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Income Tax Appellate Tribunal, NAGPUR BENCH, NAGPUR
Before: SHRI V. DURGA RAO & SHRI K.M. ROY, ACCOUNTANT, MEMBER
Date of Hearing – 08/07/2024 Date of Order – 08/07/2024
O R D E R PER V. DURGA RAO, J.M.
The present appeal has been filed by the Revenue challenging the impugned order dated 12/09/2023, passed by the learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi, [“learned CIT(A)”], for the assessment year 2015–16.
In its appeal, the Revenue has raised following grounds:–
“1. Whether on facts and circumstances of the case, the Id. CIT(A) was justified in holding that this a case of change of opinion without establishing that the AO had formed an opinion during the course of assessment proceedings that interest income from investments was operational in nature? 2. Whether on facts and circumstances of the case, the Id. CIT(A) was justified in holding that this is a case of invalid reopening based on reappraisal of existing material without verifying, whether, during the course of Yavatmal District Co–operative Bank Employee Co–operative Pat Sanstha Ltd. ITA no.359/Nag./2022 assessment proceedings, the assessee had disclosed all material facts fully and truly, by submitting that, the interest income on investments is operational in nature and eligible for claim of deduction u/s 80P(2)(a)(i) of the Act?
When the case was called for hearing, none appeared on behalf of the respondent assessee. There is no application for adjournment filed by the assessee either. Hence we proceed to dispose off this appeal qua the respondent assessee on the basis of material available on record and after hearing the learned Departmental Representative (“the learned D.R.”).
Brief facts of the case are that, the assessee is a Credit Co–operative Society, registered under the Maharashtra Co–operative Societies Act, 1960, and the main activity of the assessee is to provide credit facilities to its Members and other incidental activities within its objects by way of accepting deposits and lending money to its members. During the assessment year 2015-16, the gross receipts of society from its activity was ` 1,92,82,336, and net profit was ` 18,30,065. For the year under consideration, the assessee filed its return of income disclosing gross taxable income at ` 30,38,349, and has claimed deduction under section 80P(2)(a)(i) at ` 30,38,349. The Assessing Officer accepted returned income and allowed deduction under section 80P(2)(a)(i) of the Act. Subsequently, the Assessing Officer was in possession of certain information regarding activities of the assessee trust and hence, the case was re–opened under section 147 of the Act. In view of the reasons recorded, the Assessing Officer issued notice dated 27/03/2021 under section 148 of the Act. Thereafter, the assessee filed return of income in response to notice under section 148 on 06/05/2021.
Yavatmal District Co–operative Bank Employee Co–operative Pat Sanstha Ltd. ITA no.359/Nag./2022 Therefore, a notice u/s 143(2) dated 14/06/2021 is issued. Subsequently a notice dated 17/11/2021 under section 142(1) of the Act was issued calling for details / information relevant to the issue. The assessee submitted its reply and other details. However, the Assessing Officer was of the view that during the course of assessment proceedings, interest income received ` 66,24,574, from investment with from Central Co-operative Bank / Nationalised Bank (YDCC Bank) etc., was wrongly allowed by the Assessing Officer which needs to be taxed in the hands of assessee under the head "Income from Other Sources” under section 56 of the Act. Upon consideration of the material before the Assessing Officer, the assessment was completed by making disallowance of deduction under section 80P(2)(d) of the Act of ` 66,24,574. Aggrieved, the assessee carried the matter before the first appellate authority.
The learned CIT(A) allowed the claim of deduction under section 80P(2)(a)(i) of the Act by relying upon certain judicial pronouncements of the Hon’ble Jurisdictional High Court in Indian Energy Exchange Ltd. v/s ACIT, [2022] 140 taxmann.com 369 (Bom.) and the decision of the Hon’ble Jurisdictional Tribunal in CGS–CIMB Securities (India) Pvt. Ltd. v/s CIT(A), NFAC, Mumbai, ITA no.2573/Mum./2022, A.Y. 2013–14, order dated 22/02/2023. The Revenue being aggrieved filed appeal before the Tribunal.
None appeared on behalf of the assessee.
On the other hand, the learned Departmental Representative supported the order of the Assessing Officer. Page | 3
Yavatmal District Co–operative Bank Employee Co–operative Pat Sanstha Ltd. ITA no.359/Nag./2022
We have heard the arguments of the learned Departmental Representative, perused the material available on record and gone through the orders of the authorities below. The issue for our adjudication involved in the present appeal is, whether or not the assessee is eligible for claiming deduction under section 80P(2)(a)(i) of the Act on account of interest received from Credit Co–operative Banks. We find that identical issue has been decided by the Co–ordinate Bench, ITAT, Nagpur Bench, Nagpur, wherein this Bench is a party to that order in Vivekanand Nagri Sahakari Pat Sanstha Maryadit v/s ITO, ITA no.113–115/Nag./2023, for the assessment year 2016–17 to 2018–19, vide order dated 15/05/2024. The Bench has decided this issue in favour of the assessee and against the Revenue. The relevant finding of the Bench are reproduced below:–
“12. We have heard the rival arguments, perused the material available on record and gone through the orders of the authorities below. The only issue in the present case is, allowability of exemption under the provisions of section 80P in respect of interest income earned by a Co–operative Society from the Bank of Maharashtra. In this regard, we are of the considered opinion that even the interest income earned by co–operative society on deposits made out of surplus funds with cooperative banks as well as schedule bank qualifies for deduction both under the provisions of section 80P(2)(a)(i) and section 80P(2)(d) of the Act, therefore, the reasoning given by the lower authorities on this issue cannot be accepted. Consequently, we hold that interest income earned by the Co–operative Society from the Bank is eligible for exemption under section 80P of the Act and hence, we direct the Assessing Officer to allow deduction under section 80P(2)(a)(i) in respect of interest income earned by the Co–operative Society from the Bank. Thus, ground of appeal raised by the assessee stands allowed.”
2. Consequent upon following the aforesaid decision of the Co–ordinate Bench of the Tribunal and consistent with the view taken therein, we hold that the learned CIT(A) has rightly allowed the deduction claimed by the assessee under section 80P(2)(i)(a) of the Act. Accordingly, for the reasons set out Page | 4
Yavatmal District Co–operative Bank Employee Co–operative Pat Sanstha Ltd. ITA no.359/Nag./2022 above, we see no infirmity in the impugned decision of the learned CIT(A) and uphold the same by dismissing the grounds of appeal raised by the Revenue.
In the result, appeal filed by the Revenue’s is dismissed. Order pronounced in the open Court on 08/07/2024