VITA URBAN CO-OPERATIVE CREDIT SOCIETY LTD VITA,VITA vs. INCOME TAX OFFICER WARD 2, SANGLI

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ITA 832/PUN/2022Status: DisposedITAT Pune16 December 2022AY 2018-195 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal, following its own precedent, held that a cooperative society is eligible for deduction under section 80P(2)(a)(i) on interest income earned from deposits with cooperative banks. The insertion of section 80P(4) does not affect this eligibility.

What were the facts?

The assessee, a cooperative credit society, claimed deduction under section 80P(2)(a)(i) on interest income earned from fixed deposits with nationalized banks. The AO and CIT(A) denied this deduction, treating the interest as income from other sources.

What were the issues?

Whether interest income earned by a cooperative society from deposits with nationalized banks is eligible for deduction under Section 80P(2)(a)(i)? Whether Section 80P(4) bars deduction on interest income from deposits with cooperative banks?

Which sections of the Income-tax Act were involved?

Section 80P(2)(a)(i),Section 80P(4)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, PUNE BENCH “SMC”, PUNE

Before: SHRI R.S. SYAL

For Respondent: Shri Suhas Kulkarni

आदेश / ORDER PER R.S. SYAL, VP : This appeal by the assessee arises out of the ex parte order dated 15-07-2022 passed by the National Faceless Appeal Centre (NFAC), Delhi u/s.250 of the Income-tax Act, 1961 (hereinafter also called ‘the Act.) in relation to the assessment year 2018-19.

2.

I have heard the ld. DR and gone through the relevant material on record. There is no appearance from the side of assessee despite notice. I, therefore, proceed to dispose off the appeal ex parte qua the assessee.

Vita Urban Cooperative Credit Society Ltd.,

3.

Briefly stated, the facts of the case are that the assessee is a Cooperative credit society engaged in providing credit facilities to its members. The assessee filed return declaring total income at Nil after claiming deduction u/s.80P(2)(a)(i) for a sum of Rs.57,73,194/-. During the year under consideration, the assessee earned interest income amounting to Rs.1,73,110/- from the fixed deposits kept with Nationalised banks. The AO opined that such interest income was chargeable under the head ‘Income from other sources” and hence ineligible for deduction u/s.80P(2)(a)(i).

1.

Eventually, the assessment was completed u/s.143(3) determining the total income at Rs.1,73,110/-, being, interest earned on fixed deposits kept with Nationalised Banks. The ld. CIT(A) affirmed the view point of the AO on this score. Aggrieved thereby, the assessee has approached the Tribunal.

4.

After hearing the ld. DR and perusing the relevant material on record, it is seen that the assessee is a co-operative society registered under Maharashtra Cooperative Societies Act, 1960.

During the year under consideration, the assessee earned interest amounting to Rs.1,73,110/- from deposits kept with banks. The issue of granting deduction u/s 80P on such an income is no more

Vita Urban Cooperative Credit Society Ltd., res integra in view of the catena of decisions delivered by the Pune Benches. The Pune Bench in Rena Sahakari Sakhar Karkhana Ltd. Vs. Pr.CIT (ITA No.1249/PUN/2018) has held, vide its order dated 07-01-2022, that though co-operative banks, other than primary agricultural credit society or a primary co-operative agricultural and rural development bank, are not eligible for deduction pursuant to insertion of section 80P(4) w.e.f. 1.4.2007, but this provision does not dent the otherwise eligibility u/s 80P(2)(d) of the Act of a co-operative society on interest income on investments/deposits parked with a co-operative bank, which is a registered co-operative society as per section 2(19) of the Act, defining co-operative society to mean a co-operative society registered under the Co-operative Societies Act, 1912 or under any law for the time being in force. The assessee is also a Co-operative society registered under the Cooperative Societies Act.

Respectfully following the decision of the Division Bench, I overturn the impugned order and direct to grant deduction u/s.80P(2)(a)(i) of the Act on the amount of interest earned from various Co-operative Banks.

Vita Urban Cooperative Credit Society Ltd.,

5.

In the result, the appeal is allowed.

Order pronounced in the Open Court on 16th December, 2022.

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