UOH STAFF COOPERATIVE CREDIT SOCIETY LIMITED,HYDERABAD V. ITO., WARD-8(1), HYDERABAD

ITA 469/HYD/2025

AI Insights

The case involves the UOH Staff Cooperative Credit Society Limited, which appealed against the order of the Commissioner of Income-Tax (Appeals), National Faceless Appeal Center, Delhi. The primary issue was the eligibility of the society to claim deductions under Section 80P of the Income Tax Act for interest income earned from fixed deposits with cooperative banks. The Assessing Officer initially denied the deduction, reclassifying the interest income as 'income from other sources'. However, the CIT(A) reversed this decision, allowing the deduction but requiring verification of the cooperative status of the banks involved. The Tribunal dismissed the society's appeal, agreeing with the CIT(A)'s decision and the need for verification.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 708651 (ITAT-HYDERABAD)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-07-2025
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Assessment Year: 2021-2022
• Other Referred Cases: Mavilayi Service Co-operative Bank Ltd. Vs. CIT (2021) 123 taxmann.com 161
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Section: 143(3)

Judgement Text

"आयकर अपीलीय न्यायाधिकरण में, हैदराबाद ‘ए’ बेंच, हैदराबाद IN THE INCOME TAX APPELLATE TRIBUNAL Hyderabad ‘ A ‘ Bench, Hyderabad श्री रवीश सूद, माननीय न्याययक सदस्य एवं श्री मिुसूदन सावडिया, माननीय लेखा सदस्य SHRI RAVISH SOOD, HON’BLE JUDICIAL MEMBER AND SHRI MADHUSUDAN SAWDIA, HON'BLE ACCOUNTANT MEMBER आयकरअपीलसं./I.T.A.No.469/Hyd/2025 (निर्धारण वर्ा/ Assessment Year: 2021-22) UOH Staff Cooperative Credit Society Limited, Hyderabad. PAN : AAAAU9670K Vs. The Income Tax Officer, Ward – 8(1), Hyderabad. (अपीलार्थी/ Appellant) (प्रत्यर्थी/ Respondent) करदाता का प्रतततितित्व/ Assessee Represented by : None राजस्व का प्रतततितित्व/ Department Represented by : Shri Pavitran Kumar, J. Sr.DR सुिवाई समाप्त होिे की ततति/ Date of Conclusion of Hearing : 08.07.2025 घोर्णध की तधरीख/Date of Pronouncement : 18 .07.2025 O R D E R प्रनत रवीश सूद, जे.एम./PER RAVISH SOOD, J.M. The present appeal filed by the assessee society is directed against the order passed by the Commissioner of Income-Tax (Appeals), National Faceless Appeal Center (NFAC), Delhi, dated 2 ITA No.469/Hyd/2025 UOH Staff Cooperative Credit Society Limited, Hyderabad. 16.01.2025, which in turn arises from the order passed by the Assessing Officer (for short “A.O.”) under Section 143(3) of the Income Tax Act, 1961 (for short “the Act”), dated 27.12.2022 for A.Y. 2021-22. The assessee society has assailed the impugned order on the following grounds of appeal before us: “The Learned CIT(A) erred in Law and Facts in Partially Allowing the Appeal preferred by the Assessee. 2. The Learned CIT(A) erred in Law and Facts in deciding the allowance of deduction u/s. 80P towards the Interest Earned from Term Deposits made out of Statutory Reserves of the Society with Scheduled Public Sector Banks. 3. The Learned CIT(A) erred in evaluation of the Information and explanations offered by the Assessee during the Appellate Proceedings 4. Any Other Ground/(s) Which may be urged during the course of Appellate Proceedings.” 2. Succinctly stated, the assessee society, which is a Cooperative Society with the primary object of granting various credit facilities to its members, had filed its return of income for A.Y. 2021-22 on 14.12.2021, declaring its total income at Rs. Nil (after claiming deduction under Section 80P of the Act). The return of income was initially processed under Section 143(1)(a) of the Act on 19.06.2022. Subsequently, the case of the assessee society was selected for scrutiny assessment u/s 143(2) of the Act. 3 ITA No.469/Hyd/2025 UOH Staff Cooperative Credit Society Limited, Hyderabad. 3. During the course of assessment proceedings, it was observed by the A.O. that the major activities of the assessee society were to accept thrift deposits from its members and grant loans to them. On a perusal of the details, it was observed by him that the assessee society had sought for deduction of the surplus of Rs. 42,21,680/- as per its profit and loss account u/s 80P of the Act. On a perusal of the details, it was observed by the A.O. that the assessee society, during the subject year, had received interest income of Rs. 21,14,662/- on its Fixed Deposits (FDRs). Observing that the claim of deduction u/s 80P(2)(d) of the Act was available only in respect of interest and dividend income received by the assessee society from its investments with any other co- operative societies, the A.O. called upon the assessee society to explain as to why its claim for deduction of the aforesaid interest income u/s 80P(2)(d) of the Act, may not be declined. 