आयकर अपीलीय अधिकरण “ए” न्यायपीठ पुणे में ।

IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH, PUNE BEFORE SHRI R.K. PANDA, VICE PRESIDENT AND MS. ASTHA CHANDRA, JUDICIAL MEMBER आयकर अपील सं . / ITA Nos.670 & 671/PUN/2025 धििाारण वर्ा / Assessment Years : 2018-19 & 2020-21 Mahatma Gandhi Nagri Sahakari ITO, Ward-1, Latur Pat Sanstha Mydt Udgir, Bidar Road, Near Mahatma Vs.

Gandhi Udyan, Udgir, Latur-413517 PAN : AABAM7649H अपीलार्थी / Appellant प्रत्यर्थी / Respondent Assessee by : Miss Sailee Gujarathi (Virtual)

Department by : Shri Ramnath P. Murkunde Date of hearing : 02-07-2025 Date of 09-09-2025 Pronouncement : आदेश / ORDER PER ASTHA CHANDRA, JM :

The above two appeals filed by the assessee are directed against the two separate orders both dated 10.01.2025 of the Ld. Commissioner of Income Tax (Appeals), NFAC, Delhi [“CIT(A)/NFAC”] pertaining to Assessment Years (“AYs”) 2018-19 and 2020-21. Since common issued are involved, both the appeals were heard together and are being disposed of by this common order.

ITA No. 670/PUN/2025, AY 2018-19

2. Briefly stated the facts are that the assessee is Co-operative Credit Society registered under the Maharashtra Co-operative Societies Act, 1960 and engaged in the activity of providing credit facility to its members. For AY 2018-19, the assessee filed its return of income declaring total income at Rs. Nil after claiming deduction u/s 80P(2)(a)(i) of Rs.3,00,30,803/-. The case of the assessee was selected for complete scrutiny assessment under the E-assessment Scheme, 2019 on the following issues : (i) Bonus or Commission to Employee; (ii) Investment/Advances/Loans and (iii)

Deduction from total income under Chapter VI-A. Accordingly, statutory notice(s) u/s 142(1) of the Act were issued and served upon the assessee seeking information regarding the deduction claimed by the assessee, in response to which the assessee filed its part reply stating that it does not have any other business activity apart from the business of accepting deposits from the members and lending loans to members and that these activities are performed strictly as per the approved Bye-laws of the society. The Ld. Assessing Officer (“AO”) noted that during the relevant AY the assessee has earned interest of Rs. 3,04,88,392 from investments in Co- operative and a show cause notice was issued as to why the said interest income claimed as deduction under section 80P(2)(a)(i)/80(P(2)(d) of the Act be not disallowed and added back as income from other sources. The show cause notice issued by the Ld. AO remained uncomplied with.

2.1 Before the Ld. AO, taking support from the catena of decisions pronounced by various judicial forums on the impugned issue favorable the assessee, the assessee contended that the interest income earned during the relevant AY from deposits with Co-operative Banks tantamount to business income of the assessee and is an allowable deduction u/s 80P(2)(a)(i) of the Act. Alternatively, the said income is also an allowable deduction u/s 80P(2)(d) of the Act.

2.2 The above submissions of the assessee were however found to be not acceptable by the Ld. AO. Relying on the decision(s) of the Hon‟ble Karnataka High Court in the case of Pr. CIT Vs. The Totagars Co-operative Sale Society in ITA No. 100066/2016, dated 16.06.2017 (Kar.) and in the case of CIT Vs. Shri Sangam Sahakari Sakkare Karkane Niyamith in ITA No. 100011/2016, dated 30.10.2017 (Kar.), the Ld AO disallowed the deduction claimed by the assessee u/s 80P(2)(a)(i)/80P(2)(d) of the Act amounting to Rs.3,04,88,392/- treating the same as „other income‟. Accordingly, the Ld. AO completed the assessment on 28.09.2021 u/s 143(3) r.w.s. 144B of the Act by making an addition of Rs.3,04,88,392/- as income from other sources being not eligible for deduction u/s

80P(2)(a)(i)/80P(2)(d) of the Act

3. Aggrieved, the assessee carried the matter before the Ld. CIT(A)/NFAC challenging the above action of the Ld. AO. Before the Ld. CIT(A)/NFAC, the assessee filed detailed