The MES Employees Co-Op Credit Society Ltd., Pune V. Income-Tax Officer, Ward 6(1), , Pune

ITA 907/PUN/2022

AI Insights

The case involves The MES Employees Co-Op. Credit Society Ltd., which appealed against the orders of the National Faceless Appeal Centre (NFAC) that sustained the addition of income from interest and dividends received from other Co-operative Banks to the society's income. The primary legal contention was whether the income from these entities, classified as Co-operative Banks, was eligible for deduction under section 80P(2)(d) of the Income Tax Act. The Tribunal referenced a recent decision where the Pune District Central Co-operative Bank was recognized as a Co-operative Society, thereby supporting the assessee's claim for deductions. The Tribunal's decision overturned the NFAC's ruling, allowing the deductions claimed by the assessee.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 132876 (ITAT-PUNE)
• Duration Of Justice: 2 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-02-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 22-02-2023
• Assessment Year: 2018-2019
• Appeal Filed On: 13-12-2022
• Other Referred Cases: ITA No. 306/PUN/2022
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Co-operative Credit Society; Set aside
• Section: 80P

Judgement Text

आयकर अपीलीय अधिकरण “ए” न्यायपीठ पुणे में । IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH, PUNE BEFORE SHRI R.S. SYAL, VICE PRESIDENT AND SHRI PARTHA SARATHI CHAUDHURY, JUDICIAL MEMBER आयकर अपील सं. / ITA Nos.906, 907 & 908/PUN/2022 धििाारण वर्ा / Assessment Years : 2020-21, 2018-19 & 2017-18 The MES Employees Co-Op. Credit Society Ltd., 194, Rasta Peth, Pune – 411011 PAN : AAAAT0748D ......अपीलार्थी / Appellant बिाम / V/s. The Income Tax Officer, Ward – 6(1), Pune ......प्रत्यर्थी / Respondent Assessee by : Shri Mukund R. Bhagwat Revenue by : Shri Ramnath P. Murkunde सुनवाई की तारीख / Date of Hearing : 23-02-2023 घोषणा की तारीख / Date of Pronouncement : 27-02-2023 आदेश / ORDER PER BENCH : These appeals preferred by the assessee emanates from the separate order of National Faceless Appeal Centre (NFAC), Delhi dated 28.10.2022, 12.11.2022 and 21.10.2022 for the assessment years 2020-21, 2018-19 and 2017-18 as per following grounds of appeal on record : “1). The learned CIT NFAC erred in sustaining the addition of Rs.60,24,520/- to society’s income being interest and dividend received from other Co-op Banks which was eligible for deduction u/s. 80P(2)(d) of the Income Tax Act. 2). The learned CIT NFAC erred in holding that Co-op Banks are not Co-operative societies and, on that basis, rejecting society’s claim from deduction u/s. 80P(2)(d). 2 ITA Nos.906, 907 & 908/PUN/2022 3). The learned CIT NFAC erred in not properly appreciating the decisions of the Jurisdictional Pune Bench of Hon’ble Tribunal which squarely covered the disputed issue in the appellant’s favor. 4). Such other orders be passed as deemed fit and proper. 5). The appellant prays for leave to add to, amend or modify its grounds of appeal and lead evidence.” 2. The common grievance of the assessee in all these appeals is that the NFAC had erred in sustaining the addition to the assessee’s societies income being interest and dividend received from other Co-operative Banks which are actually Co-operative Society and therefore, such interest and dividend income are eligible for deduction u/s. 80P(2)(d) of the Act on which issue the NFAC had denied stating that those entities were actually not Co-operative Society but are Co-operative Bank. Taking the lead case in ITA No. 908/PUN/2022 for narration of facts, it is observed that the assessee is a Co-operative credit society registered under the Maharashtra Co-operative Society Act, 1960. The society is providing credit facilities to its members. The main activity of the society is to disburse loan to its members and recover the same from the members. It’s main source of income is from interest on loan, dividend on shares of Pune District Central Co-operative Bank (PDCCB), interest on investments with banks interest on securities. At the time of assessment, the Ld. AO observed that the assessee had earned interest