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Income Tax Appellate Tribunal, “SMC” BENCH, AHMEDABAD
Before: SMT.ANNAPURNA GUPTA
(Applicant) (Responent) : Assesseeby Shri S.N.Divatia, AR and Shri Samir Vora, AR : Shri N.J. Vyas, Sr.DR Revenue by सुनवाई क� तार�ख/Date of Hearing : 18/01/2024 घोषणा क� तार�ख /Date of Pronouncement: 24/01/2024 आदेश/O R D E R The present appeal has been filed by the assessee against order passed by the Commissioner of Income Tax(Appeals), National Faceless Appeal Centre, Delhi [in short referred to as ld.CIT(A)] under section 250(6)of the Income Tax Act, 1961 dated 11.10.2023 pertaining to Asst.Year 2018-19.
The grounds raised by the assessee are as under: “The learned CIT (A) erred in confirming the action of A.O. ward 3(3)(5) in holding that the deduction claimed by the Assessee u/s SOP amounting to Rs. 25,59,677/- is not allowable. Though it is Covered by Honourable ITAT order in Appellant's Own case (Copy of Order Attached - A) Further surprisingly the Honourable CIT(A) in haste passed the order on date of hearing and without looking the submission of Appellant and ignoring the fact that on same issue in Appellant's own case the Honourable ITAT has held in Appellant's favour.
2 Reliance is placed on Honourable Gujarat High Court decision in the case of CIT II vs. Sabarkantha District Cooperative Milk Producers Union Ltd - tax appeal no. 473/2014 dated 16.6.2014.
At the outset itself, it was stated that the issue raised in the present appeal stands covered in favour of the assessee by the decision of the ITAT in the case of the assessee in the immediately preceding year i.e. Asst.Year 2017-18 vide its order in dated 31.10.2022. (Copy of the order of the ITAT was placed before me).
Thereafter, the ld.counsel for the assessee proceeded to point out the facts of the case and the issue before me. He stated that the assessee had claimed deduction of interest income earned from cooperative society amounting to Rs.25,74,903/- in terms of section 80P(2)(d) of the Act. He pointed out that this interest income had been earned on advance made to one M/s.Nandoli Annexe Cooperative Housing Society. The case of the AO was that this interest income was not earned on surplus funds of the assessee cooperative society and therefore the claim of the assessee to deduction of the same under section 80P(2)(d) of the Act was not tenable in law.
Thereafter, it was pointed out that the facts in the present case were identical to that in Asst.Year 2017-18 and my attention as drawn to para-4 of the order bringing out the facts of the said case as under:
4. The facts in brief are that the assessee in the present case is a Housing Co-operative society and works for the benefit of members as mutual concern. In the year under consideration the assessee has shown interest income of Rs. 23,06,907/- from advances given to other co-operative society namely M/s Nandoli Annex Co-op Housing Society Ltd. The assessee claimed 100% deduction of the same under the provision of section 80P(2)(d) of the Act. As per the AO, the impugned amount of interest was not arising to the assessee from the activities of collecting maintenance fee/deposit
3 from member and incurring the same for the benefit of member. The AO also found that the assessee on one hand accepted interest free unsecured loan from M/s Raintree Café LLP and same transferred was to Nandoli Annex Co-op Housing Society Ltd and collected interest income of Rs. 23,06,907/-. These transaction between these 3 parties carried out for whole year. Thus, the AO was of the view that the assessee is carrying out business activity which is taxable as there is no concept of mutuality in earning impinged income as there is no contribution from the member for the specified activity. Thus, the AO held that the interest income of Rs.23,06,907/- earned on the loan and advances to a person other than member is not eligible for deduction under section 80P(2)(d) of the Act.”
The ld.counsel for the assessee pointed out from para-9 to 9.2 of the order that the ITAT decided the issue in favour of the assessee as under:
“9. I have heard the rival contentions of both the parties and perused the materials available on record including the case law cited by the learned AR for the assessee. The provisions of section 80P(2)(d) of the Act provides the deduction to a co-operative society in respect of interest and dividend income derived from investment made in other co-operative society. In the case on hand interest income derived by the assessee form advance given to other cooperative society namely Nandoli Annex Co-op Housing Society Ltd. The question before me arise whether such income is eligible for deduction under section 80P(2)(d) of the Act. In my considered opinion, the assessee is eligible to claim deduction against such income. In holding so, we find support and guidance form the judgment of Hon’ble Gujarat High Court in case Surat VankarSahakari Sangh Ltd. v Assistant Commissioner of Income-tax[2016] 72 taxmann.com 169 (Gujarat), the Gujarat High Court held that assessee-co-operative society was eligible for deduction under section 80P(2)(d) of the Act in respect of gross interest received from co- operative bank without adjusting interest paid to said bank.
9.1 We also find that in case of Surendranagar District Co-op. Milk Producers Union Ltd. v Deputy Ld. CIT(A) 111 taxmann.com 69 (Rajkot Bench) the ITAT held that assessee-co-operative society could not claim benefit of section 80P(2)(d) of the Act in respect of interest earned by it from deposits made with nationalized/private banks, however, said benefit was available in respect of interest earned on deposits made with co-operative bank. Likewise, in the case of Pr. Commissioner of Income Tax and Anr. Vs. Totagars Cooperative Sale Society (2017) 392 ITR 74 (Karn), the Karnataka High Court has held that the interest income earned by a cooperative society on its investments held with a co-operative bank would be eligible for claim of deduction under Sec.80P(2)(d) of the Act.
9.2 In view of the above and respectfully, following the decision of Hon’ble High Court of Gujarat and other cases cited above, we hold that interest earned by the assessee on surplus held with cooperative society would be eligible for deduction under Sec. 80P(2)(d) of the Act. Hence the grounds of appeal of the assessee is hereby allowed.”
The ld.DR fairly agreed to the same, though, he vehemently supported the order of the ld.CIT(A).
Inview of the above, since the issue in the present case is squarely covered by the order of the ITAT in the case of the assessee in the immediately preceding year i.e. Asst.Year 2017-18, and no distinguishing facts have been brought to my notice, the decision rendered by the ITAT in Asst.Year 2017-18 applies to the present case, following which, I hold that the assessee was entitled to claim deduction of interest income earned from advances made to a cooperative society amounting to Rs.25,59,677/-. The AO is accordingly directed to allow the claim of the assessee of the said deduction.
In the result, the appeal of the assessee is allowed. Order pronounced in the Court on 24th January, 2024 at Ahmedabad.