THE SONIKAMPA GROUP SEVA SAHAKARI MANDALI LIMITED,ARVALLI vs. THA ITO, WARD-1, MODASA

PDF · subscribers
ITA 1341/AHD/2025Status: DisposedITAT Ahmedabad23 September 2025AY 2018-19Bench: Shri Siddhartha Nautiyal, Judicial Member\nAnd Shri Narendra Prasad Sinha, Accountant Member\nITA No. 1341/Ahd/2025\nAssessment Year 2018-19\nThe Sonikampa Group\nSeva Sahakari\nMandali Ltd.\nMarket Yard, Talod\nRoad Dhansura,\nArvalli-383310,\nGujarat, India\nPAN:AAAJT1386N\n(Appellant)\nThe ITO,\nWard-1, Modasa\nVs\n(Respondent)\nAssessee Represented: Shri M.K. Patel, Advocate\nRevenue Represented: Shri Suresh Chand Meena, Sr.D.R.\nDate of hearing : 27-08-2025\nDate of pronouncement : 23-5 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal noted that the issue concerns the eligibility of a co-operative society to claim deduction under Section 80P for interest income of Rs. 17,826/- and dividend income of Rs. 2,95,194/-. The AO and CIT(Appeals) had denied the deduction, holding the income did not arise from core business activities. Before the Tribunal, the assessee submitted that both incomes were from a co-operative bank and cited judicial precedents supporting deduction under Section 80P(2)(d) for income earned by a co-operative society from investments in another co-operative society, including co-operative banks. The Tribunal found that the documentary evidence (bank statement) placed on record had not been properly verified during assessment. Therefore, the Tribunal restored the matter to the AO for re-examination, verification of the nature and source of income, and fresh decision on the Section 80P deduction claim, affording the assessee an opportunity to present supporting documents. The ratio is that income from investments in co-operative banks by a co-operative society may be eligible for deduction under Section 80P(2)(d), and such claims warrant proper verification.

What were the facts?

The assessee, The Sonikampa Group Seva Sahakari Mandali Ltd., a co-operative society, filed its return for Assessment Year 2018-19 declaring nil income after claiming deduction under Chapter VIA. The Assessing Officer (AO) noted interest income of Rs. 17,826/- from fixed deposits and dividend income of Rs. 2,95,194/-. The assessee claimed these as business income eligible for deduction under Section 80P, stating the dividend was from other cooperative societies. The AO disallowed the deduction of Rs. 3,13,020/-, treating the income as 'income from other sources' as it did not arise from core business activities. The CIT(Appeals) upheld the AO's disallowance. The assessee appealed to the ITAT.

What were the issues?

1. Whether on facts, in law, and evidence on record, the learned NFAC erred in confirming the disallowance of claim of deduction u/s 80P(2)(d) of the Act of Rs. 3,13,020/- (Question of law and fact). The assessee contended that the interest and dividend income were earned from a co-operative bank, The Sabarkantha DCCB Bank, and are eligible for deduction u/s 80P(2)(d) based on judicial precedents. The revenue relied on the observations of the AO and CIT(Appeals).

Which sections of the Income-tax Act were involved?

Section 80P,Section 143(3)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, AHMEDABAD “SMC” BENCH

Before: Shri Siddhartha Nautiyal & Shri Narendra Prasad Sinha

Assessment Year 2018-19 The Sonikampa Group The ITO, Seva Sahakari Ward-1, Modasa Mandali Ltd. Vs Market Yard, Talod Road Dhansura, Arvalli-383310, Gujarat, India PAN:AAAJT1386N (Respondent) (Appellant) Assessee Represented: Shri M.K. Patel, Advocate Revenue Represented: Shri Suresh Chand Meena, Sr.D.R. Date of hearing : 27-08-2025 Date of pronouncement : 23-09-2025 आदेश/ORDER PER : SIDDHARTHA NAUTIYAL, JUDICIAL MEMBER:-

This appeal is filed by the Assessee as against the appellate order dated 21.04.2025 passed by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi, (in short referred to as “CIT(A)”), arising out of the assessment order passed under section 143(3) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) relating to the Assessment Year 2018-19.

A.Y. 2018-19 Page No 2 The Sonikampa Group Seva Sahakari Mandali Ltd. . vs. ITO

2.

The assessee has raised the following Grounds of Appeal: (1) That on facts, in law, and evidence on record, the learned NFAC has grievously erred in confirming the disallowance of claim of deduction u/s 80P(2)(d) of the Act of Rs. 3,13,020/- (2) That on facts and in law, the learned NHAC ought to have allowed the claim as prayed for. (3) The appellant craves leave to add, alter, amend any ground of appeal.

