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TMI Blog2024 (8) TMI 1073X X X X Extracts X X X X X X X X Extracts X X X X ..... ataka Co-operative Societies Act and the relevant Rules. It was further held by the Tribunal that if the investments are out of compulsion under the Act and the relevant Rules, the interest income received out of the investment made under such compulsion would be liable to be taxed as income from business which would entail the benefit of deduction u/s 80P(2)(a)(i) of the Act. In the event it is found that assessee is not entitled to get the benefit under section 80P(2)(a)(i) of the Act, the AO shall also examine whether it is entitled to deduction under section 80P(2)(d) of the Act in light of the recent judgment of the Hon ble Apex Court in the case of Kerala State Co-operative Agricultural Rural Development [ 2023 (9) TMI 761 - SUPREME C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng part of business income and had claimed deduction under section 80P of the Act. The AO completed the assessment under section 143(3) of the Act vide order dated 18.09.2022. The AO held that interest income received amounting to Rs. 50,93,751/- from Co-operative Banks is to be assessee as income from other sources and is not entitled to deduction under section 80P(2)(a)(i) of the Act or under section 80P(2)(d) of the Act. In holding so, the AO relied on the on the judgment of the Hon ble Apex Court in the case of Totgar s Co-operative Sales Society Ltd., Vs. ITO reported in (2010) 322 ITR 283 and the judgment of the Hon ble jurisdictional High Court in the case of PCIT Vs. Totgars Sales Society reported in 395 ITR 611 (Karnataka). 4. Aggr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the orders of the AO and the CIT(A). 7. We have heard the rival submissions and perused the material on record. It is the contention of the assessee that as regards the claim of deduction of interest income received from Co-operative Banks, the investments are out of compulsions as per Karnataka Co-operative Societies Act, 1959, and the relevant Rules. Therefore, the interest income is entitled to deduction under section 80P(2)(a)(i) of the Act. On identical facts, the Bangalore Bench of the Tribunal in the case of Canara Bank Staff Credit Co-operative Societies Ltd., in ITA No.517/Bang/2023 (order dated 03.10.2023) had restored the matter to the AO to examine whether the amounts invested with the Co-operative Banks are out of compulsion ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... udgment was cited before the Bench of two learned Judges which decided the case of the Bangalore District Co-operative Central Bank Ltd. (supra). It was considered as having been rendered on its own facts and not applicable to the case of Bangalore District Co-operative Central Bank Ltd. (supra) in view of the finding of the Tribunal that the income in question was attributable to the business of that assessee. The Court referred to the Banking Regulation Act, the Karnataka Co-operative Societies Act and the Karnataka Co-operative Societies Rules, which showed that the investments that had been made by the assessee were in compliance with the statutory -provisions and in order to carry on the business of banking. They were necessary and con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ision of this Court in the case of M.P. Co-operative Bank Ltd. (supra) does not set down the correct law and that the law is as we have put it above. The question, accordingly, is answered in the affirmative and in favour of the assessee. 9. A similar view that has been held by the Hon ble Andhra Pradesh High Court in the case of CIT-II, Hyderabad Vs. Andhra Pradesh State Cooperative Bank Ltd., reported in 336 ITR 516 (AP). 10. The Bangalore Bench of the Tribunal in the case of M/s. The Bharathi Co-operative Credit Society Vs. ITO in ITA No.793/Bang/2022 (order dated 28.11.2022) for Assessment Year 2015-16, following its earlier order in the case of M/s. Vasavamba Co-operative Society Ltd., Vs. The PCIT in ITA No.453/Bang/2020 (Order dated ..... X X X X Extracts X X X X X X X X Extracts X X X X
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