RUBY HALL CLINIC KARMCHARI SAHAKARI PAT SANSTHA MARYADIT,PUNE vs. INCOME TAX OFFICER, WARD 7(1), PUNE
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Income Tax Appellate Tribunal, PUNE BENCH “B”, PUNE
Before: SHRI INTURI RAMA RAO & SHRI VINAY BHAMORE
PER INTURI RAMA RAO, AM:
This is an appeal filed by the assessee directed against the
order of National Faceless Appeal Centre, Delhi (NFAC) dated
08.11.2023 for the assessment year 2020-21.
Brief facts of the case are that the appellant is a Co-operative
credit society engaged in providing credit facilities to its members.
The Return of Income for the assessment year 2020-21 was filed on
11.02.2021 declaring total income of Rs.Nil after claiming
ITA No.32/PUN/2024
deduction under u/s.80P at Rs.1,16,19,383/-. The return was
processed u/s.143(1) and the case was selected for scrutiny under
CASS. On verification of the record, the AO noticed that the
appellant earned interest & dividend income of Rs.23,42,047/-. He
was of the opinion that said income earned by the appellant is not
income from the regular course of business and is to be assessed as
income from other sources. Accordingly, the assessment was
completed by the Assessing Officer u/s.143(3) r.w.s.144B of the
Act vide order dated 19.09.2022 disallowing assessee’s entire claim
of deduction of Rs.1,16,19,383/- on the ground that interest income
earned from deposits kept with Cooperative Bank is not eligible for
deduction u/s.80P of the Act.
Being aggrieved, an appeal was filed before the NFAC, who
vide impugned order restricted the disallowance to the tune of
Rs.23,42,047/- as against the entire disallowance of
Rs.1,16,19,383/- made by the AO.
Being aggrieved, the appellant is in appeal before this
Tribunal in the present appeal.
ITA No.32/PUN/2024
The ld. AR submitted before us that the issue no more res
integra by virtue of several decisions passed by the Pune Benches
of the Tribunal in favour of the appellant(s).
On the other hand, ld. Sr. DR placing reliance on the orders of
the lower authorities submits that no interference is called for.
Heard the rival submissions and perused the material on
record. The issue in the present appeal relates to the eligibility of
the assessee for exemption u/s 80P(2)(a)(i) or u/s 80P(2)(d) of the
Act. It is an admitted fact that the appellant is a cooperative society
engaged in the business of providing credit facilities. It does not
enjoy any license to carry on the business of banking from Reserve
Bank of India. Therefore, as held by the Hon’ble Supreme Court in
the case of PCIT vs. Annasaheb Patil Mathadi Kamgar Sahakari
Pathpedi Ltd., 454 ITR 117 (SC) that the assessee is eligible for
deduction u/s 80P(2)(a)(i) of the Act. Reliance in this regard can
also be placed on the decision of the Hon’ble Bombay High Court
in the case of PCIT vs. Quepem Urban Co-operative Credit Society
Ltd., 438 ITR 631 (Bom.).
As regards, the issue as to the allowability of exemption under
the provisions of section 80P(2)(a)(i) in respect of interest income
ITA No.32/PUN/2024
earned by a cooperative society from the scheduled banks, there is a
cleavage of judicial opinion among several High Courts on the issue
of eligibility of this kind of income for exemption u/s. 80P(2)(a)(i)
of the Act. The Hon’ble Punjab & Haryana High Court in the case
of CIT vs. Punjab State Cooperative Federation of Housing
Building Societies Ltd. 11 taxmann.com 448, the Hon’ble Gujarat
High Court in the case of State Bank of India Vs. CIT 389 ITR 578
(Guj.), the Hon’ble Delhi High Court in the case of Mantola Co-
operative Thrift & Credit Society Ltd. Vs. CIT 50 taxmann.com
278, the Hon’ble Punjab & Haryana High Court in the case of CIT
Vs. Punjab State Cooperative Agricultural Development Bank Ltd.
389 ITR 68 and the Hon’ble Kolkata High Court in the case of CIT
Vs. Southern Eastern Employees Cooperative Credit Society Ltd.
390 ITR 524 took a view that the income arising on the surplus
invested in short term deposits and securities cannot be attributed to
the activities of the society and, therefore, not eligible for exemption
u/s.80P(2)(a)(i) of the Act. However, the Hon’ble Karnataka High
Court in the case of Tumkur Merchants Souharda Credit
Cooperative Ltd. Vs. ITO (2015) 230 taxmann.com 309 (Kar.) and
the Hon’ble Telangana and Hon’ble Andhra Pradesh High Court in
ITA No.32/PUN/2024
the case of Vaveru Co-operative Rural Bank Ltd. v CIT [(2017) 396
ITR 371 took a view that such interest income is attributable to the
activities of the society and, therefore, eligible for exemption u/s
80P(2)(a)(i) of the Act. Similar view has been taken by the Hon’ble
Calcutta High Court in the case of PCIT vs. Gunja Samabay Krishi
Unnayan Samity Ltd., 147 taxmann.com 518 (Calcutta) and the
Hon’ble Madras High Court in the case of Chennai Central Co-
operative Bank Ltd. vs. ITO, 148 taxmann.com 17 (Madras). The
Coordinate Bench of Pune Benches in the case of M/s. Ratnatray
Gramin Bigar Sheti Sah. Pat Sanstha Maryadit Vs. ITO (ITA
Nos.559/560/PUN/2018, dated 11-12-2018) taken view in favour of
the assessee following the judgment of Hon’ble Karnataka High
Court in the case of Tumkur Merchants Souharda Credit
Cooperative Ltd. (supra). Following the decision of the Coordinate
Bench of the Tribunal, we of the considered opinion that the interest
income earned on fixed deposits with cooperative bank/scheduled
bank partakes character of the business income, which is eligible for
deduction u/s 80P(2)(a)(i) of the Act. Therefore, we vacate the
order passed by the CIT(A)/NFAC and direct the Assessing Officer
ITA No.32/PUN/2024
to allow the exemption u/s.80P(2)(a)(i) of the Act. Thus, the
grounds of appeal filed by the assessee stand allowed.
In the result, the appeal of the assessee is allowed. Order pronounced on this 25th day of April, 2024.
Sd/- Sd/- (VINAY BHAMORE) (INTURI RAMA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER पुणे / Pune; �दनांक / Dated : 25th April, 2024 Satish
आदेश क� �ितिलिप अ�ेिषत / Copy of the Order forwarded to : अपीलाथ� / The Appellant. 1. ��यथ� / The Respondent. 2. 3. The Pr.CIT concerned 4. िवभागीय �ितिनिध, आयकर अपीलीय अिधकरण, “B” ब�च, पुणे / DR, ITAT, “B” Bench, Pune. गाड� फ़ाइल / Guard File. 5. आदेशानुसार / BY ORDER, // True Copy // Senior Private Secretary आयकर अपीलीय अिधकरण, पुणे / ITAT, Pune
