M/s Ravikiran Co-operative Credit Society Limited, Belagavi V. National E - assessment Centre, Delhi

ITA 93/PAN/2023

AI Insights

The case involves M/s. Ravikiran Co-operative Credit Society Limited, which appealed against the orders of the National Faceless Appeal Centre (NFAC) and the Principal Commissioner of Income Tax (PCIT), Hubli, concerning the assessment years 2017-18 and 2018-19. The primary issue was whether the interest income earned by the society from investments in banks qualifies for exemption under section 80P(2)(a)(i) or section 80P(2)(d) of the Income Tax Act. The Assessing Officer had denied this exemption, citing various High Court decisions. However, the Tribunal, referencing a consistent view from the Pune Bench and other High Courts, ruled in favor of the society, allowing the exemption.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 136954 (ITAT-PANAJI)
• Duration Of Justice: 4 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-09-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: WT(D)
• Next Hearing Date: 03-09-2023
• Assessment Year: 2018-2019
• Appeal Filed On: 30-04-2023
• Other Referred Cases: PCIT vs. Totagars Co-operative Sale Society, State Bank of India vs. CIT, CIT vs. Punjab State Co-op. Agricultural Development Bank Ltd., CIT vs. Punjab State Cooperative Federation of Housing Building Societies Ltd., Mantola Co-operative Thrift & Credit Society Ltd. vs. CIT, CIT vs. Southern Eastern Employees Cooperative Credit Society Ltd., Tumkur Merchants Souharda Credit Cooperative Ltd. vs. ITO, Vaveru Co-operative Rural Bank Ltd. vs. 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: Co-operative Credit Society
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PANAJI BENCH, PANAJI – VIRTUAL COURT BEFORE SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER AND SHRI PARTHA SARATHI CHAUDHURY, JUDICIAL MEMBER Sl. No. ITA No. Name of Appellant Name of Respondent Asst. Year 1 92/PAN/2023 M/s. Ravikiran Co- operative Credit Society Limited, Belgundi, Dist.: Belagavi- 591108 PAN : AAAAR0468C ITO, Ward-3, Belagavi 2017-18 2 93/PAN/2023 M/s. Ravikiran Co- operative Credit Society Limited, Belgundi, Dist.: Belagavi- 591108 PAN : AAAAR0468C National E-assessment Centre, Delhi 2018-19 3 94/PAN/2023 M/s. Ravikiran Co- operative Credit Society Limited, Belgundi, Dist.: Belagavi- 591108 PAN : AAAAR0468C PCIT, Hubli 2018-19 आदेश / ORDER PER INTURI RAMA RAO, AM: These are the appeals filed by the assessee. The appeals in ITA No.92 & 93/PAN/2023 are directed against the separate orders Assessee by : None Revenue by : Shri Prabhakar Anand DJ Date of hearing : 04.09.2023 Date of pronouncement : 08.09.2023 ITA Nos.92 to 94/PAN/2023 2 of the National Faceless Appeal Centre, Delhi [‘NFAC’] dated 29.03.2023 for the assessment years 2017-18 and 2018-19 respectively. The appeal in ITA No.94/PAN/2023 is directed against the order of ld. Pr. Commissioner of Income Tax, Hubli [‘PCIT’] dated 15.03.2023 for the assessment year 2018-19. 2. Since the identical facts and common issues are involved in all the above captioned three appeals of the assessee, we proceed to dispose of the same by this common order. 3. For the sake of convenience and clarity, the facts relevant to the appeal of the assessee in ITA No.92/PAN/2023 for the assessment year 2017-18 are stated herein. ITA No.92/PAN/2023, A.Y. 2017-18 : 4. Briefly, the facts of the case are that the appellant is a Co-operative Credit Society engaged in the business of accepting deposits from the members and providing credit facilities to its members. The Return of Income for the assessment year 2017-18 was filed on 12.10.2017 declaring Rs.Nil income after claiming deduction u/s 80P(2)(a)(i) of the Income Tax Act, 1961 (‘the Act’) of Rs.25,90,520/-. Against the said return of income, the assessment was completed by the Income Tax Officer, Ward-3, ITA Nos.92 to 94/PAN/2023 3 Belgaum (‘the Assessing Officer’) vide order dated 28.11.2019 passed