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Income Tax Appellate Tribunal, ‘B’ (SMC
Before: SHRI MAHAVIR SINGH
[PAN AAALN 0961D] (अपीलाथ�/Appellant) (��यथ�/Respondent) अपीलाथ� क� ओर से/ Appellant by : Shri. N.V. Narayanan, Advocate ��यथ� क� ओर से /Respondent by : Shri D. Hema Bhupal, IRS, JCIT सुनवाई क� तार�ख/Date of Hearing : 22.02.2024 घोषणा क� तार�ख /Date of Pronouncement : 22.02.2024 आदेश/ O R D E R This appeal by assessee is arising out of the order of the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi in Order No.ITBA/NFAC/S/250/2023-24/1057593818 (1), dated 01.11.2023. The assessment was framed by the Income Tax Officer, Ward 2(2), Tirupur for the assessment year 2016-2017 passed u/s.143(3) of the Income Tax Act, 1961 (in short ‘’the Act’) vide order dated 19.12.2018.
The only issue in this appeal of assessee is with regard to order of 2. the ld.CIT(A) confirming the action of the ld. Assessing Officer in disallowing the claim of deduction u/s.80P(2) (a) (i) of the Act in regard to interest income earned from saving bank with The Coimbatore District Central Co-operative Bank.
The brief facts of the case are that the ld. Assessing 3. Officer noted that assessee is a Co-operative Society filed its return of income declaring Nil income after claiming deduction u/s.80P(2) (a) (i) of the Act. The ld. Assessing Officer noticed during the course of hearing that assessee is maintaining savings bank/current / FD accounts with Coimbatore District Central Co-operative Bank Ltd and TNSCB and assessee is regularly investing funds not immediately required in savings bank/current / FD accounts. According to the ld. Assessing Officer this interest income cannot fall within the meaning of the expression “”profits and gains of business’ and this income falls under the category ‘income from other sources’ and it has to be taxed u/s.56 of the Act. According to the ld. Assessing Officer no deduction under Chapter VIA is eligible and therefore he added a sum of Rs.40,50,046/- to the returned income of the assessee. Aggrieved, assessee preferred an appeal before the ld. Commissioner of Income Tax (Appeals)
The ld. CIT(A) confirmed the action of the ld. Assessing Officer 4. by disallowing the claim of deduction u/s.80P(2) (a) (i) of the Act by observing as under:-
‘’With respect to disallowance of Miscellaneous Income, the interest income on funds not required for business purpose actually amounting to Rs. 37,26,054/- is to be sustained in view of the decision of the Hon'ble Karnataka High Court in the case of Pr.CIT vs Totagars Cooperative Sale Society (2017) 395 ITR 611 (Karnataka) that a Cooperative Society would not be entitled to claim of deduction u/s 80P(2)(d) in respect of interest income from deposits made in Cooperative banks. Accordingly addition on this ground to the tune of Rs. 37,26,054/- is hereby sustained (amount mentioned by AO in his order Rs. 48,370/- has been pointed out by appellant to be actually Rs. 37,26,054/-)’.
It means that the ld. CIT(A) sustained the addition to the extent of Rs.37,26,054/-. Aggrieved, assessee preferred an appeal before the Tribunal.
I have heard the rival contention and perused the material on 5. record. I noted that the assessee earned interest from savings bank/current / FD accounts maintained with C.D.C.C. Bank to the tune of Rs.36,45,225/- and gratuity invested in LIC of Rs.80,829/- aggregating to Rs.37,26,054/-. The details are as under:-
Sl.No Particulars Net 1 FD in CDCC Bank 17,92,832.00 2 SB in CDCC Bank 2,06,967.00 3 SSD in CDCC Bank 44.00 4 TD in CDCC Bank 686.00 5 Fluid resources fund 15,06,866.00 in CDCC Bank 6 BDR in CDCC Bank 1,37,803.00 7 RF in CDCC Bank 27.00 8 Gratuity invest in LIC 80,829.00 Total 37,26,054.00 I have carefully gone through the details of interest earned by the assessee and noted that out of the total amount of Rs.37,26,054/- claimed (supra), except a sum of Rs.80,829/- claimed to have gratuity invested in LIC, is to be allowed. The reason for the same is that C.D.C.C. Bank is registered under Tamil Nadu State Co-operative Act and once it is registered under Tamil Nadu State Co-operative Act assessee is as such eligible for deduction. Since the assessee is a Co-operative Society and it has received interest from CDCC Bank, the same is eligible for claim of deduction in view of the decision of the Hon’ble Supreme Court in the case of Mavilayi Service Co-operative Bank Ltd., & Ors. Vs. CIT, 123 Taxmann.com 161 (SC). Similar view has been taken by the Tribunal in the case of Tamilnadu Co-operative State Agriculture and Rural Development Bank Limited in to 33/CHNY/2021 vide order dated 29.04.2022 following the decision of Hon’ble Supreme Court in the case of Mavilayi Service Co-operative Bank Ltd., (supra) and the Hon’ble Madras High Court in the case S-1308, Ammapet Primary Agricultural Co- operative Bank Ltd.,in T.C.A Nos.882 and 891 of 2018. Respectfully following the same, I allow the claim of deduction u/s.80P(2)(a)(i) of the Act amounting to Rs.36,45,225/-. Accordingly, the appeal of the assessee is partly allowed.
In the result, the appeal of the assessee in 2016-2017 is partly allowed.
Order pronounced in the open court at the time of hearing on 22nd day of February, 2024, at Chennai.