SWA SAINIK N L BALKAWADE NAGARI SAHAKARI PATSANSTHA LTD,PUNE V. ITO WARD 2(1), NASHIK

ITA 1526/PUN/2025

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The case involves Swa Sainik N L Balkawade Nagari Sahakari Patsanstha Ltd, the appellant, contesting an assessment order for the assessment year 2015-16 issued by the Income Tax Officer, Ward \\u2013 2(1), Nashik. The primary contention was regarding the denial of deduction under section 80P(2)(d) of the Income Tax Act for interest income from investments in Cooperative Banks. The Tribunal referenced several precedents where it was held that such interest income is eligible for deduction under section 80P(2)(d). The Tribunal's decision was influenced by previous rulings and the consistent view taken by the Tribunal in similar cases.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 708433 (ITAT-PUNE)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-07-2025
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Assessment Year: 2015-2016
• Other Referred Cases: Annapurna Nagari Sahkari Pathsanstha Maryadit Yawal Vs. ITO, Kolhapur District Central Co-op. Bank Kanista Sevakanchi Sahakar Pat Sanstha Ltd. Vs. ITO, The Ugar Sugar Works Kamgar & Dr. Shirgaokar Shaikshanik Trust Nokar Co-op Credit Society vs. ITO
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: DEEPAK KUMAR KEDIA
• Assessee Lawyers: DEEPA KHARE; PLETHORA OF DECISIONS OF THIS TRIBUNAL
• Keywords: Set aside; Business income; Additional evidence
• Section: 147; 148

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCHES “SMC”, PUNE BEFORE DR.MANISH BORAD, ACCOUNTANT MEMBER आयकर अपील सं. / ITA No.1526/PUN/2025 Assessment Year : 2015-16 Swa Sainik N L Balkawade Nagari Sahakari Patsanstha Ltd., H No.445, Ram Mandir Road, Bhagor Nashik- 422502, Maharashtra PAN: AAGAS8392A Vs. Income Tax Officer, Ward – 2(1), Nashik Appellant Respondent आदेश / ORDER The captioned appeal at the instance of assessee pertaining to A.Y. 2015-16 is directed against the order dated 16.05.2025 of National Faceless Appeal Centre(NFAC), Delhi passed u/s.250 of the Income-tax Act, 1961 (hereinafter also called ‘the Act’) arising out of Assessment Order dated 11.03.2024 passed u/s.147 r.w.s144 r.w.s144B of the Act. 2. Assessee has raised following grounds of appeal : “1. The impugned notice u/s 148 dated 21.04.2022 is invalid and bad in law being issued by the Jurisdictional Assessing Officer as the same was not in accordance with Section 151A of the Act and consequently the impugned Assessment Order u/s 147 dt 11.03.2024 is invalid and bad in law which may be cancelled 2. Whether impugned Assessment Order u/s 147 are time barred as the notice dated the 21 April 2022 issued under Section 148 of the Act is barred by limitation as per the first proviso to Section 149 of the Act? Appellant by : Smt Deepa Khare Respondent by : Shri Deepak Kumar Kedia Date of hearing : 08.07.2025 Date of pronouncement : 14.07.2025 ITA No.1526/PUN/2025 Swa Sainik N L Balkawade Nagari Sahakari Patsanstha Ltd 2 3. Whether impugned Assessment Order u/s 147 are time barred in view of the proviso to Section 149 as the notice u/s 148 rws 148A are issued beyond three years from the relevant assessment year in respect of income likely to be escaped is below Rs 50 Lakhs. Since the proceedings have been taken beyond the permitted time limit, the assessment Order is null void. 4. The Id CIT(A) erred in law and on facts in dismissing appeal ex parte without going into the merits and without appreciating the facts and circumstances of the case. 5. The Id CIT(A) erred in law and on facts in confirming disallowance of rent of Rs 1,80,000/- which was supported and substantiated. 6. The Id CIT(A) erred in law and on facts in confirming disallowance of commission of Rs 6,99,624/- which was supported and substantiated. 7. The Id CIT(A) erred in law and on facts in confirming disallowance of Rs 10,18,435/- u/s.80P(2)(a)(i) in respect of interest income from investments in Fixed Deposits with banks. 