THE GUNDUGOLANU LARGE SIZE COOPERATIVE SOCIETY LIMITED ,GUNDUGOLANU vs. NFAC, DELHI

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ITA 95/VIZ/2025Status: DisposedITAT Visakhapatnam04 July 2025AY 2018-196 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal noted that the assessee had not submitted details before the AO but did so before the appellate authority. The Tribunal found no infirmity in the order of the CIT(A) directing the AO to examine the submissions made by the assessee and allow deductions in accordance with law. Therefore, the grounds raised by the assessee were allowed for statistical purposes. The CIT(A) had directed that deduction u/s 80P(2)(a)(i) should be granted for income earned from providing credit facilities to members, but not to associate/nominal members. Further, deduction u/s 80P(2)(d) would be available on interest from deposits with cooperative societies/banks not governed by the RBI Banking Regulation Act, but not from scheduled commercial banks. The AO was directed to allow these deductions looking into the respective amounts from the appellant's books of accounts. The issue of deduction from scheduled commercial banks was expressly left undecided by the CIT(A) in its order, but the Tribunal's decision to allow for statistical purposes implies a remand for verification.

What were the facts?

The assessee, The Gundugolanu Large Size Cooperative Society Ltd., filed its return of income for Assessment Year 2018-19 admitting NIL income. The case was selected for limited scrutiny concerning investments/advances/loans and deductions under Chapter VI-A. The Assessing Officer (AO), after the assessee failed to provide details, made an addition of Rs. 68,25,879/- by disallowing deduction claimed under section 80P(2)(a)(i) and disallowed a deduction of Rs. 65,462/- under section 80P(2)(d). The assessee appealed to the Commissioner of Income Tax (Appeals) (CIT(A)). The CIT(A) partly allowed the appeal, directing the AO to allow deductions based on submissions, but excluding income from associate/nominal members for 80P(2)(a)(i) and interest from scheduled commercial banks for 80P(2)(d). The assessee is now in appeal before the Income Tax Appellate Tribunal (ITAT).

What were the issues?

1. Whether the deduction under section 80P(2)(a)(i) of the Income Tax Act, 1961, would include income earned from the activity of providing credit to associate/nominal members? The assessee argued that the list of members and details of loans and advances were provided, and prayed for the matter to be remitted back to the AO for verification of interest receipts from members and nominal members. The revenue relied on the orders of the revenue authorities. 2. Whether the deduction under section 80P(2)(d) of the Act would be available to interest received from deposits/savings accounts kept with other cooperative societies/banks which are governed by the RBI Banking Regulation Act and scheduled commercial banks? The assessee argued that this bench has allowed interest receipts from deposits with other cooperative societies/banks and prayed for the matter to be remitted back to the AO for verification and allowance of deduction. The revenue relied on the orders of the revenue authorities.

Which sections of the Income-tax Act were involved?

Section 80P(2)(a)(i),Section 80P(2)(d),Section 143(3),Section 143(3A),Section 143(3B),Section 143(2),Section 142(1)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, VISAKHAPATNAM “DIVISION” BENCH, VISAKHAPATNAM

Before: SHRI RAVISH SOOD, HON’BLE

For Appellant: Shri GVN Hari, Advocate

आदेश /O R D E R

PER SHRI S BALAKRISHNAN, ACCOUNTANT MEMBER:

1.

This appeal is filed by the assessee against order of Learned Commissioner of Income Tax (Appeals), National Faceless Appeal centre, Delhi [hereinafter in short “Ld.CIT(A)”] vide DIN & Order No. ITBA/NFAC/S/250/2024-25/1071161972(1) dated 12.12.2024 for the I.T.A.No.95/VIZ/2025 The Gundugolanu Large Size Cooperative Society Ltd., A.Y.2018-19 arising out of the order passed under section 143(3) r.w.s. 143(3A) & 143(3B) of Income Tax Act, 1961 (in short ‘Act’) dated 08.04.2021.

2.

Brief facts of the case are, assessee is an AOP/BOI, e-filed its return of income on 23.10.2018 admitting a total income of Rs. NIL. Subsequently, the case was selected for limited scrutiny for the following issues: -

i. Investments / Advances / Loans ii. Deduction from Total Income under Chapter VI-A.

3. Thereafter, notice under section 143(2) and 142(1) of the Act was duly issued and served on the assessee on various dates. In response to the notice assessee has not submitted any details before Ld. Assessing Officer [hereinafter in short “Ld. AO"] by seeking time for filing information vide letter dated 11.02.2021. The Ld. AO observed that assessee has not submitted any reply till 08.04.2021 and thereafter made an addition of Rs.68,25,879/- claimed as deduction under section 80P(2)(a)(i) of the Act and also disallowed the deduction claimed by the assessee under section 80P(2)(d) of the Act for Rs.65,462/-.

