SANGLI ZILLA DEKHAREKH SAHAKARI SOCIETY LIMITED,SANGLI vs. INCOME TAX OFFICER WARD-3, SANGLI

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ITA 563/PUN/2020Status: DisposedITAT Pune01 February 2022AY 2017-185 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 held that once the CIT(A) accepted the eligibility of deduction under Section 80P(2) on interest income, it should be allowed on the entire interest income, not just proportionately.

What were the facts?

The assessee, a Co-operative Society, claimed deduction under Section 80P(2)(a) on its net profit. The AO denied the deduction on interest income, but the CIT(A) allowed a proportionate deduction.

What were the issues?

Whether the assessee cooperative society is eligible for deduction under Section 80P on its interest income, and if so, whether the deduction should be proportionate or on the full amount.

Which sections of the Income-tax Act were involved?

Section 80P(2)(a)

AI-generated summary — verify with the full judgment below

Cases cited in this judgment(2)Show list

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Income Tax Appellate Tribunal, PUNE BENCH “SMC”, PUNE – VIRTUAL COURT

Before: SHRI R.S. SYAL

For Appellant: Shri Sarang Gudhate
For Respondent: Shri M.G. Jasnani

आदेश / ORDER PER R.S.SYAL, VP : This appeal by the assessee is directed against the order passed by the CIT(A) on 20-08-2020 in relation to the assessment year 2017-18. 2. Tersely, the facts of the case are that the assessee is a Co- operative Society and filed its return declaring net profit of Rs.11,50,144/- which was claimed as deduction u/s.80P(2)(a) of the Income-tax Act, 1961 (hereinafter also called ‘the Act’). The AO denied the benefit of deduction u/s.80P on the ground that the amount of interest income did not qualify, which view

1.

Sangli Zilla Dekharekh Sahakari Society Ltd., came to be countenanced partly in the first appeal by the ld. CIT(A) allowing proportionate deduction.

3.

I have heard the rival submissions in Virtual Court and gone through the relevant material on record. The Pune Benches of the Tribunal in Sureshdada Jain Nagari Sahakari Patsanstha Maryadit Vs. The Pr.CIT (ITA No.713/PUN/2016) has decided the question of availability of deduction u/s 80P on interest income by noticing that the Pune ITAT in an earlier case of Shri Laxmi Narayan Nagari Sahakari Pat Sanstha Maryadit Vs. ITO (ITA No.604/PN/2014) had allowed the deduction in similar circumstances. In the said case, the Tribunal discussed the contrary views expressed by the Hon’ble Karnataka High Court in Tumkur Merchants Souharda Credit Cooperative Ltd. Vs. ITO (2015) 230 Taxman 309 (Kar.) allowing deduction u/s. 80P on interest income and that of the Hon’ble Delhi High Court in Mantola Cooperative Thrift Credit Society Ltd. Vs. CIT (2014) 110 DTR 89 (Delhi) not allowing deduction u/s.80P on interest income earned from banks. Both the Hon’ble High Courts took into consideration the ratio laid down in the case of Totgar’s Cooperative Sale Society Ltd. (supra). No direct judgment from the Hon’ble

Sangli Zilla Dekharekh Sahakari Society Ltd., jurisdictional High Court on the point having been pointed out, the Tribunal in Shri Laxmi Narayan Nagari Sahakari Pat Sanstha Maryadit (supra) preferred to go with the view in favour of the assessee by the Hon’ble Karnataka High Court in the case of Tumkur Merchants Souharda Credit Cooperative Ltd. (supra). The position continues to remain the same before this Bench also.

4.

It can be seen from the impugned order that the ld. CIT(A) has accepted the assessee’s contention, in principle, about the eligibility of deduction u/s.80P(2) of the Act on interest income. He, however, restricted the benefit proportionately by considering the total receipts of the assessee vis-à-vis the amount of interest income. Once the ld. CIT(A) accepted the contention of the assessee for deduction u/s.80P(2), it was to be allowed in respect of the entire interest income. As against the interest income of Rs.1.04 crore, the assessee’s amount of deduction u/s 80P stood only at Rs.11,04,044. I, therefore set-aside the impugned order and direct to grant the benefit of deduction u/s.80P(2)(a) on the full amount claimed by the assessee.

Sangli Zilla Dekharekh Sahakari Society Ltd.,

5.

In the result, the appeal is allowed. Order pronounced in the Open Court on 01st February, 2022.

(R.S.SYAL) उपा�य�/ VICE PRESIDENT पुणे Pune; �दनांक Dated : 01st February, 2022 Satish

आदेश क� ��त�ल�प अ�े�षत / Copy of the Order is forwarded to :

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