AI Insights
The case involves The Shukan Lotus Cooperative Housing Service Society Ltd., which appealed against the order of the Commissioner of Income Tax (Appeals) confirming the disallowance of a deduction claimed under section 80P(2)(d) of the Income Tax Act for the assessment year 2021-22. The society had claimed a deduction for interest income earned from fixed deposits, part of which was with Bank of Baroda, a non-cooperative bank, and part with Ahmedabad District Cooperative Bank, a cooperative society. The initial disallowance was made by the Centralized Processing Center (CPC) under section 143(1) of the Act. The CIT(A) dismissed the appeal due to non-compliance by the assessee in providing necessary documentation and arguments. The Tribunal, however, after reviewing judicial precedents, allowed the deduction for the portion of interest income earned from Ahmedabad District Cooperative Bank, affirming the principle that cooperative societies are eligible for such deductions when the income is derived from another cooperative society.
Appeal Details
Counselvise Citation
[2025] 140 COUNSELVISE.COM (IT) 714635 (ITAT-AHMEDABAD)
Assessee PAN
Bench
Appeal Number
CRN Number
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
06-08-2025
Appeal Filed By
Assessee
Order Result
Partly Allowed
Assessment Year
2021-2022
Judgement Text
" IN THE INCOME TAX APPELLATE TRIBUNAL “SMC” BENCH, AHMEDABAD BEFORE DR. BRR KUMAR, VICE PRESIDENT & SHRI SIDDHARTHA NAUTIYAL, JUDICIAL MEMBER I.T.A. No.589/Ahd/2025 (Assessment Year: 2021-22) The Shukan Lotus Cooperative Housing Service Society Ltd., Nr. Tulsi Bungalow, New S G Road, Chandlodiya, Ahmedabad-382481 Vs. Income Tax Officer, Ward-1(1)(1), Ahmedabad [PAN No.AADAT3995R] (Appellant) .. (Respondent) Appellant by : Shri Parin S Shah, AR Respondent by: Shri B. P. Makwana, Sr. DR Date of Hearing 16.07.2025 Date of Pronouncement 06.08.2025 O R D E R PER SIDDHARTHA NAUTIYAL - JUDICIAL MEMBER: This appeal has been filed by the Assessee against the order passed by the Ld. Commissioner of Income Tax (Appeals), (in short “Ld. CIT(A)”), ADDL/JCIT (A)-2, Pune vide order dated 13.03.2024 passed for A.Y. 2021- 22. 2. The assessee has raised the following grounds of appeal: “1. The order passed CPC and confirmed by JCIT(A) is invalid bad in law and required to be quashed. 2. Ld. JCIT(A) erred in law and on facts in confirming disallowance of deduction u/s 80P(2)(d) of the Act of Rs.472220/-. 3. The order passed by authorities is required to be quashed as CPC acted beyond the power given u/s. 143(1) of the Act. 4. Charging of interest u/s 234B and 234C unjustified.” Printed from counselvise.com ITA No. 589/Ahd/2025 The Shukan Lotus Cooperative Housing Service Society Ltd. vs. ITO Asst. Year –2021-22 - 2– 3. The brief facts of the case are that the assessee is a cooperative society and had filed return of income for A.Y. 2021-22 declaring “NIL” income after claiming deduction under section 80P of the Act, amounting to Rs. 4,72,220/-. The return of income filed by the assessee was processed by the CPC and vide intimation order under section 143(1) of the Act dated 19.10.2022, the income of the assessee society was computed at a figure of Rs. 4,72,220/- by making disallowance of deduction claimed under section 80P of the Act. 4. Being aggrieved by the intimation order, the assessee filed appeal before Ld. CIT(A). CIT(A), he noted that various notices of hearing were issued to the assessee, however, there was no response which was filed by the assessee, in respect to those notices. Accordingly, Ld. CIT(A) dismissed the appeal of the assessee with the following observations: “7.2 I have carefully gone through the intimation order u/s 143(1) of the Act, Grounds of appeal as well as the relevant provisions of law. 7.3 During the appellate proceedings, the appellant has not made any compliance in response to notices issued by the undersigned. In absence of the written submission/argument and evidence, it remained to be unexplained as to how the CPC’s order is erroneous. If the