DURGAMATHA HOUSE BUILDING CONSTRUCTION CO OPERATIVE HOUSING SOCIETY LIMITED,HYDERABAD V. .INCOME TAX OFFICER, WARD-11(1), HYDERABAD

ITA 659/HYD/2024

AI Insights

The case involves the Durgamatha House Building Construction Co-operative Housing Society Limited, which appealed against the order of the Commissioner of Income-tax (Appeals) sustaining the disallowance of a deduction under Section 80P(2)(d) of the Income Tax Act, 1961. The deduction in question amounted to Rs. 6,62,116, which was interest received from nationalized banks. The Tribunal examined whether such interest income qualifies for deduction under the specified section, referencing previous decisions and interpretations of the law. The Tribunal ultimately decided that the interest income from nationalized banks does not meet the criteria set out in Section 80P(2)(d), leading to the dismissal of the appeal.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 46432 (ITAT-HYDERABAD)
• Duration Of Justice: 5 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-12-2024
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB-B
• Assessment Year: 2020-2021
• Appeal Filed On: 08-07-2024
• Other Referred Cases: Totgars Co-operative Sale Society Ltd Vs. Income Tax Officer, Karnataka, The Vavveru Co-operative Rural Bank Ltd. Vs. CCIT
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: KAVITHA RANI
• Assessee Lawyers: T. CHAITANYA KUMAR
• Keywords: Set aside; Source of fund
• Section: 143(3); 142(1); 154; 143(1); 80P

