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

ITA 30/PUN/2025

AI Insights

The case involves the Jalgaon Jilha Majur Kamgar Sahakari Sanstha Federation Limited, a cooperative society, which appealed against the order of the Commissioner of Income Tax (Appeals) that upheld the disallowance of deductions claimed under various sections of the Income Tax Act, 1961. The primary issues revolved around the eligibility for deductions under sections 80P(2)(a)(vi) and 80P(2)(d) concerning income derived from activities and interest from cooperative banks and societies. The Tribunal referenced its previous decisions and similar cases to conclude that the society was entitled to deductions under section 80P(2)(d) for interest income from cooperative banks but not under section 80P(2)(a)(vi) for the other claims.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 771898 (ITAT-PUNE)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-08-2025
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Assessment Year: 2020-2021
• Other Referred Cases: PCIT Vs. Ashwinkumar Arban Co-operative Society Ltd., Nashik District Labour Societies Co-operative Federation Limited vs. ITO
• Laws Referred To: Income Tax Act, 1961, Maharashtra State Co-operative Societies Act, 1960
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RAMNATH P. MURKUNDE
• Assessee Lawyers: DEEPA KHARE
• Keywords: Set aside
• Section: 143(3); 263

Judgement Text

" आयकर अपीलीय अधिकरण “ए” न्यायपीठ पुणे में । IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH, PUNE BEFORE SHRI R.K. PANDA, VICE PRESIDENT AND MS. ASTHA CHANDRA, JUDICIAL MEMBER आयकर अपील सं. / ITA No.30/PUN/2025 धििाारण वर्ा / Assessment Year : 2020-21 Jalgaon Jilha Majur Kamgar Sahakari Sanstha Federation Limited, 1 Shrama Sahakar, Akashwani Chowk, Jalgaon-425001 PAN : AABAJ5982G Vs. ITO Ward-1(4), Jalgaon अपीलार्थी / Appellant प्रत्यर्थी / Respondent Assessee by : Smt. Deepa Khare Department by : Shri Ramnath P. Murkunde Date of hearing : 18-06-2025 Date of Pronouncement : 25-08-2025 आदेश / ORDER PER ASTHA CHANDRA, JM : The appeal filed by the assessee is directed against the order dated 23.12.2024 of the Ld. Commissioner of Income Tax (Appeals), NFAC, Delhi [“CIT(A) / NFAC”] pertaining to Assessment Year (“AY”) 2020-21. 2. The background of the assessee as culled out from the statement of facts filed before the Ld. CIT(A)/ NFAC is that the assessee is a Co- operative Society registered under the Maharashtra State Co-operative Societies Act, 1960. The assessee is an apex cooperative society of the Primary Labour Co-operative Societies, who are engaged in the collective disposal of the labour of its members. The Membership is restricted to only Primary Labour Co-operative Societies located at various villages and Taluka Places in Jalgaon District only. The assessee collects 1% from the contracts awarded to the members, i.e. Primary Labour Co-operative 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 Printed from counselvise.com 2 ITA No.30/PUN/2025, AY 2020-21 concerned Primary Labour Cooperative Societies. The amount of Vargani is directly deposited in the Saving Account of the assessee Co-operative Society with the Jalgaon District Central Co-op. Bank Ltd. The assessee is authorized by the Registrar of Co-operative Societies to act as a liaison between various Government Department on behalf of members of the assessee as per the license granted by the Registrar of Cooperative Societies. Statutory Audit of the books of accounts of the assessee society is conducted under the Maharashtra Co-operative Societies Act, 1960. 3. The facts of the case in brief are that for AY 2020-21 the assessee filed its return of income on 14.01.2021 declaring total income at Rs.6,33,610/- after claiming deduction of (i) Rs.8,24,575/- u/s 80P(2)(a)(vi); (ii) Rs.42,32,471/- u/s 80P(2)(d) and (iii) Rs.50,000/- u/s 80P(2)(c)(ii) of the Income Tax Act, 1961 (the “Act”). The case was selected for scrutiny through CASS. The Ld. AO completed the assessment u/s 143(3) disallowing the deduction claimed u/s 80P of Rs.67,64,014/- in respect of the interest received on Fixed Deposits with – (i) HDFC Bank amounting to Rs.5,88,046/-, (ii) The Jalgaon District Central Cooperative Bank Ltd of Rs.8,57,820/- and (iii) Shri Gulabrao Devkar Nagari Sahakari Patsanstha Ltd amounting to Rs.33,74,651/-, aggregating to Rs. 48,20,517/-. The Ld. AO further disallowed the interest received on advances given to the member societies of Rs.19,43,497/- The Ld. AO also disallowed the deduction claimed u/s 80P(2)(c)(ii) of Rs.50,000/-. 