SOLAPUR DISTRICT POLICE EMPLOYEES CREDIT CO-OP SOCIETY,SOLAPUR vs. PRINCIPAL COMMISSIONER OF INCOME-TAX -4, PUNE

This appeal filed by the assessee emanates from the order of the ld. Pr. C.I.T. – 4, Pune dated 21-03-2022 passed u/s.263 of the Income-tax Act, 1961 (hereinafter also called ‘the Act’) for A.Y. 2017-18.

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 for a sum of Rs.37,92,216/-. The assessment was completed by the Assessing Officer (AO) u/s.143(3) at the declared income. The ld. PCIT, on examination of records, observed that the assessee claimed deduction u/s.80P to the tune of Rs.37,92,216/- on interest income earned from deposits kept with cooperative societies. He, therefore, opined that, the assessment order, allowing deduction u/s.80P on such interest income, was erroneous and prejudicial to the interest of the Revenue. Setting aside the assessment order, he directed the AO to pass the assessment order afresh as per law after allowing opportunity of hearing to the assessee. Aggrieved thereby, the assessee has approached the Tribunal.

None appeared on behalf of the assessee. We have heard the ld. D.R. and perused the material available on record. The assessee is admittedly a Cooperative credit society engaged in providing credit facilities to its members. The ld. PCIT has held the assessment order to be erroneous and prejudicial to the interest of the Revenue only on the ground that the claim of deduction u/s.80P on interest income amounting to Rs.37,92,216/- was not in order. In this regard, it is observed 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.

Similar view has been taken by the Pune Benches of the Tribunal in several cases including The Sesa Goa Employees Coop. Credit Society Ltd. Vs. ACIT (ITA No.203/PUN/2019, order dated 16-11-2022). In view of the foregoing discussion, we are satisfied that the AO rightly allowed deduction u/s.80P(2)(a) on interest income and the ld. PCIT was not justified in interfering with the same. The impugned order is set aside. 5. In the result, the appeal is allowed.