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Facts
The assessee, a Co-operative Credit Society, filed its return of income declaring Nil income after claiming deduction under Section 80P. The Assessing Officer disallowed Rs.42,12,352/- claimed as deduction on interest and dividend income from Co-operative Banks, and made an addition of Rs.3,776/-. The CIT(A) dismissed the assessee's appeal.
Held
The Tribunal held that the interest received from Mehsana District Co-operative Bank Limited amounting to Rs.28,45,327/- is allowable as interest from a co-operative society. Further, the dividend income of Rs.13,67,025/- received from a Co-operative Institution was also found to be from a co-operative society itself and thus allowed.
Key Issues
Whether interest and dividend income received from co-operative banks/institutions by a co-operative credit society is eligible for deduction under Section 80P of the Income Tax Act.
Sections Cited
80P, 80P(2)(d), 143(1), 143(2), 142(1), 244A
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Income Tax Appellate Tribunal, AHMEDABAD “SMC” BENCH, AHMEDABAD
Before: Ms. SUCHITRA KAMBLE & SHRI MAKARAND VASANT MAHADEOKAR
O R D E R This appeal is filed by the assessee against order dated 24.07.2024 passed by the CIT(A), National Faceless Appeal Centre (NFAC), Delhi for the Assessment Year 2017-18.
The assessee has raised the following ground of appeal :-
“The Lower Authority has erred on facts as well as law.
In making addition in reference to the claim u/s.80P in reference to the interest received from Co. Op. Banks amounting to Rs.28,45,327/- as well as the dividend income from Co. Op. Bank Rs.13,67,025/- making total of Rs.42,12,352/-. In view of the facts, it is stated that the addition made is required to be deleted.”
The assessee is a Co-operative Credit Society engaged in distribution of the Fertilizers to Agriculturist of the Mehsana District to the members of the Society and also reselling food grains, tea and other items to the members of the Society. The return of income was field by the assessee on 29.10.2017 declaring total income at Rs. Nil after claiming deduction of Rs.29,87,933/- under Section 80P of the Income Tax Act, 1961. The return was processed under Section 143(1) of the Act and the case was selected for limited scrutiny. Notice under Section 143(2) of the Act dated 09.08.2018 was issued and thereafter notice under Section 142(1) of the Act was issued on 15.03.2019. In response to the above notices, the assessee filed submissions from time to time. The Assessing Officer observed that during the year under consideration, the assessee received interest/dividend income of Rs.42,12,352/- from Co-operative Banks. After taking cognisance of the assessee’s reply and relying on the decision of Hon’ble Gujarat High Court in the case of State Bank of India vs. CIT (2016) 380 ITR 578 (Guj.) and Hon’ble Apex Court’s decision in the case of Totgars Co-operative Sale Society Limited vs. ITO (188 Taxman 282 (SC)) made disallowance of Rs.42,12,352/- out of deduction under Section 80P(2)(d) of the Act The Assessing Officer also made addition of Rs.3,776/- on account of interest income under Section 244A of the Act.
Being aggrieved by the Assessment Order, the assessee filed appeal before the CIT(A). The CIT(A) dismissed the appeal of the assessee.
The Ld. AR submitted that the assessee has claimed deduction under Section 80P(2)(d) of the Act relating to amount of dividend from Co-operative Institutions amounting to Rs 13,67,025/- and interest received from Mehsana District Co-operative Bank Limited amounting to Rs.28,45,327/-. The ld. AR submitted that out of this interest income, the assessee has rightly claimed interest received from Mehsana District Co-operative Bank Limited Rs 28,45,327/- and the balance interest of Rs.84,068/- duly included in the return income as taxable. Ld. AR relied upon the decision of Hon’ble Gujarat High Court in the case of Katlary Kariyana Merchant Sahkari Sarafi Mandali Limited vs ACIT, Assessment Year 2015-16, in R/SCA No.20585/2019 and that of Surat Vankar Sahakari Sangh Limited vs. ACIT (2016) 72 taxmann.com 169. The ld. AR submitted that the decision of Hon’ble Apex Court in the case of Totgars Co-operative Sale Society Limited (supra) was also considered in the decision of Hon’ble Gujarat High Court in the case of PCIT vs. Ashwinkumar Arban Co-operative Society Limited (2024) 168 taxmann.com 314 (Guj.)
The Ld. DR submitted that the Hon’ble Apex Court in the case of Totgars Co- operative Sale Society Limited (supra) has already considered this issue and relied upon the same as well as the Assessment Order and the order of the CIT(A).
We have heard both the parties and perused all the relevant material available on record. It is pertinent to note that the component of Rs.13,67,025/- is the amount of dividend received from Co-operative Institution and interest received from Mehsana District Co-operative Bank Limited is amounting to Rs 28,45,327/-. As per decision of Hon’ble Gujarat High Court in various case laws relied upon by the Ld. AR, the interest received from Mehsana District Co-operative Bank Limited will be considered as the interest received from Co-operative Society and, therefore, relates to the said component of Rs.28,45,327/-, the same is allowable. As regards the amount of dividend from Co-operative Institution, the assessee has demonstrated that the same is also again received from Co-operative Society itself and, therefore, the same is allowed. Thus, the ground of appeal raised by the assessee is allowed.
In the result, appeal of the assessee is allowed.
Order pronounced in the open Court on this 9th January, 2025.