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TMI Blog2018 (8) TMI 2033X X X X Extracts X X X X X X X X Extracts X X X X ..... e order dated 09.02.2016 under section 143(3) of the Income Tax Act, 1961 (hereinafter 'the Act'). 2. The only issue in this appeal of assessee is against the order of CIT(A) confirming the action of the AO in disallowing the claim of deduction under section 80P(2)(d) of the Act on interest earned from co-operative Banks. For this assessee has raised the following ground No. 2 (a) to (d): - "2. a. The Ld. CIT (A) has erred in disallowing the claim of Deduction u/s. 80P(2)(d) of Rs. 73,23,824/- on the ground that co-operative bank does not fan under the purview of a Co-operative Society referred in section 80P(2)(d) by ignoring the explanation offered b. The Ld. CIT A) ought to have considered that Co-operative Banks in which the appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng a co-operative bank in comparison to co-operative society. Accordingly, the AO disallowed the claim of the assessee. The CIT(A) also confirmed the action of the AO by observing as under: - "............................ Hence, it is clear that where the assessee is a Co-operative Credit Society whose business is to provide credit facilities to its members and if the funds created by such activities are not required immediately for business purpose and it invested the deposits to earn interest thereon, it has been held by the Hon'ble Apex Court that the interest earned by the assessee oil such deposits would come in the category of Income from other sources' taxable under section 56 of the IT Act. Applying the ratio to the fact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... perative banks, other than a Primary Agricultural Credit Society or a Primary Co-operative Agricultural and Rural Development Bank. We find that the lower authorities had observed that as the co-operative bank with which the surplus funds of the assessee were parked as investments, were neither Primary Agricultural Credit Society nor a Primary Co-operative Agricultural and Rural Development Bank, therefore, the interest income earned on such investments would not be entitled for claim of deduction under Sec. 80P(2)(d) of the Act. 7. We have deliberated at length on the issue under consideration and are unable to persuade ourselves to be in agreement with the view taken by the lower authorities. Before proceeding further, we may herein rep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the provisions of Sec. 80P would no more be applicable in relation to any co-operative bank, other than a primary agricultural credit society or a primary co-operative agricultural and rural development bank, but however, are unable to subscribe to their view that the same shall also jeopardise the claim of deduction of a co-operative society under Sec. 80P(2)(d) in respect of the interest income on their investments parked with a co-operative bank. We have given a thoughtful consideration to the issue before us and are of the considered view that as long as it is proved that the interest income is being derived by a co-operative society from its investments made with any other co-operative society, the claim of deduction under the aforesai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es: (i) Land and Cooperative Housing Society Ltd. (supra) (ii) Sea Green Cooperative Housing and Society Ltd. (supra) (iii) Marwanjee Cama Park Cooperative Housing Society Ltd. (supra). We further find that the Hon'ble High Court of Karnataka in the case of Totagars Cooperative Sale Society (supra) and Hon'ble High Court of Gujarat in the case of State Bank Of India (supra), had also held that the interest income earned by the assessee on its investments held with a co-operative bank would be eligible for claim of deduction under Sec. 80P(2)(d) of the Act. Still further, we find that the CBDT Circular No. 14, dated 28.12.2006, as had been relied upon by the ld. A.R, also makes it clear beyond any scope of doubt, that the pur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of the issue before us. Still further, the reliance placed by the Ld. D.R on the order of the ITAT 'SMC' Bench, Mumbai in the case of Shri Sai Datta Co-operative Credit Society Ltd. (supra), would also not be of any assistance, for the reason that in the said matter the Tribunal had set aside the issue to the file of the assessing officer for fresh examination. That as regards the reliance placed by the ld. D.R on the judgment of the Hon'ble High Court of Karnataka in the case of Totagars co-operative Sale Society (supra), the High Court had concluded that a co-operative society would not be entitled to claim of deduction under Sec. 80P(2)(d). We however find that as held by the Hon'ble High Court of Bombay in the case of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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