Prathmik Krasi Sakh Sahkari… vs ITO | ITAT Indore 2025

आयकर अपीलीय अिधकरण, इंदौर Ɋायपीठ, इंदौर IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE

BEFORE SHRI B.M. BIYANI, ACCOUNTANT MEMBER AND

SHRI UDAYAN DAS GUPTA, JUDICIAL MEMBER ITA No.409/Ind/2024

Assessment Year:2018-19

आदेश / O R D E R

Per B.M. Biyani, A.M.:

Feeling aggrieved by order of first appeal dated 20.03.2024 passed by learned Commissioner of Income-Tax (Appeals)-NFAC, Delhi ["CIT(A)"] which in turn arises out of assessment-order dated 23.03.2021 passed by learned National e-Assessment Centre ["AO"] u/s 143(3) of Income-tax Act, 1961 ["the Act"] for Assessment-Year ["AY"] 2018-19, the assessee has filed this appeal on the grounds as mentioned in Form No. 36.

The background facts leading to present appeal are such that the assessee is a co-operative society existing for the benefit of its members. For

AY 2018-19, the assessee filed return of income declaring a total income of Rs. Nil after claiming exemption u/s 80P. The case of assessee was selected for scrutiny and the AO ultimately passed assessment-order dated 23.03.2021 determining total income at Rs. 6,61,122/- by rejecting claim of deduction u/s 80P(2)(a)(i)/80P(2)(d) qua the interest & dividend income of Rs. 6,61,122/-. Aggrieved, the assessee carried matter in first-appeal but did not get any relief. Now, the assessee has approached this Tribunal by way of next appeal.

Ld. AR for assessee firstly carried us to the details of impugned income of Rs. 6,61,122/- noted by AO in Para 8 of assessment-order as under:

- 4. Ld. AR next submitted that the Item at S.No. (i) and (ii), namely interest income of Rs. 83,814/- and dividend income of Rs. 3,01,830/- were earned from DCCB (i.e. District Credit Co-operative Banks) and these are eligible for deduction u/s 80P(2)(d). However, the lower-authorities have denied deduction to these items for the reason that the section 80P(2)(d) allows deduction to interest or dividend income earned by a "co-operative society" from another "co-operative society". According to AO, although the assessee is a "co-operative society" but it has earned income from "cooperative banks (i.e. DCCB)" and "co-operative banks" are not "co-operative societies". However, this issue is consistently coming in several cases and the various appellate forums including ITAT, Indore have held that "cooperative banks", even if engaged in banking business, are very much "cooperative societies". Therefore, the deduction u/s 80P(2)(d) is allowable. The decisions of Indore bench holding this proposition are: - (i) ITA No. 326 & 327/Ind/2023 M.P. Police Co-operative Credit Society Vs. NFAC, Delhi - (ii) Pr. CIT vs. Bhopal Dugdh Sangh Sahakari Maryadit in ITANo. 71/Ind/2023 and CO No.03/Ind/2023.

Therefore, in the light of these decisions, the Item No. (i) and (ii) are eligible for deduction u/s 80P(2)(d). Ld. DR for revenue although dutifully relied upon the orders of lower-authorities but could not dispute the pre-existing view taken by appellate forums. In the light of decided cases of Indore Bench, we accept the claim of assessee. Accordingly, we direct the AO to allow deduction u/s 80P(2)(d) qua the Items (i) and (ii).

- 5. Thereafter, Ld. AR submitted that Item at S.No. (iii) is the interest income of Rs. 1,73,390/- from investment of reserve fund mandatorily created in terms of section 43 of the M.P. Co-operative Societies Act and therefore it is an income part of and attributable to the assessee's activity of providing credit facilities to its members and eligible for deduction u/s 80P(2)(a)(i) as held by ITAT, Indore in M.P. Police Sakh Sahkarita Maryadit Vs. ITO-4(5), Indore, ITA No. 422/Ind/2017, order dated 17.12.2019. Ld. DR for revenue although dutifully relied upon the orders of lower-authorities but could not dispute the submission of Ld. AR. Respectfully following the pre-existing view of ITAT, Indore, we accept the claim of assessee. Accordingly, we direct the AO to allow deduction u/s 80P(2)(a)(i) qua the Item No. (iii). - 6. In so far remaining items at S.No. (iv) to (x) are concerned, Ld. AR filed copies of bank statements at Page No. 52 to 58 of Paper-Book in an attempt to show that those interest incomes have also been earned from DCCBs and therefore eligible for deduction u/s 80P(2)(d) in the same manner as Item No. (i) & (ii). Ld. Representatives of both sides are ad idem to accept that these are additional evidences, therefore they may be remanded to AO for verification and thereafter giving deduction u/s 80P(2)(d) in the same

manner as Item No. (i) & (ii). We accordingly remand the Item Nos. (iv) to (x) to the file of AO for necessary verification of additional evidences filed by assessee and thereafter giving deduction u/s 80P(2)(d) in the light of our foregoing discussion qua Item (i) & (ii).

Resultantly, this appeal is partly allowed for statistical purpose.

Order pronounced in open court / by putting on notice board as per Rule 34 of ITAT Rules, 1963 on 03/02/2025

Sd/- Sd/-

JUDICIAL MEMBER ACCOUNTANT MEMBER

(UDAYAN DAS GUPTA) (B.M. BIYANI)

Indore

िदनांक /Dated : 03/02/2025

Patel/Sr. PS

Copies to: (1) The appellant

- (2) The respondent - (3) CIT (4) CIT(A) - (5) Departmental Representative - (6) Guard File

By order

Sr. Private Secretary Income Tax Appellate Tribunal Indore Bench, Indore

PRATHMIK KRASI SAKH SAHKARI SAMITI MARYADIT RATIKHEDI,MANDSAUR vs. ITO, MANDSAUR