GOVERNMENT EMPLYEES CO. OP. CREDIT SOCIETY LTD.,BHAVNAGAR V. THE ACIT, CIRCLE-1, BHAVNAGAR

ITA 1560/AHD/2024

AI Insights

The case involves the Government Employees Co. Op. Credit Society Ltd., which appealed against the order of the Commissioner of Income Tax (Appeals), Thane, upholding the addition of Rs. 7,87,374/- to the assessee's income by the Assessing Officer under section 143(3) of the Income-tax Act, 1961. The addition was made on the grounds that the interest income from fixed deposits with Bhavnagar District Co-operative Bank did not qualify for deduction under section 80P. The Tribunal, referencing decisions from the Gujarat High Court, found that the income did qualify for deduction as it was derived from another cooperative society.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 35059 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-10-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 21-10-2024
• Assessment Year: 2017-2018
• Appeal Filed On: 30-08-2024
• Other Referred Cases: Gujarat District Co-operative Mill Producers Union vs. ACIT (SCA No. 5931 of 2022), Kutlary Kariyana Merchant Sahakari Mandali Ltd. vs. ACIT (2022) 140 taxmann.com 602 (Guj)
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NITIN VISHNU KULKARNI
• Section: 143(3); 142(1); 143(2); 80P

Judgement Text

"THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD “SMC” BENCH Before: Ms. Suchitra Kamble, Judicial Member And Shri Makarand V. Mahadeokar, Accountant Member Government Employees Co. Op. Credit Society Ltd., Bhavnagar-364001 PAN: AAAAG5825A (Appellant) Vs The ACIT, Circle-1, Bhavnagar-364001 (Respondent) Assessee by: Shri Jignesh Parikh, A.R. Revenue by: Shri Nitin Vishnu Kulkarni, Sr. D.R. Date of hearing : 21-10-2024 Date of pronouncement : 24-10-2024 आदेश/ORDER PER : SUCHITRA KAMBLE, JUDICIAL MEMBER:- This is an appeal filed by the assessee against the order of the ld. Commissioner of Income Tax, Appeal, Addl/JCIT(A), Thane, in proceeding u/s. 143(3) vide order dated 22/07/2024 passed for the assessment year 2017-18. 2. The grounds of appeal are as under:- “1. On the facts and in the circumstances of the case as well in law ld. Commissioner of Income Tax, Appeal ITA No. 1560 /Ahd/2024 Assessment Year 2017-18 I.T.A No. 1560/Ahd/2024 A.Y. 2017-18 Page No. Government Employees Co. Op. Credit Society Ltd. vs. ACIT 2 ADDL/JCIT (A) Thane (for the sake of brevity \"The Ld CIT(A)\") erred in upholding the order of the Assessment Unit, National Faceless Assessment Centre / ACIT Circle 1, Bhavnagar (for the sake of brevity \"The ld AO\") passed u/s 143(3) of the Income-tax Act, 1961. 2 On the facts and in the circumstances of the case as well in law, The Ld CIT(A) erred in upholding the action of The Ld. AO in making addition of Rs 7,87,374/ by allowing the claim of deduction u/s 80P(2)(a)(i). 3.On the facts and in the circumstances of the case as well in law, the Ld. CIT(A) erred in upholding the action of the Ld. AO in making addition of Rs 7,87,374/- by disallowing the claim of deduction u/s 80P(2)(d) 4. The appellant further reserves its right to add, alter, amend or modify any of the aforesaid grounds before or at the time of hearing of an appeal. 3. The assessee company was engaged in the business of granting various credit facilities to its members and is a registered co-operative society. The assessee society filed return of income declaring total income at Rs. Nil on 05-03-2018. Thereafter, the case was selected scrutiny under CASS. First statutory notice u/s. 143(2) of the Act was issued on 17-08- 2018. Notice u/s. 142(1) of the Act along with detailed questionnaire was also issued on 04-12-2019 thereby calling upon the assessee society related to deduction claimed under Chapter VIA. The assessee submitted the submissions and reply thereby stating that the deduction claimed u/s. 80P of the Act amounting to Rs. 58,50,778/- is in respect of the business conducted by the assessee relating to granting of various credit faculties to its members and earned interest on the same. The Assessing Officer observed that the I.T.A No. 1560/Ahd/2024 A.Y. 2017-18 Page No. Government Employees Co. Op. Credit Society Ltd. vs. ACIT 3 assessee earned interest income of Rs. 7,87,374/- from fixed deposits with Bhavnagar District Co-operative Bank. The Assessing Officer observed since the said co-operative bank is not a member of the co-operative society, the same was added to the income of the assessee and thus made the addition. 4. Being aggrieved by the assessment order, the assessee filed appeal before the ld. CIT(A). The CIT(A) dismissed the appeal of the assessee. 5. The ld. A.R. submitted that the CIT(A) was not justified in upholding the addition of the disallowance of the claim of deduction u/s. 80P(2)(a)(i) and 80P(2)(d) of the Act. The ld. A.R. submitted that the deposit in the Bhavnagar District Co-operative Bank was with the co-operative society only as it is District Co-operative Bank is registered under Co-operative Societies Act. the Ld. A.R. relied upon the decision of Hon’ble Gujarat High Court in case of Gujarat District Co-operative Mill Producers Union vs. ACIT (SCA No. 5931 of 2022) as well as Kutlary Kariyana Merchant Sahakari Mandali Ltd. vs. ACIT (2022) 140 taxmann.com 602 (Guj) which was subsequently amended by MA order dated 26-04-2024. The ld. D.R. relied upon the assessment order and the order of the CIT(A). 6. We have heard both the parties and perused all the relevant materials available on record. It is pertinent to note that in assessee’s own case for assessment year 2020-21, the said disallowance was allowed by the Tribunal being ITA No. 267/Ahd/2024 order dated 18-07-2024. Thus, the facts of the present assessment year is also identical to the facts of the earlier decision in I.T.A No. 1560/Ahd/2024 A.Y. 2017-18 Page No. Government Employees Co. Op. Credit Society Ltd. vs. ACIT 4 assessee’s own case. No distinguishable facts were pointed out by the ld. D.R. Further the decision of Hon’ble Gujarat High Court in case of Kutlary Kariyana Merchant Sahakari Mandali Ltd. (amended order dated 26-04- 2024), the deduction has to be allowed on the interest income which qualifies u/s. 80P(2)(d) of the Act when the same is derived from investment in the other co-operative societies or co-operative banks as the said banks are also registered under Co-operative Societies Act. Thus, the appeal of the assessee is allowed. 7. In the result, the appeal of the assessee is allowed. Order pronounced in the open court on 24-10-2024 Sd/- Sd/- (MAKARAND V. MAHADEOKAR) (SUCHITRA KAMBLE) ACCOUNTANT MEMBER JUDICIAL MEMBER Ahmedabad : Dated 24/10/2024 आदेश क\u0006 \u0007\bत ल\fप अ\u000fे\fषत / Copy of Order Forwarded to:- 1. Assessee 2. Revenue 3. Concerned CIT 4. CIT (A) 5. DR, ITAT, Ahmedabad 6. Guard file. By order/आदेश से, उप/सहायक पंजीकार आयकर अपील\u0012य अ\u0013धकरण, अहमदाबाद "