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TMI Blog2022 (2) TMI 1243X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee that interest earned from deposits made with Co-operative banks in compliance with the Karnataka Cooperative Societies rules constituted its income under the head income from business and accordingly claimed that the same is eligible for deduction u/s 80P(2)(a)(i) - HELD THAT:- As the assessee is raising this issue for the first time before the Tribunal. In the case of M/s Vasavamba Co-operative Society Ltd (supra), the division bench of Tribunal has restored this issue to the file of the AO. Accordingly, following the above said decision of the division bench, we restore this issue to the file of the A.O. for examining the claim of the assessee in accordance with law. Addition made u/s 68 - A.O. noticed that the assessee society has deposited Specified bank notes (demonetized notes) in the account maintained by it with CDCC Bank, Hosadurga - HELD THAT:- Assessee has complied with the requirements of sec.68 of the Act. The AO has also not stated that the assessee has not discharged the responsibility placed on it u/s 68 of the Act. Peculiarly, the AO is taking the view that the assessee was not entitled to collect the demonized notes and accordingly invoked sec.68 of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rgeable under the head income from other sources u/s 56 of the Act. Accordingly, he held that the amount of Rs.1,56,710/- only falls under the head Income from business . The assessee had claimed deduction u/s 80P(2)(a)(i) of the Act in respect of above said entire income. The A.O. took the view that the applicability of deduction u/s 80P(2)(a)(i) of the Act can be considered only in respect of business income of Rs.1,56,710/-. He noticed that the assessee has admitted nominal members also as its members and they are not eligible to vote in elections. Accordingly, he took the view that the Principle of mutuality is hit in the case of the assessee. Accordingly, following the decision rendered by Hon ble Supreme Court in the case of Citizens Co-operative Society Ltd. Vs. ACIT 397 ITR 1, the A.O. held that the assessee is not eligible for deduction u/s 80P(2)(a)(i) of the Act. Accordingly, he assessed the business income of Rs.1,56,701/- without granting deduction u/s 80P(2)(a)(i) of the Act. The Ld. CIT(A) also confirmed the same. 5. I heard the parties on this issue and perused the record. The Ld. A.R. submitted that the law on deduction u/s 80P(2)(a)(i) of the Act, including the in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t under statutory compulsion. Accordingly, he submitted that interest income earned from those deposits is exempt u/s 80P(2)(a)(i) of the Act. 9. I heard Ld. D.R. on this issue. I notice that the assessee is raising this issue for the first time before the Tribunal. In the case of M/s Vasavamba Co-operative Society Ltd (supra), the division bench of Tribunal has restored this issue to the file of the AO. Accordingly, following the above said decision of the division bench, I restore this issue to the file of the A.O. for examining the claim of the assessee in accordance with law. 10. The Ld. A.R. also raised a contention that if interest income is assessed under the head income from other sources , then the corresponding expenditure incurred in earning interest income should be allowed as deduction. In support of this proposition, the Ld. A.R. placed his reliance on the decision rendered by Hon ble jurisdictional Karnataka High Court in the case of Totagars Cooperative Sales Society Ltd. Vs. ITO (2015) 58 Taxmann.com 35. 11. I heard Ld. D.R. on this issue. Since this contention is also a new contention, I restore this issue also to the file of the A.O. for examining it in the light ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds. He submitted that the RBI, vide notification dated 14.11.2016, clarified that District Central Co-operative Banks can allow their existing customers to withdraw money from their accounts up to Rs.24,000/- per week. It further clarified that no exchange facility against demonetized notes or deposit of such notes should be entertained by them. In view of the above said notification, the assessee has stopped collecting the demonetized notes from 14.11.2016 onwards. Accordingly, the Ld. A.R. submitted that the above said deposits were collected by the assessee prior to 14.11.2016 and it cannot be considered as violation of any of the Provisions of the Act. Accordingly, he submitted that the A.O. was not justified in invoking the provisions of section 68 of the Act. 14. I heard Ld. D.R. on this issue and perused the record. I notice that the A.O. has not doubted the submissions of the assessee that the above said amount of Rs.24,47,500/- represents collection of money in the normal course of carrying on of business of the assessee, i.e., it represents money remitted by the members of the assessee society towards repayment of the loan taken by them and also towards pigmy deposits, et ..... X X X X Extracts X X X X X X X X Extracts X X X X
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