appellant-society claims that it is eligible for any claim it should have furnished supporting documents. Making claim in the grounds of appeal that the adjustments made by the CPC was bad in law does not make the intimation order invalid unless the appellant-society proves so, with supporting evidence. The Appellant has failed to do so in spite of issuing as many as four notices/communications. Therefore, in absence of evidence, the grounds raised by the appellant in the present appeal cannot be accepted on its face value. The appellate proceedings are first line of remedy to those who think that the injustice has been done by the CPC. However, the appellant failed to avail the same by non-complying. During the appellate proceedings, the appellant-society has not availed of the opportunities given to it. Therefore, it is assumed that the appellant-society is not interested in pursuing its own appeal. Moreover, the appellant failed to bring on records any facts or documents which can explain how the adjustment(s) made by the CPC in intimation order u/s 143(1) of the Act, is erroneous. But it is noted that the appellant-society chose Printed from counselvise.com ITA No. 589/Ahd/2025 The Shukan Lotus Cooperative Housing Service Society Ltd. vs. ITO Asst. Year –2021-22 - 3– not to comply on the issue involved in the present appeal till the date for the reason best known to it. 7.4 Mere claiming that the CPC erred in making the adjustments does not give an edge to the appellant. Further, during appellate proceedings, no proper response/submission has been received from the appellant-society to substantiate its claim in support of grounds of appeal though adequate/reasonable/sufficient opportunities of being heard were given to it. 7.5 In the case of Anil Goel Vs CIT, [2008] 306 ITR 212 (Punjab & Haryana), the Hon'ble High Court held as under: \"4. It is thus obvious on the plain language of section 250 of the Act that date and place of hearing was duly fixed. The assessee was also given notice along with notice to the Assessing Officer. The assessee had ample opportunity to make his submissions by appearing in person or through authorised representative. Despite fixing the case for seventeen hearings, no one had put in appearance nor any justifiable reason for adjournment was given. 5. The Tribunal also found that non-recording of reasons in support of order passed by CIT(A) would not amount to committing any illegality because the CIT(A) has adopted the reasoning advanced by the Assessing Officer and has upheld his order. The judgment of this Court, in the case of Popular Engineering Co. vs. ITAT[2001] 248 ITR 577, has been rightly relied upon wherein it has been observed that elaborate reasons need not be recorded by the CIT(A) as has been done by the Assessing Officer. The reasons are required to be clear and explicit indicating that the authority has considered the issue in controversy. If the appellate/revisional authority has to affirm such an order it is not required to give separate reasons which may be required in case the order is to be reversed by the appellate/revisional authority.\" 7.6 Further, during appellate proceedings, no response is received from the appellant-society to substantiate its claim in support of grounds of appeal though ample opportunities of being heard were given to it, as tabulated in Para 6.1 above. It would not be out of context to mention here that the appellant has never shown the intention to prosecute the present appeal in proper/effective manner by making participation during the appellate proceedings being conducted before the appellate authority. Opportunity of being heard is central to any adjudication process but that does not absolve the appellant from non-submission of evidences in support of ground of appeal despite repeated and several notices/communication sent and duly served upon the appellant. An adjudication proceeding cannot be held in abeyance indefinitely on account of non-compliance of the appellant. The inherent non- compliance on the part of appellant-society clearly shows that it has no argument or cogent material or corroborative documentary evidence to produce which can prove that adjustments made by the CPC in the intimation order is wrong. 