THE ITO, WARD-5(3)(1), AHMEDABAD vs. AHMEDABAD DISTRICT CO.OP.MILK PRODUCERS UNION LTD., AHMEDABAD
What did the Tribunal hold?
The Tribunal dismissed the Revenue's appeals. For AY 2014-15, it held that the reassessment proceedings were bad in law due to a change of opinion. For AY 2017-18, it followed Gujarat High Court decisions confirming that interest and dividend from cooperative banks registered under the Cooperative Societies Act are eligible for deduction under Section 80P(2)(d).
What were the facts?
The Revenue appealed against the CIT(A)'s orders allowing deductions under Section 80P(2)(d) for interest and dividend income received by the assessee, a cooperative society, from other cooperative banks. The Assessing Officer had disallowed these deductions, arguing the banks were not cooperative societies in the context of the section.
What were the issues?
Whether interest and dividend income received by a cooperative society from other cooperative banks are eligible for deduction under Section 80P(2)(d), and whether reassessment proceedings initiated on a change of opinion are valid.
Which sections of the Income-tax Act were involved?
AI-generated summary — verify with the full judgment below
Cases cited in this judgment(2)Show listHide list
Detected automatically from the text. Citations are also linked where they appear in the judgment. The count shows how many other judgments on BharatTax rely on the same authority.
- Totgars Co-operative Sale Society Ltd. v. ITO1,283 citing322 ITR 283 · 2010 · SC
- Katlary Kariyana Merchant Sahkari Sarafi Mandali Ltd. v. ACIT69 citing140 Taxmann.com 602 · 2022 · HC · Read judgment
Income Tax Appellate Tribunal, AHMEDABAD “B” BENCH, AHMEDABAD
Before: Ms. SUCHITRA KAMBLE & SHRI MAKARAND VASANT MAHADEOKAR
PER SUCHITRA KAMBLE, JUDICIAL MEMBER:
These two appeals are filed by the Revenue against two separate orders dated 04.05.2023 & 04.07.2023 passed by the CIT(A), National Faceless Appeal Centre (NFAC), Delhi for the Assessment Years 2017-18 & 2014-15 respectively.
The Revenue has raised the following grounds of appeal :-
“1. CIT(A) has erred in allowing the disallowance under Section 80P(2)(d) of the IT Act of Rs.6,35,19,390/- being interest and dividend received from Ahmedabad District Co-op. Bank and The Gujarat State Co- operative Bank Limited when interest earned from investment made in any bank, not being co-operative society is not deductible under Section 80P(2)(d). 2. The appellant craves leave to amend or alter any ground or add a new ground which may be necessary.
& 666/Ahd/2023 Assessment Years: 2017-18 & 2014-15 Page 2 of 5
3. It is, therefore, prayed that the order of Ld. CIT(A) may be set aside and that of the Assessing Officer be restored.”
for A.Y. 2014-15 “1. CIT(A) has erred in allowing the disallowance under Section 80P(2)(d) of the IT Act of Rs.1,42,75,240/- being interest and dividend received from Ahmedabad District Co-op. Bank and The Gujarat State Co- operative Bank Limited when interest earned from investment made in any bank, not being co-operative society is not deductible under Section 80P(2)(d).
2. The appellant craves leave to amend or alter any ground or add a new ground which may be necessary.
3. It is, therefore, prayed that the order of Ld. CIT(A) may be set aside and that of the Assessing Officer be restored.”
Firstly, we are taking up Assessment Year (A.Y.) 2014-15 which is filed by the Revenue. The assessee filed return of income on 29.11.2014 declaring total income at Rs.82,40,873/-. The case was reopened on the basis of reasons recorded as the assessee offered income of Rs.82,40,873/- after claiming deduction under Section 80P(2) of the Income Tax Act, 1961 amounting to Rs.1,93,38,659/- which included dividend income of Rs.7,68,870/- and interest income of Rs.1,35,06,370/-. But as per Section 80P(2)(d) of the Act, dividend income and fixed deposit interest are required to be disallowed and, therefore, proceedings under Section 147 of the Act was initiated and notice under Section 148 of the Act was issued to the assessee. In response to the said notice, the assesses did not file return of income. The assessee was issued show cause notice dated 21.12.2019 and the assessee replied the same. After taking cognisance of the same, the Assessing Officer disallowed the claim of the assessee under Section 80P of the Act to the extent of Rs.1,42,75,240/-.
Being aggrieved by the Assessment Order, the assessee filed appeal before the CIT(A). The CIT(A) partly allowed the appeal of the assessee.
The Ld. DR submitted that those Banks are working under Banking Regulation and, therefore, the exemption claimed by the assessee Co-op. Bank/Society cannot be held as deduction under Section 80P of the Act as those Banks are not Co-op. Societies and not the Member of the assessee society. The Ld. DR relied upon the & 666/Ahd/2023 Assessment Years: 2017-18 & 2014-15 Page 3 of 5 decision of Hon’ble Apex Court in the case of Totgar’s Co-operative Sale Society vs. ITO (2010) 322 ITR 283 (SC).
The Ld. AR, at the time of hearing, submitted that as per Rule 27 of the Income Tax (Appellate Tribunal) Rules, 1963, the Tribunal should first decide that notice under Section 148 of the Act is bad in law because reopening is based on change of opinion. The Ld. AR also filed the application under Rule 27 of the Income Tax (Appellate Tribunal) Rules, 1963. The Ld. AR submitted that the original assessment order was passed under Section 143(3) of the Act vide order dated 07.12.2016 on the same issue which was actually examined and, therefore, the reopening itself is bad in law and in fact the reopening is a change of opinion and reassessment proceedings under Section 147 of the Act itself are bad in law.
