THE MANTOLA COOPERATIVE THRIFT & CREDIT SOCIETY,NEW DELHI vs. ITO, NEW DELHI

This appeal is filed by the assessee against the order of the Ld. Commissioner of income tax (appeals)-XX, New Delhi dated 26/02/2015 confirming the order of the Ld. assessing officer that the assessee is not eligible to claim deduction under section 80P(2)(D) of income tax act, 1961 on the interest income of Rs. 995019/- from investment made in the listed Cooperative bank on the ground that Delhi State Cooperative bank was not a member of the appellant society.

The assessee has raised following grounds of appeal :

Brief facts of the cases that assessee is running credits society and is providing credit facility to its members. It earns interest from loans and advances to its members and nonmembers on account of certain expenses record like postage, and couriers judges etc the assessee has declared a nil come after claiming deduction of Rs. 3753844/- under section 80P of the income tax act. The assessee filed its return of income on 30/08/2012 showing nil income.

During the course of assessment proceedings, the Ld. assessing officer found that assessee is also receiving interest from nonmember scheduled banks etc and whether the same is eligible for deduction under section 80 P of the income tax act or not. Therefore, as assessee has received interest on fixed deposit receipts with the bank amounting to Rs. 3343470/-, ld. assessing officer treated it as income from other sources. He further granted deduction of 7% of the world investment made by the assessee society as an expenditure amounting to Rs. 1406253/– and that interest income, after this deduction of expenses is brought to tax as income from other sources. The resultant effect of the same was that the assessee was denied deduction under section 80 P of the income tax act on that some. The Ld. assessing officer further noted that the assessee is also received interest from other co-operative societies which is also chargeable to tax as income from other sources and therefore he charged a sum of Rs. 7283439/– as income from interest on other co-operative societies. Consequently, the income of the assessee was assessed under section 143 (3) of the income tax act dated 16/01/2014 at Rs. 9220656/-against the nil returned income.

Assessee aggrieved with the order of the Ld. CIT (A), assessee has preferred an appeal before us. It was contended by the assessee that issue is squarely covered against the assessee with respect to the not allowing deduction under section 80 P on interest income of the assessee derived from nonmembers. However, the issue with respect to deduction of interest expenditure from such income was principally accepted by the ITAT in the assessee‟s own case for earlier years and the issue was set aside to the file of the Ld. assessing officer to allow the allocation of expenses as per the method of calculation derived by the assessee. He submitted the coordinate bench in del 2013 for assessment year 2004 – 05 along with the orders for another 7 years dated 30/06/2016 in the case of the assessee.

The Ld. authorized representative also submitted the copy of the decision of the Hon‟ble Supreme Court in case of similar appeal No. 10245 of 2017. In case of Citizen co-operative society Ltd versus ACIT dated 08/08/2017 on this issue.

The Ld. departmental representative vehemently defended the order of the Ld assessing officer and stated that assessing officer has correctly tax the income from the FDR with other co-operative banks and from nonmembers under the head income from other sources. He further submitted that the order of the Ld. CIT (A) has also correctly confirmed the above addition.

We have carefully considered the rival contentions and also perused the orders of the lower authorities. As the issue is squarely covered by the decision of the coordinate bench in the case of the assessee itself in ITA No. 483/del/2013 for assessment year 2004-05 dated 30/06/2016 wherein the coordinate bench has held that that assessing officer is right in allowing the deduction under section 80P only to the extent of interest on from members who avail the credit facility. And therefore the coordinate bench upheld the order of the Ld. assessing officer in treating the above income of interest on FDR with other co-operative