9911796707
TMI Blog2024 (7) TMI 401X X X X Extracts X X X X X X X X Extracts X X X X ..... AY) 2018-19. 2. The brief facts of the case are that the assessee is a primary agricultural credit cooperative society registered under the Karnataka State Co-operative Societies Act, 1959 and engaged in providing credit facilities to its members. It has filed its return of income (ROI) on 13.09.2018 declaring an income of Rs. 1,41,320/-. The case of the assessee was selected for scrutiny and proceedings u/s. 143(3) of the Act were initiated by the Assessing Officer (AO). 3. The AO applying the ratio of the decision of Hon'ble Apex Court in Totagars Co- Operative Sale Society v. ACIT [2023] 188 taxmann.com 282 (SC) has held that the interest income earned by the assessee is not eligible for deduction u/s. 80P(2)(a)(i) of the Act. Whil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erative Societies of Karnataka Further, the appellant is not having any banking license issued by RBI to carry on the business of a banker. Thus, the appellant is out of the harm's way and is not hit by the provisions of Section 80P (4) of the Act. Once it is established that the appellant is out of the purview of Section 80P (4), then it becomes eligible for deduction u/s. 80P of the Act subject to the fulfilment of other conditions as to the nature of activity carried on, source of income and the persons with whom such activities are carried on or investment is held etc. as prescribed under various clauses of Section 80P(2) of the Act." 6. After making the aforesaid observations the CIT(A), while concluding has ultimately dismissed t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eduction u/s. 57 of the Act and he ought not to have taxed the gross interest income and therefore, the income assessed is excessive and liable to be reduced substantially. 5. Without prejudice to the right to seek waiver with the Hon'ble CCIT/DG, the appellant denies itself liable to be charged to interest u/s 234-B of the Act, which under the facts and in the circumstances of the appellant's case deserves to be cancelled. 6. For the above and other grounds that may be urged at the time of hearing of the appeal, your appellant humbly prays that the appeal may be allowed and Justice rendered and the appellant may be awarded costs in prosecuting the appeal and also order for the refund of the institution fees as part of the costs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tated the term "member" has not been defined under the Income-tax 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 c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ervice Cooperative Bank Ltd. (surpa). Accordingly, we remit this issue of deduction 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 intere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld. AO for de-novo consideration with the above observations." 11. Perusal of the above observations of Coordinate Bench, would show that the Coordinate Bench has restored the matter to the file of the AO for considering the purport of the decision of Apex Court in the case of Mavilayi Service Co-operative Bank Ltd. v. CIT (2021) 123 taxmann.com 161 (SC). Coordinate Bench has held that If the assessee earns interest / dividend 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. in Civil Appeal No.10069 of 2016, order dated 14.09.2023, the same is entitled to deduction u/s 80P(2)(d) of the I.T. Act. Lastly the Coordina ..... X X X X Extracts X X X X X X X X Extracts X X X X
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