Shree Modheswari Bachat and Dhiran Sahkari Mandli Limited, Deesa V. The Income Tax Officer, Ward-5, Palanpur

ITA 281/AHD/2022

AI Insights

The case revolves around the disallowance of a deduction claimed by the assessee, a Co-operative Society, under Section 80P(2)(d) of the Income Tax Act, 1961. The assessee had received interest income from Co-operative Bank FDRs and claimed a deduction of Rs. 13,01,003. The Assessing Officer disallowed this claim, leading to an appeal before the CIT(A), which was also dismissed. The Tribunal's decision was influenced by the interpretation of Section 80P(2)(d) in light of precedents set by the Gujarat High Court and the Supreme Court, particularly focusing on the nature of the income and the entities involved.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 129347 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-01-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 01-01-2023
• Assessment Year: 2017-2018
• Appeal Filed On: 14-07-2022
• Other Referred Cases: State Bank of India vs. CIT (2016), 72 taxmann.com 64, Totgar's Co-operative Sale Society Limited
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 154; 72

Judgement Text

ITA No.281/Ahd/2022 A.Y. 2017-18 Page 1 of 3 IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD “SMC” BENCH, AHMEDABAD BEFORE Ms. SUCHITRA KAMBLE, JUDICIAL MEMBER ITA No.281/Ahd/2022 Assessment Year: 2017-18 Shree Modheswari Bachat And vs. National Faceless Appeal Centre Dhiran Sahkari Mandli Limited, (NFAC), Delhi 12-13, Modi Market, Income Tax Officer, Ward-5, Near Gandhi Chowk, Palanpur. Dist. B.K. Deesa – 385 535 (Gujarat) [PAN – AAABS 2407 H] (Appellant) (Respondent) Assessee by : Shri Manthan Khokhani, AR Respondent by : Shri Atul Pandey, Sr. DR Date of hearing : 02.01.2023 Date of pronouncement : 06.01.2023 O R D E R This appeal is filed by the Assessee against the order dated 30.05.2022 passed by the CIT(A), National Faceless Appeal Centre (NFAC), Delhi for the Assessment Year 2017-18. 2. The ground of appeal raised by the assessee is as under :- “1. In law and in the circumstances of the case the Hon’ble CIT(A), NFAC has erred in upholding the addition made by the Ld. A.O. and disentitling the assessee of deduction u/s.80P of the Income Tax Act, 1961.” 3. The assessee filed return of income for A.Y. 2017-18 on 15.10.2017 declaring total income at Rs.55,520/-. The assessee is a Sahkari Mandli and claimed deduction under Chapter VI-A of Rs.13,01,003/-. As the assessee received interest income from Co-operative Bank FDR and claimed deduction under Section 80P(2)(d) of the ITA No.281/Ahd/2022 A.Y. 2017-18 Page 2 of 3 Income Tax Act, 1961, the Assessing Officer made addition of Rs.13,01,003/- and disallowed the said claim. 4. Being aggrieved by the order under Section 154 of the Act, the assessee filed appeal before the CIT(A). The CIT(A) dismissed the appeal of the assessee. 5. The Ld. AR submitted that the decision of Hon’ble Gujarat High Court in the case of State Bank of India vs. CIT (2016), 72 taxmann.com 64, is in favour of the assessee wherein it was held that if the appellant wants to avail of the benefit of deduction of such interest income, it is always open for it to deposit the surplus funds with a co-operative bank and avail of deduction under Section 80P(2)(d) of the Act. Ld. AR further submitted that the Hon’ble Apex court decision in the case of Totgar’s Co-operative Sale Society Limited (supra) is not applicable in the present case because the assessee is a Co-operative Society and invested/received interest income from Co-operative Banks which are coming under the purview of Gujarat Co- operative Society Act. 6. The Ld. DR submitted that the Hon’ble Apex Court in Totgar’s Co-operative Sale Society Limited (supra) had clearly mentioned that it would not make a difference whether the interest income is earned from investments/deposits made in Scheduled Bank or in a Co-operative Bank. Therefore, the Co-operative Bank is also not a member of the Society and, therefore, the addition made by the Assessing Officer was justifiable. 7. Heard both the parties and perused all the relevant material available on record. It is not disputed that the assessee is a Co-operative Society registered under Gujarat Co-operative Society Act and engaged in providing credit facilities to its members by accepting deposits from members. The assessee society received interest income from Co-operative Banks which are also registered under the Co- operative Society Act. Section 80P(2)(d) of the Act clearly mentions that when a Society is receiving income by way of interest from its investments with any other Co- operative Society, the whole of such income can be claimed as deduction under Section 80P(2)(d) of the Act. The Assessing Officer as well as CIT(A) has not doubted that these Co-operative Banks from whom assessee society received the ITA No.281/Ahd/2022 A.Y. 2017-18 Page 3 of 3 interest are not coming under the purview of Societies’ Act. Therefore, the decision of the Hon’ble Supreme Court to that extent will not be applicable in the present case and the decision of Hon’ble Jurisdictional High Court in the case of State Bank of India and the observations therein is clearly applicable in the present case. Thus, appeal of the assessee is allowed. 8. In the result, appeal filed by the assessee is allowed. Order pronounced in the open Court on this 6 th day of January, 2023. Sd/- (SUCHITRA KAMBLE) Judicial Member Ahmedabad, the 6 th day of January, 2023 PBN/* Copies to: (1) The appellant (2) The respondent (3) CIT (4) CIT(A) (5) Departmental Representative (6) Guard File By order UE COPY Assistant Registrar Income Tax Appellate Tribunal Ahmedabad benches, Ahmedabad