Baner Nagari Sahakari Pat Sanstha Maryadit Vs ITO (ITAT Pune)
The Pune Bench of the Income Tax Appellate Tribunal allowed the assessee’s appeal against the order of the National Faceless Appeal Centre for Assessment Year 2018-19. The assessee, a co-operative society registered under the Maharashtra Co-operative Societies Act, 1960 and engaged in accepting share money and deposits from its members and providing credit facilities to them, had filed its return declaring nil income. During assessment, the Assessing Officer disallowed deduction claimed on interest income of ₹34,35,588 earned from deposits by holding that the assessee was not entitled to the benefit as claimed. The NFAC upheld the disallowance by relying on the decisions in PCIT v. Totagars Co-operative Sale Society and Totgars Co-operative Sale Society Ltd. v. ITO.
Before the Tribunal, the only issue was the allowability of deduction under Section 80P(2)(d) in respect of interest income earned by a co-operative society from deposits with a co-operative bank. The Tribunal observed that the issue was no longer res integra and was covered by the coordinate bench decision in The Ugar Sugar Works Kamgar & Dr. Shirgaokar Shaikshanik Trust Nokar Co-op Credit Society v. ITO. Referring to that decision, the Tribunal noted that Section 80P(2)(d) grants deduction in respect of income derived by a co-operative society from investments with another co-operative society and that a co-operative bank is also a co-operative society. The Tribunal further noted that the Karnataka High Court had held that the Supreme Court decision in Totgars Co-operative Sale Society Ltd. was not applicable to deduction under Section 80P(2)(d). It also referred to earlier Pune Bench decisions which had preferred the view favourable to the assessee in the absence of any direct judgment of the jurisdictional High Court.
