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TMI Blog2016 (1) TMI 1235X X X X Extracts X X X X X X X X Extracts X X X X ..... ociety from the Cooperative bank which was also a Co-operative Society was eligible for deduction cannot be faulted. - Decided in favour of assessee - ITA Nos.704 to 709/Bang/2015, Cross Objn.Nos.179 to 182/Bang/2015 - - - Dated:- 22-1-2016 - SHRI VIJAY PAL RAO, JUDICIAL MEMBER AND SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER For The Assessee : Shri G.Venkatesh, Advocate For The Revenue : Shri Sunil Kumar Agarwala, JCIT(DR). ORDER Per BENCH: These six appeals by the revenue and four cross objections by assessee are directed against the respective orders of the CIT(A) for the assessment years 2007-08 to 2012-13. 2. The revenue has raised common issues/grounds in these six appeals. The grounds raised for the assessment year 2007-08 are as under: 1. The order of CIT(A) is opposed to law and facts of the case. 2. Whether, on facts circumstances of the case, the learned CIT(A) is correct in allowing the claim of the assessee for deduction u/s 80P(2)(d) by relying on the judgment of the ITAT in the case of M/s.Markamba Mahila Cooperative Credit Society Ltd. in IT No.617/Bang/2014. 3. Whether, on facts circumstances of the case, the learned C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ith law. Thus, the contention of the assessee before the CIT(A) was that there is nothing in the section that would warrant exclusion of cooperative society from the genus of the term co-operative society. The CIT(A) allowed the claim of the assessee under section 80P(2)(d) by following the decision of this Tribunal in case of Shri Marikamba Mahila Co-operative Credit Society Ltd. in ITA No.617/Bang/2014 dated 20/3/2015 as well as the decision of this Tribunal in case of Menasi Seemeya Group Gramagala Seva Sahakari Sanga Niyamitha (supra). 5. Aggrieved by the impugned order of the CIT(A) the revenue has filed these appeals before this Tribunal. Before us, the learned DR has submitted that the income of interest earned by assessee from the deposits made in the bank does not fall under the ambit of the provisions of sec.80P(2)(d) of the Act. The AO has assessed this income as income from other sources and therefore, this income is not eligible for deduction under section 80P(2)(d). In support of his contention, he has relied upon the judgment of Hon ble Supreme Court in case of Totgar Cooperative Sale Society Ltd. vs. ITO (322 ITR 383) and submitted that in the case of the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... page 3 of the assessment order is hereunder: Hence, it was proposed to disallow the deduction claimed u/s 80P(2)(d) on interest and dividend earned from Co-op Banks amounting to ₹ 1,87,03,157/- out of total claim of ₹ 1,90,29,167/- since the same is not earned from Co-op Societies. The AR was asked to substantiate the deduction claimed and why the same should not be disallowed for reasons stated as above. After verification of nature of receipt i.e. other than interest and dividend earned from Non Co-op Societies like Co-op. Banks etc., is to be brought to tax under the head Other Sources and the assessee (society) is not eligible for deduction u/s 80P(2)(d) on this amount. From the above finding of the AO, it is clear that the interest income in question was earned by the assessee on the deposits made with the co-operative banks and the AO held that the cooperative banks are not co-operative societies and therefore the assessee is not eligible for deduction u/s 80P(2)(d) on this amount. The issue, therefore, is limited only to the point whether for the purpose of sec.80P(2)(d), a co-operative bank is considered as a co-operative society. The CIT(A) allowe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a cooperative Bank, are allowable as a deduction under Section 80P(2)(d) of the Act. We are of the opinion that restrictive interpretation given by the learned CIT(A) to section 80P(2)(d) was not warranted, by its wordings. The provisions of Section 80P(2)(d) are reproduced hereunder : in respect of any income by way of interest or dividends derived by the cooperative society from its investment with any other cooperative society, the whole of such income , A coordinate bench of this Tribunal in the case of Bagalkot District Central Cooperative Bank (supra) had held that a cooperative bank which is also a cooperative society cannot be excluded from the purview of benefits available to a cooperative society, unless the provisions of the Act so stipulate. No doubt in the said decision, the Tribunal was considering the application of section 194A(3)(v) of the Act, wherein it was mandated that a cooperative society was not required to deduct tax at source if the interest credit were paid to any cooperative society. It had unequivocally held that the said provision applied to all cooperative societies including a cooperative society engaged in the business of the ban ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... This Tribunal in the case of Bagalkot District Central Cooperative Bank had held that a Co-operative bank which is also a Co-operative Society cannot be excluded from the purview of benefits available to a Cooperative Society , unless the provisions of the Act so stipulate. No doubt in the said decision, the Tribunal was considering the application of Section 194A(3)(v) of the Act, wherein it was mandated that a Cooperative Society was not required to deduct tax at source if the interest credit were paid to any Co-operative Society. It had unequivocally held that the said provision applied to all Co-operative Society including a Cooperative Society engaged in the business of the bank or in other words, a Co-operative Bank. Therefore, the view taken by the AO that income by way of interest or dividends earned by the assessee society from the Cooperative bank namely Kanara Dist.Central Co-operative bank which was also a Co-operative Society was eligible for deduction cannot be faulted. We cannot say that the order of the AO was erroneous and prejudicial to the interest of the revenue. Order of the learned CIT, therefore, stand quashed and appeals of the assessee are allowed. 9. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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