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TMI Blog2024 (10) TMI 1272X X X X Extracts X X X X X X X X Extracts X X X X ..... the appeal was called for hearing, no one was present on behalf of the assessee to represent the case. There is no application for adjournment of hearing either. Therefore, the Bench was of the view to proceed to dispose off the appeal ex parte qua the assessee after hearing the learned Departmental Representative and on the basis of material available on record. 3. Since both these appeals pertain to the same assessee involving common issues, except variation in figures, which arose out of identical set of facts and circumstances, therefore, as a matter of convenience, these appeals were heard together and are being disposed off by way of this consolidated order. ITA no.404/Nag./2023 Assessee s Appeal A.Y. 2018 19 4. The assessee has raised following grounds: On the facts and in the circumstances of the case and in law........ 1. The Ld. Commissioner of Income Tax (Appeals), NFAC, Delhi has erred in confirming action of Ld AO of disallowing the deduction claimed u/s 80P(2)(a)(i) of Rs. 38,88,015/ . 2. The Ld. Commissioner of Income Tax (Appeals), NFAC, Delhi has erred in confirming action of AO not allowing the deduction u/s 80P(2)(d) of Rs. 38,88,015/-. The appellant craves leav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ved by the assessee is from income from other sources not eligible for deduction under section 80P(2)(a)(i) / 80P2(d) of the Act. While coming to this conclusion, the Assessing Officer referred to the conclusion of the judgment of the Hon'ble Supreme Court in The Totgars Co operative Sale Society Ltd. v/s ITO, [2010] 188 taxman 282 (SC). We find that similar issue came up for adjudication before the Tribunal, Nagpur Bench, wherein the very same Bench was a party to that order rendered in The Ismailia Urban Co operative Society v/s ITO, ITA no.122/Nag./2023, order dated 18/06/2024, wherein the Tribunal has considered this issue in detail and held that interest income earned by the assessee trust is eligible for deduction under section 80P(2)(a)(i) / 80P2(d) of the Act. The relevant portion of the order reproduced below: 9. Upon hearing both the counsel and perusing the record, we find that the issue involved is covered in favour of the assessee by a catena of decisions from ITAT as well as a decision of jurisdictional High Court. In this regard we may gainfully refer the Hon ble Jurisdictional High Court decision in the case of CIT vs. Solapur Nagri Audyogik Sahakari Bank Ltd. 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ltd (supra), in which one of us, learned Judicial Member, was a party. The concluding portion of the Tribunal s decision is as under: 4. With this brief background, we have heard both the sides. It was explained that the Co-operative Society is maintaining operations funds and to meet any eventuality towards repayment of deposit, the Co-operative society is maintaining some liquidated funds as a short term deposit with the banks. This issue was thoroughly discussed by the ITAT B Bench Ahmedabad in the case of The Income Tax Officer vs. M/s.Jafari Momin Vikas Co-op Credit Society Ltd., bearing ITA No. 1491/Ahd/2012 (for A.Y. 2009-10) and CO No. 138/Ahd/2012 (by Assessee) order dated 31/10/2012. The relevant portion is reproduced below :- 19. The issue dealt with by the Hon ble Supreme Court in the case of Totgars (supra) is extracted, for appreciation of facts as under : What is sought to be taxed under section 56 of the Act is interest income arising on the surplus invested in short term deposits and securities, which surplus was not required for business purposes? The assesse(s) markets the produce of its members whose sale proceeds at times were retained by it. In this case, we a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h that assessee (before the Supreme Court), the following clinching dissimilarities emerge, namely: (1) in the case of assessee, the entire funds were utilized for the purposes of business and that there were no surplus funds:- - in the case of Totgars, it had surplus funds, as admitted before the AO, out of retained amounts on marketing of agricultural produce of its members; (2) in the case of present assessee, it had not carry out any activity except in providing credit facilities to its members and that the funds were of operational funds. The only fund available with the assessee was deposits from its members and, thus, there was no surplus funds as such; - in the case of Totgars, the Hon ble Supreme Court had not spelt out anything with regard to operational funds; 19.5 Considering the above facts, we find that there is force in the argument of the assessee that the assessee not a co-operative bank, but its nature of business was coupled with banking with its members, as it accepts deposits from and lends the same to its members. To meet any eventuality, the assessee was required to maintain some liquid funds. That was why, it was submitted by the assessee that it had investe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e society is entitled for deduction u/s 80P as claimed in the return. 10. In the above decision, the Co ordinate Bench has already considered the judgment of the Hon ble Supreme Court in The Totgars Co operative Sale Society Ltd. (supra) and held that the facts of this case are distinguishable in nature and not applicable to the facts of the present case. We, therefore, respectfully following the decision of the Co ordinate Bench in The Ismailia Urban Co operative Society v/s ITO, ITA no.122/ Nag./2023, order dated 18/06/2024, we set aside the impugned order passed by the learned CIT(A) and hold that the assessee is eligible to claim deduction under section 80P(2)(a)(i) of the Act. Thus, grounds no.1 and 2 are allowed. 11. In the result, appeal filed by the assessee is allowed. ITA No.405/Nag./2023 Assessee s Appeal A.Y. 2020 21 12. The assessee has raised following grounds: On the facts and in the circumstances of the case and in law, 1. The Ld. Commissioner of income Tax (Appeals), NFAC, Delhi has erred in confirming action of Ld AO of disallowing the deduction claimed u/s 80P(2)(a)(i) of Rs. 46,86,362/-. 2. The Ld Commissioner of Income Tax (Appeals), NFAC, Delhi has erred in co ..... 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