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TMI Blog2024 (4) TMI 647X X X X Extracts X X X X X X X X Extracts X X X X ..... year 2018-19 was filed on 22.08.2015 declaring total income of Rs. Nil after claiming exemption u/s 80P(d)(a)(i)/80P(2)(d) of the Income Tax Act, 1961 ('the Act') of Rs. 26,73,789/- and offered the income of Rs. 30,350/- to tax. The case was selected for Limited Scrutiny to examine the (i) Investments/Advances/Loans and (ii) Deduction from total income under Chapter VI-A. The assessment was completed by the Assessing Officer vide order dated 02.03.2021 passed u/s 143(3) r.w.s. 143(3A) & 143 (3B) of the Act determining total income at Rs. 9,70,022/-. While doing so, the Assessing Officer had brought to tax the interest earned on FDs with other co-operative banks holding that the said interest does not qualify for deduction u/s 80P(2)(a)(i) o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ced on the decision of the Hon'ble Bombay High Court in the case of PCIT vs. Quepem Urban Co-operative Credit Society Ltd., 438 ITR 631 (Bom.). 8. As regards, the issue as to the allowability of exemption under the provisions of section 80P(2)(a)(i) in respect of interest income earned by a cooperative society from the schedule banks, there is a cleavage of judicial opinion among several High Courts on the issue of eligibility of this kind of income for exemption u/s. 80P(2)(a)(i) of the Act. The Hon'ble Punjab & Haryana High Court in the case of CIT vs. Punjab State Cooperative Federation of Housing Building Societies Ltd. 11 taxmann.com 448, the Hon'ble Gujarat High Court in the case of State Bank of India Vs. CIT 389 ITR 578 (Guj.), the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taken view in favour of the assessee following the judgment of Hon'ble Karnataka High Court in the case of Tumkur Merchants Souharda Credit Cooperative Ltd. (supra). Following the decision of the Coordinate Bench of the Tribunal, I am of the considered opinion that the interest income earned on fixed deposits with cooperative bank/scheduled bank partakes character of the business income, which is eligible for deduction u/s 80P(2)(a)(i) of the Act. Therefore, I direct the Assessing Officer to allow the exemption u/s. 80P(2)(a)(i) and section 80P(2)(d) of the Act. Thus, the grounds of appeal filed by the assessee stand allowed. 9. In the result, the appeal filed by the assessee stands allowed. Order pronounced on this 15th day of April, 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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