THE HARSIDDHI CO. OP. CREDIT SOCIETY LTD.,PANCHMAHAL vs. THE ACIT, ANAND CIRCLE, ANAND

The brief facts of the case are that the assessee had filed its return of income for the A.Y. 2020-21 on 29.12.2020 declaring total income of Rs. Nil. The assessee is a Co-operative Society and had claimed deduction of Rs.23,99,554/- under Section 80P(2)(a)(i) of the Act and deduction of Rs.10,58,405/- under Section 80P(2)(d) of the Act. The assessment was completed under Section 143(3) r.w.s. 144B of the Act at a total income of Rs.45,31,057/-. The Assessing Officer had treated the entire interest income on FDR of Rs.45,31,057/- as income from other sources and also disallowed the claim of deduction under Section 80P(2)(d) of the Act thereon.

Aggrieved with the order of the Assessing Officer, the assessee had filed an appeal before the First Appellate Authority which was adjudicated vide the impugned order and the appeal of the assessee was dismissed.

The assessee has raised the following grounds in this appeal: -

Alternatively and without prejudice to the above LD. CIT(A) has erred in law and on facts of the case in confirming the action of learned AO in disallowing deduction u/s 80P(2)(d) amounting to Rs.10,58,455/-.

Alternatively and without prejudice to the above, learned CIT(A) ought to have granted the benefit of set off under S.70 or 71 of the Act.

Learned CIT(A) has erred in law and on the facts in confirming the action of AO in charging interest u/s. 234A/B/C/D.

Learned CIT(A) has erred in law and on the facts in confirming the action of AO in initiating penalty u/s.270A of the Act which is wholly unsustainable in law and on facts of the case.”

Shri Mohit Balani, Ld. AR of the assessee explained that the assessee had earned interest of Rs.45,31,057/- on FDRs and the expenses incurred for earning income being 76.46% amounting to Rs.34,72,602/- was claimed as deduction. The balance amount of Rs.10,58,455/- was considered as income from other sources which was claimed as deduction under Section 80P(2)(d) of the Act. He submitted that the Assessing Officer was not correct in treating the entire FDR interest of Rs.45,31,057/- as income from other sources without allowing any deduction for expenses as claimed and also denying the deduction under Section 80P(2)(d) of the Act. He submitted that the issue of deduction under Section 80P(2)(d) of the Act is covered by the decision of the Hon’ble Gujarat High Court in the case of PCIT-1 vs. Ashwinkumar Arban Co-operative Society Limited in R/Tax Appeal no.538 of 2024. 7. Per contra, Shri Suresh Chand Meena, the Ld. Sr. DR supported the order of the lower authorities on this issue. 8. We have considered the submissions of the assessee and the materials available on record. The assessee had claimed deduction of Rs.10,58,455/- under Section 80P(2)(d) of the Act. This was after reducing 76.64% of expense from FDR interest of Rs.45,31,057/-. The Assessing Officer had disallowed the claim of deduction for the reason that the said deduction was limited only to interest received from Co- operative Society and not from Bank. The Hon’ble Gujarat High Court in the case of Ashwinkumar Arban Co-operative Society Limited (supra) has held that the Co-operative Bank is a Co-operative Society registered under Gujarat State Co-operative Societies Act and accordingly deduction under Section 80P(2)(d) of the Act was admissible to the interest derived from Co-operative Banks. Therefore, the Assessing Officer was not correct in denying the deduction under Section 80P(2)(d) of the Act in respect of interest income received from other Co-operative Banks. From the details available in the paper-book, it is found that the entire FDR interest of Rs.45,31,057/- was received from three Co-operative Banks only. Therefore, the assessee was entitled for deduction u/s 80P(2)(d) in respect of the entire FD interest of Rs.45,31,057/-, which was assessed as income from other sources by the Assessing Officer. Accordingly, the Assessing Officer is directed to allow deduction under Section 80P(2)(d) of the Act in respect of entire FDR interest of Rs.45,31,057/- received from three Co-operative banks. Accordingly, the ground taken by the assessee is allowed.

Ground nos.2 & 3 are alternative grounds taken by the assessee and have become infructuous considering the fact that the ground no.1 has been allowed whereby the entire FDR interest of Rs.45,31,057/- is The Harsiddhi Co. Op. Credit Society Ltd. vs ACIT Page 5 of 5

Ground nos.4, 5 & 6 being consequential grounds, are dismissed.

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