of Rs.33,06,516/- by investment in Pune District Central Co-operative Bank and claimed deduction u/s. 80P of the Act. It was held by the Ld. AO, since the investments are not in a Co- operative Society, the deductions availed by the assessee was incorrect. It was held that since Pune District Central Co-operative Bank is not Co- operative Society, the interest income earned from such Bank is not exempt u/s. 80P(2)(d) of the Act. That as per the provision of section 80P(2)(d) of the Act, it is only the income derived from other Co-operative 3 ITA Nos.906, 907 & 908/PUN/2022 Society i.e. eligible for deduction. The NFAC also upheld the decision of Ld. AO and had dismissed the appeals of the assessee. 3. At the outset, the Ld. Counsel for the assessee submitted that in a very recent decision of the Pune Tribunal in ITA No. 306/PUN/2022 for A.Y. 2018-19 vide order dated 29-08-2022, it was held that the same bank i.e. Pune District Central Co-operative Bank is a Co-operative Society and not a bank and therefore, the interest income earned from investments from the said Co-operative Society namely Pune District Central Co- operative Bank is therefore allowable for deduction u/s. 80P(2)(d) of the Act. The Ld. DR fairly conceded to the submissions made by the Ld. Counsel of the assessee. 4. We observe that the Pune Tribunal in ITA No. 306/PUN/2022 (supra) has already observed and held the Pune District Central Co- operative Bank as Co-operative Society and have allowed deduction u/s. 80P(2)(d) of the Act in respect of interest income earned from such Co- operative Society. For the sake of completeness, the relevant paragraph is extracted as follows : “7. I have heard the rival submissions and gone through the relevant material on record. Section 80P(2)(d) provides that deduction shall be allowed “in respect of any income by way of ... dividend derived by the Cooperative Society from its investment with any other Cooperative Society”. Thus, it can be seen that the only requirement for claiming deduction u/s. 80P(2)(d) in respect of dividend is that it should be derived by the assessee cooperative society from its investments made with any other cooperative society. The assessee received dividend income in the instant case from another cooperative society, namely, Pune District Central Coop. Bank Ltd. Thus, the condition of section 80P(2)(d) is satisfied. I, therefore, direct to allow deduction.” 5. Section 80P(2)(d) provides that deduction shall be allowed “in respect of any income by way of ... dividend derived by the Co-operative Society from its investment with any other Co-operative Society”. The only requirement for claiming deduction under this provision is that the interest 4 ITA Nos.906, 907 & 908/PUN/2022 or dividend should be derived by the assessee’s Co-operative Society by making investment in any other Co-operative Society. In the aforestated decision of Pune Tribunal the Pune District Central Co-operative Bank has already been held to be a Co-operative Society and the assessee before us also has invested and earned interest and dividend income from the same Pune District Central Co-operative Bank. Since, it is a Co-operative Society, the interest earned from investment made in Pune District Central Co-operative Bank are eligible for deduction u/s. 80P(2)(d) of the Act. We set aside the respective NFAC orders for all the three appeals before us and direct the Ld. AO for granting deduction u/s. 80P(2)(d) of the Act to the assessee. The grounds of appeal are allowed. 6. In the result, all the three appeals of the assessee are allowed. Order pronounced in the open court on 27 th February, 2023. Sd/- Sd/- (R.S. Syal) (Partha Sarathi Chaudhury) VICE PRESIDENT JUDICIAL MEMBER पुणे / Pune; दिनाांक / Dated : 27 th February, 2023. रदव आदेश की प्रधिधलधप अग्रेधर्ि / Copy of the Order forwarded to : 1. अपीलार्थी / The Appellant. 2. प्रत्यर्थी / The Respondent. 3. The concerned CIT, Pune. 4. दवभागीय प्रदतदनदि, आयकर अपीलीय अदिकरण, “ए” बेंच, पुणे / DR, ITAT, “A” Bench, Pune. 5. गार्ड फ़ाइल / Guard File. //सत्यादपत प्रदत// True Copy// आिेशानुसार / BY ORDER, वररष्ठ दनजी सदचव / Sr. Private Secretary आयकर अपीलीय अदिकरण ,पुणे / ITAT, Pune