SATARA Z P CLASS FOUR EMPLOYEES CO.OP CREDIT SOCIETY LTD,SATARA vs. INCOME TAX OFFICER WARD 2 SATARA, SATARA

At the outset, I find the appeal is time barred by limitation by 15 days before the Tribunal. The assessee has filed an affidavit stating that the appointment of Authorised Representative took some time in view of Dussehra and Diwali Festivals which led to delay in filing the appeal.

Having gone through the averments made in the affidavit and in the absence of anything contrary to disbelieve the assessee’s version made therein, I am of the opinion that there was ‘reasonable cause’ which prevented the assessee in filing the appeal before the Tribunal within the stipulated time. I therefore in the larger interest of justice condone the delay of 15 days and proceed for adjudication of appeal.

Succinctly, the facts of the case are that the assessee is a Cooperative Credit Society registered under the Maharashtra Cooperative Societies Act. It is engaged in the activity of accepting deposits from its members and providing credit facilities to them. The assessee filed the return of income for the A.Y. 2020-21 on 02.01.2021 declaring Nil income after claiming deduction under Chapter VIA at Rs.13,39,682/-. After the case selected for Scrutiny followed by validly serving of statutory notices u/s.143(2)/142(1), the assessee filed the 3 Satara Z.P. Class Gour Employees Coop Credit Society Ltd., requisite details. Based on the information furnished by the assessee, the Assessing Officer noticed that the assessee earned interest income of Rs.13,39,682/- on investment with Cooperative Banks, which in his opinion does not quality for deduction u/s.80P(2)(d) of the Act. Thus, he brought to tax the said interest income disallowing the deduction u/s.80P(2)(d) claimed by the assessee.

Aggrieved assessee preferred appeal before the ld.CIT(A) who vide impugned order affirmed the action of the Assessing Officer for non-prosecution, without discussing anything on merits of the case.

Now the assessee is in appeal before the Tribunal.

When the case was called for, none appeared on behalf of the assessee despite due service of notice of hearing. I therefore proceed to dispose of the appeal with the able assistance of ld. Departmental Representative exparte qua the assessee.

Coming to the issue on merits, I have heard the ld. Departmental Representative and perused the material on record. In the instant case, the Assessing Officer disallowed interest income of Rs.13,39,682/- earned out of the Fixed deposits/Investments made with Cooperative Banks treating the 4 Satara Z.P. Class Gour Employees Coop Credit Society Ltd., same as Income from Other Sources u/s.56 of the Act and the same was affirmed by the ld.CIT(A) in the First Appellate Proceedings.

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 Cooperative Society from its investment with any other Cooperative Society, the whole of such income is eligible for deduction u/s.80P of the Act. I find that this issue is no more res integra as the Coordinate Benches of this Tribunal has been consistently holding that the interest income earned out of the FDs/Investments kept with Cooperative Banks is allowable u/s.80P(2)(d) of the Act. I find that this Tribunal in case of Kolhapur District Central Co-op. Bank Kanista Sevakanchi Sahakar Pat Sanstha 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 ITA No.84/PAN/2018, dated 27.05.2022 has held that the interest earned from deposits with Cooperative Banks are also eligible for deduction u/s.80P(2)(d) of the Act as Cooperative Banks are basically 5 Satara Z.P. Class Gour Employees Coop Credit Society Ltd., Cooperative Societies only but have turned into Bank on getting necessary banking license. I therefore respectfully following the above referred decisions and taking consistent view along with considering the facts of the case, where the assessee made investment with the Cooperative Banks and hold that the assessee is eligible for deduction u/s.80P(2)(d) of the Act for the interest income earned from Cooperative Banks at Rs.13,39,682/-. Findings of the ld. CIT(A) is set-aside and the Assessing Officer is directed to allow the claim by the assessee. Effective grounds of appeal raised by the assessee are allowed.

In the result, the appeal of the assessee is allowed.