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Facts
The assessee, a co-operative cane development union, appealed against the denial of Section 80P deduction on interest income from surplus bank deposits for assessment years 2017-18 and 2020-21. The lower authorities held that this interest income was not derived from eligible business activity.
Held
The Tribunal held that the interest income from surplus deposits in scheduled banks should be allowed as a deduction under Section 80P. The Tribunal relied on judicial precedents to support the assessee's case.
Key Issues
Whether interest income earned by a co-operative society from surplus funds deposited in scheduled banks is eligible for deduction under Section 80P of the Income Tax Act.
Sections Cited
80P, 143(3)
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Income Tax Appellate Tribunal, DELHI BENCH ‘G’, NEW DELHI
Before: Sh. Satbeer Singh Godara & Sh. Naveen Chandra
Asstt. Year: 2017-18 : Asstt. Year: 2020-21 Vs Secretary, Co-operative Cane Income Tax Officer, Development Union Ltd., 34, Range-3(2), Najibabad Bundaki Road, Najibabad, Bijnor, Distt. Bijnor, Uttar Pradesh-246763 Uttar Pradesh-246731 (APPELLANT) (RESPONDENT) PAN No. AABAS8919C Assessee by : Ms. Gurneet Kaur, Adv. Revenue by : Sh. Manish Gupta, Sr. DR Date of Hearing: 04.11.2025 Date of Pronouncement: 04.11.2025 ORDER Per Satbeer Singh Godara, Judicial Member: These assessee’s twin appeals in & 3408/Del/2024 for Assessment Years 2017-18 and 2020-21, arise against the CIT(A)/NFAC, Delhi’s DIN & order No. ITBA/NFAC/S/250/2023-24/1057773306(1) & 1057773541(1) both dated 07.11.2023, in proceedings u/s 143(3) of the Income Tax Act, 1961 (in short “the Act”), respectively.
Heard both the parties at length. Case files perused.
& 3408/Del/2024 Secretary, Co-operative Cane Development Union Ltd. 2. It transpires during the course of hearing that both the learned lower authorities have refused section 80P deduction to the assessee qua it’s interest income derived from surplus deposits kept in scheduled/nationalized banks amounting to Rs.89,88,343/-and Rs.1,79,10,356/-; assessment year wise, respectively, in assessment order(s) dated 15.12.2019 and upheld in the lower appellate discussion.
Both the learned lower authorities hold that such an interest income as in the present instance received from parking of surplus funds in fixed deposits with scheduled/nationalized banks could not be held as “derived” from an eligible business activity under section 80P(2); and, therefore, the same deserves to be assessed as income from “other” sources only.
Mr. Gupta also quotes (2025) 170 taxmann.com 336 (Gujarat) Brahmarshi Co-op. Credit Society Ltd. Vs. ACIT deciding the very issue in the Revenue’s favour. The assessee on the other hand draws strong support from the Vaveru Co-operative Rural Bank Ltd. vs. CIT [(2017) 396 ITR 371 (AP)] wherein their lordships have rejected the Revenue’s identical stand. Be that as it may, the fact remains that no valuable guidance has come from hon’ble jurisdictional high court at Allahabad on the & 3408/Del/2024 Secretary, Co-operative Cane Development Union Ltd. instant issue. That being the case, we hereby quote Commissioner of Income-Tax, West Bengal-I vs. Vegetable Products Ltd. [1973] 88 ITR 192 (SC)to conclude that the view supporting the assessee’s case in such an instance has to be adopted; to accept the instant sole substantive ground against the department, in very terms. Necessary computation shall follow as per law.
No other ground or argument has been pressed before us.
These assessee’s twin appeals & 3408/Del/2024 are allowed. A copy of this common order be placed in the respective case files. Order Pronounced in the Open Court on 04/11/2025.