7.7 Keeping in view of all the aforesaid facts & detailed discussions held herein before and in the absence of any corroborative evidence or material/submission made Printed from counselvise.com ITA No. 589/Ahd/2025 The Shukan Lotus Cooperative Housing Service Society Ltd. vs. ITO Asst. Year –2021-22 - 4– by the appellant during the course of present appellate proceedings, I do not find any reason to interfere in the intimation order passed u/s 143(1) of the Act by CPC. In view of above, all the grounds raised by the appellant are dismissed. 8. As a result, the present appeal of the appellant is DISMISSED.” 5. The assessee is in appeal before us against the aforesaid order passed by Ld. CIT(A). Before us, the contention of the assessee was that out of the total interest amount claimed on which deduction under section 80P of the act was claimed by the assessee, a sum of Rs. 1,83,277/- had been earned by the assessee as interest income on fixed deposits kept with Bank of Baroda (the Counsel for the assessee submitted / admitted that so far as this amount is concerned, the assessee society is not eligible to claim deduction under section 80P of the Act). However, the Counsel for the assessee submitted that with respect to the balance amount on which interest was earned i.e. Rs. 2,88,943/- (Rs. 4,72,220 less Rs. 1,83,277), the same earned by the assessee on fixed deposits kept with Ahmedabad District Cooperative Bank, which is a cooperative society. The Counsel for the assessee submitted that it is a well settled law, in view of the judicial precedents on the subject that the assessee society is eligible to claim deduction under section 80P of the Act with respect to interest income earned from District Cooperative Banks. Accordingly, so far as the interest on this amount is concerned, the assessee is eligible to claim deduction under section 80P of the Act. 6. On going through the records, we note that the assessee placed on record the income and expenditure statement for the impugned assessment year and from which it is evident that the assessee had earned interest of Rs. 1,83,277/- from fixed deposits kept with Bank of Baroda and so far as this amount is concerned, we hold that the assessee is not eligible for claim of Printed from counselvise.com ITA No. 589/Ahd/2025 The Shukan Lotus Cooperative Housing Service Society Ltd. vs. ITO Asst. Year –2021-22 - 5– deduction under section 80P of the Act. However, with respect to the balance amount, in view of various judicial precedents on the subject we are of the considered view that the assessee is eligible to claim deduction under section 80P of the Act on interest income earned from fixed deposits with Ahmedabad District Cooperative Bank. 7. It would be useful to discuss some recent judicial precedents rendered by the Jurisdictional Gujarat High Court on the subject, for ready reference. 8. In the case of Principal Commissioner of Income-tax vs. Ashwinkumar Arban Co Operative Society Ltd. [2024] 168 taxmann.com 314 (Gujarat)[24-09-2024], the Gujarat High Court held that deduction under section 80P(2)(d) is available to cooperative societies on income earned as interest on investment made with cooperative bank which in turn, is a cooperative society itself. 9. In the case of Principal Commissioner of Income-tax vs. Shree Madhi Vighag Khand Udyog Sahakari Mandli Ltd. [2025] 171 taxmann.com 22 (Gujarat)[24-12-2024], the assessee was a cooperative society duly registered under Gujarat Cooperative Society Act and engaged in manufacturing of white crystal sugar. The assessee earned interest on investment made with a cooperative bank and claimed deduction under section 80P(2)(d) on same. The Assessing Officer allowed same, however, Principal Commissioner invoked revision proceedings under section 263 on ground that Assessing Officer had wrongly allowed deduction on interest