Case Law Details
Dnyaneshwar More Bigarsheti Gramin Pat Puravatha Sahakari Sanstha Ltd. Vs ITO (ITAT Pune)
Assessee is a Cooperative Credit Society and engaged in the activity of accepting deposits from its members and providing credit facilities to them. The assessee filed return for AY 2017-18 declaring Nil income after claiming deduction under Chapter VIA at Rs.13,48,854/- while claiming business loss at Rs.3,56,511/-. Case was selected for scrutiny. AO noticed that the assessee earned interest income of Rs.17,05,365/- on investment with Cooperative Banks, which in his opinion does not quality for deduction u/s.80P(2)(d) which was disallowed by AO. CIT (A) upheld the disallowance made by the AO.
ITAT held that Section 80P(2)(d) provides that the sum received in respect of any income by way of interest or dividend derived by Cooperative Society from its investment with any other Cooperative Society, the whole of such income is eligible for deduction u/s.80P. Reliance was placed on the decision of Kolhapur District Central Co-op. Bank Kanista Sevakanchi Sahakar Pat Sanstha Ltd., Vs. ITO in ITA No.1365/PUN/2023, The Ugar Sugar Works Kamgar & Dr. Shirgaokar Shaikshanik Trust Nokar Co-op Credit Society vs. ITO in ITA No.84/PAN/2018. Considering the above decisions, order of CIT (A) was set-aside and Ao was directed to allow the claim.
FULL TEXT OF THE ORDER OF ITAT PUNE
This appeal by the assessee pertaining to the Assessment Year 2017-18 is directed against the order dated 19.03.2024 passed by the Addl./JCIT(A)-4, Bengaluru [in short the “ld.CIT(A)”] Delhi u/s.250 of the Income-tax Act, 1961 (hereinafter also called ‘the Act’) which inturn is arising out of the Assessment order passed u/s.143(3), dated 25.11.2019.
2. Succinctly, the facts of the case are that the assessee is a Cooperative Credit Society registered under the Cooperative Societies Act. It is engaged in the activity of accepting deposits from its members and providing credit facilities to them. The assessee filed the return of income for the A.Y. 2017-18 on 13.11.2017 declaring Nil income after claiming deduction under Chapter VIA at Rs.13,48,854/- while claiming business loss at Rs.3,56,511/-. After the case selected for Limited Scrutiny following by statutory notices u/s.143(2)/142(1), the assessee filed the requisite details. Based on the information furnished by the assessee, the Assessing Officer noticed that the assessee earned interest income of Rs.17,05,365/- on investment with Cooperative Banks, which in his opinion does not quality for deduction u/s.80P(2)(d) of the Act. Thus, he brought to tax the said interest income disallowing the deduction u/s.80P(2)(d) claimed by the assessee.
3. Aggrieved assessee preferred appeal before the ld.CIT(A) who vide impugned order upheld the disallowance made by the Assessing Officer.
4. Now the assessee is in appeal before the Tribunal.
5. At the outset, I find that the appeal is time barred by limitation by 180 days before the Tribunal. The assessee society filed a condonation petition stating that the society is situated in a small village and the employees and the Directors of the society are not so educated and not conversant with Income-tax Portal. It is also stated that One Mr. Hanumant Tarate from Solapur was the Tax Consultant looking after the Tax matters of the society and his email id was mentioned in Primary address as well as in Form No.35. He failed to verify the notices from the Portal which led to passing of the order against the assessee. Confirmation to this effect given by Mr. Hanumant Tarate is also placed on record. It is therefore prayed for condoning the delay of 180 days in filing the appeal.
6. After analyzing the averments made in the condonation petition and nothing contrary to disbelieve the averments made therein, I am of the view that there was ‘reasonable cause’ which prevented the assessee in filing the appeal before the Tribunal within the stipulated time. I therefore in the larger interest of justice condone the delay of 180 days in filing the appeal in light of decision in the case of Collector Land Acquisition Vs. MST Katiji (1987) 167 ITR 471 SC and proceed for adjudication of appeal.
7. Coming to the issue on merits, I have heard the parties and perused the material on record. In the instant case, the Assessing Officer disallowed interest income of Rs.17,05,365/-earned out of the Fixed deposits/Investments made with Cooperative Banks treating the same as Income from Other Sources u/s.56 of the Act and the same was affirmed by the ld.CIT(A) in the First Appellate Proceedings. Assessee is now in appeal challenging the said issue before me.
8. Section 80P(2)(d) of the Act provides that the sum received in respect of any income by way of interest or dividend derived by Cooperative Society from its investment with any other Cooperative Society, the whole of such income is eligible for deduction u/s.80P of the Act. I find that this issue is no more res integra as the Coordinate Benches of this Tribunal has been consistently holding that the interest income earned out of the FDs/Investments kept with Cooperative Banks is allowable u/s.80P(2)(d) of the Act. I find that this Tribunal in case of Kolhapur District Central Co-op. Bank Kanista Sevakanchi Sahakar Pat Sanstha Ltd., Vs. ITO in ITA No.1365/PUN/2023, dated 01.01.2024 dealing with similar issue after placing reliance on another decision of this Tribunal in the case of The Ugar Sugar Works Kamgar & Dr. Shirgaokar Shaikshanik Trust Nokar Co-op Credit Society vs. ITO in ITA No.84/PAN/2018, dated 27.05.2022 has held that the interest earned from deposits with Cooperative Banks are also eligible for deduction u/s.80P(2)(d) of the Act as Cooperative Banks are basically Cooperative Societies only but have turned into Bank on getting necessary banking license. I therefore respectfully following the above referred decisions and taking consistent view along with considering the facts of the case, where the assessee made investment with the Cooperative Banks and hold that the assessee is eligible for deduction u/s.80P(2)(d) of the Act for the interest income earned from Cooperative Banks at Rs.17,05,365/-. Findings of the ld. CIT(A) is set-aside and the Assessing Officer is directed to allow the claim of the assessee. Effective grounds of appeal raised by the assessee are allowed.
9. In the result, appeal of the assessee is allowed.
Order pronounced on this 6th day of January, 2025.
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