4. Aggrieved, the assessee filed appeal before the Ld. CIT(A)/NFAC challenging the above disallowances made by the Ld. AO who dismissed the various grounds of appeal raised by the assessee before him involving the impugned issues by observing as under: “I have carefully considered Form 35, Statement of facts, Order U/s 143(3) r.w.s 144B, submissions/ details uploaded in the system and the grounds of appeal raised. The present appeal is filed against the order U/s 143(3) r.w.s 1448 dated 19/09/2022. The grounds raised are adjudicated as under. Ground No. 1 The learned AO 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. The ground raised has been carefully examined and found that during the course of assessment proceedings, the AO has requisitioned the information relating to the activities of the appellant society and examined it in detail. It is the case of the AO that, when the appellant society is not engaged in the collective disposal of labour of its members as provided u/s 80P(2)(a)(vi), it is not entitled for deduction. The AO observed that the appellant is a Federation of Primary Societies which only supervisors and co- ordinates affairs of its members. Therefore, held that the appellant is not entitled for deduction u/s 80P(2)(a)(vi). Printed from counselvise.com 3 ITA No.30/PUN/2025, AY 2020-21 During the course of appellate proceedings, when the opportunities were given, the appellant claimed that it is a co-operative society dealing in supply and collective disposal of labour. As such, entitled for deduction u/s 8OP(2)(a)(vi). The assessment order and the submission of the appellant have been carefully examined with reference to the provisions of section 80P(2)(a)(vi) and understood that the deduction u/s B * 0P(2)(a)(vi) is available to a society, which deals with the collective disposal of labour of its members. In the instant case, it needs to be appreciated that the main activity of the appellant is supervising and coordinating the affairs of its member's societies, but not engaged in disposal of labour Under the circumstances, I am of the considered opinion that the AO was right in disallowing the deduction claimed u/s 80P(2)(a)(vi) Therefore, the ground raised is dismissed. The ground No's. 02 & 06 are inter connected to each other as such, they are adjudicated as under: Ground No. 2 The learned AO erred in not allowing the appellant the benefit of deduction u/s 80P(2)(c)(ii) to the extent of Rs. 50,000/- in respect of Rent received. Ground No. 6 The learned AO may be directed to allow the deduction u/s 80P(2)(a)(vi) in respect of Income attributable from the activities carried out by the appellant and u/s 80P(2)(c) (ii) to the extent of Rs.50.000/- in respect of Rent received. The grounds raised have been carefully examined and found that during the course of assessment proceedings, as discussed by the AO at Para - 4 of Page-06 of the assessment order as held that, the nature of the profits earned by the appellant does not entitled for deduction u/s 80P(2)(c)(ii) accordingly, disallowed Rs. 50,000/-. During the course of appellate proceedings, the appellant contended since, it is a co-operative society, it is entitled for deduction u/s 80P(2)(c)(ii) amounting to Rs. 50,000/-. The assessment order, the submission and the provisions of section 80P(2)(c)(ii) have been carefully examined and found that the appellant society is entitled for deduction u/s 80P(2)(c)(ii). Therefore, the AO is directed to allow the deduction of Rs. 50,000/- The grounds raised are treated as allowed. Ground No. 3 : The learned AO erred in ignoring the decision given by the jurisdictional Income Tax Appellate Tribunal Pune Bench in the case of Nashik District Labour Societies Co-operative Federation Limited in ITA No. 1876/PUN/2014 dated 05/06/2017. The ground raised has been carefully examined and found that during the course of assessment proceedings, the AO has examined the claim of the appellant at Para-2 & 4 of Page 4 and of the assessment order and distinguished the order relied upon, since, the appellant's activity is not involved in collective disposal of labour of its members. In view of the finding given by the AO, I find there is no force in ground raised by the appellant. Therefore, the ground raised is dismissed. The ground No's. 04. 07 & 08 are inter connected to each other as such, they are adjudicated as under : Ground No. 4: The learned AO erred in ignoring the decision given by the jurisdictional Income Tax Appellate Tribunal Pune Bench that Interest Income received by the Appellant Cooperative Society from another Printed from counselvise.com 4 ITA No.30/PUN/2025, AY 2020-21 Cooperative Bank and Cooperative Society is eligible for deduction u/s 80P(2)(d). Ground No. 7: 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. 8,57,820/- and Shri Gulabrao Devkar Nagari Sahakari Patsanstha Ltd Rs. 33,74,651/- totaling to Rs. 42,32,471/- 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. Ground No, 8: Without prejudice to the above, the appellant submits that alternatively the Interest Received on Advances given to the Member Societies of Rs. 19,43,497/- which are Primary Labour Cooperative Societies may be allowed as deduction u/s 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 8OP(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. Thus, a fresh deduction cannot be considered during the course of appellate proceedings. Therefore, the grounds raised are treated as dismissed. Ground No. 5 : The learned AO 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. 