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TMI Blog2023 (6) TMI 871X X X X Extracts X X X X X X X X Extracts X X X X ..... operative bank is eligible investment u/s 80P(2)(d) of the Act. The interest of the said investment related to Cooperative Society; the assessee is eligible for deduction u/s 80P(2)(a)(i) - Decided in favour of assessee. - I.T.A. No. 86/Asr/2021 - - - Dated:- 13-6-2023 - Dr. M. L. Meena, Accountant Member And Sh. Anikesh Banerjee, Judicial Member For the Appellant : Sh. J. S. Bhasin, Adv. For the Respondent : Sh. Nakul Aggarwal, Sr. DR ORDER PER : ANIKESH BANERJEE, JM: The instant appeal of the assessee was filed against the order of the ld. Commissioner of Income Tax (Appeals), NFAC, Delhi,[in brevity the CIT (A) ], order passed u/s 250 of the Income Tax Act 1961, [in brevity the Act ] for A.Y. 2017-18. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income of the assessee society. The assessee filed an appeal before the ld. CIT(A) and the ld. CIT(A) upheld the assessment order. Being dissatisfied, the assessee filed the appeal for further adjudication before the ITAT. 3. The ld. AR filed a written submission which is kept in the record.According to the ld. AR the assessee invested his fund to the Cooperative Bank, so the interest earned from the bank is liable for the exemption u/s 80P of the Act. Section 80P(4) is not affected in this particular deduction. The Revenue is wrongly interpreted the section 80P(4) and the judgment of the Hon ble Supreme Court in the case of Totgars Co-operative Sales Society Ltd, supra . 4. The ld. DR vehemently argued and relied that the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... laimed its entire income as deduction under section 80P of the Incometax Act, 1961. Vide Notice under section 142(1) of the Income-tax Act, 1961 issued on 07.12.2019, the assessee was show caused to explain which subsection of section 80P is applicable in its case under which it has claimed deduction under chapter VI-A and also to explain as to why interest earned on FDRs should not be treated as income from other sources instead of business income and taxed accordingly. 5. The ld. AR further argued that the assessee is registered under Punjab Cooperative Society Act, 1961. The assessee is eligible for deduction of the interest or dividend derives by its investment which other Co-operative Society also from co-operative bank. It was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was right in law in allowing deduction under section 80P(2)(d) in respect of interest of Rs. 4,90,919 on account of interest received from Nawanshahr Central Cooperative Bank without adjusting interest paid to the bank. Therefore, the reference is answered against the revenue, i.e., in the affirmative, and in favour of the assessee. 7. We heard the rival submissions and perused the material available on record. Having discharge the matter in the issue of section 80P(2)(a)(i), the claim of assessee for deduction is viewed as follows:- 7.1. The Cooperative Bank wherein the assessee deposited out of its surplus funds for earning interest. Then, the only interest was earned by the assessee on the deposit would be eligible for deduction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ioner of Income tax vs Gulshan Mercantile Urban Co-Operative Bank Ltd [2013] 29 taxmann.com 8 (All.) 10. The question as to whether the business is derived from or attributable to SLR or non-SLR funds would not make any difference for the purposes of qualifying the interest earned by the cooperative bank under Section 80P(2)(a)(i) as the deposits of surplus idle money available from working capital, including reserves, excess collection of interest tax and other incomes are all attributable to the business of banking. The interest from such deposits cannot be said to be beyond the legitimate business activities of the bank. 11. For the aforesaid reasons, we do not find that the Income Tax Appellate Tribunal committed any error in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Co-ordinate Bench of the Delhi Tribunal in the case of M/s. The Veer Cooperative Group Housing Society Limited (supra) has held that Sarswat Co-operative Bank to be a Cooperative Society and the interest earned therein to be entitled to claim deduction u/s 80P(2)(d) of the Act. I further find that Co-ordinate Bench of the Mumbai Tribunal in the case of Lady Ratan Tower Cooperative Housing Society Ltd., (supra) and after relying on the decision in the case of Kaliandas Udyog Bhavan Premises Cooperative Society Ltd., (supra) has held that the interest earned on investments held with the Co-operative Banks would be eligible for deduction u/s 80P(2)(d) of the Act. 7.2. Thus, we also find that section 80P(2)(d) of the Act allows whole ..... X X X X Extracts X X X X X X X X Extracts X X X X
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