4. Aggrieved by the order of the Ld. AO, Assessee carried the matter before the Ld. CIT(A). Based on the written submissions made by the assessee, the Ld.CIT(A) by relying on the various judicial pronouncements as detailed in his order partly allowed the appeal of the assessee by directing the Ld. AO to allow the deductions based on the submissions made by the assessee.

Page. No 2

I.T.A.No.95/VIZ/2025 The Gundugolanu Large Size Cooperative Society Ltd., 5. On being aggrieved by theorder of the Ld. CIT(A), assessee is in appeal before us by raising following grounds of appeal: -

1. The order of the learned Commissioner of Income Tax (Appeals) for the AY 2018-19 dt. 12.12.2024 in DIN & Order No: ITBA/NFAC/S/250/2024-25/1071161972(1) is contrary to the facts and also the law applicable to the facts of the case.

2. The learned Commissioner of Income Tax (Appeals) is not justified in holding that the deduction u/s 80P(2)(a)(i) would not include income earned from activity of providing credit to associate/nominal members.

3.

The learned Commissioner of Income Tax (Appeals) is not justified in holding that the deduction u/s 80P(2)(d) would not be available to interest received form deposits/savings account kept with other cooperative societies/banks which are governed by RBI Banking Regulation Act and schedule commercial banks.

4.

Any other ground that may be urged at the time of appeal hearing.”

6.

Ground Nos. 1 & 4 are general in nature and needs no adjudication.

7.

Ground No. 2 is with respect to disallowance of deduction under section 80P(2)(a)(i) of the Act on the income earned from activity of providing credit to associate / nominal members. On this issue, Ld. Authorised Representative [hereinafter “Ld.AR”] submitted that the total list of members has been provided before Ld. CIT(A), Ld. CIT(A) observed and directed the Ld. AO to allow deduction under section 80P(2)(a)(i) of the Act in respect of the income earned from activity of providing credit facilities to its members. However, the Ld.CIT(A) denied the deduction for the income earned from activity of providing credit to associate / nominal members. Ld.AR submitted that list of Page. No 3

I.T.A.No.95/VIZ/2025 The Gundugolanu Large Size Cooperative Society Ltd., members has been provided in Paper Book Page Nos. 169 to 215. Further the details of loans and advances to its members provided in paper book Page Nos.78 to 163. He therefore prayed that the matter may be remitted back to the file of Ld. AO for verification of the interest receipts from the members and nominal members.

8.

Further, on the issue of allowance of deduction 80P(2)(d) of the Act, Ld.AR submitted that this Bench has allowed the interest receipts from deposits kept with other cooperative societies / banks. He therefore prayed that this matter also may be remitted back to the file of Ld. AO for verification and for allowance of deduction claimed by the assessee.

9.

Per contra, Ld. Departmental Representative [hereinafter in short “Ld.DR”] placed heavy reliance on the orders of the Revenue Authorities.

10.

We have heard rival contentions and perused the material available on record. The dispute arising out of the impugned order agitated by the assessee in this appeal is with respect to the disallowance of deduction under section 80P(2)(a)(i) of the Act on the interest earned by the assessee dealing with its non-members / nominal members and also interest received from deposits held with other cooperative societies / banks. The Ld. CIT(A) in Para No. 10.6 of its order dated 12.12.2024 observed as follows: -

Page. No 4

I.T.A.No.95/VIZ/2025 The Gundugolanu Large Size Cooperative Society Ltd., “10.6. In view of above mentioned facts, legal provisions and following decisions in above mentioned cases I, hereby, direct the AO that appellant should be granted deduction u/s 80P(2)(a)(i) for the income earned from activity of providing credit facilities to its members. However, the same will not include income earned from activity of providing credit to Associate/nominal members. Further, appellant will get deduction u/s.80P(2)(d) on the interest received from deposits/savings account kept with other cooperative societies/ banks which are not governed by RBI Banking Regulation Act. However, such deduction will not be available to interest received from scheduled commercial banks. While giving appeal effect, AO will allow these deductions looking into respective amounts/figures from appellant's books of accounts. Accordingly, the grounds related to this issue are Partly Allowed.”

11.

The assessee has also not submitted details before Ld. AO during the assessment proceedings, however, submitted the details before Appellate Authority. In this scenario, we do not find any infirmity in the order of the Ld.CIT(A) directing the Ld. AO to examine the submissions made by the assessee and allow the deductions in accordance with law. Accordingly, grounds raised by the assessee are allowed for statistical purposes.

12.

In the result, appeal of the assessee is allowed for statistical purposes.

Order pronounced in the open court on 04th July, 2025.

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