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Income Tax Appellate Tribunal, A BENCH, PUNE
Before: Dr. MANISH BORAD & SHRI VINAY BHAMORE
आदेश / ORDER PER Dr. Manish Borad, AM :- These appeals at the instance of the assessee for A.Y. 2018-19 and 2020-21 are directed against the order of the Ld. CIT(A) evenly dated 19/08/2024 which are arising out of order framed u/s 143(3) of the Income Tax Act, 1961 dated 02.03.2021 and 23.09.2022. 2. Since common issues have been raised in both these appeals, these have been heard together and are being disposed for by this consolidated order for the sake of convenience. 3. Assessee has raised following grounds of appeal for A.Y. 2018-2019 :-
1. “1. On the facts and in the circumstances of the case and in law, the learned Assessing Officer erred in rejecting deduction u/s 80P (2)(a)(i) for a sum of Rs 70.71,431/- being part of the book profit of appellant society without appreciating the fact that earning of interest is an integral part of society's business and appellant prays for allowing such deduction.
2. On the facts and in the circumstances of the case and in law, the learned Assessing Officer erred in treating the interest received from investment a sum of Rs. 70,71,431/- as income from other sources by rejecting appellants contention that said interest income is integral part of business activity and your appellant prays for cancellation of Assessing officer's action.
3. Without prejudice to above ground on the facts and in the circumstances of the case and in law, the Learned Assessing Officer in not allowing the deduction under section 80P(2)(d) or interest income received from other co-operative society. Your appellants pray for allowing the same.
4. Without prejudice to above ground, on the facts and in the circumstances of the case and the law Learned Assessing Officer erred in treating entire interest income as interest incom received from other co-operative society or bank without allowing deduction on account interest/administrative expenses. Your appellant prays for such deduction,
Your appellant prays for deletion of entire addition. Your appellant craves for to add, alter amer modify, delete any or all grounds of appeal before or during the course of hearing in the intere of natural justice.”
Assessee has raised following grounds of appeal for A.Y. 2020-2021:-
“1. On the facts and in the circumstances of the case and in law, the learned Assessing Officer erred in rejecting deduction u/s 80P (2)(a)(i) for a sum of Rs. 11,54,341/- being part of the book profit of appellant society without appreciating the fact that earning of interest is an integral part of society's business and appellant prays for allowing such deduction 2. On the facts and in the circumstances of the case and in law, the learned Assessing Officer erred in treating the interest received from investment a sum of Rs. 52,14,519/-, as income from other sources by rejecting appellants contention that said interest income is integral part of business activity and your appellant prays for cancellation of Assessing officer's action.
Without prejudice to above ground on the facts and in the circumstances of the case and in law, the Learned Assessing Officer in not allowing the deduction under section 80P(2)(d) on interest income received from other co-operative society. Your appellants pray for allowing the same.
4. Without prejudice to above ground, on the facts and in the circumstances of the case and in the law Learned Assessing Officer erred in treating entire interest income as interest income received from other co-operative society or bank without allowing deduction on account of interest/administrative expenses. Your appellant prays for such deduction.
Your appellant prays for deletion of entire addition. Your appellant craves for to add, alter amend odify, delete any or all grounds of appeal
before or during the course of hearing in the interest natural justice.”
5. From perusal of grounds we notice that the common issues in both these appeals are against the denial of claim of deduction u/s 80P(2)(d) of the Act for the interest earned on investments/deposits with Co-operative banks. For A.Y. 2018- 19 and A.Y. 2020-21 disallowances under section 80P(2)(d) is at a sum of Rs. 70,71,431/- and Rs. 11,54,341/- respectively.
At the outset ld. Counsel for the assessee submitted that the issue raised in this appeal is squarely covered in the favour of the assessee by various decisions of this Hon’ble Tribunal, consistently holding that interest earned from co-operative banks are also eligible for deduction u/s 80P(2)(d) of the Act.
On the other hand Ld. Departmental Representative heavily supported the findings of the ld. CIT(A) but failed to place any decision in favour of revenue on this issue.
We have heard the ld. Departmental Representative and perused the record placed before us. The solitary issue in the instant appeal is whether the assessee is entitled for deduction u/s 80(P)(2)(d) of the Act on the interest earned on deposits made with other Co-operative Banks. We notice that the assessee which is a co-operative society has been subjected to the scrutiny proceedings and in the order framed u/s 143 r.w.s 147 of the Act dated 23.09.2022 various additions were made by the Assessing Officer (AO). The same were challenged by the assessee and substantial relief was granted by CIT(A). However, for the addition of of Rs. 70,71,431/- and Rs. 11,54,341/- for A.Y. 2018-19 and A.Y. 2020-21 respectively, ld. CIT(A) affirmed the action of the AO denying deduction u/s 80P(2)(d) of the Act, interest earned from deposits with Co-operative banks.
Section 80P(2)(d) of the Act provides that the sum received in respect of any income by way of interest or dividend derived by Co-operative Society from its investment with any other Co- operative Society, the whole of such income is eligible for deduction u/s 80P of the Act. We observe that section 80P(d) of the Act refers to the interest from Co-operative Society but it has been consistently held by this Tribunal (Pune Benches) that Cooperative banks are basically Co-operative Societies except that they get license for doing the banking business. We find that this Tribunal in case of Kolhapur District Central Co-op. Bank Kanista Sevakanchi Sahakar Pat Sahakar Ltd., Vs. ITO in dated 01.01.2024 dealing with similar issue after placing reliance on another decision of this Tribunal in the case of the Ugar Sugar Works Kamgar & Dr. Shirgaokar Shaikshanik Trust Nokar Co-op Credit Society vs. ITO in dated 27.05.2022 has held that the interest earned from deposits with Co-operative Banks are also eligible for deduction u/s.80P(2)(d) of the Act. We therefore respectfully following the above referred decisions hold that the assessee is eligible for deduction u/s.80P(2)(d) of the Act for the alleged interest income earned from Co-operative Banks. Findings of the Id. CIT(A) is set-aside for both the years under appeal and the alleged disallowance of Rs. 70,71,431/- and Rs.11,54,341/- for the impugned Assessment Years stands deleted. Effective grounds of appeal raised by the assessee are allowed.
In the result, both the appeals of the assessee for A.Y. 2018-19 and A.Y. 2020-21 are allowed.
Order pronounced in the open court on this 10th day of February, 2025