THE RADHU MERCANTILE CO. OP. CREDIT SOCIETY LTD.,KHEDA vs. THE CPC, IT DEPARTMENT JURISDICTIONAL AO : THE ITO, WARD-1, NADIAD

Grounds raised in all these three appeals are common except for the amount mentioned therein, therefore, grounds taken in are being reproduced as under :-

Being aggrieved by the Intimation Order under Section 143(1) of the Act, the assessee filed appeal before the CIT(A). The CIT(A) dismissed the appeal of the assessee.

The Ld. AR submitted that as regards to ground no.1 related to powers of adjustment as provided in Section 143(1)(a) of the Act are beyond the provisions of Income Tax Act, 1961 relating to Intimation under Section 143(1) of the Act. The Ld. AR submitted that the adjustment was made without giving any opportunity related to prior intimation to the assessee before finalising the demand and passing the Intimation Order under Section 143(1) of the Act. As regards to ground no.2, the Ld. AR submitted that the Co-op. Banks from where the interest has been derived at 36.46% that of Rs.90,41,679/- should have been allowed as the said interest when derived from the Co-op. Society Bank which is the registered Co-op. Society (Gujarat State Co-op. Bank Limited) and, therefore, it is a member of Society from where the assessee derived the interest income which is allowable deduction under Section 80P(2)(d) of the Act. The Ld. AR in alternate submitted that the basic deduction under Section 80P(2)(c) of the Act ought to be Rs.50,000/- should have been granted to the assessee.

The Ld. DR submitted that as regards to ground no.1, the assessee has been given prior intimation and, therefore, the same cannot be treated as invalid order as envisaged by the Ld. AR. The Ld. DR submitted that the order of the Assessing Officer is as per the provisions of Income Tax Statute. As regards to merits of the case, the Ld. DR submitted that the CIT(A) has categorically mentioned the decision of Hon’ble Apex Court in the case of Totgar’s Co-operative Sale Society, 322 ITR 383 wherein it is held that the assessee would not be eligible for deduction under Section 80P(2)(d) of the Act in respect of interest income earned from Co-op. Bank Societies. The Ld. DR relied upon the decision of Hon’ble Kolkata High Court in case of Totgar’s Co- operative Sales Society, 392 ITR 74 as well. The Ld. DR also relied upon the decision , 418 & 587/Ahd/2024 Assessment Years: 2021-22 for all Appeals Page 4 of 5 of Hon’ble Apex Court in the case of Mavilayi Service Co-operative Bank Limited vs. CIT, 123 taxmann.com 161 (SC).

Heard both the parties and perused all the relevant material available on record. As regards to ground no.1, the deduction under Chapter VIA was properly intimated through prior intimation and in fact the intimation under Section 143(1) of the Act categorically mentions that if the intimation requires to be rectified, the assessee may request for rectification under Section 154 of the Act. The contention of the Ld. AR that the prior intimation is required does not sustain as the same has been followed by the Revenue as per the procedural aspect of Section 143(1) of the Income Tax Statute. Thus, ground no.1 is dismissed. As regards to ground no.2, the assessee received interest income from Kheda District Co-op. Bank amounting to Rs.47,07,620/- and Gujarat State Co-op. Bank amounting to Rs.43,34,059/-, totalling to Rs.90,41,679/-. These two co-operative Banks are registered under the Gujarat Co-operative Society Act 1961 and also the member of the Co-operative Societies as envisaged under Section 80P of the Act and, therefore, in the light of the decision of Hon’ble Gujarat High Court in the case of Katlary Kariyana Merchant Sahkari Sarafi Mandali Limited vs ACIT (order dated 04.01.2022 - C/SCA/20585/2019 amended subsequently) the assessee is entitled for deduction under Section 80P(2)(d) of the Act. Thus, ground no.2 is allowed. As regards to ground no.3, which is alternate ground, and since ground no.2 is allowed does not survive. Thus, is partly allowed. ground no.1 is similar to ground no.1 of and hence dismissed. As regards to ground no.2, the assessee has derived interest income from Gujarat Co-operative Bank Limited which is also Co- operative Society, hence the deduction under Section 80P(2)(d) of the Act of Rs.5,28,203/- is allowed. Hence, ground no.2 is allowed. Ground no.3 is dismissed. Thus, ITA No.418/Ahd/2024 is partly allowed.

In the result, all the three appeals filed by the assessee are partly allowed.