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TMI Blog2023 (9) TMI 828X X X X Extracts X X X X X X X X Extracts X X X X ..... ized and commercial banks is safe and easy for ease of business of the assessee society because many of co-operative banks have crumbled during the last many years. We are of the considered view that the CIT(A) has erred in disallowing the deduction claimed by the assessee society u/s 80P(2)(a)(i) and consequently we direct the AO to allow the deduction claimed by the assessee society. - SHRI KULDIP SINGH, JUDICIAL MEMBER AND SHRI GAGAN GOYAL, ACCOUNTANT MEMBER For the Appellant : Shri Vilas Jadhav, C.A. a/w and Ms. Priyanka Jadhav, Adv. For the Respondent : Shri Chetan Kacha, D.R. ORDER Per Bench: Since common question of law and facts have been raised in these inter-connected appeals, the same are being disposed of by way of composite order to avoid repetition of discussion. 2. The appellant, M/s. New Satara Zilla Nagrik Sahakari Patsanstha Maryadit (hereinafter referred to as the assessee ) by filing the present appeals, sought to set aside the impugned orders all dated 30.11.2022 passed by the National Faceless Appeal Centre(NFAC) [Commissioner of Income Tax (Appeals), Delhi] (hereinafter referred to as CIT(A)] qua the assessment years 2014- 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Banks ignoring binding decisions of Jurisdictional Hon'ble ITATS and Bombay High Court cited before the Learned Officials of the National Faceless Appeal Centre (NFAC), Delhi. 6. On the facts and in the circumstances of the case and in law, the Ld. AO erred in not granting General Deduction of Rs. 50,000/- u/s 80 P (2) (c) of the Act, while calculating the demand of tax. 7. The appellant craves leave to add, alter, delete any or all ground(s) of appeal. 3. Briefly stated facts necessary for consideration and adjudication of the issues at hand are: assessee being a co- operative credit society registered under Maharashtra Cooperative Society (MCS) Act, 1960, exclusively engaged in providing credit facilities to its members and transcribing its business with members only, filed its return of income for the years under consideration by claiming deductions under section 80P qua the interest income derived from deposits with nationalized and commercial banks namely Central Bank of India, IDBI Bank and Axis Bank. The Assessing Officer (AO) declining the contentions raised by the assessee society proceeded to disallow the deductions claimed by the assessee under se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arance, for fund transfer to the branches of assessee society, for the ready availability of required cash for routine business for the overdraft facility obtained from these banks and that there is no danger of loss of invested funds like in case of co-operative banks and to carry out smoothly all the objectives of by laws of the assessee and as such the investment with the cooperative banks and other banks were attributable to the assessee s business. 9. When we examine the aforesaid question in the light of the undisputed facts inter-alia that as per laws governing cooperative credit society 25% of its deposit were to be mandatorily kept in FDs with the banks and that the assessee society has been wholly and exclusively engaged in providing credit facility to its members and business is also being transacted with members only; that investments are imperative for the business and as such legal part of its business; that in earlier years right from 2007-08 interest income earned by the assessee from these banks has been considered as business income by the lower Revenue Authority by allowing the deduction claimed under section 80P(2)(a)(i) of the Act, the interest income is cer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,27,62,394 3,13,09,745 85,47,351 11. Aforesaid data shown in the table goes to prove that by parking its fund with the nationalized bank the assessee is continuously suffering losses, which further goes to prove that the funds are being parked with the banks to comply with the mandatory provisions contained under cooperative society Act and Rules framed thereunder, thus the bank interest is attributable to the business income is allowable under section 80P(2)(a)(i) of the Act. 12. Identical issue has already been decided by the co-ordinate Bench of the Tribunal in the cases cited as ITO vs. The Bombay Sales Tax Staff Coop. Credit Society Ltd. Mumbai in ITA No. 7064/M/2013 order dated 31.05.2018, ITO vs. Maharashtra Bank Employees Co-operative in ITA No. 1763/Pun/2017 order dated 06.08.2019 ITO vs. M/s. Shri Bhairavnath Multistate Co- operative Credit Society, Phaltan in ITA No. 2996/Pun/2017 order dated 08.02.2019. 13. Furthermore, the Ld. A.R. for the assessee brought to our notice CBDT circular No. 18/2015 wherein issue in question has been discussed and clarified as under: Interest from Non-SLR securities of Banks ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tive societies/banks claiming deduction under section 80P(2)(a)(i) of the Act which have parked their funds in all banks/commercial banks are entitled for deduction under section 80P(2)(a)(i) of the Act. 15. Identical issue has been decided by the co-ordinate Bench of the Tribunal in case of ITO vs. The Bombay Sales Tax Staff Co-op. Credit Society Ltd. (supra) by returning following findings: 8. We have heard the ld. Departmental representative, perused the orders of the lower authorities and the material available on record. We find that our indulgence in the present case has been sought to adjudicate as to whether the CIT(A) is right in law and facts of the case in concluding that the interest and dividend income earned by the assessee co-operative society on the short term deposits with co- operative banks and nationalized banks, was eligible for claim of deduction under Sec. 80P of the Act, or not. As observed by us herein above, the assessee is a co-operative society engaged in the business of providing credit facilities to its members. We have perused the order of the coordinate bench of the Tribunal, viz. ITAT H Mumbai in the assessee s own case for A.Y 2012-13 i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Panaji, the appellant cannot be held as a cooperative bank, hence deduction claimed u/s 80P(2)(a)(i) cannot be denied to it I find that the A.O in the present AY has nowhere led any facts to show that banking facilities such as cheque books, drafts have been provided. Neither is it the case of the A.O that facilities have been provided to members of the general public without restricting on/v to its own members. On facts therefore the A.O has not demonstrated as to how the appellant qualifies to be a bank. In the circumstances, I hold that the appellant is a cooperative society and not a cooperative bank and is therefore eligible for deduction u/s 80P(2)(a)(i). A.O is accordingly directed to allow the deduction claimed by the appellant. Grounds 1, 2 are allowed in favour of the appellant. No new facts or contrary judgments have been brought on record before us in order to controvert or rebut the findings so recorded by Ld CIT(A). Since the Ld. CIT(A) while deciding these grounds have relied upon the orders passed by the different benches of Hon ble ITAT in identical circumstances, therefore, there are no reasons for us to interfere into or deviate from the findings recorded ..... X X X X Extracts X X X X X X X X Extracts X X X X
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