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TMI Blog2024 (4) TMI 1141X X X X Extracts X X X X X X X X Extracts X X X X ..... credit facilities to such member also qualify for deduction u/s 80P(2)(a)(i) - section 80P(4) of the I.T. Act is to be read as a proviso. Section 80P(4) of the Act now specifically excludes only co-operative banks which are co-operative societies engaged in the business of banking i.e. engaged in lending money to members of the public, which have a license in this behalf from the RBI. On identical factual situation, Tribunal in the case of M/s. Ravindra Multipurpose Cooperative Society Ltd. [ 2021 (9) TMI 342 - ITAT BANGALORE] had remanded the issue to the files of the A.O. for de novo consideration. The Tribunal directed the A.O. to follow the dictum laid down by the Hon ble Apex Court in the case of Mavilayi Service Co-operative Bank Ltd ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 81,81,055/- as against the total income reported by the Appellant of Rs. 21,000/- on the facts and circumstances of the case. 3. The learned Commissioner of Income-tax (Appeals) erred in applying the ratio of judgement of Karnataka High Court in the case of M/S Totgars Co operative Sales Society reported in 83 Taxmann.com 140 for charging interest income as Income from Other Sources which are distinguishable on facts of the Appellant' case: i. The Appellant is a credit co- operative society and not engaged in marketing of agricultural produce; and ii. The Appellant has earned interest from investment of its operational funds used in business of investing and lending to members and not by investing surplus funds in short term deposits. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iness income , thus rendering deduction u/s 80P(2)(d) not applicable in the facts and circumstances of the case. 8. The learned Commissioner of Income-tax (Appeals) failed to appreciate that SCDCC Bank is a co-operative Society which is registered under Karnataka State Co-operative Societies Act, 1959, then it is no a bank per-se governed by RBI, then interest income earned from deposits with SCDCC Bank is eligible for deduction u/s 80P(2)(d) of the Act in the facts and circumstances of the case. 9. Without prejudice, the Appellant is entitled to cost of funds u/s 57 of the Act if interest income is taxed u/s 56 of the Act as Income from Other Source in the facts and circumstances of the case. 10. The Appellant craves leave to add, alter, d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act. It was, therefore, stated by the Hon ble Apex Court that the term member in the respective State Co-operative Societies Acts under which the societies are registered have to be taken into consideration. The Hon ble Apex Court held that if nominal / associate member is not prohibited under the said Act, for being taken as a member, the income earned on account of providing credit facilities to such member also qualify for deduction u/s 80P(2)(a)(i) of the Act. It was further held by the Hon ble Apex Court that section 80P(4) of the I.T. Act is to be read as a proviso. It was stated by the Hon ble Apex Court that section 80P(4) of the Act now specifically excludes only co-operative banks which are co-operative societies engaged in the b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion u/s 80P(2)(a)(i) of the Act to the files of Ld.AO to examine the same de novo in the light of the above judgment. Needless to say that proper opportunity of being heard is to be granted to assess in accordance with law. 3.1 In view of the order of the ITAT, which is identical to the facts of the case, we restore the issue of claim of deduction u/s 80P of the Act to the files of the A.O. to decide in the light of above order of Tribunal cited (supra). 3.2 Alternatively, assessee raised ground that the assessee earned interest income from deposit with scheduled banks and co-operative banks. Facts regarding this ground are that the assessee earned interest income from deposits with Scheduled banks and Cooperative banks, which has been asse ..... X X X X Extracts X X X X X X X X Extracts X X X X
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