Chansama Taluka Ni Prath Sala Shikshakoni Nana Dhiranari Sahakari Mandali Limited, Patan V. The Dy. Commissioner of Income Tax, Circle - Gandhinagar, Gandhinagar

ITA 563/AHD/2022

AI Insights

The case involves Chansama Taluka Ni Prath Sala, a cooperative credit society, appealing against the order of the CIT(A), which confirmed disallowances made by the Assessing Officer under Section 80P of the Income Tax Act for the Assessment Year 2017-18. The disallowances pertained to interest income received from nationalized banks and cooperative banks. The Tribunal dismissed the ground related to interest from nationalized banks based on the Gujarat High Court's decision but set aside the issue of proportionate expenditure for further verification. Conversely, the Tribunal allowed the deduction for interest from cooperative banks, aligning with judicial precedents.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 129438 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-04-2023
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: SMC
• Next Hearing Date: 17-04-2023
• Assessment Year: 2017-2018
• Appeal Filed On: 18-12-2022
• Other Referred Cases: State Bank of India vs. CIT, Surat Vankar Sahakari Sangh Limited vs. ACIT
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Principle of natural justice
• Section: 80P

Judgement Text

ITA No.563/Ahd/2022 Assessment Year: 2017-18 Page 1 of 4 IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD “SMC” BENCH, AHMEDABAD BEFORE Ms. SUCHITRA KAMBLE, JUDICIAL MEMBER ITA No.563/Ahd/2022 Assessment Year: 2017-18 Chansama Taluka Ni Prath Sala, vs. Dy. Commissioner of Income Tax, Shikshakoni Nana Dhiranari Circle – Gandhinagar. Sahakari Mandali Limited, Navo Suthar Vas, Opp. Dena Bank, Chansama, Dist. Patan (Gujarat) – 384 220. [PAN – AAAAC 0431 E] (Appellant) (Respondent) Assessee by : Shri Nitesh Thakkar, CA Revenue by : Ms. Chitra Soneji, Sr. DR Date of hearing : 18.04.2023 Date of pronouncement : 19.04.2023 O R D E R This appeal is filed by the Assessee against order dated 21.10.2022 passed by the CIT(A), National Faceless Appeal Centre (NFAC), Delhi for the Assessment Year 2017-18. 2. The Assessee has raised the following grounds of appeal :- “1. The Learned CIT(A) has erred in confirming disallowance of an amount of Rs.2,74,885/- under Section 80P of the Income Tax Act. It is submitted that on facts and circumstances of the case the appellant has rightly claimed the interest received from SBI and Dena bank savings account under Section 80P of the Income Tax Act. It is submitted that the same be allowed now. 2. Without prejudice to the above it is submitted that if the aforesaid interest received from nationalized bank are not allowable under Section 80P of the Income Tax Act, then proportionate expenditure to earn such interest income must be allowed as deduction while making disallowance. It is submitted that the same be allowed now. 3. The Ld. CIT(A) has erred in confirming disallowance of an amount of Rs.11,23,088/- under Section 80P(2)(d) of the income Tax Act being interest received from co-operative banks. It is submitted that the interest earned by the assessee co-operative societies being co- operative Bank is exempt under Section 80P(2)(d). It is submitted that the disallowance is justified on facts and law and the same be deleted. ITA No.563/Ahd/2022 Assessment Year: 2017-18 Page 2 of 4 4. Without prejudice to the above it is submitted that the Ld. CIT(A) has erred in confirming disallowance interest received from other Co- operative Banks (being co-operative societies) inspite of the fact that the same are being consistently allowed by Ahmedabad Tribunals and Gujarat High Court. Such addition is totally disregarded to a settled law. It is submitted that such incorrect and illegal addition of Rs.11,23,088/- be deleted.” 