3. The brief facts of the case are that the assessee, M/s The Sonikampa Group Seva Sahakari Mandali Ltd, a co-operative society, filed its return of income for the Assessment Year 2018–19 on 29.09.2018, declaring nil income after claiming deduction under Chapter VIA of the Income Tax Act, 1961 (Act). Upon examination of records, the Assessing Officer observed that the assessee had earned interest income from fixed deposits of Rs.17,826/- and dividend income of Rs.2,95,194/- during the year. The assessee declared this income as part of business income and claimed deduction under section 80P of the Act, stating the dividend was from other cooperative societies. However, upon review, the Assessing Officer held that this income did not arise from the core business activity of providing credit facilities to members or sale of agricultural inputs. Since the interest was from bank deposits and dividend was not from members or domestic companies, the AO treated this income of Rs.3,13,020/- as income from other sources and disallowed the deduction under section 80P of the Act.

4.

In appeal, CIT(Appeals) dismissed the appeal of the assessee, with the following observations:

A.Y. 2018-19 Page No 3 The Sonikampa Group Seva Sahakari Mandali Ltd. . vs. ITO

5.5. In view of the above facts it appears that the interest earned from surplus invested/deposited in the Co-operative banks/commercial banks and other financial institution is not being attributable to main business of the appellant hence d be assessed as 'income from other sources and not as 'business profits.

5.6. Accordingly, the observations and the findings of the AO appear to be in order which does not permit me to take a divergent view. Accordingly the disallowance u/s 80P made by the AO of Rs. 3,13,020/-(Interest received from Co- operative banks/commercial banks and other financial institution & Dividend Income) is upheld and all the grounds raised in this appeal are dismissed.

5.

The assessee is in appeal before us against the order passed by CIT(Appeals) dismissing the appeal of the assessee. Before us, the Counsel for the assessee submitted “Bank Statement” of the assessee’s account held with “The Sabarkantha DCCB Bank” which is a co-operative bank. The Counsel for the assessee submitted that on perusal of the same, it is evident that the assessee had earned interest of Rs.17,826/- and dividend income of Rs.2,95,194/- during the year from the said co-operative bank and the same is eligible for deduction u/s 80P of the Act. The Counsel for the assessee submitted that law on this point is quite clear in view of various judicial precedents on this issue which have held that interest and dividends earned by a society from a co-operative bank is eligible for deduction u/s 80P of the Act.

6.

In response, the Ld. DR placed reliance on the observations made by the Assessing Officer and Ld. CIT(Appeals) in their respective orders.

A.Y. 2018-19 Page No 4 The Sonikampa Group Seva Sahakari Mandali Ltd. . vs. ITO

7.

We have heard the rival contentions and perused the material on record. The issue involved in the present appeal relates to the eligibility of the assessee, a co-operative society, to claim deduction under section 80P of the Act, in respect of interest income of Rs.17,826/- and dividend income of Rs.2,95,194/-. The Assessing Officer had denied the deduction holding that the income in question did not arise from the core business activities of the society and was therefore not eligible under section 80P. The CIT(Appeals) confirmed this view. Before us, the Counsel for the assessee submitted that both the interest and dividend income were received from a co-operative bank, namely, The Sabarkantha District Central Co-operative Bank, and placed reliance on the bank statement to support this claim. It was further submitted that as per judicial precedents, income earned by a co-operative society from investments made in another co-operative society, including co-operative banks, is eligible for deduction under section 80P(2)(d) of the Act. In view of the submissions made before us and the documentary evidence placed on record, which appears to have not been properly verified during the assessment proceedings, we are of the considered opinion that the matter needs to be re-examined by the Assessing Officer. We accordingly restore the matter to the file of the Assessing Officer for carrying out necessary verification of the nature and source of the interest and dividend income and to decide the claim of deduction under section 80P afresh in accordance with law, after giving due opportunity to the assessee to present all relevant facts and supporting documents.

A.Y. 2018-19 Page No 5 The Sonikampa Group Seva Sahakari Mandali Ltd. . vs. ITO

8.

In the result, the appeal of the assessee is allowed for statistical purposes.

Order pronounced in the open court on 23-09-2025

More judgments on Section 80P

All 5,069 judgments and leading authorities on Section 80P →

Latest GST High Court judgments

Search GST case law →