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TMI Blog2023 (5) TMI 417X X X X Extracts X X X X X X X X Extracts X X X X ..... ction against such income does not arise. In any case, from Schedule-7 forming part of the audited financials of the assessee, it has been duly substantiated that the interest income, which was transferred to the Reserves and Surplus in the balance sheet, is interest earned from Co-operative Bank which is of the same nature as has already been allowed u/s 80P(2)(d) of the Act. In the assessment year 2014-15, similar accounting treatment pursuant to the Maharashtra State Co-operative Societies Act, 1960 was made by the assessee, and part of the interest income received from Co-operative Bank was directly credited to the respective Repair Fund and Sinking Fund. CIT(A) while allowing the interest credited to the profit and loss account a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Under the facts circumstances of the case, the NFAC has erred in restricting deduction U/S 80P(2)(d) in respect of the interest received from Co-operative Bank to the extent to which deduction is claimed in the ROI at Rs. 54,74,228/- only, ignoring the fact that ADDITION OF INTEREST INCOME MADE TO THE RETURNED INCOME of Rs. 1,45,16,542/-, which is DIRECTLY CREDITED TO THE RESERVES IN THE BALANCE SHEET, is also eligible for deduction U/S 80P(2)(d). 2. Under the case, the NFAC has erred in NOT considering interest received from Co- operative Bank directly credited to Balance sheet aggregating to Rs.1,45,16,542/- as per the Bye laws of the society as eligible for deduction U/s 80P(2)(d). 3. Under the facts circumstances of the ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isclosed in the return of income. The AO also disallowed the interest income of Rs.1,45,16,552 directly credited by the assessee to the Reserves and Surplus in the balance sheet as per the Co-operative Societies Act. 5. The learned CIT(A) vide impugned order granted the relief in respect of interest income of Rs.54,74,228 claimed as deduction under section 80P(2)(d) of the Act by the assessee and disclosed in the return of income, by observing as under:- From the above it becomes amply clear that section 80P(4) was introduced to preclude claims of deductions by co-operative banks. That in no way affects the status of co-operative banks as co-operative societies and in that token preclude the assessee from claiming a deduction u/s 80 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lude the assessee's claims for deduction u/s 80P(2)(d) on interest earned from its investments in a cooperative bank Having come to the aforesaid conclusion one doesn't deem it necessary to deal with the issue of 'principle of mutuality' referred to by the AO as being inapplicable in the case of the assessee. It's also relevant, in the case, to assert that the appeal with the ITAT (referred to by the AO in his order) for AY 2015-16 in ITA No. 786/Mum/2019 in the assessee's own case on the same issue has been decided against the department. The said decision would also necessitate adherence to the principles of judicial discipline. The claim of Rs. 54,74,228/- as deduction u/s 80P(2)(d) is upheld. To that extent GOA N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aharashtra Co-operative Societies Act 1960 is required to transfer to the respective repair and/or sinking fund and that should also be considered as eligible for deduction under section 80P(2)(d. Apart from the reason cited above it is also the case, in this regard, that the claim is not made out merely by asking. There is no submission on how these funds (there is no mention of the amounts deposited and under what provisions of the Society's MoA the same were deposited in such funds) qualified as income from a cooperative society The AO s finding on this count doesn't require any interference. Being aggrieved, the assessee is in appeal before us. 7. We have considered the submissions of both sides and perused the material ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, proceeded to make the addition on the basis that the claim of deduction against such income is possible only if the income is first declared in the return. It is pertinent to note that in the present case, the interest which was directly credited to the Reserve and Surplus in the balance sheet by the assessee, as per the statutory requirement, at the first instance is not only treated as income by the assessee. Therefore, the question of claim of deduction against such income does not arise. In any case, from Schedule-7 forming part of the audited financials of the assessee, it has been duly substantiated that the interest income, which was transferred to the Reserves and Surplus in the balance sheet, is interest earned from Co-operative ..... X X X X Extracts X X X X X X X X Extracts X X X X
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