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TMI Blog2024 (8) TMI 285X X X X Extracts X X X X X X X X Extracts X X X X ..... ochar, Accountant Member And Shri T R Senthil Kumar, Judicial Member For the Assessee : Shri Rushin Patel, AR For the Revenue : Ms. Bhavnasingh Gupta, Sr. D.R. ORDER This appeal in ITA No. 115/Ahd/2023 for assessment year 2018-19 is filed by the assessee before Income Tax Appellate Tribunal, Ahmedabad Bench, Ahmedabad, which has arisen from the appellate order dated 21-12-2022 vide DIN Order No. ITBA/NFAC/S/250/2022-23/1048137719(1) passed by ld. Commissioner of Income-Tax(Appeals), NFAC, Delhi u/s 250 of the Income-tax Act, 1961, which in turn has arisen from the assessment order dated 09-02-2021 passed by learned Assessing Officer u/s. 143(3), 143(3A) AND 143(3B) of the Income-tax Act, 1961(Order No. ITBA/AST/S/143(3)/ 2020-21/10304713151). 2. At the outset, it is observed that this appeal is filed belatedly by 9 days beyond the time stipulated u/s 253(3) of the 1961 Act. The assessee has filed Affidavit praying for condonation of delay, wherein it is averred that there is a delay of 9 days in filing this appeal belatedly with Tribunal as the concerned accountant was given the appellate order but he forgot to file the appeal in time, and when it was enquired by the Secretary of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dabad Bench, Ahmedabad, reads as under:- 1) The Learned Commissioner of Income Tax(Appeals) has erred in law and on facts of the case in sustaining the disallowance of deduction u/s. 80P(2)(d) of the Income Tax Act, 1961. 2) The appellant craves leave to add, amend, alter or delete the grounds of appeal at the time of hearing, if need arises. 4. The brief facts of the case are that the case of the assessee was selected by Revenue for framing limited scrutiny through CASS. Reasons for selecting the case of the assessee for framing limited scrutiny assessment are specified by the AO in its assessment order at page no. 1 and 2. One of the reason for selection of case for limited scrutiny assessment, and which is relevant for us in this appeal, was the deduction from Total Income(Chapter VI-A deductions) claimed by the assessee in its return of income filed with the Revenue. The assessee is Co-operative society having filed its return of income on 29.10.2018 declaring Nil Income after claiming deduction u/s 80P to the tune of Rs. 37,16,371/-. The AO issued statutory notices u/s 143(2) and 142(1), during the course of assessment proceedings. The assessee filed its reply, during the cour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... D.R. on the other hand relied upon the orders of authorities below, and prayed that the appellate order of ld. CIT(A) be confirmed. 7. We have considered rival contentions and perused the material on record. The solitary issue in this appeal which has arisen for our adjudication is with respect to allowability of deduction of Rs. 2,55,000/- u/s. 80P(2)(d) of the 1961 Act, with respect to interest received by the assessee from the Cooperative Bank i.e. The Sabarkantha District Central Cooperative Bank, Khedbrahma. The issue before us is of deduction of interest on deposits earned by Credit Cooperative society from deposits with Co-operative Banks which is no more res integra, as the Hon ble Jurisdictional High Court in the case of Surat Vankar Sahakari Sangh Ltd. v. ACIT reported in (2016) 72 taxmann.com 169(Guj HC) and State Bank of India v. CIT reported in (2016) 72 taxmann.com 64(Guj HC) has decided this issue in favour of the tax-payer by holding that interest income received by Credit Co-operative Society from deposits made with Co-operative Bank registered under the Co-operative Societies Act or under the State Act, shall be allowed as deduction u/s 80P(2)(d), and the ITAT in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o-Operative Banks u/s 80P(2)(d) of the Act. The Hon ble Gujarat High Court in the case of State Bank of India Vs. CIT (2016) 389 ITR 578 (Guj), held that that the interest income earned by a cooperative society on its investments held with a cooperative bank would be eligible for claim of deduction under Sec.80P(2)(d) of the Act. The Honourable Gujarat High Court made following observations in respect of interest earned from deposits kept with a cooperative bank: Therefore, it is only the interest derived from the credit provided to its members which is deductible under section 80P(2)(a)(i) of the Act and the interest derived by depositing surplus funds with the State Bank of India not being attributable to the business carried on by the appellant, cannot be deducted under section 80P(2)(a) (i) of the Act. If the appellant wants to avail of the benefit of deduction of such interest income, it is always open for it to deposit the surplus funds with a co-operative bank and avail of deduction under section 80P(2)(d) of the Act. 5.2 In the case of Surat Vankar Sahakari Sangh Ltd. v Assistant Commissioner of Income-tax [2016] 72 taxmann.com 169 (Gujarat), the Gujarat High Court held ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed above. We order accordingly. The Hon ble Gujarat High Court in the case of Katlary Kariyana Merchant Sahkari Sarafi Mandali Ltd. v. ACIT, reported in (2022) 140 taxmann.com 602(Guj. HC) vide order dated 04.01.2022 has decided the issue in favour of Revenue, but by order in MA dated 26.04.2024 in R/Special Civil Application No. 20585 of 2019, the aforesaid order dated 04.01.2022 was modified by Hon ble Gujarat High Court, and this issue stood decided in favour of the tax-payer. Similar view have been taken by the Benches of ITAT, Ahmedabad in the case of other tax-payers including decision of ITAT, Ahmedabad SMC Bench, in the case of The Kalol Co-operative Credit and Supply Society Limited in ITA no. 135/Ahd/2024 and ITA No. 267/Ahd/2024, vide order dated 18.07.2024, in which one of us being Hon ble Accountant Member was the member of SMC Bench who pronounced the said orders. We, thus decide this issue in favour of the assessee that interest income earned from deposits with Cooperative Banks shall be allowed as deduction u/s 80P(2)(d). However, similar directions as were given by Division Bench in the appellate order in the case of Sardar Patel Co-operative Credit Society Limited ..... X X X X Extracts X X X X X X X X Extracts X X X X
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