3. The assessee is a Co-operative Credit Society engaged in providing credit facility to its members. The assessee is registered under Co-operative Societies Act. Return of income was filed by the assessee on 16.10.2017 declaring total income at Rs.nil after claiming deduction of Rs.32,44,513/- under Section 80P of the Income Tax Act, 1961. The Assessing Officer made disallowance of Rs.2,74,885/- towards the interest received from Nationalised Banks/other Institutions which was claimed as deduction under Section 80P(2)(a)(i) of the Act. The said interest was received from State Bank of India savings account and from Deana Bank savings account. The Assessing Officer made further disallowance of Rs.11,23,088/- in respect of interest received from Co-operative Banks i.e. Mehsana Urban Co-operative Bank and Mehsana District Central Co-operative Bank Limited savings and Fixed Deposit and as the assessee claimed deduction under Section 80P(2)(d) of the Act. 4. Being aggrieved by the Assessment Order, the assessee filed appeal before the CIT(A). The CIT(A) dismissed the appeal of the assessee. 5. The Ld. AR in respect of ground no.1 submitted that the same is decided against the assessee as the interest was received from State Bank of India and Dena Bank savings accounts which is not permissible as per the decision of the Hon’ble Gujarat High Court in the case of State Bank of India vs. CIT. 6. The Ld. DR relied upon the Assessment Order and the order of the CIT(A). 7. Heard both the parties and perused all the relevant material available on record. Since the Hon’ble Gujarat High Court in the case of SBI vs. CIT, 389 ITR 578 has already decided this issue against the assessee, ground no.1 is dismissed. 8. As regards ground no.2, the Ld. AR submitted that without prejudice to the earlier submissions the CIT(A) who have taken into account that the interest received ITA No.563/Ahd/2022 Assessment Year: 2017-18 Page 3 of 4 from Nationalised Banks are not allowable under Section 80P of the Act then proportionate expenditure to earn such interest must be allowed. 9. The Ld. DR submitted that the plea taken by the assessee is for the first time and the same should not be taken into account. The Ld. DR relied upon the Assessment Order and the order of the CIT(A). 10. Heard both the parties and perused all the relevant material available on record. It is pertinent to note that the interest received from Nationalised Banks are not allowable under Section 80P or the Act, but at the same time the assessee has incurred certain expenditure to earn the said interest and whether the said proportionate expenditure should be allowable or not needs to be verified. Therefore, this issue is set aside to the file of the Assessing Officer for proper adjudication and verification. Needless to say the assessee be given opportunity of hearing by following the principles of natural justice. Ground no.2 is partly allowed for statistical purpose. 11. As regards to ground no.3, the Ld. AR submitted that interest received from Co- operative Banks such as Mehsana Urban Co-operative Bank and Mehsana District Central Co-operative Bank Limited are from the Co-operative Societies and its members and it is allowable under Section 80P(2)(d) of the Act. 12. The Ld. AR relied upon the decision of Hon’ble Gujarat High Court in the case of SBI vs. CIT (supra) and various Tribunal’s decisions. The Ld. AR relied upon the decision of Hon’ble Gujarat High Court in Surat Vankar Sahakari Sangh Limited vs. ACIT, 421 ITR 134. 13. The Ld. DR relied upon the Assessment Order and the order of the CIT(A). 14. Heard both the parties and perused all the relevant material available on record. It is pertinent to note that it is not disputed fact that the interest of Rs.11,23,088/- was not received by the assessee from Co-operative Banks which are registered under Co-operative Societies Act and as per the decision of Hon’ble Gujarat High Court in the case of Surat Vankar Sahakari Sangh Limited vs. ACIT ITA No.563/Ahd/2022 Assessment Year: 2017-18 Page 4 of 4 interest received from Co-operative Banks are allowable for deduction under Section 80P(2)(d) of the Act. Therefore, ground no.3 is allowed. 15. Ground no.4 is consequential to ground no.3 and hence no adjudication at this juncture. 16. In the result, appeal of the assessee is partly allowed for statistical purpose. Order pronounced in the open Court on this 19 th day of April, 2023. Sd/- (SUCHITRA KAMBLE) Judicial Member Ahmedabad, the 19 th day of April, 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