LOKMANGAL KARMACHARYANCHI SAHAKARI PATSANSTHA MARYADIT,SOLAPUR vs. ITO WARD 2(3) SOLAPUR, SOLAPUR

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ITA 1144/PUN/2024Status: DisposedITAT Pune13 August 2024AY 2020-21Bench: SHRI INTURI RAMA RAO (Accountant Member)3 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that interest income earned by a cooperative society on deposits made with other cooperative banks qualifies for deduction under Section 80P(2)(d) of the Income Tax Act. This is because the income is derived from investments held with another cooperative society.

What were the facts?

The assessee, a cooperative society, claimed deduction under Section 80P for interest income earned from a cooperative bank. The Assessing Officer denied this deduction, treating the interest as 'Other Income' under Section 56. The CIT(A)/NFAC upheld the AO's decision.

What were the issues?

The primary issue was whether interest income earned by a cooperative society from deposits with a cooperative bank is eligible for deduction under Section 80P(2)(d) of the Income Tax Act.

Which sections of the Income-tax Act were involved?

Section 80P,Section 56,Section 143(3),Section 144B

AI-generated summary — verify with the full judgment below

Cases cited in this judgment(2)Show list

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Income Tax Appellate Tribunal, PUNE BENCH “SMC”, PUNE

Before: SHRI INTURI RAMA RAO

For Appellant: Shri Pramod S. Shingte
For Respondent: Shri Rajesh Gawali
Hearing: 13.08.2024Pronounced: 13.08.2024

आदेश / ORDER

PER INTURI RAMA RAO, AM:

1.

This is an appeal filed by the assessee directed against the order of National Faceless Appeal Centre, Delhi dated 31.03.2024 for the assessment year 2020-21.

2.

Brief facts of the case are as under :

The appellant is a Primary Credit Cooperative Society registered under the Maharashtra Cooperative Societies Act, 1960. It is engaged in the business of providing credit facilities to its Members. The Return of Income for the A.Y. 2020-21 was filed on 18.09.2020 disclosing Nil income after claiming deduction u/s.80P of the Income- tax Act, 1961 (hereinafter also called ‘the Act’). The case was selected for Scrutiny under CASS for verification of Deduction from Total income under Chapter VIA. Against the said return of income, the assessment was completed by the AO vide order dated 22.09.2022 passed u/s.143(3) read with section 144B of the Act denying deduction u/s.80P of the Act. While doing so, the AO brought to tax the interest income of Rs.30,93,646/- earned from Lokmangal Bank treating the same as ‘Other Income’ u/s.56 of the Act.

3.

Being aggrieved by the above disallowance, an appeal was filed before the CIT(A)/NFAC who vide impugned order confirmed the action of the AO.

4.

Being aggrieved, the appellant is in appeal before the Tribunal.

5.

I heard the rival submissions and carefully perused the material on record. The issue in the present appeal relates to the allowability of deduction u/s.80P(2)(a)(i)/80P(2)(d) in respect of interest income earned by a Cooperative Society formed with the object of accepting deposits from Members and lending money to its Members, which is no more res integra in view of catena of decisions passed by this Bench on this very issue.

6.

In the present case, I find that admittedly the interest income was earned from Lokmangal Bank (a cooperative bank). On perusal of provisions of section 80P(2)(d), it is clear that the income derived by a cooperative society from its investment held with other cooperative societies shall be exempt from the total income of a cooperative society. Therefore, what is relevant for claiming of deduction u/s 80P(2)(d) is that interest income should have been derived from the investment made by the assessee cooperative society with any other cooperative society. This issue was considered by the Hon’ble Karnataka High Court in the case of CIT vs. Totagars Cooperative Sale Society, 392 ITR 74 (Karn) wherein the Hon’ble High Court after referring to the decision of the Hon’ble Supreme Court in the case of Totgar’s Co-operative Sale Society Ltd.Vs. ITO (2010) 322 ITR 283(SC) held that the ratio of decision of the Hon’ble Supreme Court is not to be applicable in respect of interest income on investment as same falls under the provisions of section 80P(2)(d) and not u/s 80P(2)(a)(i) of the Act. In the light of this discussion, I am of the considered opinion that the interest income earned by cooperative society on deposits made out of surplus funds with cooperative banks qualifies for deduction under the provisions of section 80P(2)(d) of the Act. Therefore, the grounds of appeal raised by the appellant stand allowed.

7. In the result, the appeal filed by the appellant is allowed.

Order pronounced on this 13th day of August, 2024.

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