Gujarat Housing Umarwada Urban Co-Op. Credit Society Ltd. Vs ITO (ITAT Surat)
Summary: The Income Tax Appellate Tribunal (ITAT), Surat Bench, allowed the appeal filed by The Gujarat Housing Umarwada Urban Co-Op. Credit Society Ltd. Vs ITO for Assessment Year 2020-21, concerning the disallowance of deduction under Section 80P(2)(d) of the Income Tax Act, 1961, amounting to ₹1,60,28,372. The assessee challenged the order dated 19 September 2024 passed by the National Faceless Appeal Centre (NFAC)/Commissioner of Income Tax (Appeals), which upheld the assessment order dated 21 September 2022 passed under Sections 143(3) read with 144B. The principal dispute concerned the eligibility of interest and dividend income received from co-operative banks for deduction under Section 80P(2)(d).
The assessee, a co-operative credit society registered under the Gujarat Co-operative Act, submitted that interest and dividend earned from co-operative banks qualified for deduction because co-operative banks continued to possess the character of co-operative societies. The assessee relied on the Surat Tribunal’s decision in Shree Salabatpura Urban Co-Op. Credit Society Ltd. v. DCIT (ITA No. 150/SRT/2023) and the jurisdictional Gujarat High Court’s judgment in Surat Vankar Sahakari Sangh Ltd. v. ACIT. It argued that these decisions established the eligibility of income earned from investments with co-operative banks for deduction under Section 80P(2)(d).
The Revenue opposed the deduction, relying on PCIT v. Totagars Co-operative Sale Society [2017] 83 taxmann.com 140 (Karnataka High Court), Bantwal Public Employees Consumers Co-operative Society v. ITO (ITA No. 903/Bang/2023) and Murthedarara Seva Sahakari Sangha (N) v. ITO (ITA No. 1474/Bang/2023). The Department contended that the disputed interest income was not eligible for deduction under Section 80P(2)(d). The Tribunal considered these submissions and observed that the assessee’s limited prayer concerned the deduction claimed on interest earned from co-operative banks.
Cases Discussed
- Murthedarara Seva Sahakari Sangha (N) Vs ITO — ITA No. 1474/Bang/2023, dated 29.11.2024 (ITAT Bangalore). Relied upon by the Revenue to oppose deduction under Section 80P(2)(d).
- Althan Bhatar Co-operative Credit Society Ltd. Vs ACIT — ITA No. 143/SRT/2024 (ITAT Surat). Followed by the Tribunal in allowing the assessee’s claim.
- Vishal Co-operative Housing Services Society Limited Vs ITO — ITA No. 886/SRT/2023, dated 22.02.2024 (ITAT Surat). Relied upon for eligibility of interest earned from co-operative bank deposits under Section 80P(2)(d).
- Bantwal Public Employees Consumers Co-operative Society Vs ITO — ITA No. 903/Bang/2023, dated 18.12.2023 (ITAT Bangalore). Relied upon by the Revenue.
- Shree Salabatpura Urban Co-Op. Credit Society Ltd. Vs DCIT — ITA No. 150/SRT/2023, AY 2018-19 (ITAT Surat). Relied upon by the assessee in support of deduction under Section 80P(2)(d).
- PCIT Vs Totagars Co-operative Sale Society — [2017] 83 taxmann.com 140 (Karnataka High Court). Relied upon by the Revenue; distinguished in effect because the jurisdictional Gujarat High Court precedent was binding on the Surat Bench.
- Surat Vankar Sahakari Sangh Ltd. Vs ACIT — (2020) 421 ITR 134 (Gujarat High Court). Jurisdictional precedent followed in allowing the deduction claim.
FULL TEXT OF THE ORIGINAL JUDGMENT/ORDER
1. This appeal by assessee is directed against the order of National Faceless Appeal Centre, Delhi/Commissioner of Income tax (Appeals) [for short to as “NFAC/Ld.CIT(A)] dated 19.09.2024 for assessment year (AY) 2020-21, which in turn arises out of assessment order passed by Assessing Officer under section 143(3) r.w.s. 144B of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) 21.09.2022. The assessee has raised the following grounds of appeal:-
“1. On the facts and circumstances of the case, the learned Commissioner of Income-tax(Appeals) has erred in confirming of Rs.16028372/-.
2. On the facts and circumstances of the case, the learned Commissioner of Income-tax(Appeals) has erred in not allowing deduction under section 80P as claimed in the return of income.
