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TMI Blog2023 (8) TMI 1265X X X X Extracts X X X X X X X X Extracts X X X X ..... ative banks are eligible for deduction u/s 80P(2)(d) of the Act. 4. Without prejudice, if the interest earned on investments with banks is considered as income from other sources, then the Ld.AO ought to have allowed deduction towards proportionate expenditure as held by the Hon'ble Apex Court in the case of Totagars Co-operative Sale Society 5. The impugned orders passed by the authorities are illegal and are liable to be set aside in view of the judgment of the Hon'ble ITAT, Mumbai in the case of Manickpur Urban Coop. Society Ltd. Vasai vide ITA. No 3083/Mum/2022 dt 27.02.2023. 6. The impugned orders passed by the authorities are illegal and are liable to be set aside in view of the judgment of the Hon'ble High Court of Karnataka in ITA 29/2015 in the case of M/s. Guttigedarara Credit Co-op. Society Ltd. Mysore Vs. ITO, Ward 2(2), Mysore and ITA 307/2014 - M/s. Tumkur Merchants Souharda Credit Co-op. Ltd. Vs. ITO, Ward-1, Tumkur. 7. For these and other grounds that may be urged at the time of hearing of the appeal the Appellant prays that the appeal may be allowed. 8. The appellant craves leave to add, alter, amend and/or delete any of the grounds mentioned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d business with their members only and have not done any business with non members. 4.2 It is submitted that the assessee is an employees cooperative society and the members are employees of Bharat Electronics Ltd., only and no outsiders are admitted as members. The Ld.AR further submitted that Clause 7(2) and 7(3) of the bye-laws clearly restricts the memberships and no outsiders except the permanent employees of Bharat Electronics are allowed to be members of the society. 4.3 The Ld.AR submitted that the judgment rendered by the Hon'ble Supreme Court in the case of The Citizen Co- operative Society Limited, Hyderabad Vs. ACIT reported in 397 ITR 1 is not applicable to assessee as, they are dealing with members only unlike the said society before Hon'ble Supreme Court submitted that where the transactions were carried out with non members. The Ld.AR submitted that para 18 of the Hon'ble Supreme Court judgment in said case states that, there cannot be any dispute to the proposition that section 80P of the Act is a benevolent provision which is enacted by the Parliament in order to encourage and promote growth of co- operative sector in the economic life of the country. It was don ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the ITAT in ITA No. 490/Bang/2021 in the case of M/s. Kakkabe VSSN Bank Ltd. vs. Pr.CIT by order dated 28.02.2022 for assessment A 2015-16. The Ld.AR submitted that, this Tribunal in above cited case, directed the Ld.AO to consider the dictum laid down by the Hon'ble Supreme Court in case of Mavilayi Service Co- operative Bank Ltd. v. CIT reported in 431 ITR 1. 5. This Tribunal in case of M/s. Bhavasar Kshtriya Co-operative Credit Society Ltd. vs. ITO/ADIT in ITA Nos. 581 to 583/Bang/2022 by order dated 19.10.2022 wherein it was held as under: 2.6. We have heard both sides in light of records placed before us. The Ld.AO denied the claim of the assessee on the ground that interest income earned by making investment of surplus funds has to be assessed under the head "Income from Other Sources" and not income from business and since interest income is not assessed as business income, the claim for deduction under section 57 of the Act cannot be allowed. In upholding the above conclusions, the Ld.CIT(A), inter alia, relied on the decision of the Hon'ble Supreme Court in the case of The Totgar's Co-operative Sales Society Ltd., Vs. ITO reported in 322 ITR 283, wherei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ies, whether or not, their main businesses banking and credit facilities to the members. Therefore, in our view, the section envisages deduction in respect of any income derived by the cooperative society from any investment with a co-operative society. 2.10. We have also considered the case of Totgars Cooperative Sale Society Ltd., reported in 322 ITR 283 relied upon by the Ld.DR, and find that, the Hon'ble Supreme Court has deliberated on the issue of deduction u/s 80P(2)(a)(i) but not on Section 80P(2)(d). We also observed that in the case of Totgars Co-operative Sale Society Ltd. itself the Hon'ble High Court of Karnataka has allowed the claim of deduction u/s 80P(2)(d) vide order dated 05.01.2017 and also in Tumukur Merchants Souharda Credit Co-operative Ltd., reported in 230 taxman 309. 2.11. Similar is the view taken by coordinate bench of this Tribunal in case of Thannirupantha Primary Agricultural Credit Co-operative Society Ltd vs. ITO in ITA no. 276- 277/Bang/2020 by order dated 30/07/2021, wherein it was held as under: 9.1 As regards the claim of deduction u/s 80P(2)(d) of the I.T.Act, the Bangalore Bench of the Tribunal in the case of M/s. The Jayanagar C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reme Court in the case of the very same assessee, the Assessment Years involved was Assessment Years 1991-92 to 1999-2000. The nature of interest income for all the Assessment Years was identical. The bone of contention of the Assessee in AY 2007-08 to 2011-12 was that M/s. Thannirupantha Primary Agri.Cr.Coop.So.Ltd. the deduction under Section 80P(2) of the Act is claimed by the respondent assessee under Section 80P(2)(d) of the Act and not under Section 80P(2)(a) of the Act which was the claim in AY 1991-92 to 1999- 2000. The reason given by the Assessee was that in AY 2007-08 to 2011-12 investments and deposits after the Supreme Court's decision against the assessee Totgar's Co-operative Sale Society Ltd. (supra), were shifted from Schedule Banks to Cooperative Bank. U/s. 80P(2)(d) of the Act, income by way of interest or dividends derived by a Co-operative Society from its investments with any other Co-operative Society is entitled to deduction of the whole of such interest or dividend income. The claim of the Assessee was that Co-operative Bank is essentially a Co-operative Society and therefore deduction has to be allowed under Clause (d) of Sec. 80P(2) of the Act. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds referred to in section 115-O,]] [or interest on securities], any reasonable sum paid by way of commission or remuneration to a banker or any other person for the purpose of realising such dividend [or interest] on behalf of the assessee; [(ia) in the case of income of the nature referred to in sub-clause (x) of clause (24) of section 2 which is chargeable to income-tax under the head "Income from other sources", deductions, so far as may be, in accordance with the provisions of clause (va) of subsection (1) of section 36 ;] (ii) in the case of income of the nature referred to in clauses (ii) and (iii) of sub-section (2) of section 56, deductions, so far as may be, in accordance with the provisions of sub-clause (ii) of clause (a) and clause (c) of section 30, section 31 and [sub-sections (1) [***] and (2)] of section 32 and subject to the provisions of [section 38]; [(iia) in the case of income in the nature of family pension, a deduction of a sum equal to thirty-three and one-third per cent of such income or [fifteen] thousand rupees, whichever is less. Explanation.-For the purposes of this clause, "family pension" means a regular monthly amount payable by the employer to a p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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