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Income Tax Appellate Tribunal, PUNE BENCH “A”, PUNE
Before: SHRI R. K. PANDA & SHRI VINAY BHAMORE
Assessment Year: 2020-21 Jankalyan Multistate Co- Vs. ITO, Ward-1(1), Solapur. operative Credit Society Limited, 940, Jagjivandas Complex, Near Garud Bangal Sadar Bazar, Solapur - 413003. PAN : AABAJ3074H Appellant Respondent Assessee by None (Written Submission Filed) : Revenue by : Shri Ramnath P. Murkunde Date of hearing : 23.07.2024 Date of pronouncement : 27.09.2024 आदेश / ORDER
PER VINAY BHAMORE, JM:
This appeal filed by the assessee is directed against the order dated 23.02.2024 passed by LD CIT(A)/NFAC for the assessment year 2020-21.
The appellant has raised the following grounds of appeal :-
1. Whether on the facts and in the circumstances of case and in law, AO and CIT(A), NIAC was correct in disallowing the deduction when the income is part of business of assessee and eligible for deduction.
2. Whether AO and CIT(A), NFAC is correct in not treating cooperative bank in the definition of cooperative society and disallowing the deduction u/s 80P.
Whether on the facts and circumstances of the case and the law AO and CIT(A) is correct in concluding that interest earned from cooperative bank of Rs.56,09,466 being interest earned on investment is not eligible for deduction under section 80P(2)(a)(i)without appreciating the fact that these deposit are part and parcel of business activity.
Whether on the facts and circumstances of the case and the law AO and CIT(A) is correct in not allowing interest earned from cooperative bank of Rs.56,09,466 as deduction under section 80P(2)(d) without appreciating the fact that these deposit or investment are with cooperative societies which includes cooperative bank.
5. AO has erred in levying interest under section 2348 and 234C.
The assessee craves leave to amend, alter or delete any of the above grounds of appeal
7. It is prayed that the above claims and allowances be allowed.”
3. The facts of the case, in brief, are that the assessee is a Multi- State Credit Cooperative Society engaged in the activity of providing credit facilities to its members. The return of income was filed on 31.12.2020 declaring Rs.Nil income after claiming deduction of Rs.56,09,466/- u/s 80P of the IT Act. The Assessing Officer disallowed the claim of the assesses made u/s 80P(2)(a)(i)/80P(2)(d) of the IT Act and vide order dated 27.09.2022 assessment order was passed by determining the total income at Rs.56,09,466/- as against Rs.Nil income declared by the assessee.
4. Being aggrieved with the above assessment order, the assessee preferred first appeal before the ld. CIT(A)/NFAC. After considering the reply of the assessee, the ld. CIT(A)/NFAC dismissed the appeal and confirmed the disallowance u/s 80P(2)(d) regarding interest income of Rs.56,09,466/- made by the Assessing Officer.
Being aggrieved with the decision of the ld. CIT(A)/NFAC, the assessee is in appeal before this Tribunal.
6. When the appeal was called for hearing, none appeared on behalf of the assessee despite due service of notice of hearing. However, a written submission was filed, wherein, it was submitted that the order passed by the ld. CIT(A)/NFAC is not correct. It was further submitted that the assessee is credit cooperative society and engaged in the activity of providing loans and accepting deposits from its members and the assessee credit cooperative society has deposited the amount in other cooperative banks, which are also cooperative society and from there it has earned interest income of Rs.56,,09,466/-. It is submitted that being business income of credit cooperative society the interest income earned is eligible for deduction u/s 80P(2)(a)(i) of the IT Act. It was also submitted alternatively that the same interest income has been earned from investments made with other cooperative societies, therefore, it is also entitled for deduction u/s 80P(2)(d) of the IT Act. In this regard, reliance was placed by the assessee in the case of Sant Motiram Maharaj Sahakari Pat Sanstha Ltd. [2020] 120 taxmann.com 10 (PUne – Trib.) and Kolhapur Zilha Madhyamik Shikshan Sevkanchi Sahakari Pat Sanstha, & 30/PUN/2024 dated 24.04.2024. It was submitted that under identical situation and similar circumstances, the Co- ordinate Bench of this jurisdictional Tribunal has decided the issue in favour of assessee. It was therefore requested before the Bench to set-aside the orders passed by the ld. CIT(A)/NFAC as well as the ld. Assessing Officer and further prayed to allow the deduction u/s 80P(2)(a)(i)/80P(2)(d) of the IT Act.
The ld. DR supported the orders passed by the sub-ordinate authorities and requested to confirm the same.
We have heard the ld. DR and perused the material available on record as well as written submission filed by the assessee. In the instant case, the Assessing Officer has disallowed the deduction claimed by the assessee credit cooperative society u/s 80P(2)(d) regarding interest income earned from other cooperative societies and the same order was also confirmed by the ld. CIT(A)/NFAC. We find that the assessee is a credit cooperative society engaged in the activity of providing loans to its members and also in accepting the deposits from their members. The resulting income was deposited by the assessee credit cooperative society with other cooperative societies and from their interest income of Rs.56,09,466/- was earned during the year. The deduction u/s 80P(2)(d) was claimed regarding the above interest income. We find that the issue regarding taxability of interest income earned by a cooperative society from other cooperative banks/cooperative societies has already been decided in favour of the assessee by the Co-ordinate Jurisdictional Benches of this Tribunal in various cases, wherein, it was held that the cooperative banks are also cooperative societies. Therefore, if the assessee credit cooperative society has deposited certain amount with those cooperative banks, the resulting interest income will either be arising during the course of business of the assessee credit cooperative society which is deductible u/s 80P(2)(a)(i) of the IT Act or will be an income from other sources arising as interest income on deposit with other cooperative banks/cooperative societies, which is deductible u/s 80P(2)(d) of the IT Act. In this regard, we find support from the following decisions :- 1. Dhanshree Multistate Cooperative Society Ltd., order dated 13-06-2024, 2. Rena Sahkari Sakhar, order dated 07- 01-2022,