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TMI Blog2020 (2) TMI 210X X X X Extracts X X X X X X X X Extracts X X X X ..... n of income at NIL after claiming deduction under section 80P(2)(a)(i) - addition has been made on the ground that the assessee has claimed deduction with respect to income earned from deposits made with scheduled bank - HELD THAT:- Direct the AO to re-adjudicate the issue and only exclude net interest income from nationalised bank from computation of income admissible under section 80P(2) of the Act. The AO shall adjudicate this issue after providing due opportunity of hearing to the assessee. Deduction u/s 80P(2) for deduction of interest income earned from scheduled bank - HELD THAT:- Assessee is covered by the decision of Hon ble jurisdictional High Court in the case of State Bank of India Employees Coop Credit Ltd. [ 2016 (7) TMI 516 - GUJARAT HIGH COURT] wherein it has been held by that cooperative society would not be eligible under section 80P(2) of the Act for deduction of interest income earned from scheduled bank. Further, assessee has agreed to proportionate disallowance to the extent of bank interest to total income. Disallowance which the assessee has received from its members towards form fee, cannot doubted to be not attributable to and/or arising from a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ₹ 984629/- Total (2098875+984629 = 4083504) 4. The ld.AO did not allow deduction to the assessee after following the decision of Hon ble Gujarat High Court in the case of State Bank of India Vs. CIT, 72 taxmann.com 64 (Guj). He made an addition of ₹ 40,83,504/-. Appeal to the CIT(A) did not bring any relief to the assessee. 5. The ld.counsel for the assessee submitted that there are two components which have been considered by the AO. The first component is the interest income earned by the assessee on the deposit made with scheduled bank. As far as allowability of such interest income for deduction under section 80P(2)(a)(i) of the Act is concerned, that issue has been resolved by the Hon ble jurisdictional High Court in the case of State Bank of India (supra), wherein it has been held that such interest income will not qualify for deduction under section 80P(2)(a)(i) of the Act. In this connection he submitted that only net interest income be excluded from the eligibility amount for grant of deduction. With regard to second component, he submitted that as far interest income earned from cooperative bank ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Hon'ble Gujarat High Court in the case of CIT vs. Sabarkantha District cooperative Milk Producers Union Ltd. Tax Appeal No. 473 of 2014. It was pointed out on behalf of the assessee that K.D.C.C. Bank is a co-operative bank registered under Co-operative Society Act and investment made in this bank and interest earned. This investment is eligible for deduction under s.80P(2)(d) of the Act. 7. In the given facts as noted above, the claim of the assessee under s.80P(2)(d) of the Act appears to be in consonance with the plain language of the Act. We thus find merit in the claim of the assessee for deduction under s.80P(2)(d) of the Act in respect of income earned from K.D.C.C. Bank. 5. On the strength of the above, she contended that interest income from any cooperative bank/credit societies be allowed as deduction under section 80P(2)(d) of the Act. She drew our attention towards computation and submitted that in the case of the Lunawada Taluka Primary School Teachers Cooperative Credit Society Ltd. for the Asstt.Year 2014-15, this interest income from cooperative bank is ₹ 36,08,164/-. Similarly, for the Asstt.Year 2013-14 in the account of the society, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ith scheduled bank. 10. With the assistance of the ld.DR, I have gone through the record carefully. A perusal of the record would indicate that the ld.AO has not specified the exact amount. He has devoted much energy for addressing discussion on law point. A perusal of page no.6 would reveal that the assessee has given break of the interest income as under: Sr. No. Name of Institution Amount of Deposit Interest Received 1 Prime Co Op Bank Ltd- Exempted under section 80P(2)(d) 1,06,92,519 190263 2 Union Bank of India 12,33,422 107954 3 Bank of Baroda 30,00,000 690 TOTAL 298907 11. It appears that some of the interest is relatable to deposits with cooperative bank and will qualify for exemption under section 80P(2)(d). Therefore, followin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... utory standard deduction of ₹ 50,000/- under section 80(2)(c)(ii) of the Act. The ld.AO considered submissions of the assessee and made a disallowance of ₹ 6,53,250/- [₹ 6,27,200/- plus ₹ 10,600/- being form fee income plus ₹ 15,455/- being room rent income]. This disallowance was confirmed by the ld.CIT(A). Against this addition, assessee is before the Tribunal. 13. On due consideration of the above facts and circumstances, I find that the assessee is covered by the decision of Hon ble jurisdictional High Court in the case of State Bank of India Employees Coop Credit Ltd. (supra) wherein it has been held by that cooperative society would not be eligible under section 80P(2) of the Act for deduction of interest income earned from scheduled bank. Further, assessee has agreed to proportionate disallowance to the extent of bank interest to total income. Therefore, disallowance of ₹ 6,27,200/- is upheld. 14. So far as the disallowance of ₹ 10,600/- which the assessee has received from its members towards form fee, cannot doubted to be not attributable to and/or arising from assessee s day-to-day activities of the assessee. Theref ..... X X X X Extracts X X X X X X X X Extracts X X X X
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