Yeshwantrao Chavan GBS, Pune V. Income Tax Officer, Wrd-10(5), Pune, Pune

ITA 698/PUN/2023

AI Insights

The case involves Yeshwantrao Chavan GBS, a cooperative society, appealing against the order of the National Faceless Appeal Centre (NFAC) which confirmed the Assessing Officer's decision denying exemption under sections 80P(2)(a)(i) and 80P(2)(d) of the Income Tax Act, 1961 for the assessment year 2017-18. The society argued that the interest income from deposits with cooperative banks qualifies for deduction under section 80P(2)(a)(i). The Tribunal referenced several High Court decisions and previous Tribunal decisions, particularly noting a split in judicial opinion on the matter. Ultimately, the Tribunal sided with the view that such interest income is attributable to the society's activities and thus eligible for the exemption claimed.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 137650 (ITAT-PUNE)
• Duration Of Justice: 1 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-07-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 19-06-2023
• Assessment Year: 2017-2018
• Appeal Filed On: 30-05-2023
• Other Referred Cases: Ichalkaranji Vyapari Sahakari Patsanstha Ltd. vs. ITO, PCIT vs. Annasaheb Patil Mathadi Kamgar Sahakari Pathpedi Ltd., PCIT vs. Quepem Urban Co-operative Credit Society Ltd., CIT vs. Punjab State Cooperative Federation of Housing Building Societies Ltd., State Bank of India Vs. CIT, Mantola Co-operative Thrift & Credit Society Ltd. Vs. CIT, CIT Vs. Punjab State Cooperative Agricultural Development Bank Ltd., CIT Vs. Southern Eastern Employees Cooperative Credit Society Ltd., Tumkur Merchants Souharda Credit Cooperative Ltd. Vs. ITO, Vaveru Co-operative Rural Bank Ltd. v CIT, PCIT vs. Gunja Samabay Krishi Unnayan Samity Ltd., Chennai Central Co-operative Bank Ltd. vs. ITO, M/s. Ratnatray Gramin Bigar Sheti Sah. Pat Sanstha Maryadit Vs. ITO
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Business income; Co-operative Credit Society
• Section: 143(3); 80P