8. The id CIT(A) erred in law and on facts in assessing interest income as income from other sources as against business income without appreciating that the said income is attributable to the activities of extending credit facilities to the members of the appellant Society. 9. Without Prejudice to the above Grounds, the Id CIT(A) erred in law and on facts in confirming disallowance of Rs 10,18,435/- u/s 80P(2)(d) of the Act. 10. The appellant craves leave to add, alter, modify or substitute any ground of appeal at the time of hearing.” 3. At the outset, Ld. Counsel for the assessee requested for not pressing the legal grounds of appeal No.1 to 3 challenging the validity of notice u/s.148 of the Act and the validity of re- assessment proceedings. Accordingly, the said legal grounds of appeal No. 1 to 3 raised by the assessee are dismissed as ‘not pressed’. 4. So far as the merits of the case are concerned, ld. Counsel for the assessee has only pressed the issue of denial of deduction u/s.80P(2)(d) of the Act denied for the interest earned ITA No.1526/PUN/2025 Swa Sainik N L Balkawade Nagari Sahakari Patsanstha Ltd 3 from investments made with Cooperative Banks. She stated that the issue stands squarely covered in favour of the assessee by plethora of decisions of this Tribunal. 5. On the other hand, ld. Departmental Representative supported the order of ld.CIT(A). 6. I have heard the rival contentions and perused the record placed before me. Admittedly, the assessee has earned interest from Cooperative Banks at Rs.10,18,435/- and the details have been captured by ld.CIT(A) at para 4 of the impugned order. I further observe that the re-assessment order passed u/s.147 r.w.s.144 r.w.s.144B of the Act for A.Y. 2015-16 has been framed on 11.03.2024 and the total income has been assessed at Rs.9,33,267/- and the calculation of total income made by AO is as under : Sl. No. Amount 1 Income from business as per computation statement Rs.37,49,262/- 2 Less : Interest on investments to be considered separately Rs.10,18,435/- 3 Income from Business Rs.27,30,827/- 4 Expenses claimed in P&L Rs.36,95,619/- 5 Less : Commission and Rent Expenses Rs.8,79,624/- 6 Net allowable Expenses Rs.28,15,995/- 7 Income/Loss from Business Activities (-)85,168/- 8 Income from Other Sources Rs.10,18,435/- 9 Total Income after Set off Rs.9,33,267/- 7. From the above details, it emerges that Income from Other Sources of Rs.10,18,435/- is the interest income earned from investments with Cooperative Banks. Though there are other disallowances, but ld. Counsel for the assessee has only ITA No.1526/PUN/2025 Swa Sainik N L Balkawade Nagari Sahakari Patsanstha Ltd 4 pressed the issue regarding denial of deduction u/s.80P(2)(d) of the Act at Rs.10,18,435/-. 8. This issue is no longer res integra by virtue of catena of decisions taking consistent view that interest income earned from deposits with Cooperative Banks is eligible for deduction u/s.80P(2)(d) of the Act. Recently, this Bench in the case of Annapurna Nagari Sahkari Pathsanstha Maryadit Yawal Vs. ITO in ITA No.313/PUN/2025, order dated 07.05.2025 has allowed the deduction claimed by the assessee u/s.80P(2)(d) of the Act observing as under : “5. We have heard the rival submissions and perused the record placed before us. There is no dispute to the fact that assessee has earned interest income of Rs.1,02,95,103/- from deposits/investments with Cooperative Banks. This fact has been accepted by the Assessing Officer in the assessment order also. Admittedly, assessee has not filed the requisite details before ld.CIT(A). We however considering the fact that the issue regarding allowability of deduction u/s.80P(2)(d) of the Act for the interest earned from Cooperative Banks is no longer res integra as the very same issue has been decided by this Tribunal in catena of decisions and in assesse’s own case for A.Y. 2020-21 holding that the assessee is eligible for deduction u/s.80P(2)(d) of