THE LUNAWADA URBAN CO OP CREDIT SOCIETY LIMITED,MAHISAGAR V. THE ITO, WARD-1, LUNAWADA

ITA 809/AHD/2025

AI Insights

The case involves the Lunawada Urban Co-Op Credit Society Ltd., which appealed against the order of the National Faceless Appeal Centre (NFAC), Delhi, concerning the assessment year 2016-17. The primary contention was regarding the disallowance of deductions claimed under section 80P of the Income Tax Act, specifically related to interest and dividend income from a cooperative bank. The Income Tax Officer (ITO) had initially disallowed these deductions, which was upheld by the CIT(A). The tribunal's decision, influenced by precedents set by the Gujarat High Court, favored the assessee, allowing the deductions claimed.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 717722 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-08-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2016-2017
• Appeal Filed On: 17-04-2025
• Other Referred Cases: Surat Sahkari Sangh Ltd. vs. ACIT, Ashwinkumar Arban Cooperative Society Ltd., Shree Madhi Vighag Khand Udyog Sahakari Mandali Ltd.
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KAMAL DEEP SINGH
• Assessee Lawyers: URVASHI SODHAN
• Keywords: Difference of opinion; Change of opinion; Initiation of penalty proceedings; Co-operative Credit Society
• Section: 143(3)

Judgement Text

"THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD “SMC” BENCH Before Dr. BRR Kumar, Vice President And Ms. Suchitra Kamble, Judicial Member Lunawada Urban Co-op Credit Society Ltd., Fuwara Chowk, Lunawada, Mahisagar PAN: AAFAT9358Q (Appellant) Vs The ITO, Ward-1 Lunawada (Respondent) Assessee by: Ms. Urvashi Sodhan, A.R. Revenue by: Shri Kamal Deep Singh, Sr. D.R. Date of hearing : 08-07-2025 Date of pronouncement : 14-08-2025 आदेश/ORDER Per Suchitra Kamble, Judicial Member: This is an appeal filed against the order dated 31-03- 2025 passed by National Faceless Appeal Centre (NFAC), Delhi for assessment year 2016-18. 2. The grounds of appeal are as under:- “1. Ld. CIT(A) (NFAC) erred in law and on facts in dismissing the ground raised by the appellant challenging reopening of the scrutiny assessment done on the basis of change of opinion when allowability of deduction claimed u/s 80P(2)(d) of the Act was thoroughly verified by AO in original assessment. 2. Ld. CIT (A) (NFAC) erred in law and on facts in confirming action of AO in making addition on altogether different grounds than mentioned in reasons recorded for reopening of scrutiny assessment. ITA No. 809/Ahd/2025 Assessment Year 2016-17 Printed from counselvise.com I.T.A No. 809/Ahd/2025 The Lunawada Urban Co-Op Credit Society Ltd., A.Y. 2016-17 2 3. Ld. CIT (A) (NFAC) erred in law and on facts confirming disallowance by AO of Rs 11, 78, 126/- said to be claimed by the appellant disregarding the fact that the appellant claimed deduction of only Rs. 5, 25, 781/- interest & dividend earned from Co-operative Bank. 4. Ld. CIT (A) (NFAC) erred in law and on facts in confirming action of AO in not appreciating that deduction of Rs. 6, 02, 341/- claimed by the appellant was u/s 80P(2)(a)(1) on income earned from members legitimately allowable. 5. Ld. CIT (A) (NFAC) erred in law and on facts in holding that co- operative banks are not a co-operative society and that interest on FD/ dividend earned are not allowable deduction u/s 80P(2)(d) but are taxable. 6. Ld. CIT (A) (NFAC) erred in placing reliance on judgment of Katlary Kirana (327 CTR 0128) of jurisdictional High Court which is rendered in the context of revisional proceedings and not on whether co-operative Bank is a species of genus co-operative society. 7. Initiation of penalty proceedings u/s 271 (1)(c) of the act is unjustified.” 3. The assessee is a co-operative credit society engaged in providing credit facilities and financial services to its members. The assessee filed its return of income on 18-12-2017 declaring total income of Rs.1,77,000/- and claimed deduction of Rs. 11,78,122/- u/s. 80P of the Act. The case was selected for complete scrutiny and assessment was completed u/s. 143(3) of the Act thereby disallowing deduction/s. 80P to the extent of Rs. 11,78,126/- 4. Being aggrieved by the assessment order, the assessee file appeal before the CIT(A). The CIT(A) dismissed the appeal of the assessee. 5. The ld. A.R. submitted that the ground nos. 1 & 2 of the appeal are not pressed. As regards ground nos. 3 & 4, Printed from counselvise.com I.T.A No. 809/Ahd/2025 The Lunawada Urban Co-Op Credit Society Ltd., A.Y. 2016-17 3 the ld. A.R. submitted that the society earned total income from co-operative bank amounting to Rs. 12,67,248/- and after deduction on proportionate expenditure amounting to Rs. 7,41,467/-, the said deduction for proportionate expanses is claimed based on various decision on net interest income amounting to Rs. 5,25,781/- which is deduction u/s. 80P(2)(d) of the Act. The ld. A.R. submitted that the assessee should be granted proportionate expenses on gross interest income and relied upon the decision of Hon’ble Gujarat High Court in case of Surat Sahkari Sangh Ltd. vs. ACIT (72 taxman.com 169). 5.1 The ld. A.R. also relied upon the decision of Hon’ble Gujarat High Court in cases of Ashwinkumar Arban Cooperative Society Ltd. 168 taxmann.com 314 (Guj) and Shree Madhi Vighag Khand Udyog Sahakari Mandali Ltd. 171 taxmann.com 2022 (Guj). 6. The ld. D.R. relied upon the assessment order and the order of the CIT(A). 7. We have heard both the parties and perused all the relevant materials available on record. It is pertinent to note that the assessee has received interest income from co- operative bank and the proportionate expenses has to be allowed as held by Hon’ble Gujarat High Court in various decisions. In the light of decisions of Hon’ble Gujarat High Court, the appeal of the assessee is allowed. Printed from counselvise.com I.T.A No. 809/Ahd/2025 The Lunawada Urban Co-Op Credit Society Ltd., A.Y. 2016-17 4 8. In the result, the appeal of the assessee is allowed. Order pronounced in the open court on 14-08-2025 Sd/- Sd/- (Dr. BRR Kumar) (Suchitra Kamble) Vice President Judicial Member Ahmedabad : Dated 14/08/2025 आदेश क\u0006 \u0007\bत ल प अ\u000fे षत / Copy of Order Forwarded to:- 1. Assessee 2. Revenue 3. Concerned CIT 4. CIT (A) 5. DR, ITAT, Ahmedabad 6. Guard file. By order/आदेश से, उप/सहायक पंजीकार आयकर अपील\u0012य अ\u0013धकरण, अहमदाबाद Printed from counselvise.com "