SISODARA VIBHAG VIVIDH KARYAKARI SAHAKARI MANDLI LTD.,NA vs. ARIVS.ITO, WARD-5, NAVSARI

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ITA 1256/SRT/2024Status: DisposedITAT Surat20 February 2025AY 2013-145 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the issue regarding deduction under section 80P(2)(d) of the Act concerning interest and dividend earned from co-operative banks is squarely covered by a series of decisions of the jurisdictional High Court and the Tribunal itself. Specifically, the Tribunal referred to decisions in Surat Vankar Sahakari Sangh Ltd. vs. ACIT, and in the assessee's own case for AY 2014-15. The Tribunal noted that the co-ordinate bench in Althan Bhatar Co-operative Credit Society Ltd. vs. ACIT had held that co-operative banks are primarily co-operative societies and interest earned on deposits with them is eligible for deduction under section 80P(2)(d). The Tribunal also addressed the revenue's reliance on the Karnataka High Court decision in PCIT vs. Totagars Co-operative Sale Society, stating that the jurisdictional High Court's decision in Surat Vankar Sahkari Sangh has binding precedent. Consequently, the Tribunal directed the Assessing Officer to delete the disallowance of deduction under section 80P(2)(d) of the Act with regard to interest and dividend income received from Valsad District Central Co-Op. Bank Ltd. The grounds of appeal concerning these additions were allowed. The Tribunal did not expressly leave any issue undecided.

What were the facts?

The assessee, Sisodara Vibhag Vividh Karyakari Sahakari Mandli Ltd., filed an appeal against the order of the Commissioner of Income-tax (Appeals)/Addl/JCIT(A)-4, Chennai, dated 25.11.2024, for Assessment Year 2013-14. This order arose from an assessment order passed by the Assessing Officer under section 143(3) r.w.s. 147 of the Income Tax Act, 1961, on 19.12.2018. The dispute concerns additions made by the revenue authorities to the assessee's income, specifically Rs. 9,49,939/- (ground 2), Rs. 1,29,864/- as dividend income from Valsad District Central Co-op Bank Ltd. (ground 3), and Rs. 8,20,075/- as interest income from Valsad District Central Co-op Bank Ltd. (ground 4). The assessee contended that these incomes were eligible for deduction under section 80P(2)(d) of the Act.

What were the issues?

1. Whether the insertion of Section 80P(2)(a) in the Finance Act 2006 was intended to withdraw exemptions for co-operative banks or to levy tax on interest and dividend earned by primary co-operative credit societies, and if the interpretation by the AO and CIT(A) against the purpose of Section 80P(4) is justified (Ground 1). 2. Whether the addition of Rs. 9,49,939/- as income was erroneous, given that it was eligible for deduction under section 80P(2)(d) of the Act (Ground 2). 3. Whether the addition of Rs. 1,29,864/- received as dividend from Valsad District Central Co-op Bank Ltd. was erroneous, as it was eligible for deduction under section 80P(2)(d) of the Act (Ground 3). 4. Whether the addition of Rs. 8,20,075/- received as interest from Valsad District Central Co-op Bank Ltd. was erroneous, as it was eligible for deduction under section 80P(2)(d) of the Act (Ground 4). Assessee's Contentions: The assessee argued that the insertion of Section 80P(2)(a) was to withdraw exemptions for co-operative banks, not to tax primary co-operative credit societies on their interest and dividend income. They contended that the AO and CIT(A) misinterpreted the law. The assessee further argued that the additions made were unjustified as the income was eligible for deduction under Section 80P(2)(d). They relied on decisions of the ITAT Ahmedabad and ITAT Surat in the cases of Uttar Gujarat Uma Co-op Credit Society Ltd and Bardoli Vibhag Gram Vikas Co-operative Credit Society Ltd respectively, stating that additions of interest and dividend earned from co-operative banks are void ab initio. The assessee also submitted that their grounds are covered by decisions of the ITAT Surat Bench in Gujarat State Co-Op. Fruits & Vegetable Marketing Federation Ltd. vs. ITO and Althan Bhatar Co-Operative Credit Society Ltd. vs. ACIT. Revenue's Contentions: The Revenue supported the orders of the lower authorities.

Which sections of the Income-tax Act were involved?

Section 80P(2)(a),Section 80P(4),Section 80P(2)(d),Section 143(3),Section 147

AI-generated summary — verify with the full judgment below

Heard together (2 matters)

ITA No.1256/SRT/2024
ITA No.143/Srt/2024

Read from the judgment's own cause title. This page is filed under one of them.

Cause title — parties, addresses and appearances
oraert atch aftreezur, axa =aratts, aa IN THE INCOME TAX APPELLATE TRIBUNAL, SURAT BENCH, SURAT BEFORE SHRI PAWAN SINGH, JUDICIAL MEMBER AND SHRI BIJAYANANDA PRUSETH, ACCOUNTANT MEMBER 31.31.38. /ITA No.1256/SRT/2024 (AY 2013-14) (Hybrid Hearing) Sisodara Vibhag Vividh Karyakari Sahakari Mandli Ltd. AT & PO Ganesh Sisodara Dist., Vs Navsari-396445 | [PAN No. AAAAS 6841 C] Income Tax Officer, Ward-5, Navsari, Near Char Pool Police Gate, Navsari-396445 ortereif/Appellant wear /Respondent Fuittd! at sik a /Assessee by Shri Sujesh C. Suratwala, CA WoT HT BX F /Revenue by Shri Mukesh Jain, Sr-DR Was Hl ANKG/Date of hearing 20.02.2025 SQUVOT Gr ae Xd/Date of pronouncement 20.02.2025 Order under section 254(1) of Income Tax Act PER PAWAN SINGH, JUDICIAL MEMBER: 1. This appeal by assessee is directed against the order of Commissioner of Income-tax (Appeals)/Addl/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.1 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. 2. 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 ITA No.1256/SRT/2024 (A.Y 13-14) Sisodara Vibhag Vividh Karyakari Sahakari Mandli Ltd. 80P(2)(d) of the act, which is unjustified, bad in law. Hence, requires to be deleted. 3.0n 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. 4. 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. 5. 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. 6. 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 dated 17.12.2024, wherein other decision in ITA Nos.895-896/SRT/2024 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 ITA No.1256/SRT/2024 (A.Y 13-14) Sisodara Vibhag Vividh Karyakari Sahakari Mandli Ltd. 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 /aw 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 inAlthan 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 Sisodara Vibhag Vividh Karyakari Sahakari Mandli Ltd.

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).

6.

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 Honble 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.”

7.

In the result, the grounds of appeal raised by the assessee is allowed.”

5.

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.

6.

Inthe 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)

[SRST Waea/ACCOUNTANT MEMBER] [=f Weel JUDICIAL MEMBER]

Wd / Surat Dated: 20/02/2025

Dkp Outsourcing Sr.P.S* Sisodara Vibhag Vividh Karyakari Sahakari Mandli Ltd.

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