the Act as the Cooperative Banks are basically Cooperative Societies. For the sake of brevity, the finding given in ITA No.2471/PUN/2024 is reproduced below: “7. We have heard both the sides and perused the record placed before us. In the instant case, the Assessing Officer disallowed the interest income of Rs.1,63,98,998/- earned out of the Fixed deposits/Investments made with Cooperative Banks treating the same as Income from Other Source. Ld.CIT(A) dismissed the appeal in limine without discussing anything on merits of the issues and on the ground that the assessee has not provided plausible explanation for admission of additional evidences. 8. Section 80P(2)(d) of the Act provides that the sum received in respect of any income by way of interest or dividend derived by Cooperative Society from its investment with any other Cooperative Society, the whole of such income is eligible for deduction u/s.80P of the Act. we find that this issue is no more res integra as the Coordinate Benches of this Tribunal has been consistently holding that the interest income earned ITA No.1526/PUN/2025 Swa Sainik N L Balkawade Nagari Sahakari Patsanstha Ltd 5 out of the FDs/Investments kept with Cooperative Banks is allowable u/s.80P(2)(d) of the Act. We find that this Tribunal in case of Kolhapur District Central Co-op. Bank Kanista Sevakanchi Sahakar Pat Sanstha Ltd., Vs. ITO in ITA No.1365/PUN/2023, dated 01.01.2024 dealing with similar issue after placing reliance on another decision of this Tribunal in the case of The Ugar Sugar Works Kamgar & Dr. Shirgaokar Shaikshanik Trust Nokar Co-op Credit Society vs. ITO in ITA No.84/PAN/2018, dated 27.05.2022 has held that the interest earned from deposits with Cooperative Banks are also eligible for deduction u/s.80P(2)(d) of the Act as Cooperative Banks are basically Cooperative Societies only but have turned into Bank on getting necessary banking license. 9. Respectfully following the above referred decisions taking consistent view along with considering the facts of the case, where the assessee made investment with the Cooperative Banks we hold that the assessee is eligible for deduction u/s.80P(2)(d) of the Act for the interest income earned from Cooperative Banks at Rs.1,63,98,998/-. Findings of the ld. CIT(A) is set-aside and the Assessing Officer is directed to allow the claim made by the assessee. Effective grounds of appeal raised by the assessee are allowed.” 6. Respectfully following the same, we hold that deduction of Rs.1,02,95,103/- u/s.80P(2)(d) of the Act claimed by the assessee on the interest earned from deposits/Investments with Cooperative Banks deserves to be allowed. Relevant finding of ld.CIT(A) on merits is set aside and grounds of appeal No.5 to 8 raised by the assessee are allowed.” 9. In view of the above and respectfully following the ration laid down by this Tribunal in the given facts and circumstances in my considered view assesssee deserves to be allowed the deduction u/s.80P(2)(d)of the Act at Rs.10,18,435/- for interest earned on investment/deposits held with Cooperative Banks and ld. AO is directed to give the deduction for the said sum. Ground No.9 raised for allowing deduction u/s.80P(2)(d) of the Act has been allowed. 10. Remaining grounds of appeal raised on merits stands dismissed as infructuous. ITA No.1526/PUN/2025 Swa Sainik N L Balkawade Nagari Sahakari Patsanstha Ltd 6 11. In the result, appeal of the assessee is partly allowed. Order pronounced on this 14th day of July, 2025. Sd/- (MANISH BORAD) ACCOUNTANT MEMBER पुणे / Pune; \u0001दनांक / Dated : 14th July, 2025. Satish आदेश क\u0002 \u0003ितिलिप अ ेिषत / Copy of the Order forwarded to : 1. अपीलाथ / The Appellant. 2. \u000eयथ / The Respondent. 3. The Pr. CIT concerned. 4. िवभागीय ितिनिध, आयकर अपीलीय अिधकरण, “SMC” ब\u0014च, पुणे / DR, ITAT, “SMC” Bench, Pune. 5. गाड\u0004 फ़ाइल / Guard File. आदेशानुसार / BY ORDER, // True Copy // Senior Private Secretary आयकर अपीलीय अिधकरण, पुणे / ITAT, Pune. "