The Bicholim Merchants Urban Co-operative Credit Society Limited, Bicholim V. National e-Assessment Centre, Circle - 1(1), Panaji

ITA 189/PAN/2023

• Counselvise Citation: [2024] 100 COUNSELVISE.COM (IT) 1475 (ITAT-PANAJI)
• Duration Of Justice: 7 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-06-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: WT(D)
• Next Hearing Date: 17-06-2024
• Assessment Year: 2018-2019
• Appeal Filed On: 09-11-2023
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Co-operative Credit Society

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PANAJI BENCH, PANAJI – VIRTUAL COURT BEFORE SHRI S. S. GODARA, JUDICIAL MEMBER AND SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER आयकर अपील सं. / ITA Nos.187 to 189/PAN/2023 नधा रण वष / Assessment Years : 2014-15, 2017-18 & 2018-19 The Bicholim Merchants Urban Cooperative Credit Society Limited, First Floor Sahayog, Near Fish market, Bicholim Bicholim 403504, Goa PAN : AABAT1545K Vs. ITO, Ward-2(3), Panaji/ ITO, Ward-1(3), Panaji Appellant Respondent आदेश / ORDER PER INTURI RAMA RAO, AM: These are the appeals filed by the assessee directed against the separate orders of the National Faceless Appeal Centre, Delhi [‘NFAC’] dated 14.09.2023 for the assessment years 2014-15, 2017-18 and 2018- 19 respectively. 2. Since the identical facts and common issues are involved in all the above captioned three appeals of the assessee, we proceed to dispose of the same by this common order. 3. For the sake of convenience and clarity, the facts relevant to the appeal of the assessee in ITA No.187/PAN/2023 for the assessment year 2014-15 are stated herein. Assessee by : Shri S.J. Kamat Revenue by : Smt. Ashwini Hosmani Date of hearing : 24.06.2024 Date of pronouncement : 25.06.2024 ITA Nos.187 to 189/PAN/2023 2 ITA No.187/PAN/2023, A.Y. 2014-15 : 4. Briefly, the facts of the case are that the appellant is a Co-operative Credit Society registered under the Goa State Cooperative Societies Act, 2001. It is engaged in the business of banking, accepting deposits from the members. The Return of Income for the assessment year 2014-15 was filed on 30.11.2014 declaring Nil income after claiming deduction u/s 80P(2)(a)(i) of the Income Tax Act, 1961 (‘the Act’) of Rs.44,05,233/-. Against the said return of income, the assessment was completed by the Income Tax Officer, Ward-2(3), Panaji (‘the Assessing Officer’) vide order dated 21.10.2016 passed u/s 143(3) of the Act at a total income of Rs.65,05,473/-. While doing so, the Assessing Officer had denied the exemption u/s.80P in respect of interest income earned out of the surplus money invested with the other cooperative societies. 5. Being aggrieved by the above order of assessment, an appeal was filed by the assesseee before the CIT(A) who vide order dated 15.03.2017 deleted the disallowance of deduction made by the AO u/s.80P of the Act. 6. Being aggrieved by the order of CIT(A), the Department filed an appeal before the ITAT. The ITAT vide order dated 22.08.2017 in the first round of proceedings restored the matter back to the file of AO for verification and enquiries in respect of deductions claimed by the assessee. 7. Pursuant to the directions given by the ITAT, the AO came to the conclusion that the assessee is not entitled to deduction u/s.80P(2)(a)(i) on the ground that the assessee did not produce the list of regular members/nominal members and in such situation the genuineness of the claim made by the assessee that the transactions are only with its regular members could not be ascertained. ITA Nos.187 to 189/PAN/2023 3 8. Against the above assessment order, the assessee appealed before the CIT(A)/NFAC who vide order dated 14.09.2023 confirmed the action of the AO holding the assessee to be a primary co-operative bank, thus disallowed the deduction claimed u/s.80P(2)(a)(i) of the Act. 9. Aggrieved thereby, the assessee is in appeal before the Tribunal in the present appeal. 10. We heard the rival submissions and perused the material on record. We find that if the issue i.e. eligibility of interest income earned from other co-operative banks or schedule banks made out of the surplus money is decided in favour of the assessee, the other issue of eligibility u/s 80P(2)(a)(i) need not be gone into. The only issue in the present appeal is pertaining to the allowability of deduction under the provisions of section 80P(2)(d) of the Act. On perusal of provisions of section 80P(2)(d), it is clear that the income derived by a cooperative society from its investment held with other cooperative societies shall be exempt from the total income of a cooperative society. Therefore, what is relevant for claiming of deduction u/s 80P(2)(d) is that interest income should have been derived from the investment made by the assessee cooperative society with any other cooperative society. In the present case, the reasoning given by the lower authorities for denial of exemption u/s 80P(2)(d) of the Act is that interest was received from cooperative bank has no legs to stand as a cooperative bank is also a cooperative society. This issue was considered by the Hon’ble Karnataka High Court in the case of CIT vs. Totagars Cooperative Sale Society, 392 ITR 74 (Karn) wherein the Hon’ble High Court after referring to the decision of the Hon’ble Supreme Court in the case of Totgar’s Co-operative Sale Society Ltd.Vs. ITO (2010) 322 ITR 283(SC) held that the ratio of decision of the Hon’ble Supreme Court is not to be applicable in respect of interest income on investment as same ITA Nos.187 to 189/PAN/2023 4 falls under the provisions of section 80P(2)(d) and not u/s 80P(2)(a)(i) of the Act. In the light of this discussion, we are of the considered opinion that even the interest income earned by cooperative society on deposits made out of surplus funds with cooperative banks qualifies for deduction under the provisions of section 80P(2)(d) of the Act. There is no material on record that the appellant cooperative society is a cooperative bank by virtue of license of banking granted by the RBI. Therefore, the reasoning given by the lower authorities on this issue cannot be accepted. Therefore, we direct the Assessing Officer to allow deduction 80P(2)(d) in respect of interest income earned from cooperative banks. Thus, the grounds of appeal filed by the assessee stands allowed. 11. In the result, the appeal filed by the assessee in ITA No.187/PAN/2023 for A.Y. 2014-15 stands allowed. ITA No.188 & 189/PAN/2023, A.Y. 2017-18 & 2018-19 : 12. Since the facts and issues involved in remaining two appeals of the assessee are identical, therefore, our decision in ITA No.187/PAN/2023 for A.Y. 2014-15 shall apply mutatis mutandis to the remaining two appeals of the assessee in ITA Nos.188 & 189/PAN/2023 for A.Yrs. 2017-18 & 2018-19 respectively. Accordingly, the remaining two appeals of the assessee in ITA Nos.188 & 189/PAN/2023 for A.Yrs. 2017-18 & 2018-19 stands allowed. 13. To sum up, all the above captioned three appeals of the assessee stands allowed. Order pronounced on this 25 th day of June, 2024. Sd/- Sd/- (S. S. GODARA) (INTURI RAMA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER पुणे / Pune; दनांक / Dated : 25 th June 2024. Satish ITA Nos.187 to 189/PAN/2023 5 आदेश क ितिलिप अ ेिषत / Copy of the Order forwarded to : 1. अपीलाथ / The Appellant. 2. यथ / The Respondent. 3. The Pr.CIT Concerned 4. DR, ITAT, Panaji. 5. गाड फ़ाइल / Guard File. आदेशानुसार / BY ORDER, // True Copy // Senior Private Secretary आयकर अपीलीय अिधकरण, पुणे / ITAT, Pune.