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TMI Blog2022 (6) TMI 1155X X X X Extracts X X X X X X X X Extracts X X X X ..... year 2014-15. 2. The assessee has taken the following grounds of appeal:- "The following grounds are without prejudice to each other. In view of the facts and circumstances of the case - 1. Learned Assessing Officer has erred in not allowing the claim u/s 80P(2)(d) amounting to Rs. 11,28,91,418/-, in view of the facts and circumstances of the case, as well as based on the argument placed before CIT(A), as per para 3.2 and onwards, there is no justification for not allowing the claim and therefore, the claim may please be allowed. 2. The Learned Assessing Officer has erred in not appreciating the facts that, the appellant is entitled to claim exemption in reference to the amount of Rs. 32,61,00/ as per the argument placed before CIT(A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssing Officer held that as per Form 3CD report, the assessee is "providing credit facility members for agriculture and allied activities and rural development" and therefore miscellaneous income and rental income cannot be considered as incidental as the assessee is engaged regularly in these activities and earns as income on regular basis. Accordingly, the Ld. Assessing Officer disallowed an amount of Rs. 32,61,007/-and added the same to the income of the assessee. 4. In appeal, Ld. CIT(Appeals) dismissed the appeal of the assessee with the following observations: "3.3.3. From the definition of Co-operative bank, it is apparent that Co-operative bank means State Co-Operative Bank, a Central Co- Operative Bank and a primary Cooperative b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... members other than interest relating to carrying on financial related activities with them. It is contended that rent income is pertaining to our premises at different places given on rent to ATM or other bank for ease of operation to members and even for us also. This income is only incidental and part of our business of financing and in view of above deduction u/s.80P may be fully allowed. 3.4.2. Facts of the case and the submissions are considered. The appellant's main activity is providing credit facility to members for agriculture and allied activities and rural development. The appellant has earned rental income by providing different places on rent to ATM and other banks providing place on rent and this cannot be incidental to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , since there was no nexus between interest earned on said deposits and business of assessee providing credit facilities to its members, it could not claim deduction under section 80P(2) of the Act in respect of interest income in question. On the same proposition the Co-ordinate Bench of the Ahmedabad ITAT vide ITA Nos. 1992/Ahd/2017, 1313/Ahd/2018, 1314/Ahd/2018, 1295/Ahd/2018 & 1296/Ahd/2018 dated 29/08/2018 in the cases of Narsanda Mercantile Co. Op. Credit Society Ltd., The Sant Taluka Teachers Co-op. Credit Society Ltd. , The Satyaprakash Co-op. Credit Society Ltd. , Shri Friends Co-op. Credit Society Ltd. and Shri ShramjiviNagrikSahakariMandli Ltd. has adjudicated the identical issue on similar fact and held that earning of interest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (A). Therefore, the appeal of the assessee is dismissed on this issue in respect of Ground Number 1. 6. With respect to Ground Number 2 with respect to disallowance of deduction under section 80P of the Act in respect of "rental income" and "other miscellaneous income" amounting to Rs. 32,61,007/-, we are of the considered view that there is no infirmity in the order of the Ld. CIT(Appeals) who held that the assessee has not been able to establish how this income is incidental to the activities of the assessee and hence eligible for deduction under section 80P of the Act. It is well-settled law that rental income or any other income not incidental to the primary activity of the co-operative societies is not eligible for deduction under sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... use property could not be treated as income attributable to banking business and would not qualify for deduction under section 80P(2) of the Act. In the case of CIT v. Nainital District Co-Operative Bank[2009] 318 ITR 62 (UTTARANCHAL), the High Court held that where the assessee-bank derived the income in question from the house property and not from the banking business, the assessee could not be allowed deduction under section 80P of the Act in respect of the income derived by house property. In view of the consistent view taken by the various High Court/Tribunals, we are of the considered view that the Ld. CIT(Appeals) has not erred in facts and law in confirming the addition made by the Ld. Assessing Officer by denying deduction under s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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