The Ld. DR submitted that the CIT(A) has categorically decided this issue thereby observing that the assessee is challenging validity of the proceedings under Section 144 read with Section 147 has become infructuous as the assessee ’s appeal was decided on merit.
We have heard both the parties and perused all the relevant material available on record. It is pertinent to note that the reasons for reopening was in fact dealing with deduction claimed by the assessee asunder Section 80P(2)(d) of the Act and the original assessment has also dealt with this issue as the return of income was filed by the assessee on 29.11.2014 which was incorrectly mentioned in the reassessment proceedings that the assessee has not filed the return of income. The notices issued alongwith questionnaire categorically mentioned information called upon the assessee relating to dividend from Co-op Society and interest from Co-op Society for which the assessee has given the detailed reply alongwith its submissions. Thus, the CIT(A) merely by deciding the case on merit cannot ignore legal aspect and state that it is infructuous. The reopening is on very same issue and, therefore, it is second opinion. Thus, application under Rule 27 of the Income Tax (Appellate Tribunal) Rules, 1963 is allowed. Since the assessment itself becomes bad in law, the issues contested by the Revenue in the present appeal does not require any comment. Hence, for A.Y. 2014-15 filed by the Revenue is dismissed.
& 666/Ahd/2023 Assessment Years: 2017-18 & 2014-15 Page 4 of 5 for A.Y. 2017-18, the assessee filed return of income on 31.10.2017 declaring total income at Rs.1,99,76,710/- after claiming deduction of Rs.7,03,37,668/- under Chapter VI-A. The assessment was completed under Section 143(3) of the Act vide order dated 30.12.2019 after denial of deduction under Section 80P(2)(d) of the Act. The Assessing Officer observed that the assessee on interest and dividend income totalling to Rs.6,35,19,390/- from Co- op. Banks which do not fall under the category of Co-op. Society.
Being aggrieved by the said Assessment Order, the assessee filed appeal before the CIT(A). The CIT(A) allowed the appeal of the assessee.
The Ld. DR relied upon the Assessment Order.
The Ld. AR submitted that in the light of the decision of Hon’ble Gujarat High Court in case of Surat District Co-op. Milk Producers Union vs. ACIT (SCA No.5931 of 2022) wherein the decision of Hon’ble Apex Court in the case of Bhagyodaya Co- op. Bank Limited vs. ACIT (Special Civil Application No.17849 of 2021 - Order dated 22.08.2023) and the decision of Hon’ble High Court of Gujarat in the case of Katlary Kariyana Merchant Sahkari Sarafi Mandali Limited vs. ACIT (2022) 140 taxmann.com 602 (Gujarat) has been considered and categorically mentioned that the interest received from Co-op. Banks are also registered Society under the Co-op. Societies Act governing the State Societies are Members of the Society and, therefore, the deduction under Section 80P(2)(d) of the Act is rightly allowed.
We have heard both the parties and perused all the relevant material available on record. After going through the decision of Hon’ble Gujarat High Court in the case of Surat District Co-op. Milk Producers Union vs. ACIT (supra) (Special Civil Application No. 5931 of 2022), the CIT(A) has categorically mentioned that the Ahmedabad District Co-op. Bank Limited and the Gujarat State Co-operative Bank Limited are Co-operative Societies registered under Gujarat Co-operative Societies Act, 1961 and, therefore, the word Co-operative Society mentioned in Section 80P(20(d) of the Act includes these Co-operative Societies also and, therefore, the interest earned and dividend income from these Co-operative Societies/Banks should be taken into account while granting deduction under Section 80P(2)(d) of the Act.
& 666/Ahd/2023 Assessment Years: 2017-18 & 2014-15 Page 5 of 5
In the result, both the appeals filed by the Revenue are dismissed.
Order pronounced in the open Court on this 9th August, 2024.
More judgments on Section 80P(2)(d)
- Duddukuru Primary Agricultural Cooperative… vs ITO, Ward - 1, TadepalligudemITA 258/VIZ/2026[2015-16]Status: Disposed16 Oct 2026AY 2015-16
- S R P Jutha 13 Rajkot VI and Gr S Ma, Rajkot vs ITO WD 1(2)(1) Rajkot, RajkotITA 951/RJT/2025[2017-18]Status: Disposed9 Oct 2026AY 2017-18
- Poonam Chambers B Wing Commercial Premises… vs Deputy Commissioner Income Tax, MumbaiITA 7044/MUM/2026[2021-2022]Status: Disposed8 Oct 2026AY 2021-2022
- Poonam Chambers B Wing Commercial Premises… vs Deputy Commissioner Income Tax, MumbaiITA 7043/MUM/2026[2019-20]Status: Disposed8 Oct 2026AY 2019-20
- Suvarnakarara Co-Operative Society Limited… vs Income Tax Officer, Ward - 2, KarwarITA 210/PAN/2025[2020-21]Status: Disposed7 Oct 2026AY 2020-21
Recent GST High Court judgments
Search GST case law →- Sunanda Raul vs. The Commissioner Of Commercial Taxes And Goods Nad Services Tax, OdishaOrissa · 14 Oct 2026
- Zakir Hussain Ali Khan vs. Additional Commissioner (Appeals), BhubaneswarOrissa · 14 Oct 2026
- M/S Manorama Nayak, Khorda vs. Assistant Commissioner Of State Tax, CT And GST, Bhubaneswar Iv Circle, KhurdaOrissa · 14 Oct 2026
- Chandan Kumar Bathual vs. Superintendent, CGST And Central Excise, Cuttack-Iii Range, CuttackOrissa · 14 Oct 2026
- Manoranjan Sadangi vs. Superintendent, CGST And Central Excise, Gopalpur Range, GanjamOrissa · 14 Oct 2026