DCIT Vs Bardoli Vibhag Gram Vikas Co-op. Society Limited (ITAT Surat)
The Income Tax Appellate Tribunal, Surat Bench, decided four appeals filed by the Revenue against separate but similar orders passed by the Commissioner of Income-tax (Appeals), National Faceless Appeal Centre, dated 28.01.2025 for Assessment Years 2017–18, 2018–19, 2020–21, and 2022–23. Since the facts and issues were identical, all appeals were heard together, with Assessment Year 2017–18 treated as the lead case.
The core dispute in all appeals related to the allowability of deduction under Section 80P(2)(d) of the Income-tax Act, 1961 in respect of interest and dividend income earned by the assessee, a co-operative society, from deposits made with a co-operative bank. The Revenue contended that such income was not eligible for deduction, relying primarily on the decision of the Supreme Court in Totgars Co-operative Sale Society Ltd., as well as on Section 80P(4), which excludes co-operative banks from the benefit of Section 80P.
For Assessment Year 2017–18, the assessee filed its return declaring nil income after claiming deduction of ₹12,89,22,780 under Chapter VIA. The deduction included interest and dividend income of ₹12,88,72,780 earned from deposits with a co-operative bank and ₹50,000 under Section 80P(2)(c). The case was selected for scrutiny, and the Assessing Officer disallowed the deduction under Section 80P(2)(d), holding that interest and dividend income earned from a co-operative bank did not qualify, as a co-operative bank was distinct from a co-operative society and was excluded by Section 80P(4). The Assessing Officer accordingly added ₹12,89,27,780 to the total income.
