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TMI Blog2019 (1) TMI 1588X X X X Extracts X X X X X X X X Extracts X X X X ..... ed for statistical purposes. X X X X Extracts X X X X X X X X Extracts X X X X ..... it Society Ltd. DCIT, Nadidad 2 1313/Ahd/2018 2015-16 The Sant Taluka Teachers Co-op. Credit Society Ltd. ACIT, Panchmahal Circle, Godhra 3 1314/Ahd/2018 2015-16 The Satyaprakash Co-op. Credit Society Ltd. ACIT, Panchmahal Circle, Godhra 4 1295/Ahd/2018 2015-16 Shri Friends Coop. Credit Society Ltd. ITO, Ward-3(1)(2), Vadodara 5 1296/Ahd/2018 2015-16 Shri Shramjivi Nagrik Sahakari Mandli Ltd. ITO, Wd-3(1)(2), Vadodara On identical issues and facts has held as under:- "7. We have heard both the sides and perused the material on record carefully. The assessee is engaged in the business of providing credit facilities to its members. The assessing officer has noticed that in addition to the interest income earned on loan and advances to its members, the assesse has claimed deduction u/s. 80P(2)(a)(i) of the act on interest income earned from fixed deposit maintained with the commercial bank and cooperative banks. As per section 80P(2)(a)(i) of the act the interest income earned on providing credit facility to its members is deductible u/s. 80P(2)(a)(i) of the act. After perusal of the aforesaid provision of the act we observe that deducti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xman 282 (SC), the assessee herein has shifted the deposits and investments from Schedule Banks to Co-operative Bank and such Co-operative Bank is essentially a Cooperative Society also and clause (d) allows deduction of income by way of interest or dividends derived by the assessee co-operative Society from its investments with any other co-operative Society. [Para 11] The sheet anchor of the contention of the assessee misses two essential points required for claiming the deduction from gross total income for a co-operative society; (i) that the character or nature of income, namely interest on investments or deposits, does not change irrespective of the fact whether it is earned or received from a Schedule Bank or Co-operative Bank, (ii) that What the Supreme Court held in the case of the assessee itself, against assessee, was that such interest income on its surplus and idle funds not immediately required for its business, is not income from business taxable under section 28 of the Act, but was taxable as 'income from other sources' under section 56, whereas for availing the exemption or 100 per cent deduction under section 80P, the income is specified in clauses (a) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... intent clear that the co-operative banks are not that specie of genus co-operative society, which would be entitled to exemption or deduction under the special provisions of chapter VIA in the form of section 80P of the Act. [Para 15] If the legislative intent is so clear, then it cannot be contended that the omission to amend clause (d) of section 80P(2) of the Act at the same time is fatal to the contention raised by the revenue before this Court and sub silentio, the deduction should continue in respect of interest income earned from the co-operatve bank, even though the Supreme Court's decision in the case of assessee itself is otherwise. [Para 16] As stated above, it is the character and nature of income which determines its taxability or exemption from taxability. It is needless to say that the provisions relating to exemption and deduction need to be strictly construed and no liberal interpretation or intendment can be inferred in such provisions. What was clearly held to be not exempt and not deductible under section 80P(2)(a) by the Supreme Court in the case of assessee, cannot be contrarily held as exempted and deductible now for these years, merely because the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tionalized or cooperative bank will not change nature and character of the income. On perusal of the provision of section we observe such deduction is pertinent to the operational income earned by the co-operative society from the activities in which it is engaged and not the other income which accrues to the society in the form of interest from investment of surplus funds with the cooperative bank. After considering the facts and legal finding, we do not find any merit in the appeal of the assessee, therefore, the same is dismissed. However as decided in the various decision of the Co-ordinate Benches of ITAT Ahmedabad we direct the assessing officer to allow pro rata expenses in respect of interest earned from deposit held with nationalized bank to the assessee for computing the deduction u/s. 80P after examining/verification and affording adequate opportunity to the assessee. Therefore, the appeal of the assessee is partly allowed for statistical purposes. 8. Assessee's ground of appeal regarding levy of interest u/s. 234A/B/C is of general nature which is to be charged mandatory as per provision of the act. Therefore, the same is dismissed. The other ground of appeal against ..... X X X X Extracts X X X X X X X X Extracts X X X X
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