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TMI Blog2024 (11) TMI 168X X X X Extracts X X X X X X X X Extracts X X X X ..... llow deduction u/s 80P(2)(a)(i) and 80P(2)(d) in respect of interest income earned from other cooperative banks. Appeal of the assessee is allowed. - Shri R.K. Panda, Vice President And Ms. Astha Chandra, Judicial Member For the Assessee : Shri Sharad Shah For the Department : Shri B.S. Rajpurohit ORDER PER ASTHA CHANDRA, JM : The appeal filed by the assessee is directed against the order dated 26.09.2023 of the Ld. Commissioner of Income Tax (Appeals)/NFAC, Delhi [ CIT(A) ] pertaining to Assessment Year ( AY ) 2018-19. 2. The assessee has filed this appeal with a delay of 286 days. The assessee has filed an application for condonation of delay along with a sworn affidavit stating therein the reasons for delay in filing of the appeal. On perusal of the same, we are satisfied that the delay in filing of appeal is not intentional or deliberate but has occurred for the reasons mentioned in the affidavit. After hearing both the sides, we are of the view that the delay is attributable to the sufficient cause. We, therefore condone the delay and proceed to decide the appeal. 3. The assessee has raised the following grounds of appeal :- 1. The Ld. AO has erred in (CIT-A erred in confirm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Act. He further observed that since, the investments/ deposits are not made in a Co-operative Society but in Co-operative banks/Scheduled banks, the deduction of interest earned on the same cannot be allowed u/s 80P(2)(d) of the Act. The assessee therefore was asked to justify its claim of deduction of interest income u/s 80P of the Act. In response thereto, the assessee furnished its reply contending the same to be allowable deduction, however, the reply of the assessee was not found tenable by the Ld. AO. The Ld. AO held that the interest income of Rs. 45,81,847/- earned by the assessee is not allowable deduction either u/s 80P(2)(a)(i) or 80P(2)(d) of the Act and added the same to the returned income of Rs. Nil and completed the assessment at total income of Rs. 45,81,847/- vide order dated 22.02.2021 passed u/s 143(3) r.w.s. 143(3A) and 143(3B) of the Act. 5. Aggrieved, the assessee carried the matter before the Ld. CIT(A)/NFAC challenging the addition of Rs. 45,81,847/- on account of interest income from investments/deposits made with the seven Cooperative/ Scheduled banks listed above. After considering the written submissions and various judicial precedents on the impu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (iv) the purchase of agricultural implements, seeds, livestock or other articles intended for agriculture for the purpose of supplying them to its members, or (v) the processing, without the aid of power, of the agricultural produce of its members, [or] (vi) the collective disposal of the labour73 of its members, or (vii) fishing or allied activities, that is to say, the catching, curing. processing, preserving, storing or marketing of fish or the purchase of materials and equipment in connection therewith for the purpose of supplying them to its members.] the whole of the amount of profits and gains of business attributable to any one or more of such activities [Provided that in the case of a co-operative society falling under sub clause (v or sub-cause there and bye-lass of the society restrict the voting rights to the blowing classes of as members, namely- (1) the individuals who contribute their labour or as the case may be carry on the fishing or allied activities (2) the co-operative credit societies which provide financial assistance to the society (3) the State Government] (b) in the case of a co-operative society, being a primary society engaged in supplying milk, oilseed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lance sheet was not eligible for deduction u/s. 8OP(2)(d) of the Act. However, the appellant is engaged in extending credit facilities to its members and the interest earned on such excess deposits over the lending with co-operative banks and societies was eligible for deduction u/s 80P(2)(d) of the Act as the interest earned is not on amounts invested which are due to its members out of sale proceeds of agricultural produce. The interest earned is attributable to carrying on business of banking and hence liable for deduction u/s 80P(2)(d) of the Act. This view has been taken by the Hon'ble Andhra Pradesh High Court in the case of CIT vs. Andra Pradesh State Cooperative Bank Ltd. (336 ITR 516). Similar view has been taken by the Hon'ble Gujarat High Court in the case of SBI vs. CIT (389 ITR 578). Similar view has been taken by ITAT PUNE BENCH 'B' in the case of Sant Motiram Maharaj Sahakari Pat Sanstha Ltd. v. Income Tax Officer, Ward Parbhani [2020] 120 taxmann.com 10 (Pune Trib.). In this decision, Hon'ble ITAT has distinguished the facts of the case of Totgar Co-operative Sale Society Ltd. and concluded that the co- operative credit societies are eligible for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to accept the assessee s sec.80P(2)(a)(i)/80P(2)(d) deduction claim(s) in very terms. Ordered accordingly. 10. Identical issue was considered and decided in favour of the assessee by the Pune Bench of the Tribunal in the case of Yogiraj Nagari Sahakari Patsanstha Maryadit Vs. ITO in ITA No. 1152/PUN/2023, dated 06.06.2024 wherein the Tribunal in turn relying on the decision of the Co- ordinate Bench in the case of The Ugar Sugar Works Kamgar Dr. Shirgaokar Shaikshanik Trust Nokar Co-op Credit Society vs. ITO in ITA No.84/PAN/2018, dated 27.05.2022 held as under : 9. Following the decision of the Co-ordinate Bench of this Tribunal (supra), we are of the considered opinion that even the interest income earned by cooperative society on deposits made out of surplus funds with cooperative banks as well as schedule banks qualify for deduction both under the provisions of section 80P(2)(a)(i) and section 80P(2)(d) of the Act, therefore, the reasoning given by the lower authorities on this issue cannot be accepted. Thus, we direct the Assessing Officer to allow deduction u/s 80P(2)(a)(i) and 80P(2)(d) in respect of interest income earned from other cooperative banks. The grounds of appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X
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