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TMI Blog2020 (11) TMI 200X X X X Extracts X X X X X X X X Extracts X X X X ..... AO till now. Appeal of the assessee is allowed for statistical purposes. - ITA No.285/Bang/2020 - - - Dated:- 7-9-2020 - Shri Chandra Poojari, Accountant Member For the Assessee : Shri R.E. Balasubramanyam, C.A. For the Revenue : Shri Ganesh R Ghale, Standing Counsel. ORDER This appeal by the assessee is directed against the order of Commissioner of Income Tax (Appeals),Kalaburagi Dt.30.12.2019 for the Asst. Year 2016-17. 2. The assessee has raised the following grounds : 2. That the Ld.CIT(A) erred in denying the deduction under section 80P(2) of the Income Tax Act in respect of interest income received from co-operative banks and in doing so a) The Ld.CIT(A) failed to appreciate that the interest income from co-operative banks are attributable to profits and gains of the business of extending credit facilities to Appellant's members. b) The Ld.CIT(A) failed to appreciate that the business of the Appellant consist entirely of extending credit facilities to its members and the interest income from co-operative banks arose only on account of keeping the surplus funds for the time being in anticipation of lending the same to the member ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cts discussed above. Regarding the argument of ld. DR of revenue that the earlier Tribunal order rendered by the Division Bench of the Tribunal in the case of M/s. Udaya Souharda Credit Cooperative Society Ltd. (supra) should be followed in preference to the later decision of SMC bench of the Tribunal rendered in the case of Siddartha Pattina Souharda Sahakari Niyamitha Vs. ITO (supra), I find that in this later case, the SMC bench of the Tribunal has duly considered the earlier decision of the Division Bench of the Tribunal rendered in the case of M/s. Udaya Souharda Credit Co-operative Society Ltd. (supra) and it is also noted that ld. CIT(A) and AO in that case has examined the whole issue in the light of Karnataka Souharda Sahakari Act, 1997. Because of this reason, it was held by the SMC bench of the Tribunal that issue has to be decided by the Tribunal and it cannot be remanded to the AO as was canvassed by the Revenue and hence, this argument has not merit that even now, the matter should be restored back to the AO for fresh decision although the SMC bench of the Tribunal has decided the issue. Regarding the judgment of Hon ble Allahabad High Court rendered in the case of CI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in denying the benefit of deduction to the Assessee. The learned DR relied on a decision of the ITAT Bangalore Bench in the case of M/s. Millennium Credit Cooperative Society Ltd. Vs. ITO ITA Nos. 2606 2607/Bang/2017 in which the Tribunal followed the decision of ITAT Bangalore Bench in the case of M/s. Udaya Souharda Credit Co-operative Society Ltd. ITA No.2831/Bang/2017 order dated 17.8.2018 in which the issue whether souharda registered under the Karnataka Souharda Sahakari Act, 1997 can be regarded as co-operative society entitled to benefit of deduction u/s.80P(2)(a)(i) of the Act was remanded to the AO for fresh consideration. We are of the view that in the present case, the AO and CIT(A) have already considered this issue in the light of the Karnataka Souharda Sahakari Act, 1997 and therefore this issue has to be decided by me and cannot be remanded to the AO as was canvassed by the Revenue. 6. I have considered the rival submissions. Sec.2(19) defines cooperative societies for the purpose of the Act and the same is as follows: Definitions. 2. In this Act, unless the context otherwise requires,- (19) co-operative society means a co-operative society registered under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l Cooperative Act which will prevent interference of the governments. This committee, after a detailed study of the Cooperative Acts of various states, drafted a Model Cooperative Act in 1991 and Central Government recommended the state governments to adopt this. Accordingly, in 1997 a bill on parallel cooperative act was tabled in the state legislature of Karnataka. Demanding an early approval of this bill by both the houses of Karnataka Legislature, a committee Souharda Samvardhana Samithi under the chairmanship of Justice Rama Jois came into existence. It was due to the combined efforts of Sahakara Bharathi Karnataka and Souharda Samvardhana Samithi, The Karnataka Souharda Sahakari Act 1997 (KSSA, 1997) was passed in the legislature. With the consent of The President of India, it was enforced from January 2001. Preamble to the Act reads thus:- An Act to provide for recognition, encouragement and voluntary formation of Co-operatives based on self-help, mutual aid, wholly owned, managed and controlled by members as accountable, competitive, self-reliant and economic enterprises guided by cooperative principles and matters connected therewith; WHEREAS it is expedient to pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al order, I hold that the assessee s claim regarding deduction u/s. 80P(2)(a)(i) cannot be rejected on this basis that assessee is a Souharda Sahakari and therefore, cannot be regarded as a co-operative society. But after holding so, I set aside the order of ld. CIT(A) and restore the matter back to the AO for fresh decision regarding allowability of deduction u/s. 80P(2)(a)(i) of the IT Act after examining other conditions for allowing such deduction because those conditions are not examined by the AO till now. I order accordingly. 4.1 Further in the case of Mahaveer Credit Co-operative Society Ltd. Vs. ITO in ITA Nos.282 283/Bang/2020 Dt.21.08.2020 wherein the Tribunal has held in paras 9 to 12 as under : 9. We have perused submissions advanced by both sides in light of records placed before us. 10. The grievance of assessee is that, in its case test of mutuality is satisfied however, Ld.CIT(A) did not spell out as to how the said test fails. We are of the view that, such grievance of the assessee would be addressed by setting aside the issue of deduction u/s.80P(2)(a)(i) of the Act to Ld.AO for consideration afresh, with a direction to the Assessee to produce a cer ..... X X X X Extracts X X X X X X X X Extracts X X X X
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