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TMI Blog2022 (5) TMI 188X X X X Extracts X X X X X X X X Extracts X X X X ..... ety. That rendering the above services insurance companies pay the society insurance commission instead of paying to the agents of the insurance company. Hence it has been pleaded that the insurance commission is part of business and hence eligible for deduction under section 80P(2)(a)(i) of the Act. Alternatively it has been pleaded that the proportionate expenses should be allowed. Commission income disallowed by learned CIT(A) on the ground that for the said income there absence of mutuality - The assessee submissions are not with respect to the same. They are with regard to the same being in the nature of business. Hence, there is lack of appropriate appreciation, hence in the interest of justice we remit this issue to the file of learned CIT(A). Learned CIT(A) shall consider the issue in the light of the submissions made by the assessee. Needless to add the assessee should be given adequate opportunity of being heard. As regard the ground of denial of deduction u/s. 80P(2)(c) of Rs. 50,000/- learned CIT(A) has mentioned that this was not arising out of the order of the Assessing Officer. That it is also not clear that this was claimed by the assessee in the beginning. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,101/- respectively but not offered for tax. Therefore, interest income amounting to Rs.1,88,328/- was added to the total income of the assessee under the head income of other sources. 4. Upon assessee s appeal learned CIT(A) held as under :- 7.1.6 Considering the aforesaid judicial pronouncements, I am of the view that the appellant co-operative society is eligible for deduction u/s 80P(2)(d)/80P(2)(a)(i) on interest derived from its investment with cooperative banks. The AO is directed to allow deduction of Rs,7,65,358/- as claimed by the appellant u/s 80P(2)(d)/80P(2)(a)(i). The ground is allowed. 7.2 The second ground of appeal is that the AO has erred in considering the income earned by the society by way of commission as income from other sources instead as business income earned in clue course of business and hence eligible for deduction u/s 80P(2)(a)(i). 7.2.1 It is observed that the appellant has received commission of Rs.31.040/- and Rs.61,559/- from Future General India Insurance Co. Ltd and 1CICI Bank Ltd respectively who are not members-of the appellant society. Therefore on this receipt the principle of mutuality will not apply. In view of the abov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther sources and denying deduction u/s 80P(2)(a)(i). SUBMISSION: During the year the society has earned income from following sources: a) Commission from Future General Insurance Rs. 31040/- b) Commission from ICICI Bank Rs. 61,559/- c) Interest from ICICI Bank Rs. 32,101/- d) Interest from Central Bank of India Rs. 1,56,227/- Total Rs.2,80,927/- a) Commission from Future General Insurance and ICICI Bank. The Society has given loans to its members against hypothecation of property, gold, goods, vehicles, etc The society to safe guard the interest of the society, has taken life insurance and Mediclaim insurance policies for the members and staff, their family members and also General Insurance policies for the hypothecated/pledged properties, debtors and goods of the borrowers of the society. The insurance premium paid by the society is charged and recovered from the respective members and staff. These services are part and par ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Profession and eligible to claim deduction u/sec.80P (2)(a)(i)of the Act . (Copy of the CBDT Circular-18/2015 is enclosed) The Hon. ITAT Mumbai bench, in the case of ITO-17(3)(4), Mumbai Vs. State Bank of India Employees M.S Patel Co-op. Credit Society Ltd., held that the assessee is a cooperative credit society, which is engaged in the activity of providing credit facilities to its members after accepting deposits from its members. In the course of assessment proceedings, the Assessing Officer noted that assessee had inter-alia, earned interest on fixed deposit with State Bank of India of Rs.83,86,322/- which was not eligible for exemption u/s 80- P(2)(a)(i) of the Act since the said income did not relate to the activity of providing credit facilities to the members. Therefore, the exemption in relation to the aforesaid interest income was denied. Before the CIT(A), assessee pointed out that it was not a co-operative bank so as to be covered by the exclusion provided u/s 8Q-P(4) of the Act, and in this context placed reliance on the judgment of the Hon'ble Bombay High Court at Goa in the case of M/s The Quepem Urban Co-operative Credit Society Ltd., Tax Appeals N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taka High Court in the case of Tumkur Merchants Souharda Credit Cooperative Ltd (2015) 230 Taxman 309. The Hon'ble Karnataka High Court has considered the decision of the Hon'ble Supreme Court in Totgars case (cited by the AO in the present appeal), and held that the interest income arising from investments of the society in both cooperative as well as scheduled banks is attributable to the business activities of the assessee and is therefore eligible for a deduction u/s 80P(2)(a)(i). The ITAT Mumbai in its order has followed the decision of the Karnataka High Court and held that interest income earned from investments in both cooperative as well as scheduled banks is eligible for deduction u/s 80P(2)(a)(i). The facts and issue in the present appeal is identical to the case before the Hon'ble ITAT Mumbai. Respectfully following the decision of the ITAT, I hold that the interest earned by the appellant from its investments in SBI are also eligible for deduction u/s 80P(2)(a)(i). The AO is directed accordingly. The disallowance made by the AO is therefore deleted. (Copy of Case law is attached) In the following case, Karnataka High Court has even considered ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een granted by the Assessing Officer. We hereby appeal to allow the deduction for the same. 7. I have heard learned Departmental Representative and perused the records. As regard ground for interest from banks the same is covered in favour of the assessee by the ITAT decision in the case of State Bank of India Employees M.S. Patel Co-operative Credit Society Ltd. (ITAT No. 1970/Mum/2016 vide order dated 31.7.2017) wherein it was held that : 3. In brief, the relevant facts are that the assessee is a co-operative credit society, which is engaged in the activity of providing credit facilities to its members after accepting deposits from its members. In the course of assessment proceedings, the Assessing Officer noted that assessee had, inter-alia, earned interest on fixed deposit with State Bank of India of Rs.83,86,322/-, which was not eligible for exemption u/s 80-P(2)(a)(i) of the Act since the said income did not relate to the activity of providing credit facilities to the members. Therefore, the exemption in relation to the aforesaid interest income was denied. Before the CIT(A), assessee pointed out that it was not a co-operative bank so as to be covered by the exclus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l as scheduled banks is to be held as income from other sources as that interest could not be said to be generated from business activities. In the said order, the ITAT has followed the decision of the Hon'ble Karnataka High Court in the case of Tumkur Merchants Souharda Credit Cooperative Ltd (2015) 230 Taxman 309. The Hon'ble Karnataka High Court has considered the decision of the Hon'ble Supreme Court in Totgars case (cited by the AO in the present appeal), and held that the interest income, arising from investments of the society in both cooperative as well as scheduled banks, is attributable to the business activities of the assessee and is therefore eligible for a deduction u/s 80P(2)(a)(i). The ITAT Mumbai in its order has followed the decision of the Karnataka High Court and held that interest income earned from investments in both cooperative as well as scheduled banks is eligible for deduction u/s 80P(2)(a)(i). 5.2 The facts and issue in the present appeal is identical to the case before the Hon'ble ITAT Mumbai. Respectfully following the decision of the ITAT, I hold that the interest earned by the appellant from its investments in SBI are also eli ..... X X X X Extracts X X X X X X X X Extracts X X X X
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