SISODARA VIBHAG VIVIDH KARYAKARI SAHAKARI MANDLI LTD.,NA vs. ARIVS.ITO, WARD-5, NAVSARI
Facts
The assessee, a primary cooperative credit society, challenged the denial of deduction under Section 80P(2)(d) for interest and dividend income received from Valsad District Central Co-op Bank Ltd. The Assessing Officer and CIT(A) had made additions totalling Rs.9,49,939/-, Rs.1,29,864/-, and Rs.8,20,075/- to the income, based on their interpretation of Section 80P(4). The assessee contended that Section 80P(4) withdrew exemption for co-op banks, not primary co-op credit societies earning income from other co-op banks.
Held
The Tribunal, relying on consistent decisions of its bench and jurisdictional High Court judgments, held that interest and dividend income earned by primary co-operative societies from other co-operative banks are eligible for deduction under Section 80P(2)(d) of the Act. It directed the Assessing Officer to delete the disallowed additions, finding the issue squarely covered by precedents.
Key Issues
Whether a primary co-operative credit society is eligible for deduction under Section 80P(2)(d) of the Income Tax Act for interest and dividend income received from another co-operative bank, considering the scope of Section 80P(4).
Sections Cited
Section 80P(2)(d), Section 80P(4), Section 143(3), Section 254(1), Income Tax Act, 1961
AI-generated summary — verify with the full judgment below
आयकर अपीलीय अधिकरण, सुरत न्यायपीठ, सुरत IN THE INCOME TAX APPELLATE TRIBUNAL, SURAT BENCH, SURAT BEFORE SHRI PAWAN SINGH, JUDICIAL MEMBER AND SHRI BIJAYANANDA PRUSETH, ACCOUNTANT MEMBER आ.अ.सं./ITA No.1256/SRT/2024 (AY 2013-14) (Hybrid Hearing) Sisodara Vibhag Vividh Karyakari Sahakari Mandli Ltd. AT & PO Ganesh Sisodara Dist., Navsari-396445 [PAN No. AAAAS 6841 C] अपीलार्थी/Appellant Vs Income Tax Officer, Ward-5, Navsari, Near Char Pool Police Gate, Navsari-396445 प्रत्यर्थी / Respondent निर्धारिती की ओर से / Assessee by Shri Sujesh C. Suratwala, CA राजस्व की ओर से /Revenue by Shri Mukesh Jain, Sr-DR सुनवाई की तारीख/Date of hearing 20.02.2025 उद्घोषणा की तारीख/Date of pronouncement 20.02.2025 Order under section 254(1) of Income Tax Act PER PAWAN SINGH, JUDICIAL MEMBER:
This appeal by assessee is directed against the order of Commissioner of Income-tax (Appeals)/AddI/JCIT(A)-4, Chennai [for short, “Ld. CIT(A)"] dated 25.11.2024 for the assessment year 2013-14 which in turn arises out assessment order passed by Assessing Office under section 143(3) r.w.s. 47 of Income Tax Act, 1961 ('the Act') on 19.12.2018. The assessee has raised the following grounds of appeal:
“1. In Finance Act 2006, the insertion of Section 80P(2)(4) to the Act as explained by the then Honorable Finance Minister in her budget speech is to withdrawal of exemption given to the co-op. Bank and not to levy the tax on interest and dividend earned by the primary co-op. credit society. Hence learned AO as well as CIT(A)/NFAC interpreted the law completely against the purpose of insertion of section 80P(4) which is unjustified to the assessee and required to be deleted.
On facts and circumstances of the case as also law on subject, the learned AO as well as CIT(A)/NFAC has erred in making addition of income of Rs.9,49,939/- which was eligible for deduction u./s 80P(2)(d) of the act, which is unjustified, bad in law. Hence, requires to be deleted. 3.On facts and circumstances of the case as also law on subject, the learned AO as well as CIT(A)/NFAC has erred in making addition of income of Rs.1,29,864/- received toward dividend from Valsad District Central Co-op Bank Ltd., which was eligible for deduction u/s 80P(2)(d) of the Act, which is unjustified, bad in law. Hence, requires to be deleted.
On facts and circumstances of the case as also law on subject, the learned AO as well as CIT(A)/NFAC has erred in making addition of income of Rs.8,20,075/- received towards interest from Valsad District Central Co-op Bank Ltd., which was eligible for deduction u/s 80P(2)(d) of the Act, which is unjustified, bad in law. Hence, required to be deleted.
On facts and circumstances of the case as also law on the subject, the learned AO as well as CIT(A)/NFAC has made an the addition made on the basis of various judgment made by Apex Court but the CIT(A)/NFAC has grossly ignored the judgment given by Honorable ITAT Ahmedabad and Honorable ITAT Surat in the case of Uttar Gujarat Uma Co-op Credit Society Ltd and Bardoli Vibhag Gram Vikas Co-operative Credit Society Ltd respectively hence making addition of interest and dividend earned from co-op. Bank is void ab initio required to be deleted.
The appellant craves leave to add, alter deletes, amend or rescind any of the above grounds of appeal.”
