GAVLINAGAR NAGARI PATH SANSTHA,PUNE vs. INCOME TAX OFFICER, WARD- 8(2), PUNE, PUNE

The only issue raised in this appeal is against denial of deduction u/s 80P(2)(a)(i) of the Income-tax Act, 1961 (hereinafter referred to as „the Act‟) in respect of interest income received from other Co-operative societies.

Briefly stated, the facts of the case are that the assessee is a Co-operative society, who filed return of income declaring 2 Gavalinagar Nagari Path Sanstha total income at Nil after claiming deduction u/s 80P amounting to Rs.30,76,502. The Assessing Officer (AO) denied the deduction, inter-alia, on interest income of Rs.17,72,010 by considering the provisions of section 80P(2)(d) of the Act. The ld. CIT(A) affirmed the action of the AO. Aggrieved thereby, the assessee has come up in appeal before the Tribunal.

I have heard both the sides and gone through the relevant material on record. The only issue pressed in this appeal is against the denial of deduction u/s 80P(2) in respect of interest income. The claim of the assessee is that the deduction was claimed u/s 80P(2)(a)(i) and the same ought to have been allowed. I find that similar issue has been considered by the Pune Tribunal in Sant Motiram Maharaj Sahakari Pat Sanstha Ltd. vs. ITO (2020) 120 taxmann.com 10 (Pune-Trib). Para 10 is relevant for the purpose, which reads as under: “10. Insofar as the reliance of the ld. DR on the case of Pr. CIT and Another Vs. Totagars Cooperative Sales Society (2017) 395 ITR 611 (Kar.) is concerned, we find that the issue in that case was the eligibility of deduction u/s.80P(2)(d) of the Act on interest earned by the assessee co-operative society on investments made in co-operative banks. In that case, the assessee was engaged in the activity of marketing agricultural produce by its members; accepting 3 Gavalinagar Nagari Path Sanstha deposits from its members and providing credit facility to its members; running stores, rice mills, live stocks, van section, medical shops, lodging, plying and hiring of goods and carriage etc. It was in that background of the facts that the Hon’ble High Court held that the assessee could not claim deduction u/s.80P(2)(d) of the Act. When we consider the impact of this decision, it turns out that the same is not germane to case under consideration in view of the position that the claim of the instant assessee is directly about the eligibility of deduction u/s.80P(2)(a)(i) of the Act and not u/s.80P(2)(d). Moreover, so many decisions relied on by the ld. AR amply go to prove that the view taken by the AO, cannot by any standard, be construed as not a possible view. We, therefore, hold that the ld. Pr. CIT was not justified in exercising the revisional power anent to interest income of Rs.22,34,270/- earned on investments made with co- operative banks.”