Shri Bhagwant Sahakari Nagari Patsanstha Maryadit Barshi, Solapur V. Income Tax Officer, Ward-2(3), Solapur, Solapur

ITA 487/PUN/2023

AI Insights

The case revolves around the denial of deductions under section 80P of the Income-tax Act, 1961, concerning interest income earned by Shri Bhagwant Sahakari Nagari Patsanstha Maryadit Barshi from cooperative and nationalized banks. The Assessing Officer initially denied these deductions, a decision upheld by the first appellate authority. However, the Tribunal, referencing several precedents from Pune Benches, overturned these decisions, allowing the deductions based on the interpretation of section 80P(2)(d) and 80P(2)(a)(i) as applicable to the interest income from cooperative and nationalized banks respectively.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 124143 (ITAT-PUNE)
• Duration Of Justice: 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-05-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 17-05-2023
• Assessment Year: 2018-2019
• Appeal Filed On: 25-04-2023
• Other Referred Cases: Rena Sahakari Sakhar Karkhana Ltd. Vs. Pr.CIT, Sureshdada Jain Nagari Sahakari Patsanstha Maryadit Vs. The Pr.CIT, Shri Laxmi Narayan Nagari Sahakari Pat Sanstha Maryadit Vs. ITO, Tumkur Merchants Souharda Credit Cooperative Ltd. Vs. ITO, Mantola Cooperative Thrift Credit Society Ltd. Vs. CIT, Totgar's Cooperative Sale Society Ltd.
• Laws Referred To: Income-tax Act, 1961
• 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.487/PUN/2023 नधा रण वष / Assessment Year : 2018-19 Shri Bhagwant Sahakari Nagari Patsanstha Maryadit Barshi 2632, Ainapur Maruti Road, Rui Oal Barshi, Solapur – 413 401 Maharashtra PAN : AABAS0993A Vs. ITO, Ward-2(3), Solapur Appellant Respondent आदेश / ORDER PER R.S. SYAL, VP: This appeal by the assessee arises out of the order dated 17-03-2023 passed by the CIT(A) in National Faceless Appeal Centre, Delhi u/s.250 of the Income-tax Act, 1961 (hereinafter also called ‘the Act’) in relation to the assessment year 2018-19. 2. The only issue raised in this appeal is against the denial of deduction u/s.80P of the Act in relation to the interest income earned from Cooperative banks and also Nationalised banks. Assessee by : Shri Piyush Bafna Revenue by : Shri Suresh Gaikwad Date of hearing 18-05-2023 Date of pronouncement 19-05-2023 ITA No. 487/PUN/2023 Shri Bhagwant Sahakari Nagari Patsanstha Maryadit Barshi 2 3. Briefly stated, the facts of the case, are that the assessee society claimed deduction u/s.80P on net interest income of Rs.25,84,235/- after reducing the expenses from the gross amount of interest earned from banks at Rs.70,26,932/-. The Assessing Officer (AO) denied the deduction which was countenanced in the first appeal. 4. I have heard both the sides and gone through the relevant material on record. It is seen that the question is of granting deduction u/s 80P of the Act on interest income earned from various cooperative banks as well as Nationalised Banks. The extant issue is no more res integra in view of the catena of decisions delivered by the Pune Benches. The Pune Bench 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 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- ITA No. 487/PUN/2023 Shri Bhagwant Sahakari Nagari Patsanstha Maryadit Barshi 3 operative society registered under the Co-operative Societies Act, 1912 or under any law for the time being in force. The payer of interest is also a Co-operative society registered under the Cooperative Societies Act. Respectfully following the decision of the Division Bench, I overturn the impugned order and direct to grant deduction u/s.80P(2)(d) of the Act on the amount of interest earned from various cooperative banks. 5. As far as the allowability of deduction u/s.8P(2)(a)(i) on the interest income earned from the deposits kept with Nationalized banks is concerned, I find the Pune Benches 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 Pune 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 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 ITA No. 487/PUN/2023 Shri Bhagwant Sahakari Nagari Patsanstha Maryadit Barshi 4 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. Respectfully following the precedent, the impugned order is overturned and the interest income earned from the deposits kept with nationalised bank is also allowed as deduction u/s.80P(2)(a)(i) of the Act. 6. In the result, the appeal is allowed. Order pronounced in the Open Court on 19 th May, 2023. Sd/- ( R.S.SYAL) VICE PRESIDENT पुणे Pune; िदनांक Dated : 19 th May, 2023 सतीश ITA No. 487/PUN/2023 Shri Bhagwant Sahakari Nagari Patsanstha Maryadit Barshi 5 आदेश की ितिलिप अ ेिषत/Copy of the Order is forwarded to : 1. अपीलाथ / The Appellant; 2. थ / The Respondent 3. 4. 5. The Pr.CIT concerned DR, ITAT, ‘SMC’ Bench, Pune गाड फाईल / Guard file. आदेशानुसार/ BY ORDER, // True Copy // Senior Private Secretary आयकर अपीलीय अिधकरण ,पुणे / ITAT, Pune Date 1. Draft dictated on 18-05-2023 Sr.PS 2. Draft placed before author 19-05-2023 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. *