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH “SMC”, PUNE BEFORE SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER आयकर अपील सं. / ITA No.698/PUN/2023 िनधाᭅरण वषᭅ / Assessment Year : 2017-18 Yeshwantrao Chavan GBS, Near Post Office Belhe, At and Post Belhe, Pune, Tal. Junnar- 412410. PAN : AAAAA0697A Vs. ITO, Ward-10(5), Pune. Appellant Respondent आदेश / ORDER PER INTURI RAMA RAO, AM: This is an appeal filed by the assessee directed against the order of the National Faceless Appeal Centre, Delhi [‘NFAC’] dated 01.03.2023 for the assessment year 2017-18. 2. Briefly, the facts of the case are that the appellant is a cooperative society registered under the provisions of Maharashtra Co-operative Societies Act, 1960. It is engaged in the business of accepting deposits from its members and providing credit facilities Assessee by : Shri Pramod S. Shingte Revenue by : Shri Rajesh Gawali Date of hearing : 20.06.2023 Date of pronouncement : 10.07.2023 ITA No.698/PUN/2023 2 to its members. The Return of Income for the assessment year 2017-18 was filed on 23.10.2017 disclosing Rs.Nil income after claiming deduction of Rs.20,44,610/- under the provisions of section 80P of the Income Tax Act, 1961 (‘the Act’). Against the said return of income, the assessment was completed by the Income Tax Officer, Ward-10(5), Pune (‘the Assessing Officer’) vide order dated 02.12.2019 passed u/s 143(3) of the Act at a total income of Rs.20,44,610/-. While doing so, the Assessing Officer denied the exemption u/s 80P(2)(a)(i) as well as section 80P(2)(d) of the Act on the ground that the interest income earned out of surplus money deposited with the cooperative banks does not qualify for deduction u/s 80P of the Act and also denied the exemption u/s 80P(2)(a)(i) considering the appellant society is cooperative bank. 3. Being aggrieved, an appeal was filed before the NFAC, who vide impugned order confirmed the action of the Assessing Officer. 4. Being aggrieved, the appellant is in appeal before this Tribunal in the present appeal. 5. It is submitted before me that the issue is decided in favour of the assessee by placing reliance on the several decisions of the ITA No.698/PUN/2023 3 Tribunal as well as the decision of the Co-ordinate Bench of this Tribunal in the case of Ichalkaranji Vyapari Sahakari Patsanstha Ltd. vs. ITO in ITA No.478/PUN/2023 for A.Y. 2020-21 dated 07.06.2023. 6. On the other hand, ld. Sr. DR placing reliance on the orders of the lower authorities submits that no interference is called for. 7. I heard the rival submissions and perused the material on record. The issue in the present appeal relates to the eligibility of the assessee for exemption u/s 80P(2)(a)(i) or u/s 80P(2)(d) of the Act. It is an admitted fact that the appellant is a cooperative society engaged in the business of providing credit facilities to its members and accepting deposits from its members. It does not enjoy any license to carry on the business from Reserve Bank of India. Therefore, as held by the Hon’ble Supreme Court in the case of PCIT vs. Annasaheb Patil Mathadi Kamgar Sahakari Pathpedi Ltd., 454 ITR 117 (SC) that the assessee is eligible for deduction u/s 80P(2)(a)(i) of the Act. Reliance in this regard can also be placed on the decision of the Hon’ble Bombay High Court in the case of ITA No.698/PUN/2023 4 PCIT vs. Quepem Urban Co-operative Credit Society Ltd., 438 ITR 631 (Bom.). 8. As regards, the issue as to the allowability of exemption under the provisions of section 80P(2)(d) in respect of interest income earned by a cooperative society from the cooperative bank. There is a cleavage of judicial opinion among several High Courts on the issue of eligibility of this kind of income for exemption u/s. 80P(2)(a)(i) of the Act. The Hon’ble Punjab & Haryana High Court in the case of CIT vs. Punjab State Cooperative Federation of Housing Building Societies Ltd. 11 taxmann.com 448, the Hon’ble Gujarat High Court in the case of State Bank of India Vs. CIT 389 ITR 578 (Guj.), the Hon’ble Delhi High Court in the case of Mantola Co-operative Thrift & Credit Society Ltd. Vs. CIT 50 taxmann.com 278, the Hon’ble Punjab & Haryana High Court in the case of CIT Vs. Punjab State Cooperative Agricultural Development Bank Ltd. 389 ITR 68 and the Hon’ble Kolkata High Court in the case of CIT Vs. Southern Eastern Employees Cooperative Credit Society Ltd. 390 ITR 524 took a view that the income arising on the surplus invested in short term deposits and ITA No.698/PUN/2023 5 securities cannot be attributed to the activities of the society and, therefore, not eligible for exemption u/s.80P(2)(a)(i) of the Act. However, the Hon’ble Karnataka High Court in the case of Tumkur Merchants Souharda Credit Cooperative Ltd. Vs. ITO (2015) 230 taxmann.com 309 (Kar.) and the Hon’ble Telangana and Hon’ble Andhra Pradesh High Court in the case of Vaveru Co-operative Rural Bank Ltd. v CIT [(2017) 396 ITR 371 took a view that such interest income is attributable to the activities of the society and, therefore, eligible for exemption u/s 80P(2)(a)(i) of the Act. Similar view has been taken by the Hon’ble Calcutta High Court in the case of PCIT vs. Gunja Samabay Krishi Unnayan Samity Ltd., 147 taxmann.com 518 (Calcutta) and the Hon’ble Madras High Court in the case of Chennai Central Co-operative Bank Ltd. vs. ITO, 148 taxmann.com 17 (Madras). The Coordinate Bench of Pune Benches in the case of M/s. Ratnatray Gramin Bigar Sheti Sah. Pat Sanstha Maryadit Vs. ITO (ITA Nos.559/560/PUN/2018, dated 11-12-2018) taken view in favour of the assessee following the judgment of Hon’ble Karnataka High Court in the case of Tumkur Merchants Souharda Credit Cooperative Ltd. (supra). Respectfully following ITA No.698/PUN/2023 6 the decision of the Coordinate Bench of the Tribunal, I am of the considered opinion that the interest income earned on fixed deposits with cooperative bank/scheduled bank partakes character of the business income, which is eligible for deduction u/s 80P(2)(a)(i) of the Act. Therefore, we direct the Assessing Officer to delete the addition of Rs.20,44,610/- by allowing the exemption u/s 80P(2)(a)(i) and section 80P(2)(d) of the Act. Thus, the grounds of appeal filed by the assessee stand allowed. 9. In the result, the appeal filed by the assessee stands allowed. Order pronounced on this 10 th day of July, 2023. Sd/- Sd/- (S. S. VISWANETHRA RAVI) (INTURI RAMA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER पुणे / Pune; ᳰदनांक / Dated : 10 th July, 2023. Sujeet आदेश कᳱ ᮧितिलिप अᮕेिषत / Copy of the Order forwarded to : 1. अपीलाथᱮ / The Appellant. 2. ᮧ᭜यथᱮ / The Respondent. 3. The Pr. CIT concerned. 4. िवभागीय ᮧितिनिध, आयकर अपीलीय अिधकरण, “SMC” बᱶच, पुणे / DR, ITAT, “SMC” Bench, Pune. 5. गाडᭅ फ़ाइल / Guard File. आदेशानुसार / BY ORDER, // True Copy // Senior Private Secretary आयकर अपीलीय अिधकरण, पुणे / ITAT, Pune.