Judgement Text

"आयकर अपीलीय अधिकरण, हैदराबाद पीठ में IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES “B”, HYDERABAD BEFORE SHRI LALIET KUMAR, JUDICIAL MEMBER AND SHRI MADHUSUDAN SAWDIA, ACCOUNTANT MEMBER ITA No.659/Hyd/2024 Assessment Year: 2020-21 Durgamatha House Building Construction Co-operative Housing Society Limited, Hyderabad. PAN : AACAD6852C Vs. The Income Tax Officer, Ward-11(1), Hyderabad. (Appellant) (Respondent) Assessee by: Shri T. Chaitanya Kumar, Advocate Revenue by: Ms. Kavitha Rani, SR-DR Date of hearing: 03.12.2024 Date of pronouncement: 10.12.2024 O R D E R PER MADHUSUDAN SAWDIA, A.M: This appeal is filed by Durgamatha House Building Construction Co-operative Housing Society Limited, Hyderabad (“the assessee”), feeling aggrieved by the order of Commissioner Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi (“Ld.CIT(A)”) dated 28.04.2024 for A.Y. 2020-21. 2 ITA No.659/Hyd/2024 2. The grounds raised by the assessee read as under : “1. The learned Commissioner of Income-tax (Appeals) erred in confirming the disallowance of deduction under Section 80P of the Income Tax Act, 1961, amounting to Rs. 6,62,116/-. 2. The learned Commissioner of Income-tax (Appeals) erred in passing an order without considering the fact that the amount of Rs. 6,62,116/- was received as interest from the State Bank of India. 3. The order of the learned Commissioner of Income-tax (Appeals) is erroneous both on facts and in law, particularly in sustaining the disallowance of Rs. 6,62,116/-.” 3. The brief facts of the case are that the assessee is a Co- operative Society, filed its return of income on 30.12.2020 admitting income of Rs.Nil on 30.12.2020. The case of the assessee was selected for complete scrutiny through CASS and notice u/s 143(2) as well as Section 142(1) of the Act were issued by the learned Assessing Officer (“Ld. AO”). The assessment was completed by the Ld. AO u/s 143(3) r.w.s. 144B of the Act, on 19.09.2022 making addition of Rs.43,06,861/- on account of interest received from co-operative bank and Rs.6,62,116/- on account of interest received from nationalized banks. 4. Aggrieved with the order of Ld. AO, assessee filed appeal before the Ld.CIT(A). The Ld.CIT(A) deleted the addition made by the Ld. AO on account of interest form co-operative bank at Rs.43,06,861/-. However, he sustained the addition made by the 3 ITA No.659/Hyd/2024 Ld. AO on account of interest from nationalized banks amounting to Rs.6,62,116/-. 5. Aggrieved with the order of Ld.CIT(A), the assessee is in appeal before us. The Ld. AR submitted that, the assessee is eligible for deduction u/s 80P(2)(d) on account of interest received from nationalized banks for Rs.6,62,116/-. The Ld. AR further submitted that, under identical issue, in assessee’s own case in ITA No.40/Hyd/2024 dt.25.03.2024, the co-ordinate of bench of ITAT has decided the issue in favour of the assessee. 6. Per contra, Ld.DR submitted that, the interest received from nationalized bank cannot be allowed as deduction u/s 80P(2)(d) as, only interest received from Co-operative Bank are only allowable as deduction under the said Section. In support of their submissions, the Ld.DR relied on the decision of hon'ble Supreme Court in the case of Totgars Co-operative Sale Society Ltd Vs. Income Tax Officer, Karnataka reported in (2010) 188 Taxmann. 282 (SC). Finally, the Ld.DR prayed before the Bench to uphold the order of Ld.CIT(A). 7. We have heard the rival submissions and gone through the record in view of the submissions made by both the parties. There is no dispute with regard to the fact that, the interest of Rs.6,62,116/- was received from nationalized bank. The only question before us is to decide whether the assessee is eligible for 4 ITA No.659/Hyd/2024 deduction u/s 80P(2)(d) of the Act or not on receipt of such interest from nationalized bank. The Ld.AR relied on the decision of co- ordinate Bench of ITAT in its own case (supra), wherein the ITAT relied on the decision of Hon'ble High Court of Andhra Pradesh in case of The Vavveru Co-operative Rural Bank Ltd., Vs. CCIT reported in (2017) 396 ITR 371 (AP) and decided the issue in favour of the assessee. The relevant portion of the decision of the co- ordinate Bench of ITAT in assessee’s own case (supra) is reproduced as under : “6. I have gone through the record in the light of the submissions made on either side. Issue involved in this matter is no longer res integra and the Hon’ble jurisdictional High Court considered the same in extenso in the case of The Vavveru Co-operative Rural Bank Ltd. (supra). On a threadbare analysis of the provisions under section 80P of the Act in the light of various decisions including the decision of the Hon’ble Apex Court in the case of Totgars Co-operative Sale Society Ltd. vs. ITO [2010] 188 Taxman 282 (SC) and the decision of jurisdictional High Court in the case of CIT vs. Andhra Pradesh State Co-operative Bank Ltd [2011] 12 taxmann.com 66 (Andhra Pradesh), the Hon’ble High Court reached a conclusion that if the investment is made in fixed deposits in nationalised banks from out of the own funds of the assessee, the interest derived from such investment would be from the activities listed in clause (i) to (vii) of section 80P(2)(a) of the Act and would be eligible for deduction. 