THE SONIKAMPA GROUP SEVA SAHAKARI MANDALI LIMITED,ARVALLI V. THA ITO, WARD-1, MODASA

ITA 1341/AHD/2025

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The case involves The Sonikampa Group Seva Sahakari Mandali Ltd., a cooperative society, appealing against the decision of the Commissioner of Income Tax (Appeals), which upheld the disallowance of a deduction claim under section 80P of the Income Tax Act, 1961. The deduction was initially claimed on interest and dividend income received from a cooperative bank, which the Assessing Officer classified as 'income from other sources' rather than 'business profits'. The Tribunal found that the matter required further examination regarding the eligibility of the income for deduction under section 80P, particularly in light of judicial precedents supporting such claims.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 793553 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-09-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2018-2019
• Appeal Filed On: 23-06-2025
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Business income
• Section: 143(3)

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD “SMC” BENCH Before: Shri Siddhartha Nautiyal, Judicial Member And Shri Narendra Prasad Sinha, Accountant Member The Sonikampa Group Seva Sahakari Mandali Ltd. Market Yard, Talod Road Dhansura, Arvalli-383310, Gujarat, India PAN:AAAJT1386N (Appellant) Vs The ITO, Ward-1, Modasa (Respondent) Assessee Represented: Shri M.K. Patel, Advocate Revenue Represented: Shri Suresh Chand Meena, Sr.D.R. Date of hearing : 27-08-2025 Date of pronouncement : 23-09-2025 आदेश/ORDER PER : SIDDHARTHA NAUTIYAL, JUDICIAL MEMBER:- This appeal is filed by the Assessee as against the appellate order dated 21.04.2025 passed by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi, (in short referred to as “CIT(A)”), arising out of the assessment order passed under section 143(3) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) relating to the Assessment Year 2018-19. ITA No. 1341/Ahd/2025 Assessment Year 2018-19 Printed from counselvise.com I.T.A No. 1341/Ahd/2025 A.Y. 2018-19 Page No The Sonikampa Group Seva Sahakari Mandali Ltd. . vs. ITO 2 2. The assessee has raised the following Grounds of Appeal: (1) That on facts, in law, and evidence on record, the learned NFAC has grievously erred in confirming the disallowance of claim of deduction u/s 80P(2)(d) of the Act of Rs. 3,13,020/- (2) That on facts and in law, the learned NHAC ought to have allowed the claim as prayed for. (3) The appellant craves leave to add, alter, amend any ground of appeal. 3. The brief facts of the case are that the assessee, M/s The Sonikampa Group Seva Sahakari Mandali Ltd, a co-operative society, filed its return of income for the Assessment Year 2018–19 on 29.09.2018, declaring nil income after claiming deduction under Chapter VIA of the Income Tax Act, 1961 (Act). Upon examination of records, the Assessing Officer observed that the assessee had earned interest income from fixed deposits of Rs.17,826/- and dividend income of Rs.2,95,194/- during the year. The assessee declared this income as part of business income and claimed deduction under section 80P of the Act, stating the dividend was from other cooperative societies. However, upon review, the Assessing Officer held that this income did not arise from the core business activity of providing credit facilities to members or sale of agricultural inputs. Since the interest was from bank deposits and dividend was not from members or domestic companies, the AO treated this income of Rs.3,13,020/- as income from other sources and disallowed the deduction under section 80P of the Act. 4. In appeal, CIT(Appeals) dismissed the appeal of the assessee, with the following observations: Printed from counselvise.com I.T.A No. 1341/Ahd/2025 A.Y. 2018-19 Page No The Sonikampa Group Seva Sahakari Mandali Ltd. . vs. ITO 3 5.5. In view of the above facts it appears that the interest earned from surplus invested/deposited in the Co-operative banks/commercial banks and other financial institution is not being attributable to main business of the appellant hence d be assessed as 'income from other sources and not as 'business profits. 5.6. Accordingly, the observations and the findings of the AO appear to be in order which does not permit me to take a divergent view. Accordingly the disallowance u/s 80P made by the AO of Rs. 3,13,020/-(Interest received from Co- operative banks/commercial banks and other financial institution & Dividend Income) is upheld and all the grounds raised in this appeal are dismissed. 5. The assessee is in appeal before us against the order passed by CIT(Appeals) dismissing the appeal of the assessee. Before us, the Counsel for the assessee submitted “Bank Statement” of the assessee’s account held with “The Sabarkantha DCCB Bank” which is a co-operative bank. The Counsel for the assessee submitted that on perusal of the same, it is evident that the assessee had earned interest of Rs.17,826/- and dividend income of Rs.2,95,194/- during the year from the said co-operative bank and the same is eligible for deduction u/s 80P of the Act. The Counsel for the assessee submitted that law on this point is quite clear in view of various judicial precedents on this issue which have held that interest and dividends earned by a society from a co-operative bank is eligible for deduction u/s 80P of the Act. 6. In response, the Ld. DR placed reliance on the observations made by the Assessing Officer and Ld. CIT(Appeals) in their respective orders. Printed from counselvise.com I.T.A No. 1341/Ahd/2025 A.Y. 2018-19 Page No The Sonikampa Group Seva Sahakari Mandali Ltd. . vs. ITO 4 7. We have heard the rival contentions and perused the material on record. The issue involved in the present appeal relates to the eligibility of the assessee, a co-operative society, to claim deduction under section 80P of the Act, in respect of interest income of Rs.17,826/- and dividend income of Rs.2,95,194/-. The Assessing Officer had denied the deduction holding that the income in question did not arise from the core business activities of the society and was therefore not eligible under section 80P. The CIT(Appeals) confirmed this view. Before us, the Counsel for the assessee submitted that both the interest and dividend income were received from a co-operative bank, namely, The Sabarkantha District Central Co-operative Bank, and placed reliance on the bank statement to support this claim. It was further submitted that as per judicial precedents, income earned by a co-operative society from investments made in another co-operative society, including co-operative banks, is eligible for deduction under section 80P(2)(d) of the Act. In view of the submissions made before us and the documentary evidence placed on record, which appears to have not been properly verified during the assessment proceedings, we are of the considered opinion that the matter needs to be re-examined by the Assessing Officer. We accordingly restore the matter to the file of the Assessing Officer for carrying out necessary verification of the nature and source of the interest and dividend income and to decide the claim of deduction under section 80P afresh in accordance with law, after giving due opportunity to the assessee to present all relevant facts and supporting documents. Printed from counselvise.com I.T.A No. 1341/Ahd/2025 A.Y. 2018-19 Page No The Sonikampa Group Seva Sahakari Mandali Ltd. . vs. ITO 5 8. In the result, the appeal of the assessee is allowed for statistical purposes. Order pronounced in the open court on 23-09-2025 Sd/- Sd/- (NARENDRA PRASAD SINHA) (SIDDHARTHA NAUTIYAL) ACCOUNTANT MEMBER JUDICIAL MEMBER Ahmedabad : Dated 23/09/2025 आदेश कȧ ĤǓतͧलͪप अĒेͪषत / 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 अपीलȣय अͬधकरण, अहमदाबाद Printed from counselvise.com "