SIDCO EMPLOYEES CO OPERATIVE THRIFT AND CREDIT SOCIETY LIMITED, CHENNAI V. ITO NATIONAL E-ASSESSMENT CENTRE, DELHI

ITA 65/CHNY/2023

AI Insights

The case revolves around the SIDCO Employees Co-Operative Thrift and Credit Society Ltd., which appealed against the order of the Commissioner of Income Tax (Appeals) confirming the disallowance of a deduction claim under section 80P of the Income Tax Act, 1961. The deduction was initially disallowed by the Assessing Officer and upheld by the CIT(A), based on the grounds that the interest and dividend income from the Chennai Central Cooperative Bank, a cooperative society and bank, was not eligible for deduction under section 80P(2)(a)(i) and 80P(2)(d). The Tribunal, however, reversed this decision, citing relevant judicial precedents that supported the assessee's claim.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 135092 (ITAT-CHENNAI)
• Duration Of Justice: 1 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-02-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 26-02-2023
• Assessment Year: 2018-2019
• Appeal Filed On: 16-01-2023
• Other Referred Cases: PCIT vs. Totagars Co-operative Sale Society, Mavilayi Service Co-operative Bank Ltd. & Ors. Vs. CIT, Tamilnadu Co-operative State Agriculture and Rural Development Bank Limited, Ammapet Primary Agricultural Co-operative Bank Ltd.
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: REDDI PRAKASH

