JALGAON JILHA MAJUR KAMGAR SAHAKARI SANSTHA FEDERATION LTD.,JALGAON V. ITO, WARD 1(4), JALGAON, JALGAON

ITA 29/PUN/2025

AI Insights

The case involves the Jalgaon Jilha Majur Kamgar Sahakari Sanstha Federation Limited, a cooperative society, appealing against the order of the Commissioner of Income Tax (Appeals) which denied them deductions under section 80P of the Income Tax Act, 1961 for the assessment year 2018-19. The primary contention was whether the interest income received from other cooperative societies qualifies for deduction under section 80P(2)(d). The Tribunal examined the provisions of section 80P and relevant judicial precedents, ultimately deciding in favor of the assessee for the deduction claimed under section 80P(2)(d).

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 396402 (ITAT-PUNE)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-05-2025
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2018-2019
• Other Referred Cases: Sant Motiram Maharaj Sahakari Pat Sanstha Ltd. Vs. Income tax officer, Income Tax Officer vs. Maharashtra Bank Employees Co-operative Credit Society Ltd, Borivali Jankalyan Sahakari Patpedhi Ltd. Vs. Income Tax Officer, Navbharat Urban Co-operative Credit Society Ltd. Vs. Commissioner of Income Tax, Income Tax Officer vs. Kundalika Nagari Sahakari Patsanstha Maryadit, PCIT Vs. Ashwinkumar Arban Co-operative Society Ltd.
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: MADHAN THIRMANPALLIL
• Assessee Lawyers: DEEPA KHARE
• Keywords: Co-operative Credit Society
• Section: 263; 12

Judgement Text

" आयकर अपीलीय अिधकरण ”एस एम सी” Ɋायपीठ पुणेमŐ। IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCHES “SMC” :: PUNE BEFORE DR.DIPAK P. RIPOTE, ACCOUNTANT MEMBER AND SHRI VINAY BHAMORE, JUDICIAL MEMBER आयकर अपील सं. / ITA No.29/PUN/2025 िनधाᭅरण वषᭅ / Assessment Year: 2018-19 Jalgaon Jilha Majur Kamgar Sahakari Sanstha Federation Limited, 1 Shrama Sahakar, Akashwani Chowk, Jalgaon – 425001. Maharashtra. V s The Income Tax Officer, Ward-1(4), Jalgaon. PAN: AABAJ5982G Appellant/ Assessee Respondent / Revenue Assessee by Smt. Deepa Khare – AR Revenue by Shri Madhan Thirmanpallil – Addl.CIT(DR) – Virtual Hearing. Date of hearing 13/05/2025 Date of pronouncement 27/05/2025 आदेश/ ORDER PER DR. DIPAK P. RIPOTE, AM: This is an appeal filed by the assessee directed against the order of ld.Commissioner of Income Tax(Appeal)[NFAC] under section 250 of the Income Tax Act, 1961 dated 23.12.2024 for the A.Y.2018-19. The Assessee has raised the following grounds of appeal : ITA No.29/PUN/2025 [A] 2 “1. The learned CIT(A) erred in holding that the appellant is not eligible to claim the deduction u/s 80P(2)(a)(vi) of the Income tax Act, 1961 in respect of Income derived from the activities carried out by the appellant 2. The learned CIT(A) failed to appreciate the fact that advances were given to the member societies for execution of contracts awarded by the Government Department, these advances were given out of the funds generated from the activities carried out by the appellant and hence the entire interest income of Rs. 17,78,232/- is eligible for deduction u/s 80P(2)(a)(vi) of the Income tax Act 1961 3. Without prejudice to the above grounds, the appellant submits that The Jalgaon District Central Cooperative Bank Ltd and Shri Gulabrao Devkar Nagari Sahakari Patsanstha Ltd are registered under the Maharashtra Co-op Societies Act 1960 and hence the income derived by way of interest received from Fixed Deposits with The Jalgaon District Central Cooperative Bank Ltd Rs. 9,08,442/-and Shri Gulabrao Devkar Nagari Sahakari Patsanstha Ltd Rs. 18.93,530/- totaling to Rs. 28.01,972/-which is credited to the Profit & Loss Account as fixed Deposit interest is eligible as a deduction u/s 80P(2)(d) of the Act. 4. Without prejudice to the above the appellant submits that alternatively the Interest Received on Advances given to the Member Societies of Rs. 17,78,232/- which are Primary Labour Cooperative Societies may be allowed as deduction u/s 80P(2)(d) of the Act 5 The appellant craves leave to add, alter, delete, and modify all or any of the grounds of appeal 6. The appellant prays leave to adduce such further evidence to substantiate its case as the occasion may demand.” Submission of ld.AR : 2. Advocate Smt.Deepa Khare - Ld.AR for the assessee filed a paper book. She explained that assessee is a Registered Co- operative Society under Maharashtra