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TMI Blog2024 (7) TMI 1130X X X X Extracts X X X X X X X X Extracts X X X X ..... disregarding the fact that appellant was eligible for deduction u/s. 80P(2)(a)(i) of the Income Tax Act, 1961. That the CIT (Appeals) has failed to appreciate that the primary income of the appellant is from credit facilities extended to members. 3. That the CIT (Appeals) has failed to appreciate that the appellant was required to pay half yearly instalment to the lender Punjab State Cooperative Agricultural Development Bank Ltd, Head office. That the CIT (Appeals) has erred in appreciating the fact that the appellant had paid interest of Rs 8829819/- to the lender and had simultaneously received interest of Rs 1390954/- from the same lender on the current account maintained with them. That the addition confirmed by CIT (Appeals) is required to be quashed as no interest was received as the appellant has actually paid net interest of Rs 7438865/-.That the Ld CIT(Appeals) has erred in appreciating the fact that the alleged interest of Rs 1390954/- was on account of current account transaction with head office which requires to be netted off. 4. The Ld CIT (Appeals) has erred in not appreciating the fact that only for accounting purposes interest received of Rs 1390954 and paid of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h co-operative banks as well as scheduled bank qualifies for deduction both under section 80P(2)(a)(i) and section 80P(2)(d) - Held, yes [Para 7] [In favour of assessee] 4. The Ld. AR argued that even if the Appellant is deemed ineligible for deduction under Section 80P(2)(a)(i) of the Income Tax Act, it unequivocally falls within the ambit of Section 80P(2)(d). This provision allows for deductions concerning any income by way of interest or dividends derived by a cooperative society from its investments with any other cooperative society. Given that the Appellant received interest from Punjab State Cooperative Agricultural Development Bank Ltd (SADB), a cooperative society, it unquestionably qualifies for deduction under Section 80P(2)(d). Therefore, the Appellant's eligibility for deduction under Section 80P remains intact, albeit under a different sub-section. 5. The AR submitted that Section 80P of the Income Tax Act provides for deductions in respect of income of cooperative societies. Specifically, Section 80P(2)(d) allows for a deduction in respect of any income by way of interest or dividends derived by the cooperative society from its investments with any other coope ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sar Bench, Amritsar in a latest judgment in the case of "The Urapar Co-op. Agri, Service Society Ltd, VPO Urapar, dated 23/05/20231 following the principle of law laid down by the Hon'ble Supreme Court(Supra)/[Annexure "A" has held that the society is entitled to deduction u/s. 80-P(2)(d) for interest income earned from other Co-op. Society, in ITA No: 89/ASR/2021 [Annexure - "B", Pages 5-141]and in the case of the Jainpur Multipurpose Coop. Society Ltd; Vs. Income Tax Officer, Nawanshahr in ITA NO: 68/Asr/2024 [Annexure -"C", Pages 15-181] 8. Following the principle of law laid down by the Hon'ble Supreme Court (Supra) and our own judgment (Supra), we hold that the decision of the Ld. CIT(A) in denying the deduction to the assessee is perverse to the facts on record and against the spirit of law, in view of the provisions of sub section 4 of section 80(P) of the Income Tax Act. Therefore, the impugned order is annulled and accordingly, the deduction of Rs. 54,00,164/- claimed by the appellant u/s 80P(2)(d) is allowed. 6. The Ld. DR stands by the impugned order. 7. Heard both the sides, perused the record, impugned order and case law referred. We find that the appellant is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rative banks) - Assessment years 2016-17 and 2017-18 - Whether a co-operative society referred under section 2(19) was only a co-operative society as registered under Co-operative Societies Act, be it a co-operative society carrying on banking business or co-operative society carrying on other businesses or a Co-operative bank - Held, yes - Assessee-co-operative society made investments with co-operative banks - Assessee received interest from said investments and claimed deduction under section 80P(2)(d)- Assessing Officer denied said claim on ground that deduction was available only for income and interest received from co-operative society and not from co-operative bank - It was noted that assessee produced document to show that Co-operative Bank, where investments were made was registered under Tamil Nadu Cooperative Societies Act, 1983 whether since investment was made by assessee in a co-operative bank registered under Co-operative Societies, assessee would be entitled to claim benefit under section 80P(2)(d) - Held, yes [Paras9, 10 and 13] [In favour of assessee]. 11. The Coordinate Bench in case of The Khan Khanna Cooperative Agricultural Society Ltd. Vs. Asst. Commissione ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 80P(2)(d). Thus, it is the income derived by the Appellant from its investments with another cooperative society, namely, Punjab State Cooperative Agricultural Development Bank (SADB). 15. In the above view, we accept that the grievance of the appellant is justified and accordingly following the coordinate bench and judicial precedent, we hold that appellant is eligible for deduction u/s 80P(2)(d) of the Act and therefore, the addition of Rs 13,90,954/- is deleted. 16. In the next ground of the appeal, the appellant objected to confirmation of the addition of Rs. 36,981 /- made by the AO on account of disallowance of payment to Gratuity Fund. 17. The AR submitted that Id. CIT (Appeals) has ignored the fact that such payment of gratuity was according to the terms, conditions and directions of the Head office. However, the Ld. CIT(A) has observed that Gratuity Fund allowable as per Rule at 8.33% and Excess contribution to Gratuity Fund has been disallowed amounting to Rs. 36,981/- 18. Accordingly, we hold that since the AO disallowed the excess contribution to gratuity fund contributed by the appellant during the Assessment Year 2020-21 amounting to Rs. 36,981/- and righ ..... X X X X Extracts X X X X X X X X Extracts X X X X
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