Appeal allowed for Cooperative Society due to disallowance of deduction under Section 80P(2)(d)

The appeal was filed against an order by the Ld. CIT(A) at NFAC, Delhi for A.Y. 2018-19. The main issues were the validity of the assessment order under sections 143(3), 143(3A), and 143(3B), and the disallowance of interest income from Cooperative Banks. The court found that the Assessing Officer did not provide sufficient justification for disallowing the deduction under Section 80P, and the CIT(A) failed to recognize the eligibility of the assessee, a Cooperative Society, for the deduction under Section 80P(2)(d). Consequently, the appeal was allowed in favor of the assessee.

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Issues involved: Appeal against order passed by Ld. CIT(Appeals) at NFAC, Delhi for A.Y. 2018-19.

Issue 1: Validity of assessment order u/s 143(3) r.w.s. 143(3A) & 143(3B):
The assessee, a Cooperative Society, filed a return of income for A.Y. 2018-19 on 05.10.2018 declaring NIL income. The Assessing Officer considered the return as belated due to filing date discrepancy and disallowed deduction claim u/s 80P of the Act. The Ld. A.R. contended that proper procedure was not followed by the Assessing Officer, who failed to provide any reason for disallowing the deduction. The CIT(A) upheld the disallowance without considering that the assessee, deriving interest from member cooperative society, is eligible for deduction u/s 80P(2)(d) of the Act.

Issue 2: Disallowance of interest income from Cooperative Banks:
The Ld. A.R. argued that interest income from Cooperative Banks like Mehsana Urban Cooperative Society should have been considered by the Assessing Officer. The interest on deposits from various Cooperative Banks, being Cooperative Societies, should have been taken into account. However, the Assessing Officer and CIT(A) failed to acknowledge this aspect.

Decision:
After hearing both parties and reviewing the material, it was observed that the Assessing Officer did not justify the disallowance under Section 80P. The CIT(A) also overlooked the fact that the assessee, as a Cooperative Society, falls under Section 80P(2)(d) and is entitled to deduction. Consequently, the appeal of the assessee was allowed.

This judgment was pronounced in Open Court on 22/03/2023.

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