Co-operative Societies Act. Copy of the Registration Certificate was at Page No.118 of the paper ITA No.29/PUN/2025 [A] 3 book. The relevant paragraph of the written submission is reproduced as under : “During the financial year under consideration, the appellant has received Interest Income from the Co-operative Bank and Co-operative Credit Society totaling to Rs.28,01,972/-. Break-up of the same is as under : Name of the Bank Rs. Investment in Fixed Deposits with Jalgaon District Central Cooperative Bank Ltd. 9,08,442 Shri Gulabrao Devkar Nagari Sahakari Patstanstha Ltd. 18,93,530 Total (A) 28,01,972 11. Alternatively, assuming without admitting, if the Interest Income Received from Co-operative Bank and Co-operative Societies is not allowable as deduction per Sec 80P(2)(a)(vi), then as per Sec 80P(2)(d) of the Act, interest and dividend income received by a cooperative society from its investment with any other cooperative society is eligible for deduction. 12. Without prejudice to whatever has been stated above, the appellant prays that it is eligible for deduction u/s 80P(2)(d) of the Act in respect of Interest Income Received from Co-operative Bank and Co-operative Societies.” 2.1 The ld.AR further submitted as under : “On a perusal of Sec. 80P(2)(d), it can safely be gathered that interest income derived by the appellant from the investments held with any other co-operative society shall be deducted in computing total income. ITA No.29/PUN/2025 [A] 4 It can be observed that, what is relevant for claim of deduction under Sec. 80P(2)(d) is that the interest income should have been derived from the investments made with any other co-operative society. Sec 80P(2)(d) does not make any distinction in regard to source of the investment because this Section envisages deduction in respect of any income derived by the co-operative society from any investment with a co-operative society. It is immaterial whether any interest paid to the co-operative society exceeds the interest received from the bank on investments. The Revenue is not required to look to the nature of the investment whether it was from its surplus funds or otherwise. The Act does not speak of any adjustment. The provision does not indicate any adjustment in regard to interest derived from the co-operative society from its investment in any other co-operative society. The appellant submits that there are various Decisions of the Jurisdictional Tribunals wherein it has been held that Interest income earned from investment of surplus funds with Co-operative Bank is eligible for deduction under s. 80P(2)(d) or 80P(2)(a)(i). Decisions relied upon by the appellant are as under which are directly relevant to facts before your honour: Sant Motiram Maharaj Sahakari Pat Sanstha Ltd. Vs. Income tax officer, ITAT, PUNE 'B' BENCH, ITA No. 826/Pune/2019; Asst. yr. 2014-15 Date of Decision 23rd September, 2020, (2021) 186 ITD 220 (Pune) Income Tax Officer vs. Maharashtra Bank Employees Co-operative Credit Society Ltd, ITAT, PUNE 'A' BENCH, ITA Nos. 454 to ITA No.29/PUN/2025 [A] 5 456/Pn/2015, (2018) 193 TTJ (Pune) 736, Date of decision 22nd December, 2017 Borivali Jankalyan Sahakari Patpedhi Ltd. Vs. Income Tax Officer, ITAT, MUMBAI 'SMC' BENCH, ITA No. 5230/Mum/2019, Date of Decision 30th March, 2021, (2021) 35 NYPTTJ 222 (Mumbai) Navbharat Urban Co-operative Credit Society Ltd. Vs. Commissioner of Income Tax, ITAT, MUMBAI 'SMC' BENCH, ITA Nos. 5288 & 5289/Mumbai/2018, Date of Decision 25th November, 2021, (2021) 35 NYPTTJ 1107 (Mumbai) Income Tax Officer vs. Kundalika Nagari Sahakari Patsanstha Maryadit, ITAT, PUNE 'A' BENCH, ITA No. 900/PN/2014, Date of decision 29th January, 2016, (2016) 178 TTJ (Pune) 381.” Submission of ld.DR : 3. Ld.DR for the Revenue relied on the order of the Assessing Officer and Ld.CIT(A). Findings & Analysis : 4. We have heard both the parties and perused the records. Assessee had filed Return of Income for A.Y.2018-19 on 22.10.2018 claiming deduction under section 80P of the Act. Assessee’s case was selected for scrutiny. In the assessment order, the Assessing Officer has held as under : ITA No.29/PUN/2025 [A] 6 “2.3.6 The following amounts earned by the assessee can not be considered to be attributable to the activity of the collective disposal of the labour of its members and hence are not liable to be allowed as deduction u/s 80(2)(a)(vi) of the Act. Earnings as per the Profit & Loss A/c Amount Interest received on FDR Rs.28,01,972/- Interest received on society Advance Rs.17,78,232/- Total Rs.45,80,204 5. Aggrieved by the assessment order, Assessee filed appeal before the ld.CIT(A). Relevant paragraph of ld.CIT(A)’s order is reproduced here as under : “The ground No's. 06, 07. 