19 43.407/-is eligible for deduction u/s 80P(2)(a)(vi) of the Income-tax Act, 1961. The ground raised has been carefully examined and found that during the course of assessment proceedings, the AO has requisitioned the information relating to the activities of the appellant society and examined it in detail. It is the case of the AO that, when the appellant society is not engaged in the collective disposal of labour of its members as provided u/s B0P(2)(a)(vi), it is not entitled for deduction. The AO observed that the appellant is a Federation of Primary Societies which only supervisors and co- ordinates affairs of its members. Therefore, held that the appellant is not entitled for deduction u/s 8OP(2)(a)(vi). During the course of appellate proceedings, when the opportunities were given, the appellant claimed that it is a co-operative society dealing in supply and collective disposal of labour. As such, entitled for deduction u/s 80P(2)(a)(vi). The assessment order and the submission of the appellant have been carefully examined with reference to the provisions of section 80P(2)(a)(vi) and understood that the deduction u/s 8OP(2)(a)(vi) available to a society, which deals with the collective disposal of labour of its members. In the instant case, it needs to be appreciated that the main activity of the appellant is supervising and coordinating the affairs of its member's societies, but not engaged in disposal of labour. Under the circumstances, I am of the considered opinion that the AO was right in disallowing the deduction claimed u/s 80P(2)(a)(vi) Therefore, the ground raised is dismissed.” 5. Dissatisfied, the assessee is in appeal before the Tribunal raising the following grounds of appeal : Printed from counselvise.com 5 ITA No.30/PUN/2025, AY 2020-21 “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.19,43,497/- 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.8,57,820/- and Shri Gulabrao Devkar Nagari Sahakari Patsanstha Ltd Rs.33,74,651/- totaling to Rs.42,32,471/-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.19,43,497/- 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.” 6. The Ld. AR, at the outset submitted that the impugned issues are covered in favour of the assessee by the decision of the Co-ordinate Bench of this Tribunal in assessee’s own case in ITA No. 29/PUN/2025, for AY 2018-19, dated 27.05.2025 wherein the Tribunal has allowed the deduction claimed in respect of interest income earned from the Co- operative Banks u/s 80P(2)(d) of the Act. The facts of the case for the relevant AY remains unchanged and therefore she urged that the order of the Ld. CIT(A)/ NFAC be set aside and the appeal of the assessee to be allowed. 7. The Ld. DR supported the order Ld. CIT(A)/ NFAC. 8. We have heard the Ld. Representatives of the parties and the perused the material available on record as well as the judicial precedent cited by the Ld. AR. The facts are not in dispute. During the relevant AY 2020-21, the assessee earned interest from Fixed Deposits with The Jalgaon District Central Cooperative Bank Ltd of Rs.8,57,820/- and Shri Gulabrao Devkar Nagari Sahakari Patsanstha Ltd of Rs.33,74,651/- Printed from counselvise.com 6 ITA No.30/PUN/2025, AY 2020-21 totaling to Rs.42,32,47. As an alternate claim, the assessee has raised a plea that the interest received on advances given to the member societies of Rs.19,43,497/- which are Primary Labour Cooperative Societies may be allowed as deduction u/s 80P(2)(d) of the Act. We find that the impugned issue is no more res-integra and covered by various decisions of the Co- ordinate Bench(es) of the Tribunal as well as other higher judicial forums in favour of the assessee. It has also been brought to our notice by the Ld. AR that the impugned issue is covered in favour of the assessee in its own case for AY 2017-18 and the facts for the relevant AY under consideration remain unchanged. We have perused the order of the Pune Tribunal in the case of Jalgaon Jilha Majur Kamgar Sahakari Sanstha Federation Limited Vs. ITO, ITA No. 29/PUN/2025, dated 27.05.2025 for AY 2018-19, a copy of which has been placed on record by the Ld. AR. The relevant observations and findings of the Tribunal in the said appeal are reproduced below: “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. 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 Printed from counselvise.com 7 ITA No.30/PUN/2025, AY 2020-21 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 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.” 9. Respectfully following the decision of the Tribunal (supra) and in the absence of any contrary material brought on record by the Revenue to enable us to take a different view, we set aside the order of the Ld. CIT(A)/ NFAC. Accordingly, ground nos. 3 & 4 raised by the assessee are allowed and ground nos. 1 & 2 are dismissed being rendered academic in nature. 10. In the result, the appeal of the assessee is partly allowed. Order pronounced in the open court on 25th August, 2025. Sd/- Sd/- (R.K. Panda) (Astha Chandra) VICE PRESIDENT JUDICIAL MEMBER पुणे / Pune; दिन ांक / Dated : 25th August, 2025. रदि आदेश की प्रधिधलधप अग्रेधर्ि / Copy of the Order forwarded to : 1. अपील र्थी / The Appellant. 2. प्रत्यर्थी / The Respondent. 3. The Pr. CIT concerned. 4. दिभ गीय प्रदिदनदि, आयकर अपीलीय अदिकरण, “ए” बेंच, पुणे / DR, ITAT, “A” Bench, Pune. 5. ग र्ड फ़ इल / Guard File. //सत्य दपि प्रदि// True Copy// आिेश नुस र / BY ORDER, िररष्ठ दनजी सदचि / Sr. Private Secretary आयकर अपीलीय अदिकरण ,पुणे / ITAT, Pune Printed from counselvise.com "