Deputy Commissioner of Income Tax, Circle - 1(1), Panaji V. The Old Goa Urban Co-operative Credit Society Limited, Old Goa

ITA 175/PAN/2019

AI Insights

The case involves the Deputy CIT, Circle-1(1) as the appellant and The Old Goa Urban Cooperative Credit Society Ltd. as the respondent. The dispute centered on the disallowance of a deduction of Rs.2,08,55,277 by the Assessing Officer under section 40(a)(ia) of the Income Tax Act, 1961, due to non-deduction of TDS on interest payments made to members. The CIT(A) reversed this disallowance, which was contested by the Revenue in the Tribunal. The Tribunal upheld the CIT(A)'s decision, emphasizing the eligibility for deduction under section 80P(2)(a)(i) and citing relevant circulars and case law.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 136832 (ITAT-PANAJI)
• Duration Of Justice: 4 year(s) 2 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-07-2023
• Appeal Filed By: Department
• Order Result: DismissedDismissed
• Bench Allotted: DB
• Assessment Year: 2016-2017
• Appeal Filed On: 13-05-2019
• Other Referred Cases: Mavilayi Service Cooperative Bank Ltd. vs. CIT [2021] 431 ITR 1 (SC)
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Business income; TDS
• Section: 40(a)(ia)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PANAJI BENCH : PANAJI (THROUGH VIRTUAL HEARING) BEFORE SHRI SATBEER SINGH GODARA, JUDICIAL MEMBER AND SHRI G.D. PADMAHSHALI, ACCOUNTANT MEMBER ITA.No.175/PAN./2019 Assessment Year 2016-2017 The Deputy CIT, Circle-1(1) 1 st Floor, Aayakar Bhawan, EDC Complex, Patto Plaza, Panaji. Goa. PIN – 403 001 vs. The Old Goa Urban Cooperative Credit Society Ltd., Panchayat Bldg., Near Police Outpost, Old Goa, North Goa, Tiswadi – 403 001 PAN AAAAO0421A (Appellant) (Respondent) For Revenue : Shri N. Shrikanth For Assessee : Shri Sham Kamat Date of Hearing : 13.07.2023 Date of Pronouncement : 24.07.2023 ORDER PER SATBEER SINGH GODARA, J.M. : This Revenue’s appeal for assessment year 2016- 2017, arises against the CIT(A) Panaji-1, Panaji's order dated 28.02.2019, in case no.CIT(A), PNJ-1/10201/2018-19, in proceedings u/sec.143(3) of the Income Tax Act, 1961 (in short "the Act"). 2 ITA.No.175/PAN./2019 Heard both the parties. Case file perused. 2. The Revenue pleads the following substantive grounds in the instant appeal : 1. “The order of the Ld. CIT (A) is opposed to law and facts of the case. 2. The Ld. CIT(A) has erred in deleting addition of Rs.2,08,55,277/- on account of disallowance of deduction under section 40(a)(ia) on interest paid to members. 3. Appellant craves leave to amend or alter any of the grounds of appeal or add to the same, if deemed necessary.” 3. Both the parties next invited our attention to the CIT(A)'s detailed discussion reversing the assessment findings invoking sec.40(a)(ia) disallowance of Rs.2,08,55,277/- on account of non-deduction of TDS regarding interest payments made to members, reading as under : “8. Ground No.1 (Part-II) This ground is directed against the disallowance of deduction claimed. 3 ITA.No.175/PAN./2019 4. Suffice to say, it has come on record that the CIT(A) has upheld the assessee’s claim as eligible for sec.80P(2)(a)(i) deduction since he has directed the Assessing Officer to verify 4 ITA.No.175/PAN./2019 about it’s nominal members. That being the case, we first of all quote the CBDT’s circular no.37/2016 dated 02.11.2016 that such a disallowance u/sec.40(a)(ia); in turn, enhances business income which is otherwise eligible for Chapter-VIA deduction. Coupled with this, case law Mavilayi Service Cooperative Bank Ltd., vs. CIT [2021] 431 ITR 1 (SC) holds that the status of the corresponding members i.e., those having voting rights and nominal memberships; hardly forms a condition precedent for the purpose of allowing sec.80P deduction. We see no merit in Revenue’s instant sole substantive grievance. Rejected accordingly. 5. This Revenue’s appeal is dismissed in above terms. Order pronounced in the open court on 24.07.2023. Sd/- Sd/- [G.D. PADMAHSHALI] [SATBEER SINGH GODARA] ACCOUNTANT MEMBER JUDICIAL MEMBER Pune, Dated 24 th July, 2023 VBP/- Copy to 1. The appellant 2. The respondent 3. The CIT(A) Panaji-1, “Aayakar Bhavan”, Plot No.5, EDC Complex, Patto Plaza, Panaji – 403 001. 4. Pr. CIT, Panaji. 5. D.R. ITAT, Panaji Bench, Panaji 6. Guard File. //By Order// Assistant Registrar, ITAT, Pune Benches, Pune.