THE HARSIDDHI CO. OP. CREDIT SOCIETY LTD.,PANCHMAHAL V. THE ACIT, ANAND CIRCLE, ANAND

ITA 1765/AHD/2024

AI Insights

The case involves The Harsiddhi Co-op Credit Society Ltd., a cooperative society, appealing against the order of the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi. The appeal was concerning the disallowance of deductions claimed under section 80P(2)(d) for interest earned from cooperative banks and the disallowance of related expenditures. The Assessing Officer (AO) had treated certain income as 'income from other sources' and disallowed the deductions claimed. The Tribunal's decision was based on the interpretation of section 80P(2)(d) and the application of relevant judicial precedents.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 298745 (ITAT-AHMEDABAD)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-03-2025
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2020-2021
• Other Referred Cases: Katlary Kariyna Merchant Sahkari Sarafi Mandali Ltd. Vs. ACIT
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: N. J. VYAS
• Assessee Lawyers: MOHIT BALANI
• Keywords: Business income; Business expenditure
• Section: 250; 37

Judgement Text

"आयकर अपीलीय अिधकरण आयकर अपीलीय अिधकरण आयकर अपीलीय अिधकरण आयकर अपीलीय अिधकरण,अहमदाबाद \bयायपीठ अहमदाबाद \bयायपीठ अहमदाबाद \bयायपीठ अहमदाबाद \bयायपीठ ‘SMC’ अहमदाबाद। अहमदाबाद। अहमदाबाद। अहमदाबाद। IN THE INCOME TAX APPELLATE TRIBUNAL “SMC” BENCH, AHMEDABAD ] ] BEFORE MS.SUCHITRA R. KAMBLE, JUDICIAL MEMBER ITA No.1765/Ahd/2024 Asstt.Year :2020-21 The Harsiddhi Co-op Credit Society Ltd. 40, Govardhan Complex, 1st Floor Opp: Civil Court, Tower Road Santrampur 389 260 PAN : AABAT 3395 D Vs The ACIT, Anand. (Applicant) (Responent) Assessee by : Shri Mohit Balani, AR Revenue by : Shri N.J. Vyas, Sr.DR सुनवाई क तारीख/Date of Hearing : 20/03/2025 घोषणा क तारीख /Date of Pronouncement: 27/03/2025 आदेश आदेश आदेश आदेश/O R D E R The present appeal has been filed by the assessee against order passed by the Commissioner of Income Tax(Appeals), National Faceless Appeal Centre (NFAC), Delhi under section 250 of the Income Tax Act, 1961 dated 13.08.2024 pertaining to Asst.Year 2020-21. 2. The grounds raised by the assessee are as under: 1. Ld. CIT(A) has erred in law and on the facts of the case in not allowing the deduction amounting to Rs.45,31,057/-being the interest earned from Co-Operative Banks u/s 80P(2)(d). 2. Ld. CIT(A) has erred in law and on facts of the case in disallowing expenditure amounting to Rs.34,72,602/-being the expenditure incurred for the purpose of earning/ interest income. ITA No.1765/Ahd/2024 2 3. Alternatively and without prejudice to the above LD. CIT(A) has erred in law and on facts of the case in confirming the action of learned AO in disallowing deduction u/s 80P(2)(d) amounting to Rs.10,58,455/-. 4. Alternatively and without prejudice to the above, learned CIT(A) ought to have granted the benefit of set off under/ S.70 or 71 of the Act.” 5. Learned CIT(A) has erred in law and on the facts in confirming the action of AO in charging interest U/S.234A/B/C/D.” 2. The assessee is a cooperative society registered under the Gujarat Co-op Societies Act, 1961. The assessee filed return of income declaring total income at Rs.NIL on 29.12.2020 thereby claiming deduction under section 80P(2)(a)(i) of Rs.23,99,554/- and deduction under section 80P(2)(d) of Rs.10,58,455/- of the Act. The case of the assessee was selected for complete scrutiny. After giving statutory notice and taking on record the assessee’s submissions, the AO made the disallowance to the extent of Rs.45,31,057/- and treated the same as “income from other sources”. 3. Being aggrieved by the assessment order, the assessee filed appeal before the ld.CIT(A) who confirmed the order of the AO. Hence, the assesse is before the Tribunal. 4. As regards ground no.1, the ld.AR submitted that the same is general in nature. Hence, ground no.1 is disposed of accordingly. 5. As regards ground no.2 related to allowability of proportionate expenses under sections 57 or 37 of the Act, the ITA No.1765/Ahd/2024 3 assessee incurred Rs.34,72,602/- in expenses directly related to earning interest income from deposits in cooperative banks. These expenses were already accounted for in business income leading to double taxation as contemplated by the AO, but the same is factually incorrect as the assessee himself disallowed the business expenses, and thereby claimed the said expenses against the interest income. 6. As regards Ground No.3, the ld.AR submitted that the deduction amounting to Rs.10,58,455/- was earned from cooperative bank interest on FDs under section 80P(2)(d) of the Act. The ld.AR pointed out to the page no.38 of the paper-book, wherein it is stated that the assessee derived interest income from the Gujarat State Cooperative Bank, the Panchmahal Dist. Cooperative Bank Ltd. The ld.DR relied upon the assessment order and the order of the ld.CIT(A). 7. I have heard both the parties and perused the material available on record. As regards ground no.2, related to allowability of proportionate expenses, where the assessee earned interest expenses from deposits in cooperative bank, the same cannot be allowed, as the assessee has already claimed deduction under section 80P(2)(d). Thus, the ground no.2 is dismissed. As regards ground no.3, the assessee had derived interest income on the FDs in three cooperative banks, and as per the decision of the Hon’ble jurisdictional High Court in the case of ITA No.1765/Ahd/2024 4 Katlary Kariyna Merchant Sahkari Sarafi Mandali Ltd. Vs. ACIT, [R/SCA No.20585 of 2019, Original order dated 4.1.2022 and modified on 26.4.2024] the same has to be allowed. Thus, the ground no.3 is allowed. 8. In the result, the appeal of the assessee is partly allowed. Order pronounced in the Court on 27th March, 2025 at Ahmedabad. Sd/- (SUCHITRA R. KAMBLE) JUDICIAL MEMBER Ahmedabad, dated 27/03/2025 vk* "