TaxTMI 
TaxTMI 
2024 (8) TMI 281
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.... of delay in which it is stated that the assessee made an application u/s. 154 of the 1961 Act with ld. CIT(A) on 18.11.2023, as there was a mistake apparent from records in the appellate order dated 16.10.2023 passed by ld. CIT(A). The ld. CIT(A) dismissed the appeal of the assessee on the grounds that the assessee received interest income from FDR from Axis Bank Limited on Rs. 86,730/-, but the assessee claimed that in-fact received interest from Co-operative Bank namely Ahmedabad District Co-operative Bank, which factual error led to dismissal of the appeal of the assessee by ld. CIT(A), and hence rectification application was filed u/s 154 with ld. CIT(A) seeking amendment to the appellate order dated 16.10.2023 passed by ld. CIT(A). Such rectification application u/s 154 was filed on 18.11.2023 vide application no. 518356300181123, and the said rectification application was dismissed by NFAC, Delhi vide orders dated 31.05.2024 vide DIN and Order No. ITBA/NFAC/F/154/2024-25/ 1065306849(1). It is stated in the condonation application that the assessee did not file appeal before the Tribunal, as the aforesaid rectification application was pending with the ld. CIT(A). The appeal w....
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.... the part of the assessee is at writ large. Under the facts and circumstances, I do not find any malafide on the part of the assessee in filing this appeal belatedly, and in the interest of justice, I condone the delay of 111 days and proceed to adjudicate this appeal on merits in accordance with law. Reference is drawn to the decision of Hon'ble Supreme Court in the case of Collector of Land Acquisition, Anantnag v. Mst. Katiji (1987 AIR 1353(SC)). 3. The grounds of appeal raised by the assessee in Memo of Appeal filed with the ITAT, Ahmedabad Bench, Ahmedabad, reads as under:- 1) The assessee maintains the savings bank account with Axis Bank just to facilitate the members of the society, where no surplus fund was invested, it is the interest of Rs. 32755/- which was earned in the routine balance which was lying in the account and therefore, the interest earned is in the due course of business only. 2) Your good self should appreciate that the Honorable ITAT Ahmedabad, in the assessee's own case for the AY 2014-15 has treated the Saving Bank Interest as business income and allowed the deduction under Section 80P. A copy of the ITAT order dated 08/02/2023 i....
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....e Ahmadabad District Co-operative Bank against which the assessee has taken the overdraft facility and has paid Rs. 88956/-. Therefore, the assessee has incurred the net interest expenses of Rs. 2,226/-. Therefore, there is no interest income after a set off the interest paid. Since the interest earned is from another cooperative society, the same is allowed for deduction under section 80P and further the expenses incurred against the income has to be set off. Therefore, not allowing the deduction under section 80P is bad in law and therefore, should be allowed. 5) The Honorable CIT(A) has made an error while considering the FD interest was earned from Axis bank which is not a Cooperative Bank. Whereas the interest on FD was received from the Ahmadabad District Co-operative Bank. If he has considered the actual facts, then CIT(A) might have allowed the deduction u/s 80P and not made such an mistake as he has simply denied the deduction on the ground of mutuality as the assessee is not a member of the Axis bank, which is a based on wrong facts. Therefore, the assessee is hereby humble request your good self to please allow the deduction u/s 80P on the interest income of Rs.....
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.... any ground on or before the date of hearing." 4. The brief facts of the case are that the assessee filed its return of income on 05.10.2017, declaring NIL income. The case of the assessee was selected by Revenue for framing limited scrutiny assessment under CASS. Statutory notices u/s. 143(2) and u/s. 142(1) were issued by the AO. During the course of assessment proceedings, the A.O. observed from the perusal of income and expenditure account as well as reply filed by the assessee during the course of assessment proceedings that the assessee has earned interest income on FDR of Rs. 86,730/- and Saving Bank Interest of Rs. 32,755/. The assessee has claimed with respect to aforesaid interest income, deduction u/s. 80P of the Act. The A.O. relied upon the decision of Hon'ble Supreme Court in the case of Totgar Co-operative Sales Society Ltd. (322 ITR 283), and observed that interest on bank deposits does not qualify for deduction u/s. 80P of the Act. Show cause notice was issued by the AO to the assessee as to why the aforesaid income from FDR and saving Bank account be not treated as income from other sources u/s 56 of the 1961 Act. The assessee submitted that the assessee is mai....
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....n FDR with Axis Bank as claimed by the assessee, instead of claim of the assessee that the said interest on FDR was interest on FDR with Ahmedabad District Co-operative Bank Limited, the assessee filed rectification application u/s. 154 which was dismissed by ld. CIT(A) vide order dated 31.05.2024 by holding that the appellate order dated 16.10.2023 passed by Ld. CIT(A) is not retrievable/available on record. 6. Still aggrieved, the assessee has now filed second appeal with the Tribunal, and the assessee has claimed that the Ld. CIT(A) has erred in holding that the assessee has received interest on FDR with Axis Bank but the fact of the matter is that the assessee received interest of Rs. 86,730/- from Ahmedabad District Co-Operative Bank Ltd and not from Axis Bank. It is submitted that the assessee is a credit co-operative society and is eligible for deduction u/s. 80P(2)(d) of the Act. The Ld. Counsel for the assessee also relied upon the other decisions of the Ahmedabad Tribunal(SMC) in its own case in Sales Tax Employees Co-operative Credit Society Limited v. ITO in ITA no. 750/Ahd/2018 for assessment year 2014-15. 6.2 The Sr. Ld. D.R. on the other hand relied upon the or....
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.... of ld. CCIT so that this issue can be taken up at an appropriate level, so that this deficiency can be removed/corrected at the earliest. Going further, the issue is of deduction of interest on FDR earned by Credit Cooperative society from deposits with Co-operative Banks 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 Cooperative 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 several cases has already decided this issue also in favour of the tax-payer, including in the case of The Sardar Patel Co-operative Credit Society Ltd. v. ACIT ( ITA no. 525 & 526/Ahd/2023 vide order dated 02.04.2024) in which I was one of the Member of the Division Bench which decided the issue in favour of the assessee., by holding as under(ITA No. 525 & 526/Ahd/2023) :- 7. ....
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....f 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 assessee-co-operative society was eligible for deduction under section 80P(2)(d) in respect of gross interest received from cooperative bank without adjusting interest paid to said bank. 5.3 In the case of Surendranagar District Co-op. Milk Producers Union Ltd. v Deputy Ld. CIT(A) 111 taxmann.com 69 (Rajkot Bench) the ITAT held that assessee-co-operative society could not claim benefit of section 80P(2)(d) in respect of interest earned by it from deposits made with nationalised/private banks, however, said benefit was available in respect of interest earned on deposits made wit....