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Income Tax Appellate Tribunal, AHMEDABAD “D” BENCH, AHMEDABAD
Before: Ms. SUCHITRA KAMBLE & SHRI NARENDRA PRASAD SINHA
PER SUCHITRA KAMBLE, JUDICIAL MEMBER:
This appeal is filed by the Assessee against order dated 22.09.2023 passed by the CIT(A), National Faceless Appeal Centre (NFAC), Delhi for the Assessment Year 2020-21.
The assessee has raised the following grounds of appeal :-
“[1] In law and in facts and circumstances of the case of the appellant, the Ld. CIT(A) has confirmed which is grievously erred in denying the deduction u/s. 80P(2)(d) of the Act for Rs.1,01,92,937/- when no such disallowance is called for looking to the various legal decisions. [2] In law and in facts and circumstances of the case of the Appellant, the Assessment Order u/s. 143(3) r.w.s. 144B of the Act dated 29.09.2022 is void and bad in law and hence deserves to be cancelled.
[3] In law and in facts and circumstances of the case of the appellant, the Ld. A.O. has erred in levying the interest u/s. 234A, 234B, 234C & 234D of the Act when no such interest is chargeable. [4] In law and in facts and circumstances of the case of the appellant, the Ld. A.O. has grievously erred in initiating the proceedings for levy of penalty u/s. 270A when no such penalty is leviable. He may be directed to withdraw such proceedings. [5] The appellant therefore requests your Honour to kindly delete the addition of interest from Co-op. Bank which is considered by the legal judgments a co-operative society hence interest is allowable u/s. 80P(2)(d) of the Act.”
The assessee is a Co-operative Service Society Limited filed its return of income for Assessment Year 2020-21 on 28.12.2020 declaring Nil income. The case was selected for scrutiny and notice under Section 143(2) of the Income Tax Act, 1961 was issued to the assessee on 29.06.2021. Subsequently, notice under Section 142(1) of the Act was issued on 23.12.2021. In response to the notices issued, the assessee furnished the explanation and details called for in respect of unsecured loans, deduction claimed under Chapter-VIA, Revised Balance Sheet, Income & Expenditure Statement, Computation of Income, Copy of 26AS, Registration Certificate and By Laws of the Society, Fixed Deposit Interest Certificate and Ledger, Short Term Investment Summary & Ledger, Ledger Copy of Members Contribution, Ledger copy of GST expenses, Ledger copy of Interest on GST, Ledger copy of Sundry Balance Written Off, Ledger copy of Creditors, Summary and Ledger copies of Other Payables etc. The Assessing Officer observed that the assessee was in receipt of interest income from Time Deposit obtained from the Kalupur Commercial Co-operative Bank Limited and Kankaria Maninagar Nagrik Sahakari Bank Limited amounting to Rs.1,01,92,937/-. The assessee claimed this amount as deduction under Chapter-VIA under Section 80P(2)(d) of the Act. The assessee submitted reply to the show cause notice issued by the Department and after taking cognisance of the same, the Assessing Officer made addition of Rs.1,01,92,937/- thereby disallowing the claim of deduction under Section 80P of the Act.
Being aggrieved by the Assessment Order, the assessee filed appeal before the CIT(A). The CIT(A) dismissed the appeal of the assessee.
The Ld. AR submitted that the assessee is a Co-operative Housing Society and a non-trading Corporation registered under Gujarat Co-operative Societies Act with the sole objective of engaging in the activities relating to maintenance of Sumel Business Park-VI. The Ld. AR submitted that the assessee is not involved in any trading or manufacturing activity. The Ld. AR submitted that the assessee Society earns interest amount of Rs.1,01,92,937/- on such surplus funds invested with the two Co-operative Banks which were also registered under Co-operative Societies Act i.e. of the Gujarat State. The Ld. AR submitted that as per decision of Hon’ble Gujarat High Court in the case of Katlary Kariyana Merchant Sahkari Sarafi Mandali Limited vs. ACIT (2022) 140 taxmann.com 602 which was subsequently modified thereby substituting the word “Co-operative Bank” to that of “Other Bank” vide order dated 26.04.2024.
The Ld. DR submitted that Kalupur Commercial Co-operative Bank Limited and Kankaria Maninagar Nagrik Sahakari Bank Limited are commercial Banks and, therefore, the same cannot be treated as Society for obtaining deduction under Section 80P(2)(d) of the Act. The Ld. DR relied upon the Assessment Order and the order of the CIT(A).
We have heard both the parties and perused all the relevant material available on record. It is pertinent to note that Kalupur Commercial Co-operative Bank Limited and Kankaria Maninagar Nagrik Sahakari Bank Limited both Banks are registered under the Gujarat Co-operative Societies Act. This fact, though disputed by the Assessing Officer, appears to be correct as the assessee has given the details of Co- operative Societies which are listed under Co-operative Banks issued by Ministry of Corporation, Government of India. As per the decision of Hon’ble Gujarat High Court in case of Katlary Kariyana Merchant Sahkari Sarafi Mandali Limited (Supra), the assessee Society is entitled for the deduction under Section 80P(2)(d) of the Act as the funds were deposited in the Co-operative Banks which were part of and registered under State Co-operative Societies Act. Therefore, the disallowance made by the Assessing Officer under Section 80P(2)(d) of the Act confirmed by the CIT(A) is not justified.
In the result, appeal of the assessee is allowed.
Order pronounced in the open Court on this 24th September, 2024.