RAJARSHI SHAHU NAGARI SAHAKARI PAT SANSTHA LTD.,KOLHAPUR vs. INCOME TAX OFFICER, WARD 1(3), KOLHAPUR

This assessee’s appeal for assessment year 2017-18 arises against the CIT(A)- National Faceless Appeal Centre (NFAC), Delhi’s order dated 23.09.2021 passed in case no. ITBA/NFAC/S/250/2021-22/1035827237(1) involving proceedings u/s 143(3) of the Income Tax Act, 1961; in short the Act. Case called twice. None appears at assessee’s behest. It is accordingly proceeded ex-parte.

Coming to the assessee’s sole substantive ground challenging correctness of both the lower authorities’ action disallowing section 80P(2)(a)(i) deduction claim of Rs.1,99,640/-, Mr. Desai vehemently argued that it represents its interest income derived from fixed deposits made in nationalized banks. The same is found to be no more res-integra in light of this tribunal’s co-ordinate bench order in dated 27.12.2021 Nashik Road Nagari Sahkari Patsanstha Ltd. Vs. ITO rejecting Revenue’s identical stand as follows :- “9. We heard the rival submissions and perused the material on record. Admittedly, the appellant is a Cooperative society formed under the provisions of Maharashtra Cooperative Societies Act,1960 with the objective of accepting deposits and lending money to its members. The money which is not immediately required for the purpose of lending to the members is deposited with Bank of Baroda in the form of Fixed Deposit. The question is whether the interest so earned qualifies for exemption u/s. 80P(2)(a)(i) of the Act. The AO as well as the CIT(A) were of the opinion that the interest earned from third parties or non- members does not quality for exemption u/s.80P. It is an admitted position that the interest so earned should be taxed as ‘income from other sources’ There is a cleavage of judicial opinion among several High Courts on the issue of eligibility of this kind of income for exemption u/s. 80P(2)(a)(i) of the Act. The Hon’ble Punjab & Haryana High Court in the case of CIT vs. Punjab State Cooperative Federation of Housing Building Societies Ltd. 11 taxmann.com 448, the Hon’ble Gujarat High Court in the case of State Bank of India Vs. CIT 389 ITR 578 (Guj.), the Hon’ble Delhi High Court in the case of Mantola Co- operative Thrift & Credit Society Ltd. Vs. CIT 50 taxmann.com 278, the Hon’ble Punjab & Haryana High Court in the case of CIT Vs. Punjab State Cooperative Agricultural Development Bank Ltd. 389 ITR 68 and the Hon’ble Kolkata High Court in the case of CIT Vs. Southern Eastern Employees Cooperative Credit Society Ltd. 390 ITR 524 took a view that the income arising on the surplus invested in short term deposits and securities cannot be attributed to the activities of the society and, therefore, not eligible for exemption u/s.80P(2)(a)(i) of the Act. However, the Hon’ble Karnataka High Court in the case of