THE STATE TRANSPORT EMPLOYEES CO OPERATIVE CREDIT THRIFT SOCIETY,MEHSANA vs. DCIT, CIRCLE, GANDHINAGAR

Without prejudice to the above, Ld. CIT(A) has erred in considering the interest income received from cooperative and nationalized banks of Rs. 11,37,101/- as fully taxable u/s. 56 of the Act without allowing the pro-rata expenditure incurred u/s. 57 of the Act. It is submitted that only the net interest income, after allowing the The State Transport Employees Co Operative Credit Thrift Society vs. DCIT Asst.Year–2018-19 pro-rata expenditure incurred, should be taxed. It is submitted that the same be allowed now.

The order passed by the Ld. CIT(A) is bad in law and contrary to the provisions of law and fats. It is submitted that the same be held so now.

Your appellant craves leave to add, alter, and/or to amend all or any of the grounds before the final hearing of the appeal.”

The assessee is a Cooperative Credit Society registered under Cooperative Societies Act, Gujarat and engaged in the business of banking / providing credit facilities to its members. The assessee’s case was selected for limited scrutiny in respect of the issues that of investment / advances / loans, disallowance under Section 40A(7) (Gratuity provision) and deduction from total income under Chapter VIA. Notice under Section 142(1) was issued on 06.01.2021 calling for the deduction under Section 80P of the Act. The Assessing Officer has not accepted the reply of the assessee and has disallowed under Section 80P amounting to Rs. 10,49,211/- interest income received from Cooperative Bank and Rs. 87,890/- interest income from Nationalized Bank.

Being aggrieved by the assessment order the assessee filed appeal before the CIT(A). The CIT(A) partly allowed the appeal of the assessee.

As regards, Ground No. 2 the assessee has not pressed the said ground. Hence, Ground No. 2 is dismissed. As regards, Ground No. 1 the Ld. A.R. submitted that in assessee’s own case for A.Y. 2017-18 the appeal of the assessee is allowed on the same issue of 80P(2)(d) of the Act, therefore, the interest received from Cooperative Bank are allowed. Asst.Year–2018-19 6. The Ld. D.R. relied upon the assessment order and the order of the CIT(A).

Heard both the parties and perused all the relevant materials available on record. It is admitted position that the assessee received interest income of Rs. 10,49,211/- from Cooperative Bank which is registered under the Cooperative Societies Act, Gujarat. The Hon’ble Cooperative Societies / Cooperative Bank and the same should be allowed. Thus, Ground No. 2 is allowed.

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