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TMI Blog2018 (5) TMI 2029X X X X Extracts X X X X X X X X Extracts X X X X ..... . 2. The only issue in this appeal of Revenue is against the order of CIT(A) deleting the disallowance of deduction by the AO claimed by assessee under section 80P(2)(d) of the Act in respect of interest received on deposit kept with co-operative bank. For this Revenue has raised the following grounds: - "i. On the facts and in the circumstances of the case, and in law, the Ld. CIT(A) erred in deleting the addition by not appreciating the provisions of section 80P(2)(d) of the I.T. Act. ii. On the facts and in the circumstances of the case, and in law, the Ld. CIT(A) erred in giving relief to the assessee by not appreciating the fact that the assessee has made investment In cooperative bank and not cooperative society which is a prereq ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se of Totagar's Co-operative Sale Society Ltd. In the case of Totagar's Co-operative Sale Society Ltd v/s ITAT (supra) the Hon'ble Supreme Court while interpreting the section 80P(2)(a)(i) of the Act held that surplus funds not immediately required in the business and invested in the short term deposit would be assessable under the head "income from other sources" where the Cooperative society is engaged in carrying on business of banking or providing credit facilities to its members and consequently no deduction is allowable u/s 80P(2)(a)(i) of the Act. Whereas in the case before us the issue is whether a co-operative society which has derived income on investment with cooperative banks is entitled to deduction u/s 80P(2)(d). The provision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e from business whereas latter provides for deduction in respect of income by way interest and dividend derived by assessee from its investments with other cooperative society. Thus it is amply clear that a cooperative society can only avail deduction u/s 80P(2)(d)(i) in respect of its income assessable as business income and not as income from other sources if it carries on business of the banking or providing credit facilities to its members and has income assessable under the head business whereas for claiming u/s 80P(2)(d) it must have income of interest and dividend on investments with other Co-operative society may or may not be engaged in the banking for providing credit facilities to its members and the head under which the income i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case of PCIT vs. Totagars Co-operative Sale Society [2017] 392 ITR 74 (Karnataka) allowed this claim. In the case of Kaliandas Udyog Bhavan Premises Co-op Society Ltd. vs. ITO in ITA No. 6547/Mum/2017 for AY 2014-15 vide order dated 25.04.2018 by observing in Para 8 and 9 as under : - "8. We shall now advert to the judicial pronouncements that had been relied upon by the authorized representatives for both the parties and the lower authorities. We find that the issue that a co-operative society would be entitled for claim of deduction under Sec. 80P(2)(d) for the interest income derived from its investments held with a cooperative bank is covered in favour of the assessee in the following cases: (i) Land and Cooperative Housing Society ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s in context of Sec. 80P(2)(a)(i), and not on the entitlement of a co-operative society towards deduction under Sec. 80P(2)(d) on the interest income on the investments parked with a co-operative bank. We further find that the reliance place by the ld. D.R on the order of the ITAT "F" bench, Mumbai in the case of M/s Vaibhav Cooperative Credit Society Vs. ITO-15(3)(4) (ITA No. 5819/Mum/2014, dated 17.03.2017 is also distinguishable on facts. We find that the said order was passed by the Tribunal in context of adjudication of the entitlement of the assessee co-operative bank towards claim of deduction under Sec.80P(2)(a)(i) of the Act. We find that it was in the backdrop of the aforesaid facts that the Tribunal after carrying out a conjoint ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Hon'ble High Court of Karnataka in the case of Pr. Commissioner of Income Tax and Anr. Vs. Totagars Cooperative Sale Society (2017) 392 ITR 74 (Karn) and Hon‟ble High Court of Gujarat in the case of State Bank Of India Vs. CIT (2016) 389 ITR 578 (Guj), wherein it was observed that the interest income earned by a co-operative society on its investments held with a cooperative bank would be eligible for claim of deduction under Sec.80P(2)(d) of the Act. 9. We thus in the backdrop of our aforesaid observations are unable to persuade ourselves to be in agreement with the view taken by the lower authorities that the assessee would not be entitled for claim of deduction under Sec. 80P(2)(d), in respect of the interest income on th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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