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TMI Blog2024 (7) TMI 401X X X X Extracts X X X X X X X X Extracts X X X X ..... vidend income out of investments with co-operative society, as observed by Hon ble Supreme Court in the case of Kerala State Co-operative Agricultural and Rural Development Bank Ltd. [ 2023 (9) TMI 761 - SUPREME COURT] , the same is entitled to deduction u/s 80P(2)(d) of the I.T . Act. Lastly the Coordinate Bench has also held that in case interest income to be charged as Income from Other sources then cost of funds to the assessee would have to considered as expenses in term of section 57 of the Act. Thus, we remit the matter back to the file of the AO for examining the issue afresh in the light of the above view of the Coordinate Bench. And also direct the AO that he should decided the allowance of cost of funds to the assessee u/s 57 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the order, has observed that depositing/investing funds in a co-operative bank/commercial bank is not a part of business of providing credit facilities to its members. The AO took a view that such income is not the operational income of the assessee society and hence not available for deduction u/s. 80P(2)(a)(i) of the Act (the order of the AO is silent on CRR point). Here it is pertinent to note that the AO has ignored that the submissions of the assessee stating that it has kept these deposits as per the mandate of government guidelines for carrying out its activities smoothly. AO also not pondered on the submission of the assessee that only 25% of the net profit has been compulsory deposited in the co-operative banks as the Mandate of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ieved with the order of the CIT(A) the assessee has come up in appeal before us and has raised the following grounds: - 1. The orders of the authorities below in so far as they are against the appellant are opposed to law, equity, weight of evidence, probabilities, facts and circumstances of the case. 2. The learned CIT[A] is not justified in upholding the disallowance of Rs. 1,82,08,694/- from out of the deduction claimed u/s 80P[2][a][i] of the Act on the ground that the said income represented interest earned by the appellant from co-operative banks and thus, the same did not form part of the eligible income for deduction u/s. 80P[2][a][i] of the Act. 2.1 The learned CIT[A] ought to have appreciated that the interest income earned by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d prayed that the matter may be restored to the AO for a fresh examination in line with the orders of the coordinate benches in the cases of co-operative societies. 9. The learned D.R. relied on the orders of the authorities below. 10. After considering the rival submissions we observe that the coordinate bench in the case of Basaveshwaranagara Co-opera society case, in ITA Nos. 329 to 333/Bang/2024 dated 23.04.2024 under identical facts has observed as under:- 2.1 The assessee claimed deduction on interest received on investment with banks and co-operative banks under section 80P(2)(a)(i) of the Act. Similar is the position in other assessment years, which is as follows: Sl. No. Assessment year Interest received on investment with banks an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng money to members of the public, which have a license in this behalf from the RBI. The Hon ble Apex Court had enunciated various principles in regard to deduction u/s 80P of the Act. On identical factual situation, the Bangalore Bench of the Tribunal in the case of M/s. Ravindra Multipurpose Cooperative Society Ltd. v. ITO in ITA No.1262/Bang/2019 (order dated 31.08.2021) 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. Ors. v. CIT Anr. (supra). The relevant finding of the Co-ordinate Bench of the Tribunal in the case of M/s. Ravindra Multipurpose Cooperative Society Ltd. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deduction u/s 80P(2)(d) of the Act has been granted to the assessee. Now the contention of the assessee is that this income is to be assessed as business income and deduction u/s 80P(2)(d) of the Act to be granted. Without prejudice to this, it was submitted that the assessee is entitled for deduction u/s 57(iii) of the Act with regard to cost of funds incurred if the income is assessed as income from other sources u/s 56 of the Act. 4. We have heard the rival submissions and perused the materials available on record. As regards the claim of deduction u/s 80P(2)(d) of the I.T. Act, we direct the A.O. to verify whether interest / dividend is received by the assessee out of investments made with Cooperative Societies. If the assessee earns i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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