TaxTMI 
TaxTMI 
2025 (8) TMI 1279
X X X X Extracts X X X X
X X X X Extracts X X X X
.... heard together and are being disposed of by way of this common order. ITA NO.527/COCH/2025 (A.Y. 2011-12) 2. We would first take up appeal for the Assessment Year 2011-12 preferred by the Assessee against Order, dated 30/06/2025, passed by the CIT(A) dismissing the appeal against the Penalty Order, dated 04/03/2025, whereby penalty of INR.48,515/- was levied under Section 271(1)(c) of the Act. 3. The grounds of appeal raised by the Assessee reads as under: "1. The appellant's accounts are subject to statutory audit under the Kerala Co-operative Societies Act, and any delay in finalization was due to reasons beyond its control. The appellant had no intention to furnish inaccurate particulars of income, as all disclosures were made in good faith based on a bona fide belief that the income was eligible for deduction under Section 80P(2)(d). The learned CIT(A) had partly allowed the appeal and revised the assessed income, reducing the disallowance substantially. In such a situation, levy of penalty is unjustified and unreasonable. The claim of the appellant was based on judicial precedents including the Supreme Court ruling in Mavilayi Service Co-op Bank Ltd. v. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... for the Assessee that the interest income of INR.1,57,006/- was eligible for deduction under section 80P(2)(a)(i) of the Act. Therefore, no penalty could have been levied upon the Assessee. The fact that the Assessee did not challenge the order passed by the CIT(A) on merits in appeal before the Tribunal on account of low tax impact cannot come in the way of Assessee making the aforesaid submission. 6. Per contra, the Learned Departmental Representative relied upon the orders passed by the authorities below and submitted that the claim for deduction made by the Assessee under Section 80P(2)(d) of the Act was in respect of ineligible income [i.e. interest from banks and entities other than co-operative societies] and the same amounted to furnishing of inaccurate particulars of income. 7. We have considered the rival submission and have perused the material on record including the orders passed by the Assessing Officer and the Ld. CIT(A). 8. Perusal of the record shows that the Assessee had claimed deduction in respect of interest income including interest income received from banks and treasury under section 80P(2)(d) of the Act. The Assessing Officer was of the view that ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n any case, it has not been disputed by the Revenue that as per the judgment of the Hon'ble Kerala High Court in the case of Sahyadri Co-op. Credit Society Ltd. (supra) the Assessee was entitled to claim deduction under Section 80P(2)(a)(i) of the Act. The relevant extract of the said judgment reads as under: "7. On a consideration of the rival submissions, we are of the view that for the reasons stated hereinafter, the question of law that arises for consideration before us must be answered against the Revenue and in favour of the assessee. The permissible deduction that is envisaged under Section 80P(2) of the I.T. Act for a Co-operative Society that is assessed to tax under the head of 'Profits and Gains of Business or Profession' is of the whole of the amount of profits and gains of business attributable to any one or more of its activities. Thus, all amounts as can be attributable to the conduct of the specified businesses by a Cooperative Society will be eligible for the deduction envisaged under the statutory provision. The question that arises therefore is whether, merely because the assessee chooses to deposit its surplus profit in a permitted bank or fina....
X X X X Extracts X X X X
X X X X Extracts X X X X
....to the Society itself; that in relation to the Society, it was to be treated as income from other sources since the interest income had lost its nexus with the principal income earned by the Society. The facts in the instant cases are entirely different and the investment concerned was of amounts that had already attained the character of surplus profits in the hands of the assessee. On this issue, therefore, we find ourselves in agreement with the view taken by the Andhra Pradesh and Karnataka High Courts respectively in The Vavveru Co-operative Rural Bank Ltd. (supra) and Tumkur Merchants Souharda Credit Co-operative Ltd. (supra). 9. As for the argument of the learned Standing Counsel for the Revenue, with reference to the provisions of Section 80P(2)(d) of the I.T. Act, we might only observe that, while it may be a fact that interest income of the nature specified therein is specifically allowed as a deduction in the case of Co-operative Societies in general, in the light of our discussion above as regards the nature of the interest income earned by the assessee Society in the instant cases, it would follow that the interest income dealt with by us in the instant cases ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....014-2015) 2,34,054 2,34,054 13. Since there is no change in the facts and circumstances of the case and the grounds raised by the Assessee are identical, our finding and adjudication in relation to appeal for the Assessment Year 2011- 2012 shall apply mutatis mutandis to the appeals preferred by the Assessee challenging the levy of penalty under Section 271(1)(c) of the Act for the Assessment Years 2012-2013, 2013-2014 and 2014- 2015. Accordingly, adopting the reasoning given while deciding identical issue in favour of the Assessee in appeal for the Assessment Year 2011-2012, we delete the penalty levied in each of the aforesaid three assessment year under Section 271(1)(c) of the Act. Thus, Ground No. 1 raised in each of the three appeals is allowed. 14. In the result, the three appeals preferred by the Assessee Assessment Years 2012-2013, 2013-2014 & 2014-2015 are allowed. ITA No. 531/Coch/2025 [A.Ys. 2018-2019] ITA No. 532/Coch/2025 [A.Ys. 2020-2021] 15. We would now take up of appeal preferred by the Assessee for the Assessment Years 2018-2019 & 2020-2021 against two separate orders passed by the CIT(A), each dated 30/06/2025, whereby Assessee's appeal agai....