Deputy Commissioner of Income Tax, Circle-02, Ajmer Vs. Ajmer Zila Dugdh Utpadak Sahkari Sangh Limited

Parties Involved

Facts Summary

The assessee, Ajmer Zila Dugdh Utpadak Sahkari Sangh Limited, is a district cooperative society of milk producers. For the assessment year 2017-18, the assessee filed its return of income on 28.10.2017, declaring a total income of Rs. 1,67,44,070 and claimed a deduction of Rs. 59,92,251 under section 80P of the Income Tax Act, 1961. The case was selected for limited scrutiny, focusing on the deduction claimed under section 80P. The Assessing Officer (AO) found that the deduction included Rs. 44,02,985 claimed under section 80P(2)(d) of the Act on account of interest received from Ajmer Central Cooperative Bank. The AO disallowed this deduction, holding that interest derived by a cooperative society from its investment with a cooperative bank is not eligible for deduction under section 80P(2)(d) of the Act. The assessee appealed to the Commissioner of Income Tax (Appeals) (CIT(A)), which allowed the deduction. The Revenue appealed to the Income Tax Appellate Tribunal (ITAT).…

Legal Issues

• 1. Whether the learned CIT(A) has erred in allowing deduction under section 80P(2)(d) of the Income Tax Act, 1961 on the interest income of Rs. 44,02,985 received by the assessee from Ajmer Central Cooperative Bank.
• 2. Whether the learned CIT(A) has erred in not appreciating the decision of the Hon'ble Karnataka High Court in Pr. CIT vs. Totgars Cooperative Sale Society Ltd.
• 3. Whether the learned CIT(A) has erred in relying upon the decision of the Hon'ble Supreme Court in Mavilayi Service Cooperative Bank Ltd. & Others.

Judgment Outcome

Decided in favour of Partly Assessee / Partly Revenue.

Precedents Relied Upon

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