M.P. POLICE CO-OPERATIVE CREDIT SOCIETY ,BHOPOAL vs. NFAC, DELHI

ITA 326/IND/2023Status: DisposedITAT Indore06 June 2024AY 2018-19Bench: SHRI VIJAY PAL RAO (Judicial Member), SHRI B.M. BIYANI (Accountant Member)22 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal held that the interest income earned on reserves maintained by the assessee in compliance with Section 43(2) of the M.P./Chhattisgarh Co-operative Societies Act, 1960, is in the nature of business income and eligible for deduction under Section 80P(2)(a)(i). The Tribunal noted that the AO denied the deduction on interest income earned from Bhopal Cooperative Central Bank and State Bank of India. The Tribunal distinguished the Supreme Court's decision in Totgars Co-operative Sale Society Ltd. by stating that in the present case, the invested funds were not liabilities but profits not immediately required for lending. Therefore, the interest income is attributable to the business of banking. The Tribunal set aside the issue of quantum of interest eligible for deduction to the AO for verification and computation, considering the profits for the year and opening balance, to allow deduction on interest on such reserves. The Tribunal did not explicitly address the issue of interest under Sections 234A, 234B, and 234C, but the operative part of the order implies that the appeals are partly allowed based on the Section 80P issue.

What were the facts?

The assessee, MP Police Co-operative Credit Society, filed appeals for Assessment Years (AY) 2018-19 and 2020-21 against orders of the Commissioner of Income Tax (Appeal) National Faceless Appeal Centre (NFAC), Delhi. The assessee claimed a deduction of Rs. 1,55,45,182/- under Section 80P of the Income Tax Act, 1961. The Assessing Officer (AO) denied this deduction on interest income of Rs. 1,00,77,742/- earned from deposits with Bhopal Cooperative Central Bank and State Bank of India, holding it was not attributable to the society's primary business of providing credit facilities. The CIT(A) upheld the AO's disallowance, stating that deduction under Section 80P(2)(a)(i)/80P(2)(d) is only for interest income earned from cooperative societies/banks without an RBI license. The assessee argued that interest from Bhopal Cooperative Central Bank is eligible under Section 80P(2)(d) and interest from State Bank of India is eligible under Section 80P(2)(a)(i) due to a statutory requirement to maintain reserves.

What were the issues?

1. Whether the interest income of Rs. 13,19,94,23/- earned by the assessee from deposits with the Bhopal Cooperative Central Bank is eligible for deduction under Section 80P(2)(d) of the Income Tax Act, 1961, as argued by the assessee, or is it not eligible as held by the lower authorities, as per the revenue's contention relying on Supreme Court judgments. 2. Whether the interest income earned by the assessee from deposits with the State Bank of India, equivalent to 25% of its profits, is eligible for deduction under Section 80P(2)(a)(i) of the Income Tax Act, 1961, as contended by the assessee relying on the M.P. Cooperative Societies Act, 1960 and coordinate bench decisions, or is it not eligible as argued by the revenue, following the CIT(A)'s findings. 3. Whether the levy of interest under Sections 234A, 234B, and 234C is unlawful and should be deleted, as argued by the assessee.

Which sections of the Income-tax Act were involved?

Section 80P,Section 234A,Section 234B,Section 234C,Section 43(2)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, INDORE BENCH, INDORE

Before: SHRI VIJAY PAL RAO & SHRI B.M. BIYANI

For Appellant: Ms. Nisha Lahoti, AR
For Respondent: Shri Ashish Porwal, Sr-DR
Hearing: 05.06.2024

Per Bench:

These two appeals by the assessee are directed against two separate orders of Commissioner of Income Tax (Appeal) National Faceless Appeal Centre(NFAC) Delhi both dated 11.07.2023 for A.Ys.2018-19 & 2020-21 respectively. The assesse has raised

common grounds in these two appeals except the quantum of ITAN0o.326 & 327/Ind/2023 M.P. Police Cooperative Credit Society

disallowance made by the AO. The grounds raised for A.Y.2018-19 are reproduced as under: “1.That on the facts and in the circumstances of the case and in law. The findings of the learned CIT (A) that disallowance of exemption claimed u / s 80(P)(2) are wholly wrong and contrary to the

The order continues below.

Read the full judgment

A free account opens 10 full judgments a month. Re-reading one you have already opened does not count again.

Create a free accountSign in

See plans and prices

The summary, the parties, the sections and the citations above are open to everyone and always will be. Only the text of the order and the PDF are metered.

More judgments on Section 80P

All 5,069 judgments and leading authorities on Section 80P →

Recent GST High Court judgments

Search GST case law →