4. As the reply filed by the assessee society did not find favour with the A.O., therefore, he re-characterized the interest income from deposits with bank as the income of the assessee society from other sources, and thus, held it as ineligible for deduction u/s 80P(2)(d) of the Act. 4 ITA No.469/Hyd/2025 UOH Staff Cooperative Credit Society Limited, Hyderabad. 5. Aggrieved, the assessee society carried the matter in appeal before the CIT(A). 6. The CIT(A) after deliberating upon the facts at length in the case before him, observed that the assessee society had, as its primary object, the granting of various credit facilities to its members. It was observed by him that the A.O. had declined the assessee society’s claim for deduction of interest income of Rs.2,14,662/- that it had earned from its investments with cooperative banks and held the same as its “Income from other sources”. The CIT(A) observed that it was the claim of the assessee society that the interest income derived from the cooperative banks was eligible for deduction u/s 80P(2)(d) of the Act. 7. The CIT(A) deliberated on the issue in hand at length and concluded that the assessee society was duly eligible to claim deduction of the interest income on its investments from cooperative banks u/s 80P(2)(d) of the Act. At the same time, the CIT(A) directed the A.O. to verify as to whether the cooperative societies/banks from whom the assessee society had received the interest income, during the subject year, were registered under the 5 ITA No.469/Hyd/2025 UOH Staff Cooperative Credit Society Limited, Hyderabad. Cooperative Societies Act or under the State Act. Also, the CIT(A) had observed that only the interest income received by the assessee society from cooperative societies/banks would be eligible for deduction under Section 80P(2)(d), and any interest income received from entities other than cooperative societies/cooperative banks would not qualify for such deduction. Accordingly, the CIT(A) relying upon the judgment of the Hon'ble Supreme Court in the case of Mavilayi Service Co-operative Bank Ltd. Vs. CIT (2021) 123 taxmann.com 161, allowed the claim of the assessee society for deduction of interest income u/s 80P of the Act, subject to the necessary verification. 8. The assessee society, being aggrieved with the order of the CIT(A), has carried the matter in appeal before us. 9. As the assessee society, despite having been intimated, had failed to put forth an appearance, therefore, we are constrained to dispose of the appeal as per Rule 24 of Income Tax (Appellate Tribunal) Rules, 1963 i.e. after hearing the respondent/revenue and perusing the orders of lower authorities. 6 ITA No.469/Hyd/2025 UOH Staff Cooperative Credit Society Limited, Hyderabad. 10. Shri Pavitran Kumar J., the learned Senior Departmental Representative (for short “Ld. DR”) relied upon the orders of lower authorities. The Ld. DR submitted that as the CIT(A) had only directed the A.O. to verify as to whether or not the assessee society had received the interest income on its activities from cooperative societies/banks i.e. a pre-condition for claiming of deduction u/s 80P(2)(d) of the Act, therefore, no infirmity emanates from the said direction of the CIT(A). 11. We have thoughtfully considered the contentions advanced by the Ld. DR in the backdrop of the orders of authorities below. Admittedly, the CIT(A) had principally concurred with the assessee society that it was eligible to claim deduction u/s 80P(2)(d) of the Act in respect of the interest income earned from its investments/ deposits with the cooperative banks, but had directed the A.O. to verify whether such interest income was, in fact, earned from cooperative societies/banks. We find no infirmity in the observations of the CIT(A) and thus, find no substance in the present appeal filed by the assessee society. 7 ITA No.469/Hyd/2025 UOH Staff Cooperative Credit Society Limited, Hyderabad. 12. Resultantly, the appeal filed by the assessee society being devoid and bereft of any substance is dismissed. Order pronounced in the Open Court on 18th July, 2025. Sd /- Sd/- (मिुसूदन सावडिया) (MADHUSUDAN SAWDIA) लेखा सदस्य/ACCOUNTANT MEMBER Sd/- Sd/- (रवीश सूद) (RAVISH SOOD) न्यायिक सदस्य/JUDICIAL MEMBER Sd/- Sd Hyderabad, dated 18.07.2025. TYNM/sps आदेशकी प्रनतनलनप अग्रेनर्त/ Copy of the order forwarded to:- 1. निर्धाररती/The Assessee : UOH Staff Cooperative Credit Society, University of Hyderabad, Admin Block back side, above SBI, Prof C R Rao Road, Gachibowli – 500046, Hyderabad, Telangana. 2. रधजस्व/ The Revenue : The Income Tax Officer, Ward – 8(1), Hyderabad. 3. The Principal Commissioner of Income Tax, Hyderabad. 4. नवभधगीयप्रनतनिनर्, आयकर अपीलीय अनर्करण, हैदरधबधद / DR, ITAT, Hyderabad 5. गधर्ाफ़धईल / Guard file आदेशधिुसधर / BY ORDER Sr. Private Secretary ITAT, Hyderabad. "