Judgement Text

आयकर अपीलीय अिधकरण, ‘सी’ (एस एम सी) ᭠यायपीठ,चे᳖ई IN THE INCOME TAX APPELLATE TRIBUNAL ‘C’ (SMC) BENCH, CHENNAI ᮰ी महावीर ᳲसह, उपा᭟यᭃ के समᭃ BEFORE SHRI MAHAVIR SINGH, VICE PRESIDENT आयकर अपील सं./ITA No.: 65/CHNY/2023 िनधाᭅरण वषᭅ/Assessment Year: 2018-19 SIDCO Employees Co- Operative Thrift and Credit Society Ltd., SIDCO Corporate Office, Thiru-vi-ka Industrial Estate, Guindy, Chennai – 600 032. PAN: AAQAS 4812D Vs. The ITO, Non-Corporate Ward 19(4), Chennai. (अपीलाथᱮ/Appellant) (ᮧ᭜यथᱮ/Respondent) अपीलाथᱮ कᳱ ओर से/Appellant by : Shri Reddi Prakash, CA ᮧ᭜यथᱮ कᳱ ओर से/Respondent by : Shri AR.V. Sreenivasan, Addl.CIT सुनवाई कᳱ तारीख/Date of Hearing : 27.02.2023 घोषणा कᳱ तारीख/Date of Pronouncement : 27.02.2023 आदेश /O R D E R This appeal by the assessee is arising out of the order of the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi in Appeal No.NFAC/2017-18/10031003 dated 18.11.2022. The assessment was framed by the National e- Assessment Centre, Delhi for the assessment year 2018-19 - 2 - ITA No.65/Chny/2023 u/s.143(3) r.w.s. 143(3A) & 143(3B) of the Income Tax Act, 1961 (hereinafter the ‘Act’) vide order dated 19.01.2021. 2. The only issue in this appeal of assessee is as regards to the order of CIT(A) confirming the action of AO disallowing the claim of deduction u/s.80P of the Act in regard to interest and dividend income earned from Chennai Central Co-operative Bank, which is a co-operative society. For this, assessee has raised the following Ground Nos.3 & 4:- 3. Ld.AO and Ld.CIT(A) erred in disallowing the deduction claimed u/s.80P. Both the Assessing Officer and the CIT(A) failed to appreciate that the relevant interest and dividend are deductible not only u/s 80P(2)(a)(i_ but also u/s 80P(2)(d). 4. The Ld Assessing Officer and the CIT(A) failed to appreciate that the Chennai Central Cooperative Bank is a Co-Operative Society as well as a Bank. They should have appreciated that the interest and dividend from such Cooperative Bank is eligible for deduction under section 80P[2][d] of the Act. 3. Brief facts are that the assessee is a Cooperative Society registered under TamilNadu Co-operative Societies Act and it has filed its return of income for the assessment year 2018-19 admitting ‘nil’ taxable income after claiming deduction u/s.80P of the Act. The case was selected for scrutiny and assessment was completed by National e-Assessment Centre, Delhi as per the recent faceless - 3 - ITA No.65/Chny/2023 assessment procedure. The assessee explained that the Statutory Reserve Fund and Statutory Bad Debit Reserve Fund were invested as FD with Chennai Central Cooperative Bank (CCC Bank). It also invested in CCC Bank share capital for obtaining loan for business purpose. The assessee claimed the interest and dividend on such investment are deductible not only u/s.80P(2)(a)(i) but u/s.80P(2)(d) of the Act. The AO while framing assessment noted that the deposit from members and available funds which are not utilized for banking / co-operative facilities to members have been parked in various investments. The AO noted that these investments are for fixed period and these investments cannot be utilized before maturity for the business of the society. Therefore, the AO computed the income on these investments at Rs.6,28,016/- and disallowed the claim of deduction made u/s.80P(2)(a)(i) of the Act. Aggrieved, assessee preferred appeal before CIT(A). 4. The CIT(A) following the decision of Hon’ble Karnataka High Court in the case of PCIT vs. Totagars Co-operative Sale Society, (2017) 395 ITR 611 (Karnataka) confirmed the disallowance. Aggrieved, assessee preferred appeal before the Tribunal. - 4 - ITA No.65/Chny/2023 5. I have heard rival contentions and gone through the facts and circumstances of the case. Admittedly, the assessee is a Co- operative Society registered under TamilNadu Co-operative Societies Act. The Chennai Central Co-operative Bank previously known as The Madras District Cooperative Central Bank Ltd., was registered as a Cooperative Society and as a District Central Cooperative Bank, it caters to the needs of the Primary Cooperative Societies and Cooperative Wholesale Stores and other Cooperatives in Chennai city. Once the assessee is a Co-operative Society and it has deposited the funds with District Central Co-operative Bank which is registered under Co-operative Society Act of TamilNadu, the same is eligible for claim of deduction in view of the decision of the Hon’ble Supreme Court in the case of Mavilayi Service Co-operative Bank Ltd., & Ors. Vs. CIT, 123 Taxmann.com 161 (SC). Similar view has been taken by the Tribunal in the case of Tamilnadu Co-operative State Agriculture and Rural Development Bank Limited in ITA Nos.31 to 33/CHNY/2021 vide order dated 29.04.2022 following the decision of Hon’ble Supreme Court in the case of Mavilayi Service Co-operative Bank Ltd., supra and the Hon’ble Madras High Court in the case S- 1308, Ammapet Primary Agricultural Co-operative Bank Ltd.,in T.C.A Nos.882 and 891 of 2018. Respectfully following the same, I allow the - 5 - ITA No.65/Chny/2023 claim of deduction u/s.80P(2)(a)(i) of the Act. Accordingly, the appeal of the assessee is allowed. 6. In the result, the appeal filed by the assessee is allowed. Order pronounced in the open court on 27 th February, 2023 at Chennai. Sd/- (महावीर ᳲसह ) (MAHAVIR SINGH) उपा᭟यᭃ /VICE PRESIDENT चे᳖ई/Chennai, ᳰदनांक/Dated, the 27 th February, 2023 RSR आदेश कᳱ ᮧितिलिप अᮕेिषत/Copy to: 1. अपीलाथᱮ/Appellant 2. ᮧ᭜यथᱮ/Respondent 3. आयकर आयुᲦ /CIT 4. िवभागीय ᮧितिनिध/DR 5. गाडᭅ फाईल/GF.