JANKALYAN GRAMIN BIGARSHETI SAHAKARI PATHSANSTHA MARYADIT ASOND,RATNAGIRI vs. INCOME TAX OFFICER, RATNAGIRI

The captioned appeal pertaining to Assessment Year 2020- 21 at the instance of assessee is directed against the order dated 30.09.2024 passed by National Faceless Appeal Centre, Delhi u/s.250 of the Income-tax Act, 1961 (hereinafter referred Jankalyan Gramin Bigarsheti Sahakari Pathasanstha Maryadit Asond to as ‘the Act’) which in turn is arising out of Assessment Order dated 19.09.2022 passed u/s.143(3) r.w.s.144B of the Act.

Tersely, the facts of the case emanating from the record are that the assessee is a Cooperative Society registered under The Maharashtra Cooperative Societies Act, 1960. The assessee is engaged in the activity of lending money to the members and accepting deposits from them. The assessee society for the year under consideration filed the return of income declaring Nil income after claiming deduction u/s.80P(2)(a)(i) at Rs.41,82,337/- and u/s.80P(2)(d) of the Act at Rs.35,25,457/-. A show cause notice was issued to the assessee as to why the issue related to large claim of deduction under Chapter VI would be allowed u/s.80P of the Act and further calling upon it to provide documentary evidence in respect of status claimed as a Cooperative Society and the assessee filed its submissions. The Assessing Officer after considering the submissions of the assessee disallowed the deduction claimed u/s.80P(2)(d) on the interest earned from investment by holding as under :

Aggrieved assessee filed appeal before the ld.NFAC who vide impugned order confirmed the action of the Assessing Officer on the ground that the assessee is not entitled to deduction u/s.80P(2)(d) of the Act on the ground that the interest earned out of investments made with Nationalized Banks and Cooperative Banks. While doing so, the ld. NFAC relied on the decisions of Hon’ble Supreme Court in the case of Mavilayi Service Cooperative Bank Ltd. and Others Vs.CIT 123 taxman.com 161 and Totagars Cooperative Sale Society Vs. ITO 188 taxmann.com 282 (SC).

Now the assessee is in appeal before the Tribunal by raising the following solitary ground :

When the appeal 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 from the ld. Departmental Representative exparte qua the assessee.

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 dated 27.05.2022 has held that the interest earned from deposits with Cooperative Banks are also eligible for deduction Jankalyan Gramin Bigarsheti Sahakari Pathasanstha Maryadit Asond u/s.80P(2)(d) of the Act as Cooperative Banks are basically Cooperative Societies only but have turned into Bank on getting necessary banking license.

In the light of above discussion, even if the interest income of the assessee society is from Cooperative Societies and Cooperative Banks, then also it is eligible. Finding of lower authorities nowhere dispute the fact that alleged sum is interest income received from Cooperative Banks and Cooperative Societies. Since interest from both of them are eligible for deduction u/s.80P(2)(d) of the Act, I therefore set-aside the finding of ld.CIT(A) and allow the alleged claim of deduction u/s.80P(2)(d) at Rs.35,25,457/-. Ground of appeal raised by the assessee is allowed.

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