VANASHRI NANASAHEB MAHADIK, Sangli V. INCOME TAX OFFICER, Ward-5, Sangli, Sangli

ITA 37/PUN/2023

AI Insights

The case involves Vanashri Nanasaheb Mahadik Multistate Urban Co.op Credit Society Ltd., a cooperative society engaged in providing credit facilities, which appealed against the order of the CIT(A) that confirmed the disallowance of a deduction claimed under section 80P of the Income-tax Act on interest income earned from various banks and financial institutions. The Assessing Officer had treated this interest income as 'Income from other sources' under section 56 of the Act, disallowing the deduction. The Tribunal examined precedents and the applicability of section 80P(2)(a)(i) to the interest income of cooperative societies, ultimately deciding in favor of the assessee based on interpretations and rulings from other High Courts and previous Tribunal decisions.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 124125 (ITAT-PUNE)
• Duration Of Justice: 1 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-02-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 26-02-2023
• Assessment Year: 2018-2019
• Appeal Filed On: 09-01-2023
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 80P; 2(19)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, PUNE BEFORE SHRI R.S. SYAL, VICE PRESIDENT आयकर अपील सं. /ITA No.37/PUN/2023 नधा रण वष / Assessment Year : 2018-19 Vanashri Nanasaheb Mahadik Multistate Urban Co.op Credit Society Ltd., 905/B, Pune Bangalore Highway, Peth Naka, Tal. Walwa, Dist. Sangli- 415 110, Maharashtra PAN : AABAV4094P Vs. ITO, Ward-5, Sangli Appellant Respondent आदेश / ORDER PER R.S. SYAL, VP: This appeal by the assessee arises out of the order dated 21-11-2022 passed by the CIT(A) in National Faceless Appeal Centre, Delhi in relation to the assessment year 2018-19. 2. Briefly stated, the facts of the case are that the assessee is a cooperative society engaged in the business of providing credit facilities to its members. The assessee filed the return declaring gross total income at Rs.33,74,402/- and claimed deduction u/s.80P Chapter VIA of the Income-tax Act, 1961 (hereinafter also called ‘the Act’) for the equal amount leading to total income at Nil. During the course of Assessee by Shri M.K. Kulkarni Revenue by Shri Akhilesh Srivastava Date of hearing 27-02-2023 Date of pronouncement 27-02-2023 ITA No. 37/PUN/2023 2 assessment proceedings, the Assessing Officer (AO) observed that the assessee earned interest amounting to Rs.33,74,402/- (gross interest income at Rs.39,21,781/- as reduced by expenses) from various cooperative banks/scheduled banks and financial institutions, which did not qualify for deduction u/s.80P(2)(a)(i). Eventually, the AO treated the said interest income as ‘Income from other sources’ u/s.56 of the Act and disallowed the deduction. The ld. CIT(A) countenanced the view point of the AO on this score, against which the assessee has approached the Tribunal. 3. I have heard both the sides and gone through the relevant material on record. It is seen that the assessee is a co-operative society which earned interest from various cooperative banks, scheduled banks/financial institutions. Insofar as the allowability of deduction u/s.8P(2)(a)(i) interest income earned from banks is concerned, I find that the Pune Tribunal in Sureshdada Jain Nagari Sahakari Patsanstha Maryadit Vs. The Pr.CIT (ITA No.713/PUN/2016) has decided the question of availability of deduction u/s 80P on interest income by noticing that the Bench in an earlier case of Shri Laxmi Narayan Nagari Sahakari Pat Sanstha Maryadit Vs. ITO (ITA No.604/PN/2014) has allowed similar deduction. In the said case, the Tribunal discussed the contrary views expressed by the Hon’ble ITA No. 37/PUN/2023 3 Karnataka High Court in Tumkur Merchants Souharda Credit Cooperative Ltd. Vs. ITO (2015) 230 Taxman 309 (Kar.) allowing deduction u/s. 80P on interest income and that of the Hon’ble Delhi High Court in Mantola Cooperative Thrift Credit Society Ltd. Vs. CIT (2014) 110 DTR 89 (Delhi) not allowing deduction u/s.80P on interest income earned from banks. Both the Hon’ble High Courts took into consideration the ratio laid down in the case of Totgar’s Cooperative Sale Society Ltd. (supra). No direct judgment from the Hon’ble jurisdictional High Court on the point having been pointed out, the Tribunal in Shri Laxmi Narayan Nagari Sahakari Pat Sanstha Maryadit (supra) preferred to go with the view in favour of the assessee by the Hon’ble Karnataka High Court in the case of Tumkur Merchants Souharda Credit Cooperative Ltd. (supra). The position continues to remain the same before this Tribunal also. I thus hold that no exception can be taken to the granting of deduction on interest income by the AO u/s 80P(2)(a)(i) of the Act. 4. The Pune Benches of the Tribunal in Rena Sahakari Sakhar Karkhana Ltd. Vs. Pr.CIT (ITA No.1249/PUN/2018) has held, vide its order dated 07-01-2022, that though co-operative banks, other than primary agricultural credit society or a primary co-operative agricultural and rural development bank, are not eligible for deduction ITA No. 37/PUN/2023 4 pursuant to insertion of section 80P(4) w.e.f. 1.4.2007, but this provision does not dent the otherwise eligibility u/s 80P(2)(d) of the Act of a co-operative society on interest income on investments/deposits parked with a co-operative bank, which is a registered co-operative society as per section 2(19) of the Act, defining co-operative society to mean a co-operative society registered under the Co-operative Societies Act, 1912 or under any law for the time being in force. The assessee is also a co-operative society, being, registered as such. 5. Respectfully following the decisions of the Division Bench as discussed supra, I overturn the impugned order and direct to grant deduction u/s.80P of the Act on the amount of interest income earned by the assessee. 6. In the result, the appeal is allowed. Order pronounced in the Open Court on 27 th February, 2023. Sd/- (R.S.SYAL) VICE PRESIDENT प ु णे Pune; दनांक Dated : 27 th February, 2023 Satish ITA No. 37/PUN/2023 5 आदेश क त ल प अ े षत/Copy of the Order is forwarded to: 1. अपीलाथ / The Appellant; 2. यथ / The Respondent; 3. The Pr. CIT concerned 4. 5. िवभागीय ितिनिध, आयकर अपीलीय अिधकरण, SMC, Pune / DR, ITAT, Pune गाड फाईल / Guard file आदेशान ु सार/ BY ORDER, // True Copy // Senior Private Secretary आयकर अपीलीय अिधकरण ,पुणे / ITAT, Pune Date 1. Draft dictated on 27-02-2023 Sr.PS 2. Draft placed before author 27-02-2023 Sr.PS 3. Draft proposed & placed before the second member -- JM 4. Draft discussed/approved by Second Member. -- JM 5. Approved Draft comes to the Sr.PS/PS Sr.PS 6. Kept for pronouncement on Sr.PS 7. Date of uploading order Sr.PS 8. File sent to the Bench Clerk Sr.PS 9. Date on which file goes to the Head Clerk 10. Date on which file goes to the A.R. 11. Date of dispatch of Order. *