TN CIVIL SUPPLIES CORPORATION STAFF COOP THRIFT AND CREDIT SOCIETY LTD.,CHENNAI vs. AO, NON CORP WARD 12(1), CHENNAI

Aforesaid appeal by the assessee is directed against the order of the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Income Tax Department, Delhi, dated 20.09.2023, and pertains to AY 2020-21.

1. The contention of AO which was confirmed by CIT(A) is erroneous, opposed to facts, law and circumstance of the case.

2. Ld. CIT(A) erred in misdirecting himself by not following the Judgments of Supreme court, jurisdictional High Court and ITAT.

3. Interest on Reserve fund, Dividend, Interest on BDR and FD are deductible not only u/s 80P(2)(a)(i) but also u/s 80P(2)(d).

4. The deductions are available even if the income is assessed as income from other sources. 5. Chennai Central Cooperative Bank (CCC Bank) continues to be a cooperative society even though it obtained a license to do banking business. 6. Deduction u/s SOP is available for income from investments in any other Cooperative societies that includes even any Cooperative Banks. 7. Sec. 80P(4) was brought in to tax the income of a cooperative bank and not income received from a cooperative bank. 8. Sec 80P(4) does not vitiate the eligibility of deduction u/s SOP if the income is received from investment with a co-operative bank. For these grounds and any other grounds that may be adduced in future, it is prayed that the entire disallowance and the resultant demand be deleted.

As is evident, the sole issue that arises for our consideration is assessee’s claim of deduction u/s 80P(2)(d).

“…..We have heard rival contentions and gone through facts and circumstances of the case. We noted that admittedly, the assessee is a co-operative society extending credit facility to its members who are the employees of Tamil Nadu Civil Supplies Corporation and depositing the surplus funds with its controlling bank i.e., Chennai Central Cooperative Bank Ltd. The assessee admittedly earned dividend and interest income to the tune of Rs.85,55,757/- from its investments in the Central Cooperative Bank Ltd., and claimed the same as deduction u/s.80P(2)(d) of the Act. The AO while framing assessment in limited scrutiny assessment has examined the claim of deduction u/s.80P(2)(d) of the Act and even otherwise on merits also, the assessee's case is squarely covered by the decision of Hon'ble Supreme Court in the case of Maviiayi Service Co- operative Bank Ltd., vs. CIT, (2021) 431 ITR 1 and a recent decision of Hon'ble Supreme Court in the case of Keraia State Co-operative Agricultural and Rural Development Bank Ltd., in Civil Appeal No.10069 of 2016, order dated 14.09.2023. We noted that the assessee is a co- operative society and its receipts are mainly from members from where the assessee earned interest income and also out of surplus funds, the deposited with Co-operative Banks / Societies and earned interest and dividend of Rs.85,55,757/- and claimed the same as deduction u/s.80P(2)(d) of the Act. Since, the issue is covered by the decisions of Hon'ble Supreme Court in the case of Maviiayi Service Co-operative Bank Ltd., supra and Kerala State Co-operative Agricultural and Rural Development Bank Ltd., supra, respectfully following the same we quash the revision order passed u/s.263 of the Act by the PCIT and allow the appeal of assessee…...”