u/s 143(3) of the Act at a total income of Rs.11,50,472/-. While doing so, the Assessing Officer had denied the exemption u/s 80P(2)(a)(i)/80P(2)(d) in respect of interest income earned out of the surplus money invested with the bank i.e. The Cosmos Bank of Rs.11,50,472/- by placing reliance on the decision of the Hon’ble Karnataka High Court in the case of PCIT vs. Totagars Co- operative Sale Society, 395 ITR 611 (Kar.), the decision of the Hon’ble Gujarat High Court in the case of State Bank of India vs. CIT, 389 ITR 578 (Guj.) and the decision of the Hon’ble Punjab & Haryana High Court in the case of CIT vs. Punjab State Co-op. Agricultural Development Bank Ltd., 389 ITR 607 (P&H). 5. Being aggrieved by the above order of assessment, an appeal was filed before the NFAC, who vide impugned order confirmed the action of the Assessing Officer. 6. Being aggrieved, the appellant is in appeal before us in the present appeal. 7. When the matter was called on, none appeared on behalf of the appellant-assessee despite due service of notice of hearing. ITA Nos.92 to 94/PAN/2023 4 Therefore, we proceed to dispose of the matter after hearing the ld. Sr. DR. 8. We heard the ld. Sr. DR and perused the material on record. The issue in the present appeal relates to whether the interest income earned by the co-operative society on the investments made with the banks out of the surplus money qualifies for exemption u/s 80P(2)(a)(i) or section 80P(2)(d) of the Act or not?. The Pune Bench of the Tribunal had been taken a consistent view that the interest income earned by the co-operative society on the investments made with the schedule banks/co-operative banks/nationalized banks made out of the surplus money also qualifies for exemption u/s 80P(2)(a)(i) of the Act. 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, ITA Nos.92 to 94/PAN/2023 5 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 money invested in short term deposits and 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. vs. 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 Pune Bench of the Tribunal in the case of M/s. Ratnatray Gramin ITA Nos.92 to 94/PAN/2023 6 Bigar Sheti Sah. Pat Sanstha Maryadit vs. ITO (ITA Nos.559/560/PUN/2018, dated 11-12-2018) taken a 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 the decision of the Coordinate Bench of this Tribunal (Pune), we are of the considered opinion that the interest income earned on fixed deposits with cooperative bank/schedule bank partakes character of the business income, which is eligible for deduction u/s 80P(2)(a)(i) of the Act. In the light of the above settled position of law, we direct the Assessing Officer to allow the exemption in respect of interest income earned from schedule banks/co-operative banks/nationalized banks u/s 80P(2)(a)(i) of the Act. Accordingly, the grounds of appeal filed by the assessee stand allowed. 9. In the result, the appeal filed by the assessee in ITA No.92/PAN/2023 for A.Y. 2017-18 stands allowed. ITA No.93 & 94/PAN/2023, A.Y. 2018-19 : 10. Since the facts and issues involved in remaining two appeals of the assessee are identical, therefore, our decision in ITA No.92/PAN/2023 for A.Y. 2017-18 shall apply mutatis mutandis to ITA Nos.92 to 94/PAN/2023 7 the remaining two appeals of the assessee in ITA Nos.93 & 94/PAN/2023 for A.Y. 2018-19 respectively. Accordingly, the remaining two appeals of the assessee in ITA Nos.93 & 94/PAN/2023 for A.Y. 2018-19 stands allowed. 11. To sum up, all the above captioned three appeals of the assessee stands allowed. Order pronounced on this 08 th day of September, 2023. Sd/- Sd/- (PARTHA SARATHI CHAUDHURY) (INTURI RAMA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER पुणे / Pune; ᳰदनांक / Dated : 08 th September, 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. DR, ITAT, Panaji. 5. गाडᭅ फ़ाइल / Guard File. आदेशानुसार / BY ORDER, // True Copy // Senior Private Secretary आयकर अपीलीय अिधकरण, पुणे / ITAT, Pune.