Case Law Details
Rethal Dudh Utpadak Sahkari Mandali Ltd. Vs ITO (ITAT Ahmedabad)
The case of Rethal Dudh Utpadak Sahkari Mandali Ltd. Vs ITO, adjudicated by the Income Tax Appellate Tribunal (ITAT) in Ahmedabad, presents a crucial judgment concerning the deductions under Section 80P(2)(d) of the Income Tax Act, 1961. ITAT’s ruling affirms that a Co-operative Society can claim Section 80P(2)(d) deductions for the interest income derived from a Fixed Deposit Receipt (FDR) with a Co-operative Bank.
Analysis:
The appellant, a Co-operative Society engaged in milk collection and supply, sought to avail the deductions under Section 80P of the Income Tax Act, 1961 for its interest income from an FDR with the Ahmedabad District Co-operative Bank. However, the Assessing Officer disallowed this claim, leading to an appeal before the CIT(A), which was eventually dismissed.
The appellant contended that the said bank is a registered Co-operative Society, and as per previous rulings of the Gujarat High Court, the income derived from investment with a Co-operative Society is eligible for deductions under Section 80P(2)(d). The appellant also drew parallels with another case (Zanu Dudh Utpadak Sahkari Mandali) where a similar claim was justified.
On hearing the arguments and examining the evidence, ITAT concurred with the appellant’s view. It was recognized that the Ahmedabad District Co-operative Bank is a registered Co-operative Society and that Section 80P(2)(d) does not distinguish the source of the investment. As such, the income derived from this investment qualifies for the claimed deduction.
Conclusion:
ITAT’s ruling in Rethal Dudh Utpadak Sahkari Mandali Ltd. Vs ITO sets a significant precedent for Co-operative Societies seeking to claim deductions under Section 80P(2)(d) for their income from investments with other Co-operative Societies. This judgment strengthens the financial autonomy of Co-operative Societies and enhances their contribution to the socio-economic development of their members.
FULL TEXT OF THE ORDER OF ITAT AHMEDABAD
This appeal is filed by the Assessee against order dated 24.02.2023 passed by the CIT(A), National Faceless Appeal Centre (NFAC), Delhi for the Assessment Year 2017-18.
2. The Assessee has raised the following grounds of appeal :-
“1. The learned CIT(A) has grievously erred in law and on facts in confirming disallowance of interest received on FDRs with the Ahmedabad District Cooperative Bank of Rs.3,01,911/- claimed as ‘Exempt’ u/s.80(P)(2)(d) of the Act without considering the facts and submission in its proper perspective.
2. He has erred in law and on facts in upholding non allowance of deduction of interest of Rs.3,01,011/- under Section 80P(2)(d) of the Act.
3. He has erred in law and on facts in erroneously distinguishing the decision of Gujarat High Court in the case of Jafri Momin Vikash Co-op. Credit Society – 362 ITR 331 and Ekta Co-op. Credit Society – 402 ITR 85 to justify the disallowance of interest on FD with ADC Bank.
4. He has grievously erred in law and on facts in conveniently ignoring the decision of Zanu Dudh Utpadak Sahkari Mandalai Ltd. for AY 2017-18 on similar facts, passed by the CIT(A) on 30.03.2022, submitted to him vide submission dated 02.04.2022 directing the allowance of interest on FDR with ADC Bank.
5. On the facts of the assessee society, the NIL return of income ought to have been accepted without any addition.
6. He has erred in law and on facts in confirming levy of interest u/s.234A, 234B, 234C and 234D as applicable without furnishing the computation sheet.”
3. The assessee is a Co-operative Society and engaged in the business of collecting milk from its members and supplying it to the member union i.e. The Ahmedabad District Co operative Milk Producers Union Limited. The assessee filed its return of income for A.Y. 2017-18 on 16.11.2017 declaring total income at Rs.Nil thereby claiming deduction under Section 80P of the Income Tax Act, 1961 amounting to Rs.16,90,725/-. The Assessing Officer observed that the assessee received interest income from FDR with Ahmedabad District Co-operative Bank amounting to Rs.3,01,911/-. After taking cognisance of the reply of the assessee, the Assessing Officer made disallowance of Rs.3,01,911/- as claimed deduction under Section 80P(2)(d) of the Act by the assessee.
4. Being aggrieved by the Assessment Order, the assessee filed appeal before the CIT(A). The CIT(A) dismissed the appeal of the assessee.
5. The Ld. AR submitted that the Ahmedabad District Co-operative Bank Limited is a registered Co-operative Society under Societies Registration Act and, therefore, the decision of Hon’ble Gujarat High Court in case of Surat Vankar Sahkari Sangh Limited vs. ACIT, 72 com 169 (Gujarat) as well as Jafri Momin Vikash Cooperative Credit Society, 362 ITR 331. The Ld. AR further submitted that the assessee is a Co-operative Society and the interest received from the Ahmedabad District Co-operative Bank which is also a Co-operative Society. The claim of the assessee as regards to deduction under Section 80P(2)(d) of the Act is justifiable as in one of the case of different assessee, the CIT(A) therein has held that the Ahmedabad District Co-operative Bank is also a Co-operative Society and interest earned from the said Banks/Co-operative Societies can be treated/claimed as deduction under Section 80P(2)(d) (Zanu Dudh Utpadak Sahkari Mandali – AY 2017-18, order dated 30.03.2022.
6. The Ld. DR relied upon the Assessment Order and the order of the CIT(A) and further submitted that the CIT(A) has distinguished other decisions quoted by the assessee. The Ld. DR further submitted that provisions contained in Section 80P(2)(a)(i) and 80P(2)(d) is different and, therefore, the decision of Hon’ble Gujarat High Court will not be applicable in the present case.
7. Heard both the parties and perused all the relevant material available on record. It is undisputed fact that the Ahmedabad District Co-operative Bank is registered under Societies Registration Act of Gujarat. The Hon’ble Gujarat High Court in case of Surat Vankar Sahkari Sangh Limited (supra) categorically mentioned provision of Section 80P(2)(d) of the Act does not make any distinction in regard to source of the investment because this Section envisages deduction in respect of any income derived by the co-operative society from any investment with a Co-operative Society. The Ahmedabad District Co-operative Bank is also a registered Co-operative Society and, therefore, the assessee is eligible for claiming deduction under Section 80P(2)(d) of the Act. The Ld. DR has not pointed out any distinguishing facts from the decision of Hon’ble Gujarat High Court and that of assessee’s case. Therefore, the appeal of the assessee is allowed.
8. In the result, appeal filed by the assessee is allowed.
Order pronounced in the open Court on this 10th day of May, 2023.
