Case Law Details
Kolhapur ZPKSPSM Vs ITO (ITAT Pune)
The assessee appealed against the order dated 21.11.2024 passed by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi, arising from the assessment order passed under Section 143(3) of the Income-tax Act, 1961 dated 24.02.2021 for Assessment Year 2018-19.
The principal dispute before the Tribunal was the denial of deduction under Section 80P in respect of interest earned from investments with co-operative banks. The assessee challenged the disallowance of deduction under Section 80P(2)(a)(i) as well as the denial of the alternate claim under Section 80P(2)(d) for interest earned from co-operative banks amounting to ₹9,14,916. The assessee requested that the appeal be decided based on written submissions filed on 21.02.2025.
The Revenue supported the orders of the Assessing Officer and the CIT(A).
The Tribunal observed that the assessee had been denied deduction under Section 80P(2)(a)(i) in respect of ₹9,14,916, comprising interest, dividend from co-operative banks and form fees. It further noted that the assessee had alternatively claimed deduction under Section 80P(2)(d).
From the written submissions, the Tribunal found that out of the total amount of ₹9,14,916, a sum of ₹9,12,640 represented interest and dividend received from Kolhapur District Central Co-operative Bank, Kanista Sevakanchi Sahakar Pat Sanstha Ltd., and NKGSB Co-operative Bank. This amount comprised interest of ₹8,72,600 and dividend of ₹40,040.
The Tribunal referred to Section 80P(2)(d), which provides deduction in respect of interest and dividend earned by a co-operative society from investments with another co-operative society. It further noted that a consistent view had been taken in several decisions, including Kolhapur District Central Co-operative Banks Kanista Sevakanchi Sahakar Pat Sanstha Ltd. vs. ITO, that co-operative banks are essentially co-operative societies and, therefore, interest and dividend earned from co-operative banks qualify for deduction under Section 80P(2)(d).
Following the consistent view, the Tribunal held that the assessee was entitled to deduction under Section 80P(2)(d) in respect of interest of ₹8,72,600 and dividend of ₹40,040, aggregating to ₹9,12,640, earned from co-operative banks.
Accordingly, the Tribunal partly affirmed the findings of the CIT(A), allowed deduction under Section 80P(2)(d) for ₹9,12,640, partly allowed the effective grounds of appeal, and partly allowed the assessee’s appeal.
Cases Discussed: Kolhapur District Central Co-operative Banks Kanista Sevakanchi Sahakar Pat Sanstha Ltd. vs. ITO (ITAT Pune), ITA No. 1365/PUN/2023 dated 01.01.2024
FULL TEXT OF THE ORDER OF ITAT PUNE
This appeal by the assessee pertaining to Assessment Year 2018-19 is directed against the order dated 21.11.2024 passed by CIT(A) National Faceless Appeal Centre, (NFAC) Delhi u/s 250 of the Income-tax Act, 1961 which in turn is arising out of the Assessment Order passed u/s.143(3) dated 24.02.2021.
2. Assessee has raised following grounds of appeal:-
1. Whether on the facts and in the circumstances of case and in law, AO and CIT(A), NFAC was correct in disallowing the deduction when the income is part of business of assessee and eligible for deduction.
2. Whether AO and CIT(A), NFAC is correct in not treating co operative bank in the definition of co operative society and disallowing the deduction u/s 80P.
3. Whether on the facts and circumstances of the case and the law AO and CIT(A) is correct in concluding that interest earned from co operative bank of RS 9,14,916 being interest earned on investment is not eligible for deduction under section 80P(2)(a)(i)without appreciating the fact that these deposit are part and parcel of business activity.
4.Whether on the facts and circumstances of the case and the law AO and CIT(A) is correct in not allowing interest earned from co operative bank of RS 9,14,916 as deduction under section 80P(2)(d) without appreciating the fact that these deposit or investment are with co operative societies which includes co operative bank.
5. AO and CIT (A) have earred in calculating penalty /interest.
6. The assessee craves leave to amend, alter or delete any of the above grounds of appeal.
7. It is prayed that the above claims and allowacnes be allowed.
3. The sole grievance of the assessee is that Ld. CIT(A) erred in confirming the disallowance of deduction u/s 80P(2)(d) of the Act for the interest earned from Cooperative banks at Rs. 9,14,916/-The assessee has requested to decide the issues based on the return submissions filed on 21.02.2025 running into 21 pages.
4. On the other hand Ld. AO supported the orders of the lower authorities.
5. We have heard rival contentions and perused the record placed before us. The assessee has been denied deduction u/s 80P(2)(a)(i) of Rs. 9,14,916/- which includes interest and dividend from Co-operative Banks and Form fees. The alternate ground is that the assessee is entitled for its deduction u/s 80P(2)(d) of the Act for the interest and dividends earned from Co-operative Banks. From the perusal of written submissions filed by the assessee out of the alleged sum of Rs. 9,14,916/-, Rs. 9,12,640/- is interest and dividend received from Kolhapur District Central Co-operative Banks Kanista Sevakanchi Sahakar Pat Sanstha Ltd. and NKGSB Co-operative Bank. Section 80P(2)(d) provides that interest on dividend earned by the Cooperative Society from its investment from any other Cooperative Society is eligible for deduction u/s 80P(2)(d) the Act. We further notice that a consistent view has been taken in Plethora of decisions including that of Kolhapur District Central Co-operative Banks Kanista Sevakanchi Sahakar Pat Sanstha Ltd. vs. ITO in ITA No. 1365/PUN/2023 dated 01.01.2024 that since the co-operative Banks are basically Co-operative Societies, therefore even the interest and dividends earned from Co-operative Banks is eligible for deduction u/s 80P(2)(d) of the Act. Taking consistent view we are inclined to up hold that in the instant case interest and dividend from Co-operative Bank at Rs. 8,72,600/- and Rs. 40,040/- respectively total Rs. 9,12,640/- is to be allowed as deduction u/s 80P(2)(d) of the Act. Finding of Ld. CIT(A) is partly affirmed. Effective grounds of appeal raised by the assessee are partly allowed.
In 6. result, appeal of the assessee is partly allowed.
Order pronounced on this 25th day of April, 2025.
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