2018 (4) TMI 1990

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..... eduction in respect of interest received/derived by it on deposits with coop. banks and therefore the appeal of the assessee is allowed by reversing the order of the CIT(A). We hold that the assessee is entitled for deduction u/s 80P(2)(d) of the Act in respect of interest income earned on deposits kept with the co-operative banks. Accordingly we set aside the order passed by Ld CIT(A) on this issue and direct the AO to allow deduction.
S/SHRI B.R. BASKARAN (AM) AND SANDEEP GOSAIN (JM) For the Assessee : Shri Vimal Vunmiya For the Department : Smt. N. Hemalatha ORDER PER B.R. BASKARAN (AM):- The appeal filed by the assessee is directed against the order dated 25- 03-2016 passed by Ld CIT(A)-33, Mumbai and it relates to the assessmen .....

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..... case of Totagar's Co-operative Sale Society Ltd. In the case of Totagar's Co-operative Sale Society Ltd v/s ITAT (supra) the Hon'ble Supreme Court while interpreting the section 80P(2)(a)(i) of the Act held that surplus funds not immediately required in the business and invested in the short term deposit would be assessable under the head "income from other sources" where the Cooperative society is engaged in carrying on business of banking or providing credit facilities to its members and consequently no deduction is allowable u/s 80P(2)(a)(i) of the Act. Whereas in the case before us the issue is whether a co-operative society which has derived income on investment with cooperative banks is entitled to deduction u/s .....

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..... s if the said income is assessable as income from business whereas latter provides for deduction in respect of income by way interest and dividend derived by assessee from its investments with other cooperative society. Thus it is amply clear that a cooperative society can only avail deduction u/s 80P(2)(d)(i) in respect of its income assessable as business income and not as income from other sources if it carries on business of the banking or providing credit facilities to its members and has income assessable under the head business whereas for claiming u/s 80P(2)(d) it must have income of interest and dividend on investments with other Co-operative society may or may not be engaged in the banking for providing credit facilities to its me .....

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