MEHSANA DISTRICT CO. OPERATIVE PURCHASE AND SALES UNION LTD.,MEHSANA V. THE ACIT, CIRCLE MEHSANA, MEHSANA

ITA 1760/AHD/2024

AI Insights

The case involves the Mehsana District Co-operative Purchase and Sales Union Limited, which appealed against the order of the CIT(A), National Faceless Appeal Centre, Delhi, for the Assessment Year 2017-18. The primary contention was regarding the disallowance of deductions claimed under Section 80P of the Income Tax Act, 1961, specifically related to interest and dividend income received from Co-operative Banks and Institutions. The Assessing Officer had initially disallowed these deductions, which was upheld by the CIT(A). However, the Tribunal, referencing decisions from the Gujarat High Court and the Supreme Court, ruled in favor of the assessee, allowing the deductions claimed.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 34105 (ITAT-AHMEDABAD)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-01-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2017-2018
• Other Referred Cases: State Bank of India vs. CIT (2016) 380 ITR 578 (Guj.), Totgars Co-operative Sale Society Limited vs. ITO (188 Taxman 282 (SC)), Katlary Kariyana Merchant Sahkari Sarafi Mandali Limited vs ACIT, Assessment Year 2015-16, in R/SCA No.20585/2019, Surat Vankar Sahakari Sangh Limited vs. ACIT (2016) 72 taxmann.com 169, PCIT vs. Ashwinkumar Arban Co-operative Society Limited (2024) 168 taxmann.com 314 (Guj.)
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NITIN VISHNU KULKARNI
• Assessee Lawyers: KETAN H. SHAH
• Keywords: Co-operative Credit Society
• Section: 142(1); 143(2); 143(1); 80P; 244A; 72

