ACIT Vs Visnagar Taluka Majoor Sahakari Mandli Limited ITAT Ahmedabad

ITA Nos.
1529 & 1530/Ahd/2019

Assessment Years: 2014-15 & 2013-14
Page 1 of 4
IN THE INCOME TAX APPELLATE TRIBUNAL

AHMEDABAD “D” BENCH, AHMEDABAD
BEFORE Ms. SUCHITRA KAMBLE, JUDICIAL MEMBER AND

SHRI WASEEM AHMED, ACCOUNTANT MEMBER
ITA Nos.1529 & 1530/Ahd/2019

Asstt. Commissioner of Income Tax, vs. Visnagar Taluka Majoor Sahakari

Patan Circle, Patan. Mandli Limited,
Darbar Road, Visnagar
[PAN – AAALV 00006 H]
(Appellant) (Respondent)
Assessee by : Shri H.V. Doshi, AR

Revenue by : Shri Atul Pandey, Sr. DR
Date of hearing : 06.09.2022

Date of pronouncement : 07.10.2022
ORDER
PER SUCHITRA KAMBLE, JUDICIAL MEMBER :
These appeals are filed by the Revenue against two different orders, both
dated 08.08.2019, passed by the CIT(A), Gandhinagar, Ahmedabad for the
Assessment Years 2014-15 & 2013-14.
2. The Assessee has raised the following grounds of appeal:
ITA No.1529/Ahd/2019 for Assessment Year 2014-15:
“i) Whether, the Ld. Commissioner of Income Tax (Appeals) has erred in
law and on facts in deleting the interest earned u/s.80P(2)(d) of the Act
to the tune of Rs.2,55,842/-.
Ii) On the facts and circumstances of the case, the Ld. Commissioner of
Income Tax (Appeals) ought to have upheld the order of the Assessing
Officer.
iii) It is, therefore prayed that the order of the Ld. Commissioner of Income
Tax (Appeals) may be set aside and that of the Assessing Officer be
restored.”
ITA Nos.1529 & 1530/Ahd/2019
Page 2 of 4
ITA No.1530/Ahd/2019 for Assessment Year 2013-14:
“i) Whether, the Ld. Commissioner of Income Tax (Appeals) has erred in
law and on facts in deleting the interest earned u/s.80P(2)(d) of the Act
to the tune of Rs.16,02,299/-.
Ii) On the facts and circumstances of the case, the Ld. Commissioner of
Income Tax (Appeals) ought to have upheld the order of the Assessing
Officer.
iii) It is, therefore prayed that the order of the Ld. Commissioner of Income
Tax (Appeals) may be set aside and that of the Assessing Officer be
restored.”
3. The assessee is a Co-operative Society and filed its return of income on

