SHARADCHANDRA NAGARI SAHAKARI PATSANSTHA MARYADIT,PUNE V. ITO WARD 10(1), PUNE

ITA 1391/PUN/2024

AI Insights

The case involves Sharadchandra Nagari Sahakari Patsanstha Maryadit, a cooperative society, which appealed against the order of the CIT(A)/NFAC confirming the disallowance of Rs.1,33,50,608 claimed under section 80P of the Income Tax Act for the assessment year 2020-21. The primary issue was the eligibility of interest income from deposits with cooperative banks and other banks for deduction under section 80P(2)(d). The Assessing Officer had disallowed the deduction citing the principle of mutuality was not met and the society's activities resembled that of a banking institution. The ITAT, referencing previous decisions, allowed the deduction for interest income from cooperative banks but confirmed the disallowance for interest income from deposits with MSEDCL due to insufficient evidence of eligibility.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 474187 (ITAT-PUNE)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-03-2025
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2020-2021
• Other Referred Cases: Samarth Nagari Shakari Path Sanstha Maryadit vs. ITO, The Ugar Sugar Works Kamgar & Dr. Shirgaokar Shaikshanik Trust Nokar Co-op Credit Society vs. ITO
• Laws Referred To: Income Tax Act
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ARVIND DESAI
• Assessee Lawyers: ABHAY A. AVCHAT
• Section: 143(3); 142(1); 143(2); 80P

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH “B”, PUNE BEFORE SHRI MANISH BORAD, ACCOUNTANT MEMBER AND SHRI VINAY BHAMORE, JUDICIAL MEMBER आयकर अपील सं. / ITA No.1391/PUN/2024 िनधाᭅरण वषᭅ / Assessment Year : 2020-21 Sharadchandra Nagari Sahakari Patsanstha Maryadit, At Post- Rajuri, Taluka- Junnar, Dist.- Pune- 412411. PAN : AAABS1016L Vs. ITO, Ward-10(1), Pune. Appellant Respondent आदेश / ORDER PER MANISH BORAD, AM: This appeal filed at the instance of assessee is directed against the order of Ld. CIT(A)/NFAC dated 30.03.2024 which is arising out of the assessment order u/s 143(3) r.ws. 144B of the Act for Assessment Year 2020-21 framed on 22.09.2022 by the ITO, NFAC. Assessee by : Shri Abhay A. Avchat Revenue by : Shri Arvind Desai Date of hearing : 06.03.2025 Date of pronouncement : 24.03.2025 ITA No.1391/PUN/2024 2 2. The sole grievance of the assessee that Ld. CIT(A)/NFAC erred in confirming the disallowance u/s 80P(2)(a)(i)/80P(2)(d) of the Act at Rs.1,33,50,608/-. 3. Brief facts of the case are that the assessee is a cooperative society established with the object to enroll the members, to educate the members, to effect cooperation, to accept deposits under various schemes and pay interest thereon and to lend money to members. Income of Rs.3,92,570/- declared in the e-return for assessment year 2020-21 filed on 06.01.2021 after claiming deduction u/s 80P of the Act at Rs.1,33,50,608/-. The case selected for complete scrutiny followed by validly serving notices u/s 143(2) and 142(1) of the Act. During the course of assessment proceedings, Ld. Assessing Officer observed that principle of mutuality cannot be invoked in the instant case as basic requirement of mutuality are missing. Ld. Assessing Officer also observed that the assessee has invested surplus funds with cooperative banks and other banks which are not eligible for deduction and such interest income from such investments are not allowable u/s 80P(2)(d) of the Act. Ld. Assessing Officer taking into consideration the fact that the assessee ITA No.1391/PUN/2024 3 has admitted nominal/associate members who do not have voting rights, the principle of mutuality is violated and the nature of business of the assessee society bears the character of a banking institution. Accordingly, income assessed at Rs.1,37,43,180/-. 4. Aggrieved the assessee preferred an appeal before Ld. CIT(A)/NFAC but failed to succeed. Now the assessee is in appeal before this Tribunal. 5. Ld. Counsel for the assessee, at the outset, submitted that out of the total interest income earned from banks/cooperative banks/MSEDCL at Rs.4,16,37,342/-, interest income of Rs.4,15,27,813/- is earned from deposits with cooperative banks which are eligible for deduction u/s 80P(2)(d) of the Act. For this he relied on the decision of Co-ordinate Bench of this Tribunal in the case of Samarth Nagari Shakari Path Sanstha Maryadit vs. ITO in ITA No.1414/PUN/2023 dated 03.05.2024. 6. On the other hand, Ld. DR supported the orders of the lower authorities. 7. We have heard rival contentions and perused the records placed before us. We observe that the assessee which is a co- ITA No.1391/PUN/2024 4 operative society has declared income of Rs.3,92,570/- after claiming deduction u/s 80P at Rs.1,33,50,608/-. We also observe that during the year the assessee society has earned interest income of Rs.18,96,95,893/- and has made interest payments of Rs.13,78,57,308/-. Further, the net total income of Rs.1,37,43,180/- has been assessed after considering the interest income earned from surplus funds deposited with cooperative banks at Rs.4,15,27,813/-. We observe that since the cooperative banks are basically cooperative societies, therefore, the interest earned from cooperative banks are clearly eligible for deduction u/s 80P(2)(d) of the Act and this view has been consistently followed by the Co-ordinate Bench of Tribunal in plethora of decisions including that of Samarth Nagari Shakari Path Sanstha Maryadit (supra) and The Ugar Sugar Works Kamgar & Dr. Shirgaokar Shaikshanik Trust Nokar Co-op Credit Society vs. ITO in ITA No.84/PAN/2018 order dated 27.05.2022. Therefore, in view of the above, the interest income from cooperative banks at Rs.4,15,27,813/- is eligible for deduction u/s 80P(2)(d) of the Act. However, deposit with MSEDCL at Rs.1,09,529/-, Ld. Counsel for the assessee failed to furnish any ITA No.1391/PUN/2024 5 judicial precedent, therefore, disallowance to the extent of Rs.1,09,529/- is hereby confirmed. In view of the above, against the total disallowance u/s 80P of the Act at Rs.1,33,50,608/-, we allow the deduction u/s 80P of the Act to the extent of Rs.1,32,41,080/- and confirm the disallowance of Rs.1,09,529/-. Effecting grounds of appeal raised by the assessee are partly allowed. 8. In the result, the appeal of the assessee is partly allowed. Order pronounced on 24th day of March, 2025. Sd/- Sd/- (VINAY BHAMORE) (MANISH BORAD) JUDICIAL MEMBER ACCOUNTANT MEMBER पुणे / Pune; ᳰदनांक / Dated : 24th March, 2025. 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. िवभागीय ᮧितिनिध, आयकर अपीलीय अिधकरण, “B” बᱶच, पुणे / DR, ITAT, “B” Bench, Pune. 5. गाडᭅ फ़ाइल / Guard File. आदेशानुसार / BY ORDER, // True Copy // Senior Private Secretary आयकर अपीलीय अिधकरण, पुणे / ITAT, Pune. "