At the outset of hearing, Ld. Authorized Representative (Ld.AR) for the assessee submits that grounds of appeal raised by him is covered by a series of decisions of this Bench including in case of Gujarat State Co-Op. Fruits & Vegetable Marketing Federation Ltd. vs. ITO in ITA Nos.895-896/SRT/2024 dated 17.12.2024, wherein other decision in case of Althan Bhatar Co- Operative Credit Society Ltd. vs. ACIT in ITA No.143/Srt/2024 dated 30.05.2024 was followed. The Ld. AR for the assessee submits that during the year under consideration, assessee received interest income and dividend from other Co-operative Bank i.e., Valsad District Central Co-Op. Bank Ltd., the Valsad District Central Co-Op. Bank Ltd. is a primary Co- operative society. The Ld. AR of the assessee submits that no relief is claimed in the present appeal of assessee.
On the other hand, Ld. Senior-Departmental-Representative (Ld. Sr-DR) for the Revenue supported the order of lower authorities.
We have considered the rival submission of both parties and have gone through the orders of the authorities below carefully. We find that appeal relates to dividend income of Rs.1,29,864/- and interest income of Rs. 8,20,075/- received from Valsad District Central Co-Op. Bank Ltd. we find that on similar grounds of appeal, combination of this Bench in the case of Gujarat State Co-Op. Fruits & Vegetable Marketing Federation Ltd. (supra) by following the earlier decision in the case of Althan Bhatar Co-Operative Credit Society Ltd. (supra) this bench on similar contention of the parties passed the following order: 4.We have considered the rival submissions of both the parties and have gone through order of lower authorities carefully. We have also deliberated the case law relied upon by both the parties. We find that Ld. AR of the assessee has made a limited prayer about deduction under section 80P(2)(d) of the Act which has been clearly recorded by Assessing Officer in page-2 of assessment order i.e., interest and the dividend earned from co-operative bank. We find that ground of appeal raised by assessee is squarely covered by a series of decisions of this co- ordinate Bench of this Tribunal even after considering the decisions of Hon'ble Karnataka High Court in the case of Totagars Co-operative Sale Society (supra) relied by Ld. Sr-DR for the Revenue. 5.We find that in Althan Bhatar Co-operative Credit Society Ltd. Vs ACIT in ITA No. 143/Srt/2024, this combination on similar contention of the parties passed the following order; 7.We have considered the rival submissions of both the parties and perused the orders of the lower authorities carefully. The dispute relates to deduction claimed under section 80P(2)(d) of the Act with regard to interest earned on fixed deposit with Surat District Co- including in the case of Vishal Co-operative Housing Services Society Limited vs. ITO, in ITA No.886/SRT/2023, dated 22.02.2024 (Surat – Trib.), wherein it was held that Co-operative Banks are primarily the Co-operative Society and the interest earned on deposit with Co- operative banks are eligible for deduction under section 80P(2)(d) of the Act. Similar, view was taken in assesses own case for AY 2014-15 in ITA No.151/SRT/2019, dated 31.03.2022. Having gone through the order of Co-ordinate Bench (supra), we see no reason to take a different view from the view taken by the Co-ordinate Bench (supra).
Considering the aforesaid consisting decision, which is followed in a series of decisions by this co-ordinate Bench of this Tribunal and respectfully following the said decisions, we direct the Assessing Officer to delete the deduction under section 80P(2)(d) of the Act. So far as reliance on the decision of Hon'ble Karnataka High Court in case of PCIT vs. Totagars Co-operative Sale Society (supra) is concerned, we find that the decision of Juri ictional High Court in Surat Vankar Sahkari Sangh (supra) has binding precedent on this bench.”
In the result, the grounds of appeal raised by the assessee is allowed.”
Considering the consistent decisions of this bench on similar issues and respectfully following the same, we direct the the Assessing Officer to delete the disallowance of deduction under section 80P(2)(d) of the Act with regard to interest income and dividend income received from Valsad District Central Co-Op. Bank Ltd. This ground of assessee's appeal is allowed. In the result, appeal of the assessee is allowed. Order pronounced in the open court on 20/02/2025 at the time of hearing of appeal. (BIJAYANANDA PRUSETH) (PAWAN SINGH) [लेखा सदस्य/ACCOUNTANT MEMBER] [न्यायिक सदस्य JUDICIAL MEMBER] सूरत / Surat Dated: 20/02/2025 Dkp Outsourcing Sr.P.S* 4 Sisodara Vibhag Vividh Karyakari Sahakari Mandli Ltd. आदेश की प्रतिलिपि अग्रेषित/ Copy of the order forwarded to : • • • • • अपीलार्थी/ The Appellant प्रत्यर्थी/ The Respondent आयकर आयुक्त / CIT विभागीय प्रतिनिधि, आयकर अपीलीय आधिकरण, सूरत/ DR, ITAT, SURAT गार्ड फाईल / Guard File //// By order/आदेश से, सहायक पंजीकार आयकर अपीलीय अधिकरण, सूरत 5", "summary": { "facts": "The assessee, a co-operative society, appealed against the CIT(A)'s order for AY 2013-14, which upheld the addition of interest and dividend income earned from Valsad District Central Co-Op. Bank Ltd. The assessee claimed these incomes were eligible for deduction under Section 80P(2)(d) of the Income Tax Act, 1961.", "held": "The Tribunal noted that similar grounds of appeal have been consistently decided in favour of the assessee by various benches, following the juri ictional High Court's decisions and its own co-ordinate benches. The Tribunal found that the issue was squarely covered by previous decisions.", "result": "Allowed", "sections": [ "80P(2)(d)", "143(3)", "47", "80P(4)" ], "issues": "Whether the interest and dividend income earned by a primary co-operative society from a co-operative bank is eligible for deduction under Section 80P(2)(d) of the Income Tax Act." } }