30.09.2014 declaring total income at Rs.1,89,56,840/- for A.Y. 2014-15. The
Assessing Officer observed that the deduction under Section 80P(2)(a)(i) of the
Income Tax Act, 1961 of Rs.2,55,842/- being interest income received from Co-
operative Bank is not eligible. The PCIT vide order under Section 263 of the Act dated
23.03.2018 directed the Assessing Officer to reframe the assessment denovo after
considering the position of law and as held by the Hon’ble High Court of Karnataka in
PCIT vs. Totgars Co-operative Sale Society Limited (188 taxman 282). The assessee
submitted that the assessee is a co-operative credit society and its main activity is
providing credit facilities to its members by accepting deposits, savings etc. and
providing loan and advances to its members only. The Assessing Officer disallowed
the claim of Rs.2,55,842 under Section 80P(2)(d) of the Act.
4. Being aggrieved by the assessment order, the assessee filed appeal before the
CIT(A). The CIT(A) allowed the appeal of the assessee.
5. The Ld. DR submitted that as per the decision of the Hon’ble Supreme Court in
the case of Totgars Co-operative Sales Society Limited vs. ITO (188 taxman 282 –
SC) interest income earned from Nationalised Bank is to be taxed under the head
“income from other sources” as provided under Section 56 of the Act. Income from
other sources is not the business of the assessee, therefore, not eligible for deduction
under the provisions of Section 80P of the Act. The Ld. DR further submitted that the
CIT(A) erred in deleting the interest earned under Section 80P(2)(d) of the Act and
ITA Nos.1529 & 1530/Ahd/2019
Page 3 of 4
prayed that the disallowance of deduction was rightly done by the Assessing Officer.
Ld. DR relied upon the decision of the Hon’ble Supreme Court in the case of Pandian
Chemicals Limited (227 ITR 414).
6. The Ld. AR submitted that the Hon’ble Jurisdictional High Court in the case of
State Bank of India (SBI) vs.CIT, 389 ITR 578 clearly held that in case of Society
engaged in providing credit facilities to its members, it is only interest derived from
credit provided to its members which is deductible under Section 80P(2)(a)(i) of the
Act. Thus, the Ld. AR submitted that the CIT(A) rightly allowed the appeal of the
assessee.
7. We have heard both the parties and perused all the relevant material available
on record. It is pertinent to note that the decision of Hon’ble Apex Court in the case of
Totgars Co-operative Sale Society Limited (supra) the issue was related to interest
income earned from Nationalised Bank which is taxed under the income from other
sources. But in case of co-operative credit societies/cooperative banks which has
different setup altogether where deduction under Section 80P(2)(a)(i) of the Act is
allowable when the interest is derived from credit provided to its members. The same
cannot be equated with Nationalised Bank which has dealt by the Apex Court. In the
present case the assessee society had received interest income from co-operative
banks only and the assessee is a credit society and funds received from its members
only thus the deduction is properly claimed by the assessee. The decision of Hon’ble
Gujarat High Court and the ratio laid down by the Hon’ble Jurisdictional High Court is
applicable in assessee’s case. In fact, the decision of Hon’ble Apex Court has also
not debarred for claiming deduction under Section 80P wherein the credit facilities are
given to the members and is directly related to the business while deriving interest.
Thus, the appeal filed by the Revenue is dismissed.
8. As regards ITA No.1530/Ahd/2019 for A.Y. 2013-14, the issue is similar and
hence the appeal filed by the Revenue is dismissed.
ITA Nos.1529 & 1530/Ahd/2019
Page 4 of 4
9. In the result, both the appeal filed by the Revenue are dismissed.
Order pronounced in the open Court on this 7th day of October, 2022.
Sd/- Sd/-
(WASEEM AHMED) (SUCHITRA KAMBLE)
Accountant Member Judicial Member
Ahmedabad, the 7 th day of October, 2022

PBN/*
Copies to: (1) The appellant
(2) The respondent
(3) CIT
(4) CIT(A)
(5) Departmental Representative
(6) Guard File
By order
UE COPY
Assistant Registrar
Income Tax Appellate Tribunal
Ahmedabad benches, Ahmedabad

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ITA Nos.

1529 & 1530/Ahd/2019

IN THE INCOME TAX APPELLATE TRIBUNAL

BEFORE Ms. SUCHITRA KAMBLE, JUDICIAL MEMBER AND

ITA Nos.1529 & 1530/Ahd/2019

Asstt. Commissioner of Income Tax, vs. Visnagar Taluka Majoor Sahakari

Assessee by : Shri H.V. Doshi, AR

Date of hearing : 06.09.2022

PER SUCHITRA KAMBLE, JUDICIAL MEMBER :

2. The Assessee has raised the following grounds of appeal:

ITA No.1529/Ahd/2019 for Assessment Year 2014-15:

ITA No.1530/Ahd/2019 for Assessment Year 2013-14:

3. The assessee is a Co-operative Society and filed its return of income on

Ahmedabad, the 7 th day of October, 2022

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