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TMI Blog2024 (10) TMI 1269X X X X Extracts X X X X X X X X Extracts X X X X ..... H HIGH COURT] held that interest income derived on investment with banks is earned / derived from by a co-operative society in the course of its regular business of accepting deposit providing credit facilities to its members hence eligible for deduction u/s 80P(2)(a) of the Act. Revenue could place no contrary decision of Hon'ble Jurisdictional High Court. Therefore, without multiplying judicial precedents on the aforestated issue in view of the ratio laid down in Smt. Godavari devi Saraf [ 1977 (9) TMI 24 - BOMBAY HIGH COURT] we adjudicate the issue in favour of assessee following the decision of Vavveru Co-operative Rural Bank Ltd. [ 2017 (4) TMI 663 - ANDHRA PRADESH HIGH COURT] by holding that, the interest income earned by the appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee is a credit co-operative society registered under the provisions of Multi-State Co-op. Societies Act and is engaged in providing credit facilitates to its members. For the year under consideration the assessee filed its return of income declaring total income at NIL after claiming 80P(2) deduction of ₹67,15,641/- representing interest income. The case of the assessee was selected for scrutiny wherein the Ld. AO after vouching the source of interest of ₹30,05,033/- earned by assessee from investment denied the deduction u/s 80P(2) of the Act by pressing into service the decision of Hon ble High Court of Karnataka rendered in PCIT Vs Totagars Co-op. Sale Society [2017, 395 ITR 611 (Kar)]. 4.2 Aggrieved by denial of claim fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it qualifies for deduction u/s 80P(2)(a)(i) of the Act and (ii) alternatively since no portion of interest is earned from co-operative banks where these are registered as credit cooperative societies therefore eligible for deduction u/s 80P(2)(d) of the Act. Per Contra, the Ld. DR Mr Rajpurohit placed strong reliance on the impugned orders. 6. Heard rival submissions; and subject to provision of rule 18 of ITAT-Rules, 1963 perused material placed on record, case laws relied upon by both the rival parties. The solitary issue in these appeals hinges around allowability of deduction u/s 80P(2) of the Act. We see strong force in the first contention of the appellant that, in view of the restriction placed u/s 251(1)(a)/(1A)(a) of the Act the Ld ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ieties. The appellant in the present case, undisputedly a registered credit co-operative society and engaged in the qualified business of providing credit facilities to its members, therefore the impugned interest earned by it out of liquid funds placed/invested with other co-operative banks qualifies the test laid in section 80P(2)(a)(i) of the Act, hence very much deductible. Alternatively on perusal of section 80P(2)(d), it is ostensibly clear that interest dividend income derived by one cooperative society from its investment held with other cooperative societies is eligible for deduction u/s 80P(2)(d) of the Act. For this purpose, the chief determinant factor entitling a claim of deduction u/s 80P(2)(d) in the hands of assessee society ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Supreme Court arose, the assessee was carrying on the business of marketing agricultural produce of the members of the society. It is also found from paragraph-3 of the decision of the Karnataka High Court in Totgar's Co-operative Sale Society Ltd.'s case (supra) that the business activity other than marketing of the agricultural produce actually resulted in net loss to the society. Therefore, it appears that the assessee in Totgars was carrying on some of the activities listed in clause (a) along with other activities. This is perhaps the reason that ITA Nos.450 451/PUN/2024 and C.O.Nos.23 24/PUN/2024 Vishwakarma Sarkshan Kamgar Sahakari Patsanstha Maryadit the assessee did not pay to its members the proceeds of the sale of their p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2)(a), is set aside. . (Emphasis supplied) 7. Thus, in substance, the Hon'ble High Court of AP TS (supra) held that interest income derived on investment with banks is earned / derived from by a co-operative society in the course of its regular business of accepting deposit providing credit facilities to its members hence eligible for deduction u/s 80P(2)(a) of the Act. 8. On the other hand, the Revenue could place no contrary decision of Hon'ble Jurisdictional High Court. Therefore, without multiplying judicial precedents on the aforestated issue in view of the ratio laid down in Smt. Godavari devi Saraf Vs CIT [1978, 113 ITR 589(Bom)] we adjudicate the issue in favour of assessee following the decision of non-jurisdictional High C ..... X X X X Extracts X X X X X X X X Extracts X X X X
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