THE LUNAWADA URBAN CO OP CREDIT SOCIETY LIMITED,MAHISAGAR vs. THE ITO, WARD-1, LUNAWADA

Ld. CIT (A) (NFAC) erred in law and on facts in confirming action of AO in making addition on altogether different grounds than mentioned in reasons recorded for reopening of scrutiny assessment. Assessment Year 2016-17

Ld. CIT (A) (NFAC) erred in law and on facts confirming disallowance by AO of Rs 11, 78, 126/- said to be claimed by the appellant disregarding the fact that the appellant claimed deduction of only Rs. 5, 25, 781/- interest & dividend earned from Co-operative Bank.

Ld. CIT (A) (NFAC) erred in law and on facts in confirming action of AO in not appreciating that deduction of Rs. 6, 02, 341/- claimed by the appellant was u/s 80P(2)(a)(1) on income earned from members legitimately allowable.

Ld. CIT (A) (NFAC) erred in law and on facts in holding that co- operative banks are not a co-operative society and that interest on FD/ dividend earned are not allowable deduction u/s 80P(2)(d) but are taxable.

Ld. CIT (A) (NFAC) erred in placing reliance on judgment of Katlary Kirana (327 CTR 0128) of juri ictional High Court which is rendered in the context of revisional proceedings and not on whether co-operative Bank is a species of genus co-operative society.

Initiation of penalty proceedings u/s 271 (1)(c) of the act is unjustified.”

The assessee is a co-operative credit society engaged in providing credit facilities and financial services to its members. The assessee filed its return of income on 18-12-2017 declaring total income of Rs.1,77,000/- and claimed deduction of Rs. 11,78,122/- u/s. 80P of the Act. The case was selected for complete scrutiny and assessment was completed u/s. 143(3) of the Act thereby disallowing deduction/s. 80P to the extent of Rs. 11,78,126/-

Being aggrieved by the assessment order, the assessee file appeal before the CIT(A). The CIT(A) dismissed the appeal of the assessee.

The ld. A.R. submitted that the ground nos. 1 & 2 of the appeal are not pressed. As regards ground nos. 3 & 4,

The ld. D.R. relied upon the assessment order and the order of the CIT(A).

We have heard both the parties and perused all the relevant materials available on record. It is pertinent to note that the assessee has received interest income from co- operative bank and the proportionate expenses has to be allowed as held by Hon’ble Gujarat High Court in various decisions. In the light of decisions of Hon’ble Gujarat High Court, the appeal of the assessee is allowed.

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

Revenue 3. Concerned CIT 4. CIT (A) 5. DR, ITAT, Ahmedabad 6. Guard file. By order/आदेश से,