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TMI Blog2021 (3) TMI 933X X X X Extracts X X X X X X X X Extracts X X X X ..... red in holding that the interest earned by the assessee from deposit made with Co-operative Banks amounting to Rs. 15,77,910 is chargeable to tax u/s 56 of the I.T.Act. 3. The brief facts of the case are as follow: The assessee is a Co-operative Society, registered under the Karnataka Co-operative Societies Act. It is providing credit facilities to its members. For the assessment year 2016-2017, the return of income was filed declaring `Nil' income after claiming deduction u/s 80P of the I.T.Act amounting to Rs. 26,86,206. The return was selected for scrutiny and assessment was completed u/s 143(3) of the I.T.Act vide order dated 17.12.2018. The Assessing Officer treated the interest received from other Co-operative Banks as income from o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , it was submitted that the same is attributable to carrying on the business activity of the assessee, and therefore, is eligible for deduction u/s 80P(2)(a)(i) of the I.T.Act. 6. The learned Standing Counsel relied on the assessment order and the CIT(A)'s order. 7. I have heard rival submission and perused the material on record. The Hon'ble Apex Court in the case of The Mavilayi Service Co-operative Bank Ltd. & Ors. v. CIT (supra) had held that the expression "members" is not defined under the Income-tax Act. Hence, it is necessary to construe the expression "members" in section 80P(2)(a)(i) of the I.T.Act as it is contained in the respective State Co-operative Act. The Hon'ble Apex Court had held that providing credit facilities to ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 309 (Kar.), wherein the Hon'ble Karnataka High Court considered the decision of the Hon'ble Apex Court in the case of The Totagar's Co-operative Sales Society (supra) and held that interest income in respect of temporary parking of own surplus funds not immediately required is eligible for deduction u/s 80P(2)(a)(i) of the Act. The learned DR relied on a subsequent decision of the Hon'ble Karnataka High Court in the case of Pr.CIT v. Totagars Co-operative Sale Society Ltd. (supra). I notice that on identical facts the co-ordinate bench of the Tribunal in the case of M/s.Raithara Seva Sahakara Sangh v. ITO in ITA No.1992 & 2596/Bang/2018 (order dated 02.01.2019) had restored the matter to the A.O. for de novo consideration. The relevant fin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt assessee under Section 80P(2)(d) of the Act and not under section 80P(2)(a) of the Act which was the claim in AY 1991-92 to 1999-2000. The reason given by the Assessee was that in AY 2007-08 to 2011-12 investments and deposits after the Supreme Court's decision against the assessee Totgar's Cooperative Sale Society Ltd. (supra), were shifted from Schedule Banks to Co-operative Bank. U/s.80P(2)(d) of the Act, income by way of interest or dividends derived by a Co-operative Society from its investments with any other Co-operative Society is entitled to deduction of the whole of such interest or dividend income. The claim of the Assessee was that Co-operative Bank is essentially a Co-operative Society and therefore deduction has to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deciding the issue. The Assessee has also filed an application for filing additional evidence regarding its membership to show that no nominal members existed in the society. We give liberty to the Assessee to file these documents before the AO in the set aside proceedings. 9. In view of the above co-ordinate Bench order in the case of M/s.Raithara Seva Sahakara Sangh v. ITO (supra), I restore the issue of claim of interest income received from other cooperative banks to the files of the A.O. for de novo consideration. The A.O. shall follow the directions of the Tribunal contained (supra). It is ordered accordingly. 10. In the result, the appeal filed by the assessee is allowed for statistical purposes. Order pronounced on this 19th day ..... X X X X Extracts X X X X X X X X Extracts X X X X
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