THE JAGRAON CO-OPERATIVE MARKETING CUM PROCESSING SOCIETY LIMITED ,PUNJAB vs. THE INCOME TAX OFFICER WARD-1, JAGRAON , PUNJAB

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ITA 315/CHANDI/2024Status: DisposedITAT Chandigarh25 September 2024AY 2020-2021Bench: SHRI. VIKRAM SINGH YADAV (Accountant Member)13 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the Assessee cooperative society is eligible for the claim of deduction under Section 80P(2)(d) of the Act in respect of interest receipts of Rs. 28,92,482/- on deposits placed with The Ludhiana Central Co-operative Bank Limited. The Tribunal reasoned that Section 80P(4) is a proviso to the main provision and excludes only cooperative banks that possess a license from the RBI to conduct banking business. The Supreme Court in 'Mavilayi Service Cooperative Bank Ltd.' clarified that the object of Section 80P(4) is to exclude cooperative banks functioning at par with commercial banks, which lend money to the public. Since the Assessee is a cooperative society and not a cooperative bank, Section 80P(4) is not applicable to its claim. The Tribunal found the Karnataka High Court's decision in 'Totagars Co-operative Sale Society' distinguishable and, in any case, subordinate to the Supreme Court's decision in 'Mavilayi Service Cooperative Bank Ltd.'. The Tribunal also noted that the jurisdictional High Court's decision in 'Doaba Co-operative Sugar Mills Ltd.' was not directly on the point of interest earned from a cooperative bank by a cooperative society. Following the Supreme Court's decision and the coordinate bench's ruling in 'Mullanpur Garibdas Co-operative Multipurpose Society', the Tribunal allowed the deduction.

What were the facts?

The Assessee, The Jagraon Co-operative Marketing Cum Processing Society Ltd., filed its return for Assessment Year 2020-21, claiming a deduction of Rs. 49,52,952/- under Section 80P of the Income Tax Act. The Assessing Officer (AO) disallowed a deduction of Rs. 28,92,482/- claimed under Section 80P(2)(d) on account of interest received from The Ludhiana Central Cooperative Bank Ltd., holding it ineligible. The Commissioner of Income Tax (Appeals) / Non-Resident Facilitation Centre (CIT(A)/NFAC) upheld the AO's disallowance. The Assessee is in appeal before the Income Tax Appellate Tribunal (ITAT) against this order.

What were the issues?

1. Whether the interest income of Rs. 28,92,492/- received by the Assessee, a cooperative society, from The Ludhiana Central Cooperative Bank Ltd. is eligible for deduction under Section 80P(2)(d) of the Income Tax Act, 1961, despite the provisions of Section 80P(4). Assessee's Contention: The Assessee argued that Section 80P(2)(d) clearly allows deduction for interest or dividend income derived from investments with any other cooperative society. It contended that Section 80P(4), which excludes cooperative banks, is not applicable as the Assessee is a cooperative society, not a cooperative bank. The Assessee relied on the judgment of the ITAT Chandigarh Bench in 'Jagadhari Cooperative Marketing cum Processing Society Ltd. Vs. PCIT' and the Supreme Court's decision in 'Mavilayi Service Cooperative Bank Ltd.'. Revenue's Contention: The Revenue, represented by the Sr. DR, argued that the CIT(A) had rightly confirmed the disallowance by relying on the Supreme Court's decision in 'Mavilayi Co-operative Bank' and the Karnataka High Court's decision in 'Totagars Co-operative Sale Society', which interpreted Section 80P(4) to disallow such deductions. The Revenue also cited the jurisdictional Punjab and Haryana High Court's decision in 'Doaba Co-operative Sugar Mills Ltd.' as a guiding force.

Which sections of the Income-tax Act were involved?

Section 80P,Section 80P(1),Section 80P(2),Section 80P(2)(d),Section 80P(2)(e),Section 80P(2)(f),Section 80P(4),Section 143(3),Section 144B,Section 263

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, CHANDIGARH BENCHES, “SMC” CHANDIGARH

Before: SHRI. VIKRAM SINGH YADAV, AM

For Appellant: Shri Sudhir Sehgal, Advocate
For Respondent: Dr. Ranjeet Kaur, Sr. DR
Hearing: 17/09/2024Pronounced: 25/09/2024

Order

PER VIKRAM SINGH YADAV, AM:

1.

This is an appeal filed by the Assessee against the order of the Ld. CIT(A)/NFAC, Delhi dt. 07/02/2024 pertaining to Assessment Year 2020-21.

2.

In the present appeal, Assessee has raised the following grounds:

1. That the Ld. CIT(A) has erred in dismissing the appeal of the assessee and thereby, confirming the order of Assessing Officer in disallowing the deduction u/s 80P of the Act on account of interest received from The Ludhiana Central Cooperative Bank Ltd. to the tune of Rs. 28,92,492/-.

2. That the Ld. CIT(A) has failed to consider that the interest income is only from The Ludhiana Central Cooperative Bank Ltd. and, as such, the deduction u/s 80P (2)(d) of the Income Tax Act, has rightly been claimed. 3. That the Ld.CIT(A) has not followed the detailed recent judgment of Chandigarh Bench of the ITAT in the case of "Jagadhari Cooperative Marketing cum Processing Society Ltd. Vs. PCIT" reported in (2024), 125 TLC 103, in which, it has been held that any interest received by the Cooperative Society from the 'Cooperative Bank' is eligible for deduction u/s(80P (2) (d) of the Income Tax Act and that being the judgment of Jurisdictional Bench of the ITAT, the Ld. CIT(A) was supposed to follow and hence the confirmation of addition by the CIT(A) is bad in law.

4.

That the appellant craves leave to add or amend the grounds of appeal

before the appeal is finally heard or disposed off.

3. During the course of hearing the Ld. AR submitted that the assessee is a co-operative society registered with the

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