Judgement Text

"ITA No.1760/Ahd/2024 Assessment Year: 2017-18 Mehsana Dist. Co-op. Purchase & Sales Union Ltd. Vs. ACIT Page 1 of 3 IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD “SMC” BENCH, AHMEDABAD BEFORE Ms. SUCHITRA KAMBLE, JUDICIAL MEMBER AND SHRI MAKARAND VASANT MAHADEOKAR, ACCOUNTANT MEMBER ITA No.1760/Ahd/2024 Assessment Year: 2017-18 Mehsana District Co-operative Purchase and Sales Union Limited, C/o. Ketan H. Shah, Advocate, 512, Times Square – 1, Opp. Ram Baug Bungalow, Thaltej Shilaj Road, Tahaltej, Ahmedabad – 380 -059. [PAN – AAAAM 0858 P] Vs. The Assistant Commissioner of Income Tax, Circle, Mehsana. (Appellant) (Respondent) Assessee by Shri Ketan H. Shah, A.R. Revenue by Shri Nitin Vishnu Kulkarni, Sr. DR Date of Hearing 11.12.2024 Date of Pronouncement 09.01.2025 O R D E R This appeal is filed by the assessee against order dated 24.07.2024 passed by the CIT(A), National Faceless Appeal Centre (NFAC), Delhi for the Assessment Year 2017-18. 2. The assessee has raised the following ground of appeal :- “The Lower Authority has erred on facts as well as law. 1. In making addition in reference to the claim u/s.80P in reference to the interest received from Co. Op. Banks amounting to Rs.28,45,327/- as well as the dividend income from Co. Op. Bank Rs.13,67,025/- making total of Rs.42,12,352/-. In view of the facts, it is stated that the addition made is required to be deleted.” 3. The assessee is a Co-operative Credit Society engaged in distribution of the Fertilizers to Agriculturist of the Mehsana District to the members of the Society and also reselling food grains, tea and other items to the members of the Society. The ITA No.1760/Ahd/2024 Assessment Year: 2017-18 Mehsana Dist. Co-op. Purchase & Sales Union Ltd. Vs. ACIT Page 2 of 3 return of income was field by the assessee on 29.10.2017 declaring total income at Rs. Nil after claiming deduction of Rs.29,87,933/- under Section 80P of the Income Tax Act, 1961. The return was processed under Section 143(1) of the Act and the case was selected for limited scrutiny. Notice under Section 143(2) of the Act dated 09.08.2018 was issued and thereafter notice under Section 142(1) of the Act was issued on 15.03.2019. In response to the above notices, the assessee filed submissions from time to time. The Assessing Officer observed that during the year under consideration, the assessee received interest/dividend income of Rs.42,12,352/- from Co-operative Banks. After taking cognisance of the assessee’s reply and relying on the decision of Hon’ble Gujarat High Court in the case of State Bank of India vs. CIT (2016) 380 ITR 578 (Guj.) and Hon’ble Apex Court’s decision in the case of Totgars Co-operative Sale Society Limited vs. ITO (188 Taxman 282 (SC)) made disallowance of Rs.42,12,352/- out of deduction under Section 80P(2)(d) of the Act The Assessing Officer also made addition of Rs.3,776/- on account of interest income under Section 244A of the Act. 4. Being aggrieved by the Assessment Order, the assessee filed appeal before the CIT(A). The CIT(A) dismissed the appeal of the assessee. 5. The Ld. AR submitted that the assessee has claimed deduction under Section 80P(2)(d) of the Act relating to amount of dividend from Co-operative Institutions amounting to Rs 13,67,025/- and interest received from Mehsana District Co-operative Bank Limited amounting to Rs.28,45,327/-. The ld. AR submitted that out of this interest income, the assessee has rightly claimed interest received from Mehsana District Co-operative Bank Limited Rs 28,45,327/- and the balance interest of Rs.84,068/- duly included in the return income as taxable. Ld. AR relied upon the decision of Hon’ble Gujarat High Court in the case of Katlary Kariyana Merchant Sahkari Sarafi Mandali Limited vs ACIT, Assessment Year 2015-16, in R/SCA No.20585/2019 and that of Surat Vankar Sahakari Sangh Limited vs. ACIT (2016) 72 taxmann.com 169. The ld. AR submitted that the decision of Hon’ble Apex Court in the case of Totgars Co-operative Sale Society Limited (supra) was also considered in the decision of Hon’ble Gujarat High Court in the case of PCIT vs. Ashwinkumar Arban Co-operative Society Limited (2024) 168 taxmann.com 314 (Guj.) ITA No.1760/Ahd/2024 Assessment Year: 2017-18 Mehsana Dist. Co-op. Purchase & Sales Union Ltd. Vs. ACIT Page 3 of 3 6. The Ld. DR submitted that the Hon’ble Apex Court in the case of Totgars Co- operative Sale Society Limited (supra) has already considered this issue and relied upon the same as well as the Assessment Order and the order of the CIT(A). 7. We have heard both the parties and perused all the relevant material available on record. It is pertinent to note that the component of Rs.13,67,025/- is the amount of dividend received from Co-operative Institution and interest received from Mehsana District Co-operative Bank Limited is amounting to Rs 28,45,327/-. As per decision of Hon’ble Gujarat High Court in various case laws relied upon by the Ld. AR, the interest received from Mehsana District Co-operative Bank Limited will be considered as the interest received from Co-operative Society and, therefore, relates to the said component of Rs.28,45,327/-, the same is allowable. As regards the amount of dividend from Co-operative Institution, the assessee has demonstrated that the same is also again received from Co-operative Society itself and, therefore, the same is allowed. Thus, the ground of appeal raised by the assessee is allowed. 8. In the result, appeal of the assessee is allowed. Order pronounced in the open Court on this 9th January, 2025. Sd/- Sd/- (MAKARAND VASANT MAHADEOKAR) (SUCHITRA KAMBLE) Accountant Member Judicial Member Ahmedabad, the 9th January, 2025 PBN/* Copies to: (1) The appellant (2) The respondent (3) CIT (4) CIT(A) (5) Departmental Representative (6) Guard File By order TRUE COPYE COPY Assistant Registrar Income Tax Appellate Tribunal Ahmedabad benches, Ahmedabad "