Accordingly it was therefore requested before the Bench to set-aside the orders passed by Ld. CIT(A)/NFAC as well as passed by the Assessing Officer and further prayed to allow the deduction u/s 80P(2)(a)(i)/80P(2)(d) of the IT Act 7. The ld. DR supported the orders passed by the sub-ordinate authorities and requested to confirm the same.
8. We have heard Ld. Counsels from both the sides and perused the material available on record as well as written submission filed by the assessee. In the instant case, the Assessing Officer has disallowed the deduction claimed by the assessee credit cooperative society u/s 80P(2)(d) regarding interest income earned from other cooperative societies and the same order was also confirmed by Ld. CIT(A)/NFAC. We find that the assessee is a credit cooperative society engaged in the activity of providing loans to its members and also engaged in accepting the deposits from their members. The resulting income was deposited by the assessee credit cooperative society with other cooperative societies and from their net interest income of Rs.67,07,883/- was earned during the year. The deduction u/s 80P(2)(d) was claimed regarding the above interest income. We find that the issue regarding taxability of interest income earned by a cooperative society from other cooperative banks/cooperative societies has already been decided in favour of the assessee by the Co-ordinate Jurisdictional Benches of this Tribunal in various cases, wherein, it was held that the cooperative banks are also cooperative societies. Therefore, if the assessee credit cooperative society has deposited certain amount with those cooperative banks, the resulting interest income will either be arising during the course of business of the assessee credit cooperative society which is deductible u/s 80P(2)(a)(i) of the IT Act or will be an income from other sources arising as interest income on deposit with other cooperative banks/cooperative societies, which is deductible u/s 80P(2)(d) of the IT Act. In this regard, we find support from the following decisions :- 1. Dhanshree Multistate Cooperative Society Ltd., order dated 13-06-2024. order dated 07- 01-2022.
Karmveer Bhaurao Patil Nagri Sahkari Patsanstha Maryadit, order dated 21-02-2024.
Talegaon Nagri Sahakari Patsanstha Ltd. vs. ITO (ITA No.743/PUN/2024 dated 03.06.2024).
PP Pandurang Gramin Bigarshet Sahakari Patsanstha Maryadit vs. AU, Delhi (ITA No.854/PUN/2024 dated 26.06.2024. ITO Pandarpur vs. Dhanshree Mahila Graming 6. Bigarsheti Sahakari Pat Sanstha Ltd. (ITA No.853/PUN/2024 dated 31.07.2024) 9. In all the above decisions, under identical situation, it has been held that the assessee credit cooperative societies are entitled for deduction u/s 80P(2)(d) of the IT Act. We therefore respectfully following the above decisions allow the grounds of appeal raised by