ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE-1(1), HUBBALLI vs. TOTGARS CO-OPERATIVE SALE SOCIETY LTD, SIRSI

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ITA 571/BANG/2017Status: DisposedITAT Bangalore02 January 2019AY 2013-142 pages

In favour of the Revenue: the Revenue's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The CIT(A) deleted the addition made by the AO, allowing the deduction. The tribunal upheld the CIT(A)'s decision, finding that the income was not from co-operative banks as defined in Section 80P(4).

What were the facts?

The assessee, a co-operative society, claimed deduction under Section 80P(2)(d) for interest and dividend income received from other co-operative societies. The Assessing Officer denied this deduction, arguing that the income was from co-operative banks, and Section 80P(4) disallows such deductions for co-operative banks.

What were the issues?

Whether interest and dividend income received by a co-operative society from other co-operative societies is eligible for deduction under Section 80P(2)(d), especially when the AO considers them to be co-operative banks.

Which sections of the Income-tax Act were involved?

Section 80P(2)(d),Section 80P(4)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “B” BENCH : BANGALORE

Before: SHRI JASON P BOAZ & SHRI PAVAN KUMAR GADALE

For Appellant: Shri. M. Narasimha Raju, JDIT
For Respondent: Shri. S. V. Ravishankar, Advocate
Hearing: 10.12.2018Pronounced: 02.01.2019

Per Jason P Boaz, Accountant Member

1.

This appeal is filed by the Revenue against the order dated 11.04.2016 of CIT(A), Hubballi relating to Assessment Year 2013-14.

2.

The assessee is a Co-operative Society engaged in the business of processing and marketing of agricultural produce grown by the members. The assessee also provides the credit facility to its members besides running a kirana Store and earning interest on deposits. The assessee claimed deduction u/s 80P(2)(d) of the Act. The assessee claimed deduction on a sum of Rs.4,20,93,663/- which was interest and dividend received from Co-operative Societies. The AO denied the benefit of Page 2 of 7 deduction on the ground that the interest received by the assessee from Co-operative Societies which are engaged in business of banking and, therefore, regarded as Co- operative Banks. Since as per section 80P(4) of the Act to provision of section 80P(2)(d) are not applicable to Co-operative Banks, hence the AO denied the benefit of deduction u/s 80P(2)(d) of the Act.

3.

On appeal by the assessee, the CIT(A) deleted the addition made by the AO by observing as under at paras 8 to 17 of the impugned order:

“8. I find that, during the year, the assessee has earned a total interest income of Rs.4,20,70,913/- from Co-operative banks, the details are as under:

9.

Out of the total interest earned from co-operative banks of Rs.4,20,70,913/-, a sum of Rs.2,85,86,294/- was shown as income in the Income & Expenditure account of the appellant society and the balance of Rs.1,34,84,619/- which was earned on the reserve fund and statutory funds, was directly credited to such funds. As such. the appellant society claimed deduction u/s.80P(2)(d) of the Act to the extent of Rs.2,86,09,044/- (interest of Rs.2,85,86,294/- and dividend of Rs.22,750/-). As regards the interest income of Rs.1.34.84.619/-. the appellant society did not claim deduction u/s.80P(2)(d) as it was not offered as income.

10.

The assessing officer was of the view that the appellant is not entitled to deduction u/s.80P(2)(d) as the interest was earned from co-

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