earned from cooperative society. The High Court noted that Gujarat High Court in case of Pr. CIT v. Ashwinkumar Arban Cooperative Society Ltd. Printed from counselvise.com ITA No. 589/Ahd/2025 The Shukan Lotus Cooperative Housing Service Society Ltd. vs. ITO Asst. Year –2021-22 - 6– [2024] 168 taxmann.com 314 (Gujarat) held that deduction under section 80P(2)(d) is available to cooperative societies on income earned as interest on investment made with cooperative bank which in turn, is a cooperative society itself. In view of same, the Gujarat High Court held that since cooperative bank was a cooperative society registered under Gujarat State Cooperative Societies Act, assessee would be allowed to claim deduction under section 80P(2)(d) of the Act. 10. In the case of Kutch District Co-Operative Milk Producers Union Ltd. vs. Assistant Commissioner of Income-tax [2025] 173 taxmann.com 495 (Gujarat)[23-12-2024], the Gujarat High Court held that where assessee society earned interest income on fixed deposit kept with cooperative bank, assessee was eligible for deduction under section 80P(2)(d) of the Act on said interest income. 11. In the case of Principal Commissioner of Income-tax 1 vs. Rajkot Lodhika Sahakari Kharid Vechan Sangh Ltd. [2025] 176 taxmann.com 71 (Gujarat)[17-06-2025], the Gujarat High Court held that Cooperative bank is a cooperative society and interest earned from cooperative bank is eligible for deduction under section 80P(2)(d) of the Act. 12. In the case of Principal Commissioner of Income-tax vs. Ambika Co-Operative Credit Society Ltd. [2025] 174 taxmann.com 532 (Gujarat) [21-04-2025], the Gujarat High Court held that where assessee-co-operative society had earned interest from fixed deposits placed with co-operative bank and claimed said amount as deductible under section 80P(2)(d) and Assessing Officer had made due enquiries on issue of allowability of deduction during Printed from counselvise.com ITA No. 589/Ahd/2025 The Shukan Lotus Cooperative Housing Service Society Ltd. vs. ITO Asst. Year –2021-22 - 7– course of original assessment proceedings, Pr. CIT erred in invoking revision jurisdiction under section 263 to disallow deduction claimed by assessee. 13. In the result, the appeal of the assessee is partly allowed. This Order pronounced in Open Court on 06/08/2025 Sd/- Sd/- (DR. BRR KUMAR) (SIDDHARTHA NAUTIYAL) VICE PRESIDENT JUDICIAL MEMBER Ahmedabad; Dated 06/08/2025 TANMAY, Sr. PS TRUE COPY आदेश की Ůितिलिप अŤेिषत/Copy of the Order forwarded to : 1. अपीलाथŎ / The Appellant 2. ŮȑथŎ / The Respondent. 3. संबंिधत आयकर आयुƅ / Concerned CIT 4. आयकर आयुƅ(अपील) / The CIT(A)- 5. िवभागीय Ůितिनिध, आयकर अपीलीय अिधकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाडŊ फाईल / Guard file. आदेशानुसार/ BY ORDER, उप/सहायक पंजीकार (Dy./Asstt.Registrar) आयकर अपीलीय अिधकरण, अहमदाबाद / ITAT, Ahmedabad 1. Date of dictation 01.08.2025 2. Date on which the typed draft is placed before the Dictating Member 04.08.2025 3. Other Member………………… 4. Date on which the approved draft comes to the Sr.P.S./P.S 04.08.2025 5. Date on which the fair order is placed before the Dictating Member for pronouncement 06.08.2025 6. Date on which the fair order comes back to the Sr.P.S./P.S 06.08.2025 7. Date on which the file goes to the Bench Clerk 06.08.2025 8. Date on which the file goes to the Head Clerk…………………………………... 9. The date on which the file goes to the Assistant Registrar for signature on the order…………………….. 10. Date of Dispatch of the Order…………………………………… Printed from counselvise.com "
Other Referred Cases
Principal Commissioner of Income-tax vs. Ashwinkumar Arban Co Operative Society Ltd., Principal Commissioner of Income-tax vs. Shree Madhi Vighag Khand Udyog Sahakari Mandli Ltd., Kutch District Co-Operative Milk Producers Union Ltd. vs. Assistant Commissioner of Income-tax, Principal Commissioner of Income-tax 1 vs. Rajkot Lodhika Sahakari Kharid Vechan Sangh Ltd., Principal Commissioner of Income-tax vs. Ambika Co-Operative Credit Society Ltd.
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