08 & 09 are inter connected to each other as such. they are adjudicated as under Ground No.6. Without prejudice to the above grounds the appellant submits that The Jalgaon District Central Cooperative Bank Ltd and Shri Gulabrao Devkar Nagan Sahakari Patsanstha Ltd was registered under the Maharashtra Coop. Societies Act 1960 and hence the income derived by way of interest received from Fixed Deposits with The Jalgaon District Central Cooperative Bank Ltd Rs. 908442 and Shri Gulabrao Devkar Nagari Sahakari Patsanstha Ltd Rs.18,93,530 totaling to Rs. 2801972 which is credited to the Profit and Loss Account as Fixed Deposit Interest was eligible as a deduction u/s 80P(2)(d) of the Act. Ground No.7 ITA No.29/PUN/2025 [A] 7 Without prejudice to the above grounds the appellant submits that Shri Gulabrao Devkar Nagari Sahakari Patsantha Ltd was registered under the Maharashtra Coop. Societies Act 1960 and hence the income derived by way of interest received on Saving Account with Shri Gulabrao Devkar Nagari Sahakari Patsanstha Ltd Rs. 381743 which is included in Bank Interest credited to the Profit and Loss Account Rs.5,55,435 was eligible as a deduction us 80P(2)(d) of the Act. Ground No.8 Without prejudice to the above grounds theappellant submits that The Jalgaon District Central Cooperative Bank Ltd was registered under the Maharashtra Co-op. Societies Act 1960 and hence the income derived by way of interest received on Saving Account with The Jalgaon District Central Cooperative Bank Ltd Rs.1.73.692 which is included in Bank Interest credited to the Profit and Loss Account Rs. 5.55.435 was eligible as a deduction us 80P(2)(d) of the Act. Ground No.9 Without prejudice to the above the appellant submits that alternatively the Interest Received on Advances given to the Member Societies of Rs.17,78,232 which are Primary Labour Co-operative Societies may be allowed as deduction us 80P(2)(d) of the Act. The grounds raised have been carefully examined and found that during the course of assessment proceedings, the AO has examined the claim of deduction made u/s 80P(2)(c) (ii) and 80P(2)(a)(vi) and the same were disallowed. It is observed that there was no claim of deduction u/s 80P(2)(d). This is the fresh claim made by the appellant which was not made either in the return of income, nor before the Assessing Authority ITA No.29/PUN/2025 [A] 8 Thus, a fresh deduction cannot be considered during the course of appellate proceedings. Therefore, the grounds raised are treated as dismissed.” 5.1 Aggrieved by the order of the ld.CIT(A), Assessee filed appeal before this Tribunal 6. Admittedly, Assessee is a Co-operative Society registered under the Maharashtra State Cooperative Societies Act 1960. The appellant is an apex Cooperative Society of the Primary Labour Cooperative Societies who are engaged in the collective disposal of the labour of its members The Membership is restricted to only Primary Labour Cooperative Societies located at various villages and Taluka Places in Jalgaon District only. The appellant collects 1 percent from the contracts awarded to the members i.e. Primary Labour Cooperative Societies by the State Government Zilla Parishad etc. The amount so collected is commonly called as Vargani or the Subscription. This amount of Vargani is directly deducted from the Payments made by the respective Government Departments who has awarded the Work under a Tender to the concerned Primary Labour Cooperative Societies. The amount of Vargani is directly deposited in the Saving Account of the Appellant ITA No.29/PUN/2025 [A] 9 Cooperative Society with the Jalgaon District Central Coop Bank Ltd. The appellant is authorized by the Registrar of Cooperative Societies to act as a liaison between various Government Department on behalf of members of the appellant societies as per the license granted by the Registrar of Cooperative Societies. Statutory Audit of the Books of Accounts of the appellant society was conducted under the Maharashtra Cooperative Societies Act 1960. 