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Facts
The assessee, a cooperative society, claimed deduction under Section 80P. The AO disallowed this claim and added interest income from bank investments under Section 56. The CIT(A) upheld the AO's order, dismissing the assessee's appeal, which led to the current appeal before the Tribunal.
Held
The Tribunal remanded the matter to the AO for re-examination. The assessee is directed to furnish specific details of interest receipts from other cooperative societies or cooperative banks, which, if proven, would be eligible for deduction under Section 80P(2)(d) as per jurisdictional High Court precedents.
Key Issues
Whether the CIT(A) was justified in denying the deduction under Section 80P(2)(d) for interest income from co-operative societies/banks, particularly when the assessee failed to provide specific details to substantiate the claim.
Sections Cited
250, 80P, 143(3), 56, 80P(2)(d)
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Income Tax Appellate Tribunal, COCHIN BENCH
Before: SHRI GEORGE GEORGE K., VP & SHRI INTURI RAMA RAO, AM
O R D E R Per: George George K., VP This appeal at the instance of the assessee is directed against the order of the National Faceless Appeal Centre, Delhi[CIT(A)], dated 27.08.2024 passed u/s. 250 of Income Tax Act, 1961 (hereinafter "the Act"). The relevant assessment year is 2021-22.
The solitary issued raised is whether the CIT(A) is justified in confirming the action of AO in denying the claim of deduction u/s. 80P(2)(d) of the Act.
Koothattukulam Farmers Service Co-op. Bank Ltd.
Brief facts of the case are as follows:- Assessee is a co-operative society registered under the Kerala State Co-operative Societies Act, 1969. For AY 2021-22 the return of income was filed on 11.03.2022 declaring Nil income after claiming deduction u/s. 80P of the Act. The return was selected for scrutiny and assessment was completed u/s. 143(3) of the Act disallowing the deduction u/s. 80P and making addition of interest income received from investment with banks treating the same as ‘income from other sources’ u/s. 56 of the Act. The total income computed in the assessment completed u/s. 143(3) of the Act was at Rs.60,46,520/-.
Aggrieved by the assessment completed the assessee preferred appeal before the first appellate authority. The assessee submitted before the first appellate authority that it was eligible for deduction u/s. 80P(2)(d) of the Act on interest income received from the District Co-operative Bank. However, the CIT(A) dismissed the appeal of the assessee.
Aggrieved by the order of the CIT(A), the assessee has filed the present appeal before the Tribunal. The learned A.R. submitted that the CIT(A) dismissed the appeal without considering any of the contentions raised by the assessee society and ignoring the judgement of the Hon'ble Jurisdictional High Court in the case of Pr. CIT vs. Peroorkada Service Co-op. Bank Ltd. [2022] 442 ITR 141 (Ker).
We have heard the rival submissions and perused the material available on record. The solitary issue raised in this appeal is with regard to the claim of deduction u/s. 80P(2)(d) of the Act. It is the claim of the learned A.R. that the assessee had received interest income from co-operative societies and banks and in light of the judgement of the Hon'ble Jurisdictional High Court in the case of Pr. CIT vs. Peroorkada Service Co-op. Bank Ltd. [2022] 442 ITR 141 (Ker) the assessee is entitled for deduction u/s. 80P(2)(d) of the Act. The CIT(A) has dismissed the claim of the assessee by observing as under: -
“6.2 The appellant has relied upon a number of judgements in its favour including the judgement of the Hor'ble Kerala High Court in the case of Principal Commissioner of Income Tax, Thiruvananthapuram vs. Vilappil Service Cooperative Bank Ltd. in which the Hon'ble High Court has held that interest income earned from cooperative Banks would be eligible for deduction u/s 80P(2)(d) as cooperative Banks are registered as cooperative Societies. The case of the appellant is covered by the decision of Hon'ble Kerala High Court. However, in the instant case, it is observed that though the appellant has contended that it has earned interest income from other cooperative societies and cooperative Banks, it has nowhere provided details of how much of the disputed amount of Rs. 60,46,520/- is from cooperative Banks or from other cooperative societies or from scheduled banks or from other Financial Institutions. The appellant has thus failed to discharge the onus of bringing on to record, evidence, to Koothattukulam Farmers Service Co-op. Bank Ltd. substantiate its claim for deduction u/s 80P(2)(d). The appellant has neither provided details of income from cooperative banks nor has it brought forth evidence in support of the contention that these cooperative banks are registered as cooperative societies, in the absence of evidentiary proof, I am constrained to hold that the order of the AO does not warrant interference.”
From the above order of the CIT(A) it is clear that the assessee society has not placed on record details of interest receipts whether same has been received from co-operative societies/co- operative banks entailing the benefit of deduction u/s. 80P(2)(d) of the Act. In the interest of justice and equity, we restore the matter to the file of the AO so that the assessee can give the details of the interest receipts for which it is claiming deduction u/s. 80P(2)(d) of the Act. If it is found that interest income is received from other co- operative societies or co-operative banks the same shall be entitled to deduction u/s. 80P(2)(d) of the Act in light of the judgement of the Hon'ble Jurisdictional High Court in the case of Peroorkada Service Co-op. Bank Ltd. (supra). It is ordered accordingly.
In the result, appeal filed by the assessee allowed for statistical purposes.
Order pronounced in the open court on 2nd April, 2025.