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Facts
The assessee, a cooperative society, claimed deduction under section 80P for commission income earned from MSEDCL and interest income from MSEDCL deposits and government securities. The lower authorities denied this deduction.
Held
The Tribunal held that the activity of earning commission from MSEDCL and earning interest from deposits akin to the society's main objects, are eligible for deduction under section 80P(2)(a)(i) of the Act, following High Court and Tribunal precedents.
Key Issues
Whether commission and interest income earned from MSEDCL and government securities by a cooperative society are eligible for deduction under section 80P of the Income Tax Act.
Sections Cited
80P, 250, 143(3), 80P(2)(a)(i)
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Income Tax Appellate Tribunal, PUNE BENCHES “SMC”, PUNE
Before: DR.MANISH BORAD & MS. ASTHA CHANDRA
आदेश / ORDER
PER DR. MANISH BORAD, ACCOUNTANT MEMBER :
The captioned appeal at the instance of assessee pertaining to assessment year 2012-13 is directed against the order dated 10.01.2025 passed by National Faceless Appeal Centre, Delhi u/s.250 of the Income Tax Act, 1961 ( in short ‘the Act’) which inturn is arising out of the Assessment order dated 13.02.2015 passed u/s.143(3 of the Act.
The only grievance of the assessee is that the lower authorities erred in denying the benefit of deduction u/s.80P of the Act for its commission income earned from MSEDCL as well as interest income on deposit with MSEDCL and other Government Securities.
At the outset, ld. Counsel for the assessee submitted that the issue of 80P deduction on commission income earned from MSEDCL is covered squarely in favour of the assessee by the judgment of Hon’ble Jurisdictional High Court in the case of CIT Vs. Ahmednagar Dist. Coop. Bank Ltd. (2003) 264 ITR 0038 (Bom HC) and also the decisions of this Hon’ble Tribunal in the case of ITO Vs. Vijkamgar Coop. Credit Society Ltd. in order dated 29.05.2014 and Panvel Peoples Nagari Sahakari Patsanstha Maryadit Vs. ITO in ITANo.1862/PUN/2018, order dated 01.03.2019.
On the other hand, Ld. Departmental Representative submitted that the assessee has not filed the details of the objects of the assessee society and whether the assessee society has an object to earn commission from MSEDCL.
We have heard the rival contentions and perused the record placed before us. We observe that the assessee has challenged the finding of ld.CIT(A) affirming the action of the AO in the assessment order framed for A.Y. 2012-13 u/s.143(3) of the Act on 13.02.2015 by not allowing deduction u/s.80P of the Act for the commission income earned from MSEDCL as well as interest earned from MSEDCL and Government Securities.
Revenue authorities failed to dispute this fact that the deposits with MSEDCL have been made by the assessee for carrying out the activity of earning commission and similarly the deposits made with the Government Securities are on account of the mandatory deposits for maintaining liquidity ratio to be maintained by the Credit Cooperative Societies in order to carry out its activity. We further observe that the Hon’ble Jurisdictional High Court in the case of CIT Vs. Ahmednagar Dist. Coop. Bank Ltd. (supra) has laid down that the activity of collecting bills, dues and charges for and on behalf of the Government, local authority, MTNL, BEST, MSEB etc., is akin to banking activity and is eligible for deduction u/s.80P(2)(a)(i) of the Act. Ratio laid down by the Hon’ble Jurisdictional High Court has been subsequently followed by this Tribunal in the case of ITO Vs. Vijkamgar Coop. Credit Society Ltd. (supra) and in the case of Panvel Peoples Nagari Sahakari Patsanstha Maryadit Vs. ITO (supra).
On going through the said judgment of the Hon’ble Jurisdictional High Court and the decisions of this Tribunal, we find that the same are squarely applicable to the assessee on the facts of the instant case and respectfully following the same we are of the considered view that assessee is eligible for deduction u/s.80P of the Act for the commission income of Rs.6,11,030/- earned from MSEDCL. Similarly, the interest income earned from deposits with MSEDCL as well as mandatory deposits in Government Securities by the assessee society for carrying out the activity are akin to the main objects of the assessee society and therefore since the commission income is eligible for deduction u/s.80P(2)(a)(i) of the Act being incidental in nature and not having earned interest from deposit made from surplus funds with any Scheduled Banks, the same deserves to be allowable as deduction u/s.80P(2)(a)(i) of the Act. Accordingly, the finding of ld.CIT(A) is set aside and the grounds of appeal No. 1 to 3 raised by the assessee are allowed.
In the result, the appeal of the assessee is allowed.
Order pronounced on this 24th day of April, 2025.