3.On the facts and circumstances of the case, the learned Commissioner of Income-tax(Appeals) has erred in not granting deduction in respect of interest and dividend received from Co.Op. Bank etc.,
4.On the facts and circumstances of the case, the learned Commissioner of Income-tax(Appeals) has erred in not appreciating that there are various decisions in favour of the appellant.
5. The appellant reserves right to add, alter, vary any or all grounds of appeal.”
2. Rival submission of both the parties have been heard and record perused. The Ld. Authorized Representative (Ld.AR) for the assessee submits that the assessee is a cooperative credit society registered under The Gujarat Cooperative Act. The assessee while filing return of income in the computation of total income, claimed deduction of interest and dividend received from Co- operative bank under section 80P(2)(d) aggregating to Rs.1.60 crore. The figure of such amount is mentioned in para-8 of assessment order. The Ld. AR of the assessee submits that ground of appeal raised by assessee is covered by a series of decisions including by the decision of this Tribunal in case of Shree Salabatpura Urban Co-Op. Credit Society Ltd. vs. DCIT in ITA No.150/SRT/2023 for assessment year 2018-19, wherein this Tribunal by following various decisions including the judgment of Hon’ble jurisdictional High Court in case of Surat Vankar Sahakari Sangh Ltd. vs. ACIT held that co- operative bank are primarily co-operative society and interest or dividend earned from such co-operative bank are eligible for deduction under section 80P(2)(d) of the Act.
3. On the other hand, Ld. Senior Departmental Representative (Ld.Sr-DR) for the Revenue relied upon the decision of Hon’ble Karnataka High Court in case of PCIT vs. Totagars Co-operative Sale Society [2017] 83 taxmann.com 140 (Kar) ITAT Bangalore Benches in case of M/s Bantwal Public Employees Consumers Co-operative Society vs. ITO in ITA No.903/Bang/2023 dated 18.12.2023 and Murthedarara Seva Sahakari Sangha (N) vs. ITO in ITA No.1474/Bang/2023 dated 29.11.2024. The Ld. Sr-DR for the Revenue submits that since interest earned from assessee’s business operation and not eligible for deduction under section 80P(2)(d) of the Act.
4. We have considered the rival submissions of both the parties and have gone through order of lower authorities carefully. We have also deliberated the case law relied upon by both the parties. We find that Ld. AR of the assessee has made a limited prayer about deduction under section 80P(2)(d) of the Act which has been mentioned by Assessing Officer in para-10 of assessment order i.e., interest earned from co-operative bank. We find that ground of appeal raised by assessee is squarely covered by a series of decisions of this co- ordinate Bench of this Tribunal even after considering the decisions of Hon’ble Karnataka High Court in the case of Totagars Co-operative Sale Society (supra) relied by Ld. Sr-DR for the Revenue.
5. We find that in Althan Bhatar Co-operative Credit Society Ltd. Vs ACIT in ITA No. 143/Srt/2024, this combination on similar contention of the parties passed the following order;
7. We have considered the rival submissions of both the parties and perused the orders of the lower authorities carefully. The dispute relates to deduction claimed under section 80P(2)(d) of the Act with regard to interest earned on fixed deposit with Surat District Co-operative Bank. We find that issue related with the deduction under section 80(P)(2)(d) is squarely covered by the series of decisions of jurisdictional High Court in Surat Vankar Sahakari Sangh Ltd. vs. ACIT ( supra) as well as by decisions of this Tribunal in favour of assessee including in the case of Vishal Co-operative Housing Services Society Limited vs. ITO, in ITA No.886/SRT/2023, dated 22.02.2024 (Surat – Trib.), wherein it was held that Co-operative Banks are primarily the Co-operative Society and the interest earned on deposit with Co-operative banks are eligible for deduction under section 80P(2)(d) of the Act. Similar, view was taken in assesses own case for AY 2014-15 in ITA No.151/SRT/2019, dated 31.03.2022. Having gone through the order of Co-ordinate Bench (supra), we see no reason to take a different view from the view taken by the Co-ordinate Bench (supra).
8. Considering the aforesaid consisting decision, which is followed in a series of decisions by this co-ordinate Bench of this Tribunal and respectfully following the said decisions, we direct the Assessing Officer to delete the deduction under section 80P(2)(d) of the Act. So far as reliance on the decision of Hon’ble Karnataka High Court in case of PCIT vs. Totagars Co-operative Sale Society (supra) is concerned, we find that the decision of Jurisdictional High Court in Surat Vankar Sahkari Sangh (supra) has binding precedent on this bench.
9. In the result, the grounds of appeal raised by the assessee is allowed.
Order pronounced in the open court on 10/12/2024.