7. During the appellate proceedings before the ld.CIT(A), Assessee had claimed deduction u/s.80P(2)(d) as without prejudice. Ld.CIT(A) dismissed this ground stating that this is a new claim. We have perused the Return of Income and Audit Report filed by the Assessee which was filed during Assessment Proceedings also. As per the computation of the income, Assessee had claimed deduction u/s.80P(2)(d) also. 7.1 Therefore, ld.CIT(A) erred in stating that it is a new claim. We have perused the Audit Report filed by the Assessee in Form No.3CD and it is noted that in Column No.33, the Assessee has claimed deduction u/s.80P of Rs.51,07,046/-. Thus, in the Form ITA No.29/PUN/2025 [A] 10 No.3CD Assessee has claimed deduction u/s.80P of the Act. The ld.CIT(A) has not bothered to verify any of these documents and rejected the claim of the Assessee. 8. Section 80P(2)(d) is reproduced here as under : Deduction in respect of income of co-operative societies. 80P. (1) Where, in the case of an assessee being a co-operative society, the gross total income includes any income referred to in sub-section (2), there shall be deducted, in accordance with and subject to the provisions of this section, the sums specified in sub-section (2), in computing the total income of the assessee. (2) The sums referred to in sub-section (1) shall be the following, namely :— …………………………….. (d) in respect of any income by way of interest or dividends derived by the co-operative society from its investments with any other co- operative society, the whole of such income; 8.1 Thus, as per Section 80P(2)(d) of the Act, any income by way of interest or dividend derived by the Co-operative Society from its investments with any other Co-operative Society is allowed as deduction. In this case, Assessee is a Co-operative Society who has derived interest income from Jalgaon District Central Cooperative Bank Limited and Shri Gulabrao Devkar Nagari Sahakari Patsansth Ltd. ITA No.29/PUN/2025 [A] 11 8.2 The Hon’ble Gujarat High Court in the decision of PCIT Vs. Ashwinkumar Arban Co-operative Society Ltd., 168 taxmann.com 314(Guj) held as under : Quote “33. In view of the above dictum of law as well as the provisions of the Act which are considered we are of the opinion that the provisions of section 80P(2)(d) would be applicable in the facts of the case and the PCIT was not justified in invoking revisional powers under section 263 of the Act which is rightly reversed by the Tribunal holding that the cooperative bank is a cooperative society registered under the Gujarat State Cooperative Societies Act and in view of the various decisions of the Court, the Tribunal after following the same has come to the conclusion that the assessment was not erroneous allowing deduction of section 80P(2)(d) of the Act which is in consonance with the various decisions of the Court as a twin condition invoking section 263 as to the assessment being erroneous and prejudicial to the interest of the revenue are not being fulfilled.” Unquote 8.2.1 Thus, Hon’ble Gujarat High Court held that Co-operative Banks are Co-operative Societies registered under the State Acts. 8.3 The ITAT Pune in various decisions which have been quoted by the ld.AR for the Assessee has held that Interest Income earned by Co-operative Society from Co-operative Banks which are Co- operative Societies is eligible for deduction u/s.80P(2)(d) of the Act. 8.4 In these facts and circumstances of the case, respectfully following the judicial precedents, the Assessee’s claim for deduction ITA No.29/PUN/2025 [A] 12 u/s.80P(2)(d) of the Act, is to be allowed. Accordingly, we direct the Assessing Officer to allow the claim of the Assessee of deduction u/s.80P(2)(d) of the Act. Accordingly, Ground No.3 and 4 raised by the assessee are allowed. Ground No.1 and 2 : 9. Since we have allowed Assessee’s Ground No.3 and 4, the Ground No.1 and 2 become academic in nature, accordingly, dismissed as unadjudicated. 10. In the result, appeal of the assessee is Partly Allowed. Order pronounced in the open Court on 27 May, 2025. Sd/- Sd/- (VINAY BHAMORE) (DIPAK P.RIPOTE) JUDICIAL MEMBER ACCOUNTANT MEMBER पुणे / Pune; ᳰदनांक / Dated : 27 May, 2025/ SGR आदेशकᳱᮧितिलिपअᮕेिषत / Copy of the Order forwarded to : 1. अपीलाथᱮ / The Appellant. 2. ᮧ᭜यथᱮ / The Respondent. 3. The CIT(A), concerned. 4. The Pr. CIT, concerned. 5. िवभागीयᮧितिनिध, आयकर अपीलीय अिधकरण, “एस एम सी” बᱶच, पुणे / DR, ITAT, “SMC” Bench, Pune. 6. गाडᭅफ़ाइल / Guard File. ITA No.29/PUN/2025 [A] 13 आदेशानुसार / BY ORDER, // TRUE COPY // Senior Private Secretary आयकर अपीलीय अिधकरण, पुणे/ITAT, Pune. "