7. In the cases of Ashoka Palace Co-op. Hsg. Soc. Ltd., and Hilla Heights Co-operative Housing Society Limited (supra), the claim for deduction under section 80P(2)(d) of the Act was disallowed through intimation under section 143(1) of the Act and the rectification application filed by the assessee under section 154 of the Act was rejected. Appeal filed against the order under section 154 of the Act was also rejected on the ground that the disallowance under section 80P(2) of the Act in the original assessment order under section 143(1) of the Act, but not under section 154 of the Act and, therefore, the assessee cannot challenge the order under section 154 of the Act, directly without challenging the order under section 143(1) of the Act. 5 ITA No.659/Hyd/2024 8. In the case of Hilla Heights Co-operative Housing Society Limited (supra), since the disallowance was made under section 143(1) of the Act assessee filed a rectification application before Centralized Processing Centre, Bangalore, however, the same was denied without giving any proper reasons and assessee filed the appeal before the learned CIT(A) and learned CIT(A) did not decide the issue on merits, however, he proceeded to decide the issue on technical ground whether assessee should file the appeal under section 143(1) or 154 of the Act, the Tribunal proceeded to decide the issue on merits in the light of the decided case law. 9. Since the case on hand is squarely covered by the decision of the jurisdictional High Court in the case of The Vavveru Co-operative Rural Bank Ltd. vs. CCIT (supra), while following the decision of the Co- ordinate Bench of the Tribunal in the case of Hilla Heights Co-operative Housing Society Limited (supra), I am of the considered opinion that the assessee is entitled to claim deduction under section 80P(2)(d) of the Act, if the interest is earned on the deposits of its own funds in the nationalized banks. 10. With this view of the matter, I set aside the orders of the Revenue authorities and restore the issue to the file of learned Assessing Officer to cause verification as to whether the interest in question was earned by the assessee in respect of its own amounts deposited in the nationalized banks, and if it is so, to allow the deduction under section 80P(2)(d) of the Act. Assessee should produce all the relevant material before the learned Assessing Officer and get the matter disposed of on merits.” 8. We have gone through the decision of Hon'ble High Court of Andhra Pradesh in the case of the Vavveru Co-operative Rural Bank Ltd (supra), where the Hon'ble High Court in a different issue at Para Nos.36 and 37 has held as under : “36. The original source of the investments made by the petitioners in nationalised Banks is admittedly the income that the petitioners derived from the activities listed in sub- Clauses (i) to (vii) of Clause (a). The character of such income may not be lost, especially when the statute uses the expression attributable to and not anyone of the two expressions, namely, derived from or directly attributable to. 6 ITA No.659/Hyd/2024 37. Therefore, we are of the considered view that the petitioners are entitled to succeed. Hence, the Writ Petitions are allowed, and the order of the Assessing Officer, insofar as it relates to treating the interest income as something not allowable as a deduction under Section 80P (2) (a), is set aside.” 9. On perusal of the order of the Hon'ble High Court of Andhra Pradesh in the case of The Vavveru Co-operative Rural Bank Ltd (supra), it is abundantly clear that if original source of funds, which is invested in nationalized bank is from the activities listed in (i) to (vii) of clause (a) of Section 80P(2), then only the interest received from nationalized bank shall be treated as income attributable to the activities listed in sub-section (i) to (vii) of clause (a) of Section 80P(2) and accordingly, will be eligible for deduction u/s 80P(2)(a) of the Act. However, in the case of the assessee, the funds deposited in the nationalized bank are not out of surplus funds from the activities listed in (1)(2) of (vii) of clause (a) of Section 80P(2) of the Act. Further, the assessee has claimed deduction u/s 80P(2)(d) and not under Section 80P(2)(a) of the Act. Therefore, reliance made by the Ld.AR in the case of co-ordinate Bench of the Tribunal(Supra) and Hon'ble High Court’s decision in the case of The Vavveru Co-operative Rural Bank Ltd. (supra) are not applicable in the present case. 10. Further, for the sake of clarity, it is crucial to reproduce here the provisions of Section 80P(2)(d) of the Act, which is to the following effect : 7 ITA No.659/Hyd/2024 “In respect of any income by way of interest or dividends derived by the co-operative society from its investments with any other co-operative society, the whole of such income;” 12. On going through the aforesaid provisions, it is abundantly clear that the interest or the dividend received from co-operative society is only eligible for such deduction u/s 80P(2)(d) of the Act. However, in the case of the assessee, interest is not received from Co-operative Society. Therefore, in our considered opinion, the interest received by the assessee from nationalized bank is not eligible for deduction u/s 80P(2)(d) of the Act. Hence, we dismiss the appeal of the assessee. 13. In the result, the appeal of the assessee is dismissed. Order pronounced in the Open Court on 10th December, 2024. Sd/- Sd/- Sd/- Sd/- (LALIET KUMAR) JUDICIAL MEMBER (MADHUSUDAN SAWDIA) ACCOUNTANT MEMBER Hyderabad, dated 10.12.2024. TYNM/sps 8 ITA No.659/Hyd/2024 Copy to: S.No Addresses 1 Durgamatha House Building Construction Co-operative Housing Society Limited, Hyderabad, E-101, Aditya Empress Towers, Shaikpet Nala, Tolichowki, Golconda Post – 500008, Telangana. 2 The Income Tax Officer, Ward 11(1), Hyderabad. 3 Pr.CIT, Hyderabad. 4 DR, ITAT Hyderabad Benches 5 Guard File By Order "