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Income Tax Appellate Tribunal, PUNE BENCH “SMC”, PUNE
Before: SHRI INTURI RAMA RAO
आदेश / ORDER
PER INTURI RAMA RAO, AM:
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.
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.
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.
Being aggrieved, the appellant is in appeal before the Tribunal.
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.
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.