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TMI Blog2021 (9) TMI 342X X X X Extracts X X X X X X X X Extracts X X X X ..... Interest from investment in Co-operative banks, nationalised banks - HELD THAT:- This issue has been decided by coordinate bench of this Tribunal in case of Potters Cottage Industrial Co-Operative Society Ltd., for assessment years 2015-16 [ 2021 (9) TMI 137 - ITAT BANGALORE]. Thus as relying on it we direct the Ld.AO to verify the interest earned on investment earned from co-operative societies and to consider the claim of assessee in accordance with law under section 80P(2)(d). Grounds raised by assessee stands allowed for statistical purposes. - ITA No.1262/Bang/2019 - - - Dated:- 31-8-2021 - Shri Chandra Poojari, Accountant Member And Smt. Beena Pillai, Judicial Member For the Assessee : Shri Ramasubramaniyan, C.A For the Revenue : Smt. H Kabila, Addl.CIT ORDER PER BEENA PILLAI, JUDICIAL MEMBER Present appeals are filed by the assessee against the common order dated 30/03/2019 passed by the Ld.CIT(A) Mangaluru for assessment year 2016-17 on the following grounds. 1. That the order of the learned Commissioner of Income-Tax (Appeals) is bad in so far it is prejudicial to the interests of the appellant and erroneous in law ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntrary, the Ld.DR though opposed the admission of the additional grounds, could not controvert the submissions made by the Ld.Counsel. 2.3. We have perused the submissions advanced by the both sides and records placed before us. 2.4. We note that issue raised by the assessee in this additional ground is no longer res-integra. The ground raised by assessee under this application is a legal ground and needs to be admitted. We draw our support from the decision of Hon ble Supreme Court in case of National Thermal Power Corporation Ltd (NTPC) v. CIT(supra). Accordingly we admit the additional grounds is reproduced hereinabove. Brief facts of the case are as under: 3. Assessee is a co-operative society providing credit facilities to its members. For years under consideration assessee filed its return of income after claiming deduction under section 80P of the Act. The return was selected for scrutiny under Cass and notice under section 143(2) was issued to assessee. In response to the statutory notices, representative of assessee appeared before the Ld.AO and filed requisite details as called for. 3.1 Ld.AO from the details filed by assessee observed th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the violation of the Karnataka Co-operative Society Act, the Ld.CIT(A) observed that the society is not eligible for deduction u/s 80P and as such ratio of the decision of Hon`ble Supreme Court decision in the case of Citizen Co-op Society Ltd, Hyderabad v. ACIT, C-9(1), Hyderabad in Civil Appeal No.10245 of 2017 dated 8.08.2017 is applicable to the facts of the assessee society. 3.6 The Ld.CIT(A) also held that, in the assessee's case, mutuality principles have failed as substantial business is being carried out with the general public or nominal members and also in view of the assessee being registered as Souharda Co-operative Society and not as Co-operative Society and taking into account the byelaws and the nature of business carried out by the assessee, the society is not eligible for deduction u/s 80P of the Income tax Act, 1961. 3.6 The Ld.CIT(A) thus upheld the order of Ld.AO. 4 Aggrieved by the order of Ld.CIT(A) assessee is in appeal before us now. 4.1. We have considered the rival submissions of both sides in the light of records placed before us. 4.2. The issue that arises for consideration is: (i) whether the authorities below were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ratio laid down by Hon ble Supreme Court. Hon ble Supreme Court in the case of the Totgars Co-operative Sale Society Ltd. Vs. ITO reported in 322 ITR 283 held that, Income from utilisation of surplus funds was taxable under the head income from other sources, and therefore not eligible for deduction u/s 80P. Hon ble Karnataka High Court in case of Tumkur Merchants Souharda Credit Cooperative Ltd. vs. ITO reported in 230 Taxman 309, dealt with an issue where deduction u/s.80P(2)(a)(i) of the Act was claimed on interest from the deposits made in a nationalized bank which was used for providing credit facilities to its members. The Assessee therein claimed that the said interest amount is attributable to the credit facility provided by the assessee and forms part of profits and gains of business. Hon ble Karnataka High Court after considering the decision by Hon ble Supreme Court in case of Totgars(supra) held that, since the word income is qualified by the expression attributable to the business of Banking, is used in Sec.80P(2)(a)(i) of the Act, it has to receive a wider meaning and should be interpreted as covering receipts from sources other than the actual conduct of business. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - Operative Sale Society reported in 392 ITR 74 in the context of deduction u/s.80P(2)(d) of the Act, it was held by Hon ble Karnataka high Court that deduction in respect of any income by way of interest or dividends derived by the co-operative society from its investments with any other co-operative society, the whole of such income is available under sec.80P(2)(d) of the Act. Hon ble Karnataka high Court held that decision by Hon ble Supreme Court in case of Totgars (supra), was not on the deduction claimed u/s.80P(2)(d) of the Act, but was rendered in respect of deduction claimed under Section 80P(2)(a)(i) of the Act. Hon ble Karnataka High Court in the case of Pr.CIT Anr. vs. Totgars Co- Operative Sale Society reported in 395 ITR 611 took a different view and held that interest income earned on deposits whether with any other bank will be in the nature of income from other sources and not income from business and therefore the deduction u/s.80P(2)(d) of the Act cannot be allowed to the Assessee. The Hon ble Court followed decision of Hon ble Gujarat High Court in the case of SBI Vs. CIT reported in 389 ITR 578, wherein Hon ble Gujarat High Court dissented from the view taken b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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