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Income Tax Appellate Tribunal, ‘A’ BENCH: CHENNAI
Before: SHRI N.R.S. GANESAN & SHRI INTURI RAMA RAO
आदेश / O R D E R
PER INTURI RAMA RAO, ACCOUNTANT MEMBER:
This appeal of the Revenue is directed against the order of the Commissioner of Income-tax (Appeals), Trichy dated 14.01.2019 for assessment year 2014-15.
The brief facts of the case are that the respondent assessee is a co-operative society, engaged in the business of producing milk and milk products. The e-return of income for the assessment year 2014-15 was filed on 14.10.2014 disclosing total income of Rs. 43,04,440/- after claiming deduction of Rs.1,37,72,830/- u/s.80P(2)(d) of the Act. Against the said return of income, the assessment was completed by Income Tax Officer, Ward-3(3), Trichy vide order dated 27.12.2016 passed u/s. 143(3) of the Income Tax Act, 1961 (for short ‘the Act’) declaring total income of Rs. 1,80,77,274/-. While doing so, the Assessing Officer had not allowed the benefit of deduction u/s.80P(2)(d) of the Act in respect of interest income of Rs.1,36,89,966.97 earned from Nationalized Bank, placing reliance on the decision of Hon”ble Supreme Court in the case of Totagars Co-operative Sale Society Vs. ITO [2010] 322 ITR 283(SC). Being aggrieved by the above order, assessee preferred an appeal before the ld.CIT(A), who vide impugned order deleted the addition made by the Assessing Officer, placing reliance on the decision of Hon’ble Karnataka High Court in the case of Principal C.I.T., Hubli Vs. Totagars Co-operative Sale Society, reported in [2017] 78 Taxmann.com 169(Karnataka) wherein the Hon’ble Karnataka High Court distinguished the decision of the Hon’ble Supreme Court in the case of Totagars Co-operative Sale Society Vs. ITO, reported in [2010] 322 ITR 283(SC) held that the interest income earned on the deposits made out of the surplus generated of the Co-operative Society is eligible for deduction u/s.80P(2)(d) of the Act. Similarly, the ld.CIT(A) has also relied on the decision of Hon’ble Andhra Pradesh and Telengana High Court in the case of Vavveru Co-operative rural Bank Ltd., Vs. Chief C.I.T. reported in [2017] 88 taxmann.com 728 wherein the ratio of the decision of the Hon’ble Karnataka High Court in the case of Totagars Co-operative Sale Society Vs. ITO, reported in [2010] 322 ITR 283(SC) was followed. Being aggrieved, the Revenue is in appeal before us in the present appeal challenging the decision of ld. CIT(A) to delete the addition of Rs.1,37,72,830/- u/s.80P(2)(d) of the Act.
The ld.Senior D.R submitted that the Co-operative Society cannot be treated as the Co-operative Bank and therefore, the interest income earned by the Co-operative Society from the Co-operative Banks cannot be allowed as deduction in the clause (d) of sub-section (2) of Section 80P of the Act.
On the other hand, none appeared on behalf of the assessee and also no written submission was filed from respondent assessee side.
5. We have heard the submission of ld.DR and perused the material available on record. The only issue involved in the present appeal is whether or not the respondent-assessee is entitled for deduction u/s.80P(2)(d) of the Act in respect of the interest earned from another Co-operative Society.
Admittedly, the respondent-assessee is a Co-operative Society and earned interest income of Rs.1,36,89,966/- from Nationalized banks and a sum of Rs.1,36,829/- from Tiruchirappalli District Co-operative Bank. Assessee claimed entire interest income as exemption from tax under the provisions of section 80P(2)(d) of the Act. The Nationalized Banks cannot be treated as a Co-operative Society and therefore, the interest income earned on the Fixed Deposit with the Nationalized Banks cannot be exempt under the provisions of section 80P(2)(d) of the Act. However, in respect of interest income earned on the Fixed Deposit made with Tiruchirappalli District Co-operative Bank is also necessarily a Co-operative Society on the ratio of the decision of the Hon’ble Karnataka High Court cited supra and also the decision of the Hon’ble Telangana and Andhra Pradesh High Court cited supra is squarely applicable.
Thus, the findings of the ld.CIT(A) are reversed in respect of interest income earned from the Nationalized Banks and the findings of the ld.CIT(A) in respect of the interest income earned from Tiruchirappalli District Co-operative Bank is hereby confirmed. Accordingly, the appeal of Revenue is partly allowed.
In the